Retirement Plans Archives - Page 30 of 70

Privacy and Security Concerns for Employee Benefit Plans with Service Provider Relationships

by Anthony A. Bongiorno, Andrew Liazos and Amy C. Pimentel | Jul 21, 2015 | Benefit Controversies, Employment, Fiduciary and Investment Issues, Health and Welfare Plans, Labor, Privacy and Data Security, Retirement Plans

Recent cyber-attacks on health insurers have heightened awareness that sensitive participant and beneficiary information may not be adequately secure. There will undoubtedly be other attacks on databases maintained by service providers to employee benefit plans, which raises an important question for Employee Retirement Income Security Act of 1974 (ERISA) fiduciaries: what should be done now to protect participant and beneficiary information entrusted to service providers against future attacks and unauthorized disclosure? While the extent of a fiduciary’s responsibility to protect personal identifiable information of participants and beneficiaries is unclear, the fiduciary provisions of ERISA can be interpreted to impose a general duty to protect this information when it is part of a plan’s administration. In addition, plan fiduciaries also may have obligations under other federal and state laws governing data privacy and security that are not preempted by ERISA. This article addresses the nature of the problem, identifies the types of data breaches that can occur with employee benefit plans, provides an overview of relevant law that may apply, and sets forth practical steps that can be taken by plan fiduciaries with service providers to address privacy and security concerns.

Click here to read the full article from Benefits Law Journal.

View From McDermott: DOL Re-Proposes Regulations to Expand ERISA ‘Fiduciary’ Definition

by Brian Tiemann and Joseph K. Urwitz | Jul 7, 2015 | Retirement Plans

The U.S. Department of Labor (DOL) issued proposed regulations on April 14, 2015 that would expand the types of investment advice covered by fiduciary protections under the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Internal Revenue Code of 1986, as amended (the Code). The proposed regulations would require advisers to ERISA-governed retirement plans and individual retirement accounts (IRA) to act as ‘‘fiduciaries’’ within the meaning of ERISA and the Code, subject to certain carve-outs identified by the DOL for nonfiduciary adviser services. Advisers that become fiduciaries under the proposed regulations would be subject to ERISA fiduciary duties and prohibited from engaging in certain non-exempt transactions. The proposed regulations are accompanied by two new class prohibited transaction exemptions and amendments to several existing class exemptions, which recognize the expanded scope of ERISA’s fiduciary protections under the proposed regulations while allowing advisers to continue certain types of transactions and existing fee arrangements that would otherwise be prohibited for ERISA fiduciaries. While the proposed regulations likely would have the greatest impact on the IRA marketplace, advisers to plan sponsors, and therefore plan sponsors themselves, are likely to be impacted. Comments on the proposed regulations are due by July 21, 2015.

Read the full article.

DOL Report on Quality of Independent Plan Audits Shows that Plan Sponsors Must Continually Monitor Plan Compliance

by Jeffrey Holdvogt | Jun 18, 2015 | Retirement Plans

The Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) recently released “Assessing the Quality of Employee Benefit Plan Audits,” a comprehensive report reviewing the quality of audit work performed by independent qualified public accountants with respect to financial statement audits of employee benefit plans covered by the Employee Retirement Security Act of 1974 (ERISA). EBSA finds, among other things, that nearly four out of 10 (39 percent) employee benefit plan audits completed by independent qualified public accountants for the 2011 filing year contained “major deficiencies with respect to one or more relevant GAAS requirements” which “would lead to rejection of a Form 5500 filing.” Common audit deficiencies include insufficient review of plan documents and administration, failure to obtain evidence of required communications to participants, inadequate review of employee eligibility, participant accruals and non-discrimination testing, and failure to obtain evidence of adequate internal controls.

EBSA’s findings are significant for plan sponsors and fiduciaries, because they illustrate the importance of continually monitoring employee benefit plans for compliance with the requirements of ERISA and the Internal Revenue Code. It can be easy for plan sponsors and fiduciaries to assume that once the independent audit is complete they can rest assured that the plan complies with legal requirements. However, as EBSA shows, completion of an independent audit does not guarantee compliance. Moreover, an independent audit is not enough—plan sponsors have a fiduciary obligation to ensure their plans are properly maintained and administered beyond what is required to complete the annual audit.

We recently published an article on the “Top IRS and DOL Audit Issues for Retirement Plans.” As we discuss in the article, both the Internal Revenue Service (IRS) and DOL are increasingly focused on the internal controls that plan sponsors and fiduciaries maintain to show that their benefit plans are in compliance when they audit employee benefit plans. The article describes numerous steps plan sponsors should take to review their plans to avoid problems that come up on IRS and DOL audits, as well as to make sure they have proper internal controls. Regular review of these issues and proper focus on internal controls can help prevent costly fines and fees when the IRS or DOL does audit a plan.

IRS Updates EPCRS Correction Methods and Procedures

by Alan D. Nesburg, PC | Jun 10, 2015 | Retirement Plans

The Internal Revenue Service (IRS) recently issued two updates which modify the Employee Plans Compliance Resolution System (EPCRS), which is the comprehensive system for correction of retirement plan failures. EPCRS now allows plans with automatic contribution features to use a new safe harbor to correct certain deferral failures, provides more flexible correction provisions on overpayments and excess annual additions, and reduces certain correction filing fees.

Read the full article.

Whoops! How Do I Fix Our Retirement Plan’s Operational Error?

by rshankar | Jun 4, 2015 | Retirement Plans

Join McDermott partner, Susan Peters Schaefer, at a Worldwide Employee Benefits Network Chicago Chapter breakfast meeting that will cover operational errors in retirement plans.

Mistakes can and do happen, especially in the complex world of retirement plans. In recognition, the U.S. Internal Revenue Service (IRS) created the Employee Plans Compliance Resolution Program (EPCRS) to help retirement plan sponsors fix operational errors either through self-correction or through an IRS application and approval process. In April, the IRS revised and expanded the correction rules under EPCRS. Here experts will explain the new and old correction rules for retirement plans and provide some real life examples and guidance.

Wednesday, June 24, 2015
7:30 am CDT – Breakfast and Networking
8:00 – 9:00 am CDT – Program

Northern Trust Conference Center
50 South LaSalle Street
Chicago, IL 60603

To register for the event, click here.

Fiduciary Risks Involved in Transferring Assets from a Seller’s 401(k) Plan to the Buyer’s Plan

by McDermott Will & Emery | Jun 2, 2015 | Benefit Controversies, Fiduciary and Investment Issues, Health and Welfare Plans, Retirement Plans

In many transactions, particularly those where the buyer is a portfolio company of a private equity fund, the buyer agrees to cause its 401(k) plan to accept a transfer of assets from the seller’s 401(k) plan. The asset transfer from the seller’s plan provides the buyer’s with an asset base with which to negotiate the best possible administrative fee structure, and seamlessly transfers the retirement plan benefits of employees being retained or hired by the buyer. If the seller’s plan contains employer stock as an investment however, the buyer should be aware of fiduciary concerns that may arise under the Employee Retirement Income Security Act of 1974 (ERISA), as amended.

“Stock-drop” litigation is a well-known phenomenon centering on plan fiduciary liability to plan participants when the value of employer stock investments in a retirement plan drops significantly. Less well-known is the fiduciary liability exposure facing new 401(k) plan sponsors and fiduciaries accepting a transfer of assets from the seller’s plan that includes former employer stock. Holding a significant block of a single security that is not company stock implicates ERISA prudence and diversification issues, and must be closely monitored.

Fiduciaries of 401(k) plans considering accepting asset transfers of former employer stock have often been advised to engage counsel to evaluate the prudence of holding the former employer stock in the buyer’s plan as an investment alternative (even if “frozen” to new investment) and establish a timeline for requiring that plan participants divest the former employer stock within one to two years of the asset transfer from the seller’s plan.

In light of the decision in Tatum v RJR Pension Inv. Comm., 2014 U.S. App. LEXIS 14924 (4th Cir. Aug. 4, 2014), buyer 401(k) plan sponsors and plan fiduciaries must now be even more careful to engage in a process that separates fiduciary from non-fiduciary acts and carefully follows established procedures for implementing any required divestitures of former employer stock. In Tatum, the plan was not properly amended to require the divestiture of former employer stock. This failure to properly amend the plan converted a plan design decision, which was a non-fiduciary or “settlor” decision, into a fiduciary act. In Tatum, the plan fiduciaries also failed to follow a prudent process for determining whether or not to eliminate former employer stock and for determining the timeline for implementing such divestitures.

The Tatum decision highlights that, in addition to fiduciary risk in holding former employer stock in the buyer’s 401(k) plan as an investment, there is also fiduciary risk in the process of eliminating former employer stock as an investment in the buyer’s plan.

When establishing a new 401(k) plan, the buyer should consult with legal counsel regarding the risks involved in accepting an asset transfer from a seller’s plan that includes former employer stock. Any new plan sponsors or plan fiduciaries that are contemplating accepting former employer stock as part of an asset transfer should consider whether or not they should engage an independent third party to monitor the former employer [...]

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Supreme Court Acknowledges Fiduciaries Have Continuous Duty to Monitor Plan Investments, Remove Imprudent Investments

by McDermott Will & Emery | May 21, 2015 | Fiduciary and Investment Issues, Retirement Plans

On May 18, 2015, the Supreme Court of the United States issued its opinion in the Tibble v. Edison Int’l, 575 U.S. ___ (2015) case, finding that the U.S. Court of Appeals for the Ninth Circuit erred in applying the six-year statutory bar in the Employee Retirement Income Security Act (ERISA) to plaintiff’s claim alleging that respondents owed a continuing duty to monitor and remove imprudent investment selections. Through the decision, the Supreme Court expressly held that ERISA fiduciaries have a continuing duty to monitor plan investments and to remove imprudent investments.

Read the full article.

McDermott’s Todd Solomon Discusses Same-Sex Employee Benefits with the Wall Street Journal

by Diane Morgenthaler and McDermott Will & Emery | May 14, 2015 | Benefit Controversies, Employee Benefits, Employment, Executive Compensation, Fiduciary and Investment Issues, Health and Welfare Plans, Retirement Plans

As the U.S. Supreme Court weighs whether gay couples are constitutionally entitled to marry, more companies in states with marriage equality have begun to mandate that gay employees marry in order to maintain benefits, including health care coverage. In a recent interview with the Wall Street Journal, McDermott partner Todd Solomon discusses the shifting terrain of coverage and benefits that companies offer unmarried gay partners. McDermott lawyers have been monitoring domestic partnership benefits for almost two decades, and, as Mr. Solomon notes, the landscape is definitely changing.

Read the full article, “Firms Tell Gay Couples: Wed or Lose Your Benefits,” in the Wall Street Journal.

McDermott to Host Benefits Innovators Roundtable Series – May 19 in New York City

by rshankar | May 5, 2015 | Employment, Health and Welfare Plans, Privacy and Data Security, Retirement Plans

McDermott Will & Emery will be holding the next invitation-only Benefits Innovators Roundtable series in our New York office on May 19, 2015. These roundtables offer senior, experienced professionals an opportunity to discuss employer-provided benefits best practices with peers and experienced McDermott employee benefits lawyers. Previous events in this series have led to spirited discussions on a broad range of cutting-edge topics.

This session’s topics will include:

Lawsuits by health service providers
Hot issues in data privacy
Brainstorming sessions on: the U.S. Supreme Court’s 2015 term (including King v. Burwell), legislative proposals, 401(k) issues and recent U.S. Department of Labor actions.

If you are interested in attending, please contact Donna Baker.

View From McDermott: 2014 ERISA Litigation Review–Decisions From the Supreme Court and Beyond

by Michael T. Graham | Apr 7, 2015 | Retirement Plans

Recently, the U.S. Supreme Court issued a number of significant ERISA cases. In its 2013-14 term, the Supreme Court decided two ERISA-based appeals – Fifth Third Bancorp v. Dudenhoeffer and Heimeshoff v. Hartford Life & Acc. Ins. Co. In the current 2014-15 term, the Supreme Court already issued one ERISA decision in M&G Polymers USA, LLC v. Tackett, and will issue another ERISA decision soon in Tibble v. Edison Int’l. Although these four cases have received much attention within the ERISA community, each year there are hundreds of other decisions issued by federal appellate and district courts that also impact a plan sponsor’s daily administration of welfare and retirement plans. In fact, many of these district court and appellate decisions are interpreting issues raised or addressed in these Supreme Court opinions. This article will address a few of these cases, which may not have received a lot of attention by the press, but could have long-lasting impacts on plan administration and litigation in future years.

Read the full article.

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