Employee Retirement Income Security Act Archives - Page 5 of 10

Supreme Court to Review Application of ERISA’s Six-Year Statute of Limitations in Tibble v. Edison Int’l.

by Patrick Ryan | Nov 5, 2014 | Retirement Plans

On October 2, 2014, the Supreme Court of the United States granted the plaintiffs’ petition for a writ of certiorari in Tibble v. Edison International to answer “Whether a claim that [Employee Retirement Income Security Act] ERISA plan fiduciaries breached their fiduciary obligation by offering higher-cost retail-class mutual funds to plan participants, even though identical lower-cost institutional-class mutual funds were available, is barred by 29 U.S.C. § 1113(1) when fiduciaries initially chose the higher-cost mutual funds as plan investments more than six years before the claim was filed.” The underlying claim asserts that the investment committee of the Edison 401(k) Savings Plan (the Plan), a defined contribution plan sponsored by Edison International, breached its fiduciary duty, although the issue presented to the Supreme Court focuses on the statute of limitations applicable to that claim.

The Plan’s investment committee selected a variety of funds for the investment of Plan assets. The funds selected by the investment committee were retail-class funds, which charged higher fees than the comparable institutional-class funds available in the retail market. Plan participants sued, alleging that lower-cost mutual funds were available and should have been selected for the Plan’s investment portfolio. The district court dismissed the case and the U.S. Court for the Ninth Circuit affirmed the dismissal on the basis that the funds were selected more than six years earlier and were therefore barred by ERISA statute of limitations.

ERISA provides a six-year period within which a participant or beneficiary may sue based on allegations of a breach of ERISA fiduciary duties. In general, the ERISA statute of limitation period begins to run on the date of the last act that constitutes a fiduciary breach owed to the beneficiaries. The U.S. District Court for the Central District of California dismissed several claims in the plaintiffs’ lawsuit, concluding that these claims were statutorily barred because the plaintiffs’ filed them after expiration of the six-year statute of limitations period. In addition, the district court ruled that it must defer to the investment committee’s selection of the higher-cost mutual fund by application of the deferential Firestone standard previously set by the Supreme Court.

In its petition for certiorari, the plaintiffs asked that the Supreme Court determine whether ERISA’s six-year limitations period begins on the date that the investment committee initially selected the higher-cost mutual fund options for the Plan’s investment portfolio or whether the on-going offering of such funds constituted a “continuing” fiduciary breach, thereby extending the period. The Supreme Court elected not to address whether the Firestone deference applies to fiduciary breach actions with respect to whether a fiduciary failed to follow plan terms in the selection of investment options.

This case follows the Supreme Court’s 2013 decision in Heimeshoff v. Hartford Life & Accident Insurance Co. Heimeshoff concluded that an ERISA plan’s contractual three-year limitations period for benefit claims was enforceable, despite the fact that the statute of limitations began to run before the participant’s benefit claim had been decided by the plan administrator. Conversely, in Tribble v. Edison, Int’l., the Supreme Court is asked when ERISA’s [...]

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PBGC Coverage May No Longer Apply to Puerto Rico-Only Qualified Retirement Plans

by Jeffrey Holdvogt | Oct 22, 2014 | Retirement Plans

Employers that sponsor defined benefit qualified retirement plans benefiting only Puerto Rico employees should be aware that Pension Benefit Guaranty Corporation (PBGC) coverage may no longer apply. Last year, the PBGC withdrew old prior opinion letters (Opinion Letters 77-172 and 85-19) regarding PBGC coverage in Puerto Rico and Guam. Those opinion letters articulated the PBGC’s position at that time, that Title IV of the Employee Retirement Income Security Act (ERISA) (providing for PBGC coverage), may apply to defined benefit plans covering only Puerto Rico participants if the Puerto Rico plan is either qualified under Section 401(a) of the U.S. Internal Revenue Code or has been operated in practice in accordance with the requirements of Section 401(a) for at least the five preceding years. Earlier this year, in remarks made at an enrolled actuaries meeting, PBGC officials stated that, going forward, PBGC will determine that a plan is not covered under Title IV of ERISA if (1) the plan’s trust is created or organized outside of the United States (e.g., Puerto Rico) and (2) no election under ERISA section 1022(i)(2) has been made. As a result, it appears the new PBGC position is that Puerto Rico-only qualified plans generally are not covered under Title IV of ERISA (although dual-qualified plans with Puerto Rico participants are covered). Since few Puerto Rico plans have made an election under ERISA section 1022(i)(2) due to the strict U.S. laws applicable to such arrangements, this new PBGC position will affect a number of Puerto Rico-only defined benefit plans. PBGC officials also stated that if the PBGC determines that a plan is not covered under Title IV of ERISA, it may refund up to six years of premiums.

Employers with Puerto Rico-only defined benefit plans should consider whether PBGC coverage of their plan is still possible or desired. If not, a refund of PBGC premiums should be sought.

PBGC Coverage May No Longer Apply to Puerto Rico-Only Qualified Retirement Plans

by Jeffrey Holdvogt | Aug 14, 2014 | Retirement Plans

Employers that sponsor defined benefit qualified retirement plans benefiting only Puerto Rico employees should be aware that Pension Benefit Guaranty Corporation (PBGC) coverage may no longer apply. Last year, the PBGC withdrew old prior opinion letters (Opinion Letters 77-172 and 85-19) regarding PBGC coverage in Puerto Rico and Guam. Those opinion letters articulated the PBGC’s position at that time, that Title IV of the Employee Retirement Income Security Act (ERISA) (providing for PBGC coverage), may apply to defined benefit plans covering only Puerto Rico participants if the Puerto Rico plan is either qualified under Section 401(a) of the U.S. Internal Revenue Code or has been operated in practice in accordance with the requirements of Section 401(a) for at least the five preceding years. Earlier this year, in remarks made at an enrolled actuaries meeting, PBGC officials stated that, going forward, PBGC will determine that a plan is not covered under Title IV of ERISA if (1) the plan’s trust is created or organized outside of the United States (e.g., Puerto Rico) and (2) no election under ERISA section 1022(i)(2) has been made. As a result, it appears the new PBGC position is that Puerto Rico-only qualified plans generally are not covered under Title IV of ERISA (although dual-qualified plans with Puerto Rico participants are covered). Since few Puerto Rico plans have made an election under ERISA section 1022(i)(2) due to the strict U.S. laws applicable to such arrangements, this new PBGC position will affect a number of Puerto Rico-only defined benefit plans. PBGC officials also stated that if the PBGC determines that a plan is not covered under Title IV of ERISA, it may refund up to six years of premiums.

Employers with Puerto Rico-only defined benefit plans should consider whether PBGC coverage of their plan is still possible or desired. If not, a refund of PBGC premiums should be sought.

New IRS Program for Delinquent Form 5500 Filers of Non-ERISA Plans

by Jeffrey Holdvogt, Patrick Ryan and Todd Solomon | Jun 17, 2014 | Retirement Plans

The Internal Revenue Service recently established a one-year pilot program that provides plan administrators and plan sponsors of certain non-ERISA and foreign plans subject to the annual Form 5500 reporting requirements relief from penalties under the Internal Revenue Code. The penalty relief is temporary and expires on June 2, 2015.

Read the full article.

View From McDermott: Conflicting Review Standards in Executive Retirement Plan Benefit Claims—Is There Really a Difference?

by McDermott Will & Emery | Feb 26, 2014 | Retirement Plans

Under the Employee Retirement Income Security Act, retirement plans generally come in two flavors – (i) retirement plans qualified under Section 401 of the Internal Revenue Code (the Code) and (ii) executive retirement plans, called “top hat” plans, which aren’t Code-qualified. What does that mean? While qualified retirement plans are subject to all of ERISA’s funding, participation and fiduciary provisions, top hat plans aren’t and may offer benefits exceeding those allowed under Code-qualified plans. Simply put, top hat plans are unique animals under ERISA.

Litigation involving top hat plans isn’t plentiful—likely due to the fact that such plans are available only to a small number of highly paid executives. However, within the limited top hat litigation realm, there exists a conflict among the federal courts of appeals over a seminal question—what review standard is to be applied to a benefit determination? While the U.S. Supreme Court has definitively answered this question for most ERISA plans in Firestone Tire & Rubber Co. v. Bruch, the unique nature of top hat plans has resulted in conflicting rules among the circuits. Whether these conflicting standards elicit similar results is an open and complex question for most ERISA practitioners.

To read the full article, click here.

View From McDermott: Estoppel Claims Under ERISA–Confusion in Need of Clarification

by McDermott Will & Emery | Aug 8, 2013 | Retirement Plans

by Michael T. Graham

The Employee Retirement Income Security Act of 1974 was enacted to set minimum participation, fiduciary and nondiscrimination standards for employee benefit plans and to protect employees when an employer voluntarily established retirement and health care plans in private industry. Employers also benefited from ERISA’s enactment because ERISA made nationwide administration of benefit plans easier through federal preemption of most conflicting state laws. Although ERISA preemption covers most state laws that impact plan administration, judicial rulings on certain ERISA issues, including estoppel claims, are creating new challenges for nationwide and uniform benefit administration.

To read the full article, click here.

Sixth Circuit Requires a Net Loss to Sue in Certain ERISA Stock-Drop Cases

by McDermott Will & Emery | Jun 21, 2012 | Retirement Plans

by John A. Litwinski and Chris C. Scheithauer

Recently, the U.S. Court of Appeals for the Sixth Circuit held that a 401(k) plan participant who sued under the Employee Retirement Income Security Act (ERISA) for losses in connection with a company stock fund that suffered a drop must show losses on a “net basis” during the class period to have constitutional standing. This decision has great significance in addressing plaintiffs’ standing and class certification in so-called ERISA “stock-drop” cases, often filed after a company’s stock price falls.

Read the full article here.

PBGC Announces New Enforcement Approach that Reduces Impact of ERISA Section 4062(e) on Financially Sound Employers

by McDermott Will & Emery | Apr 12, 2012 | Benefit Controversies, Retirement Plans

by Michael T. Graham, Joseph S. Adams and Patrick D. Ryan.

The PBGC announced that it may lessen ERISA Section 4062(e) enforcement for employers in strong or moderately strong financial condition. However, the PBGC will continue to enforce its prior Proposed Rule on ERISA Section 4062(e) liability.

To read the full article, click here.

New Service Provider and Participant Fee Disclosure Rules: What Employers Need to Know

by McDermott Will & Emery | Feb 17, 2012 | Employee Benefits

Thursday, March 8, 2012
11:00 – 12:00 pm CST

To register, please click here.

The U.S. Department of Labor (DOL) recently issued final regulations relating to service provider fee disclosures to plan fiduciaries under the Employee Retirement Income Security Act, which affect the participant fee disclosure regulations finalized by the DOL in October 2010. Under the new final regulations, service providers must provide initial fee disclosures to plan fiduciaries by July 1, 2012, and plans must provide initial fee disclosures to participants by August 30, 2012.

McDermott Will & Emery is pleased to offer a complimentary webcast that tells employers what they should expect to receive from service providers and the practical steps they should take to fulfill their fiduciary responsibilities in light of the new final regulations.

McDermott Speakers
Karen Simonsen, Partner, Chair, Plan Fiduciary and Investment Management Group
Maureen O’Brien, Partner
Elizabeth Savard, Partner

Who should attend?
All human resources executives, in-house counsel, compensation and benefits directors, and others responsible for overseeing defined contribution and defined benefit pension plans.

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