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Employee Benefits Law Report Reporting on recent trends and developments affecting employee benefits

Tag Archives: 401(k)

IRS Finalizes Rules for Reduction or Suspension of Safe Harbor Contributions

Posted in Retirement Plans

During the most recent recession (some might say a mini depression), many employers requested greater flexibility to reduce or suspend safe harbor non-elective contributions to their 401(k) plans. They felt that a temporary reduction or suspension of contributions would be a better alternative than outright terminating their plans. Although the applicable regulations contained procedures for reducing or suspending safe harbor matching contributions, it wasn’t until Treasury issued proposed regulations on May 18, 2009, that a procedure was available to reduce or suspend safe harbor non-elective contributions. Recently, Treasury issued final regulations that revise the requirements for permitted mid-year reductions or …


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How Do You Jack a 401(k) Plan? Santomenno v. John Hancock Life Insurance Company

Posted in ERISA Litigation, Retirement Plans

If you are the fiduciary of an ERISA plan that invested in John Hancock group variable annuity contracts, we hope you have heard that three individuals have filed a lawsuit, claiming to be representing your plan and its participants and beneficiaries. You will not be receiving service of process.

Santomenno v. John Hancock Life Insurance Company is an “excessive fee” case. The Third Circuit held that a participant may bring ERISA Sections 502(a)(2) and (3) claims without first making demand upon the plan trustee who entered into the contract with the defendant, and without joining the plan trustee. The U.S. …


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Allowing Employee Investment in an ESOP or 401(k) Employer Stock Fund Becomes a Bigger Gamble – Sixth Circuit Decision in Pfeil v. State Street Bank & Trust Co.

Posted in ERISA Fiduciary Compliance, ERISA Litigation, Retirement Plans

The Sixth Circuit has reversed the district court’s dismissal of the GM ERISA stock-drop suit, Pfeil v. State Street Bank & Trust Co., and is allowing the case to proceed.  You may recall that we cautioned fiduciaries of ESOPs and 401(k) plans allowing investment in employer stock to keep an eye on this case because it could be a game-changer. And now it is.

The GM plan offered a number of investment options, one of which was the GM stock fund. The GM stock fund was not a default fund, and participants could change investments on any business day. …


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Sixth Circuit Allows ERISA Section 404(c) Safe Harbor to Protect a 401(k) Plan’s Directed Trustee from Responsibility for Losses in Self-Directed Brokerage Accounts

Posted in ERISA Litigation

The Sixth Circuit recently allowed the ERISA Section 404(c) safe harbor to protect a 401(k) plan’s directed trustee from being held responsible for losses in self-directed brokerage accounts. See, Tullis v. UMB Bank, N.AThis case spotlights the importance of this safe harbor for plans that allow participant direction of investments, and the DOL’s recent efforts to limit the availability of this safe harbor. It also demonstrates the pros and cons of including self-directed brokerage accounts in a 401(k) plan.…


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