Current Events & News
The DOL’s Final Fiduciary Rule Released: Plan Sponsor’s Perspective
The Department of Labor (DOL) issued its highly-anticipated final regulation (Final Rule) that, once effective, will make sweeping changes to the fiduciary definition under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code). Investment professionals working with employer-sponsored retirement plans (such as 401(k) plans) and IRAs (including, for example, an individual retirement account or annuity or a health savings account) must evaluate and, if necessary, alter their current practices or risk significant legal exposure. Read more.
Perpetual Exposure? The Supreme Court’s Tibble Decision
On May 18, 2015, the Supreme Court of the United States unanimously vacated the Ninth Circuit Court of Appeals’ decision in Tibble v. Edison International, holding that applying ERISA’s breach-of-fiduciary duty statute of limitations to a breach of fiduciary duty claim requires consideration of the “contours of the alleged breach of fiduciary duty.” The Court remanded the case to the Ninth Circuit to consider the statute of limitations as it relates to a plan’s ongoing duty to monitor selected investments and service providers. Read more about the Tibble decision.
Department of Labor Revises “Investment Advice” Definition
On April 14, 2015, the Department of Labor (Department) released a long-awaited proposed regulation (Regulation) that revises the definition of “investment advice” for purposes of the Employee Retirement Income Security Act of 1974, as amended, and the Internal Revenue Code. At the same time, the Department withdrew its much-maligned 2010 proposed regulation on the same subject and proposed new and modified prohibited transaction exemptions related to changes proposed by the Regulation. Read more about the “Investment Advice” Definition.
IRS Changes Rules for Correcting Common 401(k) & 403(b) Plan Errors
The IRS recently released additional guidance to the Employee Plans Compliance Resolution System. Revenue Procedures 2015-27 and 2015-28 modify and improve the previous Revenue Procedure 2013-12 and describe new IRS rules for correcting several of the more common errors in qualified retirement plans. The IRS correction guidance provides increased flexibility when making certain corrections as well as reduced fees designed to encourage plan sponsors to participate in the voluntary correction programs. Read more about IRS Changes Rules for Correcting Common 401(k) & 403(b) Plan Errors.
PPA Restatements Are Right Around the Corner
The next restatement period for qualified, pre-approved retirement plans is fast approaching. A lot has happened since the last restatement period, most notably enactment of the Pension Protection Act of 2006 (PPA), which many consider the most sweeping pension reform legislation since ERISA, and other legislation affecting retirement plans. And the IRS has issued regulations interpreting the new laws and some old ones as well. Access the full PPA Restatements publication.
Investment Management Update: Private Equity Funds May Face ERISA Liability
On July 24, 2013, the U.S. Court of Appeals for the First Circuit issued an opinion with significant implications to private equity funds under the Employee Retirement Income Security Act (ERISA). Specifically, the court adopted an expansive definition of “trade or business” for purposes of imposing liability on certain related companies for unfunded multi-employer pension plan obligations. As a result, private equity funds may no longer simply assume that they will be insulated from liability as investors. Rather, the court’s ruling in Sun Capital Partners III LP v. New England Teamsters & Trucking Industry Pension Fund emphasizes the importance of undertaking a careful review and evaluation of a fund’s ownership interest in, and control of, the companies in which it invests. Access the full Investment Management Update.
Employee Benefits Update: Are ERISA Budgets Plan Assets? The DOL Sheds Some Light
The Department of Labor (DOL) recently issued Advisory Opinion 2013-03A (Opinion), which addresses several legal issues surrounding ERISA budgets – arrangements plans commonly use to benefit from some or all amounts generated by revenue sharing arrangements between a plan’s recordkeeper and plan investment alternatives (e.g., mutual funds). The Opinion provides important clarification concerning when such amounts are considered plan assets, and provides important reminders to plan fiduciaries of their responsibilities when analyzing and structuring these arrangements. Read more about ERISA Budget Plans.
Employee Benefits Update: Temporary Enforcement Relief for Delivery of Annual Participant Disclosures
On July 22, 2013, the Department of Labor (DOL) issued Field Assistance Bulletin 2013-02 (FAB) in which it announced temporary enforcement relief regarding the deadline for delivery of annual participant disclosures by plan administrators of participant-directed individual account plans (e.g., 401(k) plans). The DOL also announced it is considering changes to the annual disclosure requirements to provide reasonable timing flexibility on a permanent basis. Access the full article on Temporary Enforcement Relief.