The SECURE Act—the most significant piece of retirement plan legislation in more than a decade—is now law. Plan sponsors should immediately start considering how changes included in the SECURE Act could impact their retirement and health and welfare plans in 2020 and beyond.
The Treasury Department and the IRS recently finalized new hardship distribution rules applicable to defined contribution plans. Plan sponsors should prepare for operational changes to comply with the new regulations, including some beginning January 1, 2020.
The Ninth Circuit signaled that it might rehear Dorman v. The Charles Schwab Corp., where earlier this year it held that a mandatory arbitration provision required arbitration of an ERISA fiduciary-breach claim.
The Department of Labor (DOL) issued a proposed rule that, if finalized, would expand its existing guidance and liberalize rules for electronic disclosure of retirement plan notices under ERISA. The proposed rule, which sets forth a notice and access safe harbor, would permit electronic disclosure as the default method of delivery while permitting participants to opt out and continue to receive paper disclosures.
In the string of pension-plan related, actuarial equivalence lawsuits, the court in DeBuske, et al. v. PepsiCo, Inc., et al. recently handed down the first decision favorable to plan sponsors. The DeBuske court’s narrow decision may, however, have limited impact going forward.
In today’s high-stakes environment, in-house counsel and HR professionals are often on the frontlines, responding to headlines that threaten business and reputational objectives.
Join McDermott Will & Emery’s Employment and Employee Benefits practice groups at a half-day forum in our Chicago office on Oct. 10. This forward-looking program is designed to drive conversation around emerging trends to help employers craft their own narrative, instead of being held captive by it.
A Texas federal court certified a class in case brought by participants in one plan, and allowed those participants to represent participants in unaffiliated plans. The claims alleged that the defendants, who marketed and provided services to all of the plans, breached fiduciary duties by imposing excessive fees. See Chavez, et al. v. Plan Benefits Services, Inc., et al., No. AU-17-CA-00659-SS, United States District Court for Western District of Texas (Aug. 30, 2019).
IBM estimated last year that data breaches cost companies $148 per stolen record. Given that, not surprisingly, many employers have grown increasingly concerned about the potential impact of such breaches, including breaches that may affect employer-sponsored benefit plans.
Courts have not yet formally addressed whether ERISA requires benefit plan fiduciaries to manage cybersecurity risks. However, a federal district court recently rejected a motion to dismiss filed by defendants seeking to avoid liability for fraudulent distributions from a plan caused by cyber criminals. There, the court held that the defendants were plan fiduciaries and that the plaintiffs had pled facts sufficient to allege that the defendants breached their fiduciary duties. Although this decision only relates to a motion to dismiss, the case underscores the potential for plaintiffs to assert, even in the absence of clear guidance, that plan fiduciaries are not doing enough to protect plan participants from cybersecurity risks.
As a result, with cybersecurity concerns on the rise, plan fiduciaries are continuing to enhance their focus on the best ways to protect employee data. Recently, on Law360, McDermott’s Mark E. Schreiber discussed four helpful tips for handling cybersecurity risks.
Over the past several years, the IRS and DOL have significantly increased the number of benefit plans audits conducted each year.
As a result, it is important for plan sponsors to understand the types of issues that often arise in connection with such audits. At the recent PSCA 2019 National Conference, Brian Tiemann explained what plan sponsors should expect if their benefit plan is selected for audited. More specifically, Brian discussed the ways audits are typically triggered and how to respond when a plan is audited. In addition, Brian outlined some of the most common retirement and health and welfare compliance issues identified in plan audits. He also discussed how plan sponsors can prepare for audits and even address potential compliance issues before they occur.
The House recently passed the most significant piece of proposed retirement plan legislation in more than a decade: the SECURE Act. Although the Senate must also approve the bill before it becomes law, its proposed changes have considerable bipartisan support in Congress. Plan sponsors should start considering how changes included in the SECURE Act could impact their retirement plans. Employers who do not currently offer retirement plans should also review the new retirement plan incentives included in the proposed legislation.
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