Category: Fiduciary Duties
Employee Benefits & Executive Compensation 2020 Year-End Client Advisory
Click here to view as a PDF . This Client Advisory highlights important developments in the law governing employee benefit plans over the past year. It offers insight into what these developments mean for employers and plan sponsors and previews developments we expect to see in 2021. The following...
Target Date Funds: Are You Asking the Right Questions?
Eight years ago, the U.S. Department of Labor (“DOL”) issued “tips” for retirement plan fiduciaries to consider when selecting and monitoring target date retirement funds (“TDFs”). At the time, the DOL noted that TDFs were becoming “increasingly popular.” Who could have predicted how popular? Earlier this year, Barron’s magazine...
Supreme Court Declines to Address Pleading Standards in Stock-Drop Litigation - Retirement Plans Committee of IBM v. Jander
On November 9, 2020, the Supreme Court declined to consider an appeal from the Second Circuit Court of Appeals in Retirement Plans Committee of IBM v. Jander , leaving unresolved for now questions about the specificity required by the “more harm than good” pleading standard in stock drop litigation...
DOL Proposed Regulation Highlights the Risks of ESG Investing for ERISA Fiduciaries
On June 23, 2020, the U.S. Department of Labor (“DOL”) issued a proposed regulation outlining the duties of an ERISA fiduciary when considering an investment that incorporates environmental, social, and corporate governance (“ESG”) factors. [1] Some believe that the DOL will likely move quickly to finalize the regulation before...
Supreme Court Holds Pension Plan Participants Lack Standing to Sue Fiduciaries for Breach of Duties
In Thole v. U.S. Bank , a 5-4 Supreme Court decision issued on June 1, the Court held that retired participants in a defined benefit pension plan lack constitutional standing to sue the plan fiduciaries for alleged breach of their ERISA fiduciary duties. What was key for the Court’s...
Supreme Court: written disclosures not enough to show actual knowledge in ERISA suits
The United States Supreme Court unanimously decided last week that a plan participant who received written disclosures about the plan’s investments, but does not remember reading them, does not necessarily have “actual knowledge” of the content of the disclosures. This is important because ERISA imposes a shorter statute of...
Supreme Court – Updates for 2020
We are barely two months into the new year and already there are significant updates to the 2020 Supreme Court Preview included in our December 2019 Client Advisory (available here ). Below are updates regarding the employee benefit cases before the Court previously mentioned in our Advisory: IBM v...
DOL Proposes New Electronic Disclosure Rules for Retirement Plans
At long last, the Department of Labor (DOL) has issued an update to its safe harbor rules governing electronic distributions of retirement plan disclosures. When finalized and adopted, the new safe harbor rules will update guidance that has been in place since 2002. The new rules do not apply...
December 2018 Client Advisory
This Client Advisory, originally distributed in December 2018, highlights important developments in the law governing employee benefit plans and executive compensation over the past year. It offers insight into what these developments mean for employers and plan sponsors and previews developments we expect to see in 2019. The following...
Join Us for Managing 401(k) Plan Fiduciary Risk on 11/8
In today's ever-changing and challenging 401(k) environment, plan sponsors find themselves in a new and seemingly complex environment. Regulations are becoming increasingly complicated, the number of class action lawsuits continues to rise, and employees insist on access to less expensive options with better performance, without understanding what the fees...
Stronger Than Its Weakest Links: NYU Survives 403(b) Fee Lawsuit
In the first University 403(b) plan fee case to proceed to trial, Sacerdote v. New York University (No. 16-cv-6284 (KBF) (S.D.N.Y. July 31, 2018), the Court found that plaintiffs were unsuccessful in proving that the NYU Retirement Plan Committee breached its fiduciary duties by failing to reduce high recordkeeping...
Socially Responsible Investing and the Plan Fiduciary
In the wake of mass shootings, environmental disasters, industrial accidents, drug and tobacco use pandemics, and other tragedies, retirement plan investors are paying more attention to selecting or rejecting investments based on perceived public policy benefits or detriment. For example, investors are more focused than ever on the larger...
Fifth Circuit Vacates DOL Conflict of Interest Fiduciary Rule
The Fifth Circuit vacated the Department of Labor's long-suffering conflict of interest rule (commonly referred to as the "fiduciary rule"), holding that the rule exceeds the scope of DOL's regulatory authority. The decision means that the expanded definition of fiduciary, the elevated standards of conduct for certain investment advisors...
Time is Running Out – New Disability Claims Procedures Take Effect April 2, 2018
It has been a long time coming, but the Department of Labor's final rule regarding disability benefit claims procedures (the "Final Rule") will finally take effect on April 2, 2018. Employers need to determine which of their ERISA plans will be subject to the Final Rule and implement the...
Dismissal of Case Against UPenn Good News for 403(b) Plan Sponsors
Colleges and universities have finally received some encouraging news in the recent spate of class action suits against higher education 403(b) plans. Last week a federal judge dismissed all claims against the University of Pennsylvania, marking the first time that one of these recent law suits has been be...
PODCAST: 403(b) Plan Fee Litigation Update
Verrill Dana Employee Benefits attorneys Eric Altholz and Chris Lockman provide a brief update on class action lawsuits alleging various breaches of fiduciary duties under ERISA pending against a dozen major universities. All of these lawsuits are related to the administration of the 403(b) plans maintained by the universities...
Client Advisory - Winter 2016
This Client Advisory highlights certain developments regarding the Affordable Care Act (most significantly, the delay of the ACA reporting requirements and the "Cadillac" tax), discusses the EEOC's proposed rules for wellness programs and the outcome of recent EEOC wellness program litigation, reviews important cases recently decided by and pending...
Fiduciary Committee Best Practices – Part 2: Preparing Meeting Minutes
In Part 1 of this two-part series we suggested that the key to compliance with the fiduciary requirements of ERISA can be boiled down to a simple proposition: follow a prudent process and document it. We used that proposition as a basis for offering five foundational steps that a...
Fiduciary Committee Best Practices – Part I: The Basics
Even in areas of law where the landscape of rules, regulations, and risks seems constantly to be changing, certain core concepts and basic principles hold fast. In the case of fiduciary responsibility under ERISA, the core concepts and basic principles can be boiled down to three key elements: (1...
Fort Halifax Redux: Identifying an ERISA Plan Made Simple Again
We are frequently asked by clients whether a severance policy or program is an "ERISA plan" and, thus, subject to ERISA's documentary, administrative, reporting, and disclosure requirements. A recent decision from the United States District Court for the District of Puerto Rico provides a helpful analysis of this re-occurring...
Selecting Investment Consultants for Pension Plans With Imperfect Information
An article in the business section of the New York Times last week reported some surprising conclusions reached by a recent study of the performance of pension plan investments. ("Doubts Raised on Value of Investment Consultants to Pensions," September 30, 2013.) The study, performed by two Oxford professors, revealed...
July 1 Deadline Approaching for Service Provider Disclosures
As all sponsors and fiduciaries of tax-qualified retirement plans should know by now, written fee and expense disclosures are due to be provided to plan fiduciaries by "covered service providers" by July 1. As we explained in a prior post , this important disclosure is mandated by final regulations...
Participant-Level Fee Disclosure for ERISA and Non-ERISA Plans
After our recent post on the fiduciary-level fee disclosure rules under ERISA Section 408(b)(2), we wanted to complete the picture for plan fiduciaries by revisiting the participant-level fee disclosure rules under ERISA Section 404(a). These rules require fiduciaries of participant-directed individual account plans (such as 401(k) and 403(b) plans...
Plan Fiduciaries Should “Welcome” Final Regulations Regarding Service Provider Disclosures
Last week the U.S. Department of Labor published Final Regulations dealing with service provider disclosures under Section 408(b)(2) of ERISA. This is the latest in a series of regulatory initiatives undertaken by the DOL to ensure that plan fiduciaries, as well as plan participants and beneficiaries, obtain meaningful information...
DOL Finalizes (and Adjusts) Delay in Fee Disclosure Rules, Clarifies Quarterly Notice Requirement
Yesterday the DOL's Employee Benefits Security Administration (EBSA) issued a final rule delaying the applicability dates of the new fiduciary and participant fee disclosure rules. This final rule extends the effective date of the new fiduciary-level fee disclosure rules under ERISA Section 408(b)(2) from July 16, 2011 to April...
DOL Officially Proposes Delay in Application of Fiduciary Fee Disclosure Rules
The DOL's Employee Benefits Security Administration (EBSA) has finally provided official notice of its proposal to delay the applicability date of the new fiduciary fee disclosure rules under ERISA Section 408(b)(2), from July 16, 2011 to January 1, 2012. Although EBSA announced its intention to propose this delay back...
The Presumption of Prudence Persists: In re UBS ERISA Litigation
In 1995 the Third Circuit Court of Appeals broke new ground in the area of fiduciary liability under ERISA when it found that an action of a fiduciary "should be presumed to be reasonable" if the terms of a retirement plan "require or strongly encourage" the fiduciary to take...
A Prudent Process Protects Fiduciaries
Section 404(a)(1)(B) of ERISA requires a fiduciary to discharge its duties with respect to an ERISA plan "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of...
DOL Announces Delay in Application of Fiduciary Fee Disclosure Rules
Today EBSA (part of the DOL) announced its intention to delay the applicability date of the new feedisclosure rules under Section 408(b)(2) of ERISA, from July 16, 2011 to January 1, 2012. These interim final rules , published on July 16, 2010, require certain pension plan service providers to...
Update Regarding Expanded Definition of "Fiduciary"
The Employee Benefits Security Administration (EBSA) will hold a hearing to consider issues regarding the adoption of a new regulation defining when a person is considered a "fiduciary" by reason of giving investment advice to a benefit plan or to a plan's participants. The hearing will be held on...
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