Sutardja Decision Shows Employers How to Preserve Stock Option Flexibility In a 409A World
Many commentators were surprised by the recent federal court of claims decision to deny summary judgment in Sutardja v United States. Sutardja, which currently is headed for trial, involves the IRS assessing a public company executive with Code Section 409A penalties, including a 20% additional income tax plus interest, with respect to potentially discounted stock …
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ESOP Dividend Deduction Rule Targeted by Obama Budget Proposal
The just-released Obama budget proposal includes a proposal to eliminate the IRC Section 404(k) ESOP dividend deduction for large C corporations (or at least what the Obama administration describes as large for this purpose).
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IRS Announces Cost of Living Adjustments for Retirement Plans
The Internal Revenue Service (“IRS”) recently announced cost of living adjustments affecting retirement plans. These new limitations are effective for tax year 2012. Many, but not all, applicable dollar limitations will increase. For this purpose, the IRS uses an adjustment process that is similar to the process used to adjust Social Security benefits (which also will increase effective in 2012).
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“Fiduciary” Regulation Change Put On Hold, Pending Revision and Economic Analysis
The Department of Labor’s Employee Benefits Security Administration (EBSA) has put the brakes on its proposed rule on the definition of a fiduciary, which was slated to become final in the near future. EBSA’s goal for the regulatory change was to ensure that potential conflicts of interest among financial advisors would not compromise the quality of investment advice to individuals.
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Curtiss-Wright Corp. v. Schoonejongen Comes Back to Haunt Us — Follow Your Plan Amendment Procedures
We often are asked why plan amendment procedures vary from plan to plan, and why it is important to follow those procedures—however written. Sometimes there are unique reasons for the specified procedures, but very possibly the answer goes back to the 1990′s and a case called Curtiss-Wright Corp. v. Schoonejongen, which took us on an …
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Update on What Fiduciaries Need to Know about Investments and Fees
Plan fiduciaries generally understand that they have certain duties related to plan investments and service provider fees. Court decisions over the years have shed some light on these duties. Fiduciaries should already be doing the following to satisfy their fiduciary duties: 1. Obtain some measure of expertise in plan investments. Lacking expertise, a fiduciary should …
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DOL Urges Sixth Circuit to Weaken Presumption of Prudence of Plan Fiduciaries in Stock Drop Cases
The United States Department of Labor (“the DOL”) has challenged the dismissal of a 401(k) plan fiduciary breach claim on two grounds, in an amicus brief filed with the Sixth Circuit Court of Appeals, See Pfeil v. State Street Bank & Trust Co., E. D. Mich. No. 09CV12229; (Brief available here). One argument the DOL …
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