DOL Sues Insurance Brokerage Firm – Selection of an Annuity Provider for a Terminating Pension Plan is a Fiduciary Duty
The Department of Labor (“DOL”) has sued an insurance brokerage firm, and its owner, for allegedly breaching fiduciary duties associated with purchasing an annuity contract for a terminating defined benefit plan. The complaint alleges that in 2003, the firm entered into an agreement to function as an ERISA fiduciary with respect to the purchase, for a …
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Fee Disclosures Are Almost Here — What Should Plan Sponsors Do Now?
The quickly approaching deadline for written fee disclosures by covered service providers creates new homework for plan sponsors–in the form of enhanced fiduciary review obligations and a suggested need to review (and/or create) written service agreements. By now folks who work in the tax-qualified retirement industry are well (and perhaps painfully) aware that the United …
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Definition of Fiduciary—Relief Or More of the Same?
The United States Department of Labor (the “DOL”) last week withdrew a proposed regulation that would have expanded the definition of “fiduciary” under ERISA in the context of retirement plans. (See our recent post that announced that withdrawal.) The regulation project was based on a belief that the old regulations defining the term, which originally were issued in 1975, were inadequate in today’s marketplace (a contention that seemingly drew little opposition in the abstract).
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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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Resolving Employee Benefit Plan Audit Problems and Late or Amended Forms 5500
This time of year, many employers are struggling to satisfy the independent auditors of their employee benefit plans so that they can obtain opinions and file their Forms 5500 on time. For a calendar year plan that filed a Form 5558 extension, the deadline is generally October 15 (but is October 17 this year, given that the 15th is a Saturday). As the deadline nears, employers may also encounter problems with electronic filing (now in its second year) and with getting answers to their questions regarding the filing. The potential penalties for failure to timely file a Form 5500 are substantial.
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Health Care Reform Update: Grandfathered Plans
The Department of Labor (“DOL”) has published Frequently Asked Questions describing the scope of the anti-abuse rule (available here). Generally, transferring employees from one grandfathered plan or benefit package (transferor plan) to another (transferee plan) will cause the transferee plan to relinquish grandfather status if amending the transferor plan to replicate the terms of the transferee …
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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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