First Circuit Weighs Standard of Review In Suits for Executive Compensation Benefits

In approving a paper company's decision to deny severance benefits to its former chief technology officer, the U.S. Court of Appeals for the First Circuit clarified the standard of review applicable to “top-hat” plans that provide benefits for highly paid executives (Niebauer v. Crane & Co., 2015 BL 113073, 1st Cir., No. 14-2059, 4/21/15).

Final Rules Clarify Performance-Based Pay Exception Under Section 162(m)

The Internal Revenue Service issued final regulations (T.D. 9716; RIN 1545-BI65) confirming that stock-based compensation plans must provide a limit on the maximum number of shares for which individual employees may receive options and that only compensation specifically identified in the regulations is available for special transition relief in the case of newly public companies.

Court Weighs Dudenhoeffer in $25M Case Targeting Investment in Lehman Bros. Notes

Bank of New York Mellon Corp. received another blow to its securities lending program on March 16, when a federal judge gave the green light to claims challenging the bank's involvement with now-defunct Lehman Brothers Holding Co. (Teamsters Local 710 Pension Fund v. The Bank of N.Y. Mellon Corp., 2015 BL 70319, N.D. Ill., No. 1:13-cv-01844, 3/16/15).

Plans Considering De-Risking Advised on Steps to Protect Participants, Themselves

As defined benefit plan de-risking continues to flourish, with sponsors either buying pension annuities or unloading their liabilities through lump-sum distributions, politicians, retirement experts and attorneys have raised questions about how to ensure that sponsors and participants come out ahead after the pension transfers have been made.

Plan Sponsors May Face New Challenges With Same-Sex Marriage Definition, Attorneys Say

Sponsors of retirement and welfare benefit plans governed by federal law face substantial challenges in navigating the quickly changing legal waters surrounding treatment of same-sex married couples after the U.S. Supreme Court's decision in United States v. Windsor, 133 S. Ct. 2675, (U.S. 2013) invalidating a section of the Defense of Marriage Act, according to a panel of experts in a webcast.

Multiemployer Plan Participants Allege Rehabilitation Plan Violates ERISA and PPA

The Bakery and Confectionery Union and Industry International Pension Fund violated federal benefits law when it adopted a rehabilitation plan which prevents former covered employees from “aging into” vested benefits as previously permitted under the plan, a class of participants in the plan have alleged in a complaint filed in federal district court in New York (Tagliareni v. Bakery &  Confectionary Union &  Indus. Int'l Pension Fund Pension Plan, S.D.N.Y., No. 7:15-cv-00171-UA, complaint filed 1/9/15).

GM Wins Pension Benefit Challenge; Split Sixth Circuit Finds No ERISA Plan

A group of retired autoworkers lost their bid for additional pension benefits because the arrangement under which they sought benefits wasn't an ERISA plan, the U.S. Court of Appeals for the Sixth Circuit held in a 2-1 split ruling (Buchanan v. Gen. Motors, LLC, 2015 BL 3173, 6th Cir., No. 13-1664, unpublished 1/7/15).

Panelists: Dudenhoeffer and GreatBanc Pact Provide ESOP Fiduciaries Useful Guidance

Fiduciaries for employee stock ownership plans who want to avoid litigation over the prudence of their actions in either buying or selling employer stock should focus on the fallout from the U.S. Supreme Court's decision in    Fifth Third Bancorp v. Dudenhoeffer , 134 S. Ct. 2459 (U.S. 2014)   and procedures set forth in the Department of Labor's June settlement agreement with GreatBanc Trust Co., according to experts in a video webcast sponsored by the American Law Institute-Continuing Legal Education.

As Fiduciary Rule Stalls, DOL Advances Amicus Brief Program, Targets Providers

Recent efforts in the courts to treat service providers as fiduciaries aren't a signal that providers should worry for the safety of their nonfiduciary status, but they could be a "warning shot" that the Department of Labor is hungry to expand fiduciary status as it continues to work on crafting its yet-to-be-released fiduciary rule.

EEOC Needs to Coordinate Wellness Guidance With ERISA Agencies, Benefits Attorneys Say

The Equal Employment Opportunity Commission's lawsuit alleging that Honeywell International Inc.'s wellness program violated anti-discrimination laws is a "gross overstep" that should provide a "wake-up call" to President Barack Obama's administration to take a better coordinated approach to developing wellness program guidance for benefits plan sponsors, said benefits attorneys with Groom Law Group Chartered.

Retiree Health Benefit Dispute Draws Multiple Briefs, Including ‘True' Amicus Brief

In a surprising move, Bethesda, Md.-based law firm Goldstein & Russell P.C. has filed an amicus brief with the U.S. Supreme Court in an upcoming retiree benefit case that purports to be solely informational and in support of neither party ( M& G Polymers USA, LLC v. Tackett, U.S., No. 13-1010, arguments scheduled 11/10/14).


DOL Urged to Deny Credit Suisse Exemption By Members of Congress and Commenters

A proposed individual prohibited transaction exemption that would allow Credit Suisse AG-affiliated qualified professional asset managers to continue to rely on a 1984 PTE despite violation of the conditions of the exemption by the bank has drawn sharp rebuke in a letter from three members of Congress as well as two public comment letters filed with the Department of Labor.

High Court to Address Statute of Limitations For Suits Challenging Retirement Plan Fees

The U.S. Supreme Court announced that it will wade into the world of ERISA plan fee litigation, when it granted review of a case asking whether plan fiduciaries breach their duties by offering higher-cost, retail-class mutual funds when identical lower-cost, institutional-class funds are available ( Tibble v. Edison Int'l, U.S., No. 13-550, cert. granted 10/2/14).

3rd Cir.: John Hancock Not ERISA Fiduciary In Case Alleging Excessive 401(k) Plan Fees

In a move that will have retirement plan service providers breathing sighs of relief, the U.S. Court of Appeals for the Third Circuit ruled that John Hancock Life Insurance Co. isn't an ERISA fiduciary for purposes of a lawsuit accusing it of charging excessive fees to participants in two Section 401(k) plans ( Santomenno v. John Hancock Life Ins. Co., 2014 BL 267210, 3d Cir., No. 13-3467, 9/26/14).

Attorneys Reflect on 40 Years of ERISA's Biggest Court Rulings

For the special report, ERISA @40, Jacklyn Wille of Bloomberg BNA invited attorneys who represent plan participants, plan sponsors and industry groups to reflect on some of the most significant court decisions decided under ERISA over the past 40 years. Each was asked, “How did this case change the landscape of ERISA litigation, plan design or plan administration?”

ERISA's Rich History: A Conversation With Phyllis Borzi

Phyllis C. Borzi, assistant secretary of labor of the Employee Benefits Security Administration, sat down with Kristen Ricaurte Knebel of Bloomberg BNA recently to discuss where ERISA was, how far it has and hasn't come and what might need to be done to bring the law into the future.

Moench-ing on a Bunch of Presumptions - What's Left After Fifth Third v. Dudenhoeffer?

Dudenhoeffer is yet another case in which the Court rejects years of lower-court precedent with nary a shrug.  We saw this happen in CIGNA v. Amara, where the Court both rejected the notion that an SPD could effectively be a binding plan document, and then held, unlike every circuit court to have previously considered the point, that monetary damages could be available under ERISA in the appropriate case.

Senate Sets Sight on Retiree Benefit Vesting; ERISA Amendments Create New Presumption

In what some may see as an effort to preempt U.S. Supreme Court review of the topic in next year's term, the Senate is considering amendments to federal benefits and labor laws that would make any retiree group health benefits vest upon retirement or the completion of 20 years of service.        

  In what some may see as an effort to preempt U.S. Supreme Court review of the topic in next year's term, the Senate is considering amendments to federal benefits and labor laws that would make any retiree group health benefits vest upon retirement or the completion of 20 years of service.    

Internal Controls, Good Communications Key To Reducing Plan Errors, Consultant Says

Retirement plan sponsors need to have internal controls and good communications between all relevant departments to reduce typical problems that would prompt an investigation from the Internal Revenue Service that could lead to disqualifying their plans, a consultant said at the American Institute of CPAs employee benefits conference.    

Pamela Baker of Dentons on Parachute Cap Provisions

Pamela Baker, a partner in the Chicago office of Dentons US LLP, discusses golden parachute cap provisions in employment agreements in a Bloomberg BNA video. Pam discusses how cap and no-cap provisions work, and why parachute provisions with no caps that give employees the right to choose which benefits to forfeit to avoid excise taxes may be better for both employer and employee and avoid Section 409A problems.

Plan Administrators Face Beneficiary Hurdles After IRS Windsor Guidance, Attorneys Say

Retirement plan sponsors should check beneficiary designations for participants' same-sex spouses in light of recent Treasury Department and Internal Revenue Service guidance on the applicability of the U.S. Supreme Court's Windsor decision to retirement plans, if they haven't already done so, benefits attorneys told Bloomberg BNA.  

Helen H. Morrison of Ernst & Young on new ACA Regulations

Helen H. Morrison, a principal at Ernst & Young LLP, discusses new regulations under the Affordable Care Act in two videos. Part 1 discusses the "pay or play" requirements under Section 4980H.  In Part 2, Helen discusses the new reporting requirements under Sections 6055 and 6066.

Battle Over Presumption of Prudence Heats Up Ahead of High Court Arguments

The question of whether a judge-made presumption of prudence should protect fiduciaries of employer stock plans from liability for declining stock prices will be front and center at the U.S. Supreme Court next week, with the court receiving nine amicus briefs in the months leading up to oral arguments.  

Guidance on ACA 90-Day Waiting Periods Issued in Tri-Agency Final, Proposed Rules

Group health plans or health insurance issuers offering group health insurance coverage can't apply a waiting period that exceeds 90 days for individuals to be eligible for benefits coverage under terms of their plans, according to new final regulations under the Affordable Care Act and released jointly by three federal agencies.           

Plan Fee Litigation Burned Hot in 2013, But Some Decisions Baffling, Speakers Say

Plan fee litigation had a big year in 2013, with divisive appellate court decisions affecting standards of judicial review, statutes of limitations and functional fiduciary status that may open the door for increased and novel litigation, employee benefits attorneys said during a conference panel presentation.

Year in Review: 2013 in ERISA Litigation

Several U.S. Supreme Court rulings broke new ground for employee benefits in 2013, and decisions in 2014 are also expected to push these issues into new territory. In addition to its landmark ruling recognizing same-sex marriage under federal law, the U.S. Supreme Court also issued two significant opinions under the Employee Retirement Income Security Act in 2013-one involving contractual limitations periods, and the other involving Section 502(a)(3)'s equitable remedies provision. 

Class-Action Complaint Challenges Fidelity Plan's Revenue-Sharing Arrangement


A recently filed class action complaint alleges that Fidelity Investments committed fiduciary breach and engaged in prohibited transactions with respect to its own profit sharing plan by failing to "recapture" certain revenue-sharing payments made by the plan's mutual fund adviser to the plan's record keeper, both of which are Fidelity entities ( Yeaw v. FMR LLC, D. Mass., No. 1:14-cv-10035, complaint filed 1/7/14).

D.C. Circuit: No Relief for Participant In Underfunded Cash Balance Plan

An attorney challenging the amount of benefits she received from her former law firm's underfunded cash balance plan failed to convince the U.S. Court of Appeals for the D.C. Circuit that a district court erred in rejecting her claims of fiduciary breach and violations of the tax code ( Clark v. Feder Semo &   Bard, P.C., D.C. Cir., No. 12-7092, 1/7/14).        

Under Deferential Review, Second Circuit Again Nixes Xerox's Use of Phantom Account

Xerox Corp.'s use of a phantom account in calculating and offsetting its employees' pension benefits was unreasonable under the terms of the plan and violated the notice requirements of the Employee Retirement Income Security Act, the U.S. Court of Appeals for the Second Circuit ruled ( Frommert v. Conkright, 2d Cir., No. 12-67-cv, 12/23/13).

IRS Issues Guidance on Application Of Windsor Decision on FSAs, HSAs

Cafeteria plans can permit midyear election changes for plan participants who were legally married to same-sex spouses as of June 26, the date of the U.S. Supreme Court's decision in United States v. Windsor , the Internal Revenue Service said in Notice 2014-1, issued Dec. 16.

DOL Lists Fiduciary Re-Proposal, Project On Brokerage Windows on Regulatory Agenda

The Department of Labor's Employee Benefits Security Administration projected that its rule on the redefinition of the term "fiduciary," also known as its conflict-of-interest rule, will be re-proposed in August 2014, and also indicated its intentions to start on a project related to brokerage windows, according to the DOL's fall 2013 regulatory agenda.           

Fourth Circuit: No Deferential Review Despite Plan's ‘Satisfactory to Us' Language

Language in a Prudential Insurance Co. of America disability policy requiring claimants to submit proof of disability that is "satisfactory to Prudential" didn't constitute an unambiguous grant of discretionary authority that would entitle Prudential to deferential judicial review of an adverse benefit determination, the U.S. Court of Appeals for the Fourth Circuit ruled.


DOL Guidance on Same-Sex Spouses Mirrors IRS's, but Practitioners See Some Divergence

Department of Labor guidance providing that the terms "spouse" and "marriage" under the Employee Retirement Income Security Act now include same-sex legally married couples was a confirmation of earlier Internal Revenue Service guidance, but some issues remain on the health and welfare plan side that could lead to legal action down the line, practitioners told Bloomberg BNA in a series of interviews.      

HRA Guidance Tied Employers' Hands, Has Some Re-Examining Plans, Attorneys Say

Employers hoping to offer health reimbursement arrangements to employees to give them money to spend on the Affordable Care Act health insurance marketplaces have found their hands tied following guidance issued Sept. 13 by the Internal Revenue Service and the Department of Labor, attorneys said during a session of the Groom Law Group's Employee Benefits Seminar.

High Court Hears Arguments on Accrual Of Limitations Periods in ERISA Plans

In considering the date on which a disability plan's contractual limitations period begins to run, the U.S. Supreme Court justices questioned attorneys on a wide range of issues, including federal law preemption, equitable doctrines, potential harm and the purpose of the Employee Retirement Income Security Act's administrative exhaustion requirement.

DOL Investigators Quiz Plan Sponsors On Training of Fiduciaries, Attorneys Say


The Department of Labor is looking into fiduciary training as part of the agency's investigations into retirement plans, attorneys at Trucker Huss in San Francisco told Bloomberg BNA.The attorneys had taken part in a recent webinar on the basics of retirement plan committees, and later Bloomberg BNA asked them to share some of their real-life experiences relating to fiduciary training under the Employee Retirement Income Security Act.


ERISA Advisory Council Roundup

MISSING PARTICIPANTS/LOST PLANS Pension specialists recommended June 4 that the Department of Labor's Employee Benefits Security Administration develop a lost-plan registry to help...

Implications of ASU 2011-4 for sponsors of ESOPs

Conservatism. Consistency. Conformity. These are the big “C’s” of financial reporting. But at a recent conference of employee stock ownership plan (ESOP) sponsors and advisors, another “C” joined...

Follow-Up Q&A From EBN Webinar

Here are a few follow-up question from the EBN/Bloomberg BNA webinar titled Behind the Scenes of IRS Employee Plans Enforcement Strategies. To view the archived program, click here . Q: ...

GASB’s New Pensions Brings Weight of Education

Will the new pension accounting standards--to be publicly available in August by the Governmental Accounting Standards Board-- spur a new round of debate as a result of the new accounting measures...

ERISA Advisory Council Meeting Roundup: Annuities

Witnesses urged the Department of Labor June 13 to facilitate the use of annuities as lifetime income options at an ERISA Advisory Council meeting on examining income replacement for retirees...

Which employees are considered full-time for purposes of the health care reform employer mandate?

The Internal Revenue Service, Department of Labor, and Department of Health and Human Services have issued a series guidance that summarizes their intended direction in implementing the employer shared responsibility requirement and related Patient Protection and Affordable Care Act requirements.  Most recently, IRS Notice 2012-17 and DOL Technical Release 2012-01 address the PPACA employer shared responsibility requirement, automatic enrollment requirement, and waiting period limitation in a series of "frequently asked" questions and answers.

Summary of Benefit Coverage Rules – The Devil is in the Details

During the February 28, 2012 ALI-ABA Video Broadcast program on Health Plans some representatives from the government provided us with their personal insights on how the Summary of Benefits and Coverage ("SBC") rules and templates should operate. Earlier this week the DoL posted FAQ VIII on its ACA website regarding the SBC that provided additional flexibility for employers.   This is just a highlight of some of the important information learned during such program and from FAQ VIII.


DOL Initiatives: Questions Answered

Editor's Note: Last month, advisory board member Sherwin Kaplan and his colleague at Nixon Peabody, Eric Paley, conducted a webinar titled "Managing and Protecting Your Employee Benefit Plans: New Department of Labor Initiatives."  As part of that webinar, Sherwin and Eric took questions from the audience, but they were unable to get to every question in the time allocated for the program.  Sherwin--a former co-chair of the Bloomberg BNA Pension & Benefits Publications Advisory Board--agreed to answer outstanding questions here on the blog.

Long Forgotten Rapid Trading Fees Rise Again in New Ways

SEC Chairman Mary Schapiro recently announced that the SEC is looking to curb high-frequency trading in stocks, a practice commonly referred to as day trading. The SEC previously attempted to address market timing or rapid trading in mutual funds when it issued amendments to rule 22c-2 in 2006. Rule 22c-2 permitted mutual funds to impose redemption fees for rapid trading or to stop rapid trades. While this rule has been in place for some time, plans may want to consider verifying how the record keepers for their plans and the mutual funds in their participant directed investment account plan are monitoring and complying with the restrictions imposed by the mutual funds and what redemption fees the mutual funds might impose for a violation not stopped by the record keeper or custodian of the funds. 

Welcome to the New Bloomberg BNA Pension & Benefits Blog

This week we officially relaunch the Bloomberg BNA Pension & Benefits Blog. Now on a new platform, the blog is more attractive and easier to use, yet it continues to contain insight, commentary, and analysis from the well-respected Bloomberg BNA Pension & Benefits Advisory Board.


Be Ever Vigilant Regarding 409A and Include 409A Interpretive Provisions!

At the end of 2008 we were all scurrying to be sure we had identified and amended all arrangements that involved 409A deferred compensation. That is more than 3 years ago and we may not currently be as focused on identifying 409A arrangements and issues as we were in 2008.  Yet it is important to consider 409A issues today.

BNA Launches ERISA Litigation Tracker™

Now available: BNA's new ERISA Litigation Tracker™ .  A smart, simple, streamlined resource designed to help practitioners stay on top of key ERISA cases as they are filed and litigated in federal courts.

IRS Compliance Initiatives

The DOL’s recent proposed class exemption for the provision of investment advice has re-ignited the debate over the need for and the role of investment advice in participant directed plans. The proposal would strike a good balance between the need to offer investment advice to plan participants and the importance of participant safeguards.

What does the new accounting standard on 'fair value' mean to ERISA fiduciaries?

The DOL’s recent proposed class exemption for the provision of investment advice has re-ignited the debate over the need for and the role of investment advice in participant directed plans. The proposal would strike a good balance between the need to offer investment advice to plan participants and the importance of participant safeguards.

PPACA--A Poison Pill for State Budgets?

For many states, the fastest increasing budget item is Medicaid. In states like Utah, Medicaid in a matter of years will become the largest single budget item, surpassing education which for decades has been the state’s largest expenditure.  Other states are in a similar position. At a recent meeting of the National Governors Association, CNN reported that Governors have proposed spending $15.9 billion more in fiscal 2012 on Medicaid than in fiscal 2011 and at the same time are slashing higher education by $5 billion and K-12 education by $2.5 billion.

New for You Today--the Benefits Practice Resource Center

Today, BNA unveils its new Benefits Practice Resource Center , which takes pension and benefits information services to a new level. The Benefits Practice Resource Center incorporates the superior reference and analysis material found in BNA's well-respected Benefits Practice Center , and adds even more valuable content, including four popular BNA Books, as well as practice-ready checklists, sample plans, and other practice tools.

What Does Amara CIGNA-fy?

Is CIGNA v. Amara ( 50 EBC 2569 ), the recent ERISA case from the U.S. Supreme Court, a major development? Notwithstanding the lack of surprise in the final result, the Court's rationale looks to be extremely important.

New Regulations Likely to Impede Hybrid Plans

The contraction of defined benefit plans over the last 20 or so years has been dramatic and disappointing for those of us who believe that such plans are the best vehicle for providing retirement security. Some of the decline can be based on changes to the economy, the emergence of new companies and the decline of others, global competition, funding and financial reporting volatility, and other macro and micro economic factors.

Nell Hennessy Remembrance

As most of you know by now, we have lost our friend and colleague, Nell Hennessy. Nell finally succumbed to a long illness that she faced with the usual courage, determination and grace that she demonstrated throughout her life.

Target Date Funds - What's In a Name?

Many investors lack financial literacy. Others simply do not have (or want) to take the time to manage their accounts. One answer -- target date funds (TDF). Pick your retirement date, and forget it. Someone else will manage the plan for you.

The Revolution Will Not Be Televised: Reading the New DOL Fee Regulation

The existence of a fiduciary duty to disclose information pertinent to plan investments, including employer stock, is again in the news. But the lead has been buried in a regulation that focuses attention on information about fees charged by typical 401(k) plan pooled investments.

Non-Discrimination in Insured Health Care Plans, No More Executive Health Benefit Plans?

The provision of the PPACA is deceptively simple: "A group health plan (other than a self insured plan) shall satisfy the requirements of section 105(h)(2) of the Internal Revenue Code of 1986 (relating to prohibition on discrimination in favor of highly compensated individuals)." *** "Rules similar [my emphasis] to the rules contained in paragraphs (3),(4) and (8) of section 105(h) of such Code shall apply."

Essential Health Benefits Include . . .

Health reform has many employers stretched to try to meet all of the requirements applicable for the first plan year beginning on or after Sept. 23, 2010. One of the many difficulties faced by employers is determining what constitutes an essential health benefit on which there can be no annual or lifetime dollar limits on the value of benefits.

PPACA's Impact on Claim and Appeal Procedures

PPACA imposes new requirements on both insured and self-insured plans regarding their claim and appeal procedures, including a new requirement for an external appeal. The Departments of Labor, Treasury and HHS jointly issued interim final regulations on July 23 providing guidance on the new requirements (140 PBD, 7/23/10).

The New VEBAs

The VEBA Trust has three separate accounts, each holding assets transferred or to be transferred by one of the respective companies and was, at its inception on January 1, 2010, one of the nation’s largest health care operations.

Hardt Times

The Supreme Court's decision in Hardt v. Reliance Standard should have been a reason to celebrate for participants and their lawyers (99 PBD, 5/25/10). The simple holding, that you don't have to be a prevailing party before a court can exercise its discretion to grant attorney's fees is unexceptionable. Their were no dissents. But the court seemed to be at pains to tie the decision to its facts. The participant was granted benefits by the plan on the remand. Did that matter?

As Certain as Death: Quotations About Taxes

Jeff Yablon has compiled a wonderful collection of tax quotes for the new edition of As Certain as Death: Quotations About Taxes. I discovered the book from an Alan Sloan column that appeared in the Washington Post. Sloan quotes Mark Iwry, Senior Advisor to the Secretary and Deputy Assistant Secretary (Retirement and Health Policy) at Treasury. Mark is the most quoted living person in the book. Justice Jackson holds the record but I predict that Mark will overtake him in later editions since Justice Jackson is dead and Mark is still alive and saying quotable things.

Career Advice for the New(er) ERISA Lawyer

Each year when Henry Eickelberg of General Dynamics and I finish our course on Employee Benefits in Corporate Transactions at Georgetown, we take our students to my pub, the Irish Channel in DC, and the talk inevitably turns to jobs (or lack thereof) and careers in ERISA. I thought it might be useful to share some of that discussion with the BNA Pension & Benefits readers.

Conkright v. Frommert: The Justices Make Mistakes

"People make mistakes." Hand it to the Chief Justice, he's got an ear for a catch phrase. As BNA summarized the holding: "Employee Retirement Income Security Act plan administrators will not be stripped of deferential review by federal courts when they make a "single honest mistake" in administering and interpreting plans...." ( Conkright v. Frommert, U.S., No. 08-810, 4/21/10).

The Fiduciary Decision to Choose the ERISA Plan Auditor

Since many ERISA plans are in the process of preparing their audited financials for the 2009 Form 5500, this is a good time to to reflect on the nature and responsibilities that the plan administrator has in connection with the audit process. (As chair of the Audit Subcommittee for the committee that is the plan sponsor and plan administrator of the Goodyear Retiree VEBA, I had to think through these issues for our plan.)

Some Musings on Funding Relief

Congress has been considering extending funding relief to sponsors of defined benefit plans.There has been controversy about the conditions under which a sponsor will be eligible for relief.

Advisable Advice Regulations

Today's decision on the merits by the 9th Circuit in the Golden Gate Restaurant Association v. San Francisco case upholding the employer spending requirements of the San Francisco ordinance as not preempted by ERISA is a most interesting read.

Auto-Pilot Retirement - Ready for Takeoff?

In late October, the Government Accountability Office released a report on auto-pilot retirement practices and proposals. The report reviews data on 401(k) plans that have adopted automatic enrollment, and discusses the Obama administration’s budget proposal to mandate payroll deduction IRAs for firms with ten or more employees that lack other plan coverage.

Thanksgiving Feast or Famine? - DOL Withdraws its Investment-Advice Regulation

The DOL has withdrawn its investment-advice regulation, culminating a process that began with a firestorm of objection regarding the DOL's attempt to implement the PPA's new investment-advice exemptions. The PPA's exemptions were controversial when passed, and became more controversial when the Department interpreted certain fee-leveling requirements in a manner that was perceived to be narrow.

Glass Half Empty or 3/4 Full?

The DOL’s recent proposed class exemption for the provision of investment advice has re-ignited the debate over the need for and the role of investment advice in participant directed plans. The proposal would strike a good balance between the need to offer investment advice to plan participants and the importance of participant safeguards.

How to Restart the Pension System By Giving Executives a Stake In It

In 1973, just before ERISA, we worried about individual workers losing their defined benefits because of insufficient funding, no plan termination guarantees, and little or no vesting.  Most of us did not worry about the whole system falling apart.   There were just too many disappointed expectations under the previous system.

A Modest Proposal Regarding Same-Sex Marriage

It is not being controversial to say that there is a trend in the states in favor of permitting same-sex marriage.  Previously, a broad array of employers had begun provide benefits for their employees' domestic partners.  See generally Libert, Oringer & Raskin, "Same-Sex Marriage and Employee Benefits: The Approaching Revolution," 63 Empl. Ben. Plan Rev. 22.

Election and Retirement Security

The election is now only days away and will occur within the context of a financial markets meltdown. The effect on retirement security has been significant. Public policy considerations must be addressed asap.

Investment Advice—ERISA’s Culture War

The DOL’s recent proposed class exemption for the provision of investment advice has re-ignited the debate over the need for and the role of investment advice in participant directed plans. The proposal would strike a good balance between the need to offer investment advice to plan participants and the importance of participant safeguards.

Reviewing the Scope of Section 409A Transition

Full compliance with Section 409A is scheduled to be required in less than four months, by January 1, 2009. This deadline is the result of the considered and responsive review by personnel from Treasury, the IRS and the legislative branch last year, as 2007 ran its course.

Looking Back, Looking Forward

While December is when most of us look back on the year coming to end and make plans and resolutions for the year about to begin, September is another one of those times for me. After all, it’s an important month in its own right—the start of the academic year (even if classes now begin in August), the official beginning of the race in election years like this one, the unofficial end of summer with Labor Day and lest we forget, the anniversary of ERISA’s passage.

Good Planning or Pension Manipulation?

A front page article in the August 4th edition of the Wall Street Journal outlines a method by which companies are transferring portions of their non-qualified deferred compensation obligations of senior executives into their qualified plans.

A Report on Yet Another Reporting Issue for Private Equity and Other Investment Funds

Section 404(a)(1) of ERISA generally requires a fiduciary to act in the interest of participants and beneficiaries and to act prudently. ERISA also requires, under Section 103(b)(3)(A), an annual report which includes a financial statement containing, among other things, a statement of assets and liabilities "valued at their current value." Current value is to be determined in good faith by a trustee or named fiduciary.

Recent Standing Case Promotes Confusion

The U.S. Supreme Court in LaRue , albeit in a footnote, endorsed the holding that participants who cashed out of defined benefit plans did not lose standing to assert claims under section 502(a)(2) for losses to their plans that diminished the amount in their accounts at the time they cashed out.

Interim Amendments for Tax Qualified Plans -- A Mixed Bag

Beginning in the late 1990s, the IRS Employee Plans group spent a great deal of time studying various options for avoiding the enormous workload spikes that arose during the determination letter process in the past and developing the settled upon option -- the staggered remedial amendment period (RAP). As part of this process, IRS EP personnel made a real effort to "partner" with the various stakeholders in the benefits community (ranging from benefits practitioners to prototype sponsors and vendors) to develop a workable, manageable program for all.

Social Investing Revisited?

There appears to be a continuing debate, with the Department of Labor's involvement, between the AFL-CIO and the U.S. Chamber of Commerce concerning use of plan assets in proxy voting and shareholder related activities as well as in connection with union organizing campaigns and union goals in collective bargaining negotiations.

What's a DB Plan Administrator/Advisor to Do

Administrators of defined benefit plans and other professionals dealing with them have had a real problem on their hands this year.   2008 is now half over and a significant amount of clear, final guidance on how the Pension Protection Act applies to plans has not been issued.

Some Additional Reflections on MetLife

Way back in 1989, in the Bruch v. Firestone decision, the Supreme Court told us that a plan decision-maker's rejection of a benefit application would be subject to de novo judicial review . . . unless the plan included magic words vesting the decision-maker with DISCRETION.

Is it time to require all employers to provide health care for their employees?

Having just returned from a conference at Oxford University in England where we were discussing the effect of pension and health liabilities on global competitiveness, I have been thinking about the question of how our current voluntary benefits system affects intra-business competitiveness within the US, an often overlooked aspect of the problem

Distinguishing among Employees Based on Pension Status

The US Supreme Court's decision in Metropolitan Life Ins. Co. v. Glenn (6/19/2008) is commanding a lot of attention from ERISA practitioners.   I suspect that is because the decision is expected to shift the odds in contests over disability claims, which provide a lot of grist for ERISA litigation and now are likely to yield richer settlements. For those of us who focus on retirement plan design and benefit policy , Kentucky Retirement Systems v. EEOC, also handed down on 6/19/2008, is the more interesting decision. The headline: it is legal for employers to discriminate against employees based on their eligibility for a pension.

A New Firestone Drill: MetLife v. Glenn

Hopefully, the Supreme Court's MetLife decision will turn out to be a welcome clarification of the Firestone case, even if it generates some new uncertainty. Firestone left open the question of how much a conflict of interest in the administrator should affect the level of a court's deference to the administrator's decision.

Amschwand? Or am not Schwand?

In Amschwand v Spherion Corp. , 505 F.3d 342, 41 EBC 2697 (5th Cir. 2007), Mr. A was on medical leave for terminal cancer and still covered by Spherion's life insurance plan.

The Trouble With Estoppel in ERISA Cases

Every now and then an estoppel case pops up under ERISA, and the law is twisted and mangled to make it fit.   See, e.g., Livick v. The Gillette Co., U.S. App. Lexis 8261, 43 E.B.C. 2025 (1st Cir. 2008) (dictum), citing Hooven v. Exxon Mobil Corp., 465 F.3d 566, 578 (3d Cir. 2006); Mello v. Sara Lee Corp., 431 F.3d 440, 444 (5th Cir. 2005); Devlin v. Empire Blue Cross & Blue Shield, 274 F.3d 76, 85-86 (2d Cir.2001); Sprague v. General Motors Corp., 133 F.3d 388, 403 & n.13 (6th Cir. 1998) (en banc); Greany v. W. Farm Bureau Life Ins. Co., 973 F.2d 812, 821 (9th Cir. 1992); Kane v. Aetna Life Ins., 893 F.2d 1283, 1285 (11th Cir. 1990).

Health Care - Is Anyone Asking the Hardest Question?

In a matter of a few days, here are some headlines from the Pension & Benefits Reporter: "Report Says Health Costs Hurt U.S. Firms, Advocates End of Employer Financing System"; "CRS Says Price Transparency May Drive Down Costs"; "Reform Efforts Should Combine Options in Public, Private Sector, Health Group Says"; "Democrats Pounce on GAO Study Finding Taxpayers with HSAs Have Higher Incomes"; "Measure of Family Medical Spending Has Lowest Increase in Past Five Years" and the list goes on and on.

Common Errors in Qualified Plans: It's Time for Spring Cleaning!

I have come to realize that "As time marches on" -- so do the errors in our client's retirement plans. So, with "spring cleaning" in the air, I decided to clean out the garage of plan errors and list, in no particular order, some of the errors that have occurred over the past year. The type of error might not be new -- but the resulting consequences clearly explain the often used phrase -- "No Good Deed Goes Unpunished."

Are we Professionals Ruining Defined Contribution Plans?

Even though defined benefit plans will not disappear completely, there is little doubt, at least in the private sector, that those employers who have the option are abandoning those plans in favor of defined contribution plans.


Trying to be somewhat current and topical, with a vote scheduled this week in the House Education and Labor Committee on Rep. Miller's 401(k) Fair Disclosure for Retirement Security Act bill (HR 3185) and the DOL moving forward with proposed rules addressing these issues, I just wonder what the ultimate impact will be at the participant level.

ERISA Preemption

The house passed its version of ERISA in the fall of 1973. The Senate approved its version in February of 1974. There were many differences to be reconciled by the Conference, which got underway in April of that year. One of them, however, was not the preemption of state law rule, which was the same in both bills. It provided for "subject matter" preemption. States were precluded from legislating with respect to matters addressed in ERISA.

Should We Rue LaRue?

Last month the Supreme Court resolved, at least for one case, this question: Do individual employees have a cause of action when a fiduciary violates its responsibilities with respect to the assets in an individual’s defined contribution account?

Preparing for the Code section 409A Compliance Deadline

The extension for amending plans for compliance with Code section 409A and the final regulations thereunder under Notice 2007-86 does not mean that companies or individuals should wait to address these issues until later this year.

PBGC Returns to a Diversified Portfolio

When PBGC takes over a terminated plan, it becomes the trustee and may invest the assets of the plan in the full range of investments available to other ERISA plan trustees.

Deere 401(k) Fee Disclosure Case Dismissed

As expected, the 401(k) fee disclosure case against Deere & Company was the first to be decided, since the District Court for the Western District of Wisconsin has a reputation as a "rocket docket."

Reading the Supreme Court Tea Leaves

Litigation brings home how fragile our common understanding of ERISA can be. Until the 9th Circuit decided Beck v. PACE International Union, 427 F. 3d 668, 673 (2005), practitioners understood that the only ways to distribute participants' benefits under a terminating defined benefit plan were annuities or lump sums. Unfortunately, the 9th Circuit didn't find it so clear.

Would You Buy an Annuity for Your Mother?

Much has been made of the fact that employers are increasingly turning to 401(k) plans rather than defined benefit plans. Employers are implementing a number of strategies to help employees achieve retirement security in this brave new world.

On Patenting Tax Advice - A Lesson From Pythagoras

The flap over patenting tax advice reminds me of something I learned long ago about the lessons of Pythagoras and Pythagoreans ages ago - some 500 years B.C. to be precise (and Pythagoreans were supposed to be, if anything, precise).

The Intersection of Federal and State Health Care Reforms

Massachusetts enacted its health reform requiring individuals to purchase health insurance or benefits under a plan that meets certain minimum standards in order for the individual to avoid a tax on the uninsured.

Patenting Employee Benefits Advice

Patenting employee benefits strategies or computer systems has been occurring since 1988 when an improved system for enrolling employees into pension benefits was granted a patent.

The Future of Health Care

I read the other day that 20% of the income of a typical medical office is spent on insurance claims administration. Then there's the insurance company cost of administering the claims, plus the cost of the darned ERISA lawyer who brings those class actions.  A billion here, a billion there, pretty soon it starts to add up (Thanks Ev Dirkson).

So What Else Is New In DC?

In journalism theory, the headline is a literary genre unto itself. It's supposed to capsulize what follows it so that the reader's own unassisted, low-tech browser linking eyes and brain can discern in a flash whether he or she has an interest in reading more.

Local Option in Texas: The Great GASB

Any time a legislative body as large as that of the Texas House of Representatives passes a bill of greater import than the designation of a state flower (e.g., Yellow Rose) or nut (e.g., Pecan) by a unanimous vote (i.e., 140-0), you sense that something odd may be afoot.

Insuring the employee’s risk

The benefit gambit currently in vogue is a new kind of risk-transfer.  Instead of having the employer assume the employee’s long term risk (by defined benefit pensions, and by comprehensive health benefits), the name of the game now seems to be: transfer the risk to the employee.

Fees for what?

There has been a lot of conversation about the fees paid by retirement plans. Most of that attention has been paid to the level of the fees.  The implication seems to be that a high fee is bad and a low fee is good.

Attack of the Killer Accountants

Regular tax season is coming to a close and the season for auditors to turn to benefit plan audit work is nearly upon us.  That made me think of some of the problems we encountered last year and the fact that advance knowledge and enlisting the assistance of the legal community might be helpful.

Closing the loop on Uncertain Tax Positions

Since many readers of this blog work within the benefits department of a company, are consultants or attorneys, they may not follow financial reporting standards that are not aimed specifically at compensation or benefit considerations.

Continuing on FIN 48

This discussion is based on the prior discussion of new FASB Interpretation 48 - Accounting for Uncertainty in Income Taxes.

Another Accounting Standard Impact Benefit Plan Advisors(2)

As if there isn't enough change going on - revised SEC disclosures, potentially 400 pages of "final" 409A regulations, revised accounting standards for equity compensation, proposed legislation limiting the amounts of deferred compensation, ad nauseum. Benefit's advisors must also deal with subtle and unexpected changes, like "FIN 48."

401(k) Fee Disclosure

As 401(k) plans become the major source of retirement savings,  Congress, GAO, DOL and the SEC are all turning their attention to the issue of 401(k) fees.

PPA Relief?

Not being a Washington type, I am not privy to who is lobbying for what provision in proposed legislation. After wading through the new prohibited transaction exemption which was added by the Pension Protection Act, now found in ERISA section 408(b)(14) and limited by the terms of section 408(g), I wondered who lobbied for this and how useful will it be?

State Based Health Care Reform-Getting Out from Under Preemption

In January the Fourth Circuit decided RILA v. Fielder, 39 EBCases 2217, 2007 U.S. App. LEXIS 920 (4th Cir. 2007) holding, in a split decision, that Maryland's law requiring certain large employers (most notably Wal-Mart) to spend 8% of payroll on healthcare for their employees or pay the difference to the state to defray the cost of Medicaid.

EDS--The End of Fiduciary Responsibiilty

Since the DOL issued its 404(c) regulation in 1992, it has been generally understood that section 404(c) did not relieve fiduciaries from liability for limiting or designating investment options in a 404(c) plan.  This view was contained in the preeamble to the regulation as a gloss on regulatory language limiting 404(c)s relief to losses which are "the direct and necessary result of that participant's or beneficiary's exercise of control."  29 C.F.R. sec. 2550.404c-1(d)(2)(1).

Default Investments

In the PPA, Congress endorsed (and well it should have) automatic enrollment 401(k) plans by adopting legislation to make it easier for employers to sponsor such plans.

U.S. Health Care Costs

In today’s WSJ, Justin Lahart observes that the United States spends a much larger portion of its GDP on health care than other countries, yet seems to get little for its extra spending.

Top Cats in Top Hats

Mostly, but not entirely, exempts from its provisions unfunded plans “maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.” In the informal taxonomy of employee benefits speak, these plans carry the label “top-hat” plans.

BNA Sponsors Conference on Pension Plans and Executive Compensation

On March 21-22, 2007, BNA will present a conference on pension issues and executive compensation.  "ReDesigning Pension Plans and Executive Compensation: New Rules, New Opportunities," will be held in Washington, D.C., and will feature eight top officials from Treasury, DOL, and the SEC.

Whither ''Consumer-Directed Health Plans?''

People who purchase their own individual health insurance may be particularly interested in less expensive high deductible plans paired with a tax-advantaged health savings account (HSA).

New Initiatives Regarding Pension Plan Freezes

The DB system continues to contract.  With new FASB disclosure rules and greater funding volatility under PPA, additional DB plan freezes can be anticipated.  Last year a number of healthy major companies announced plan freezes.

An Alternative to ''Employee'' Benefit Plans

ERISA has served American workers relatively well over the past 30 plus years.  Millions of employees have achieved relative retirement security with significant pension and retiree health benefits.

More Mandated Benefits? Stop! Think!

ERISA regulates and mandates a system that is, above everything else, voluntary.  In my view, mandates have no place in it, not because they are not good objectives, but because they are not voluntary, not free, and inevitably counter-productive.

Section 420 Transfers by Multiemployer Plans

A little-noted feature of the Pension Protection Act is its provision extending to multiemployer pension plans the opportunity to transfer "excess" assets to fund retiree health benefits.  Until now, only single employer pension plan sponsors were permitted to make such transfers.

Participant Diversification Requirement

Employers are being inundated with a press of new guidance issued by government agencies on many new employee benefit requirements with which the failure to comply can result in some fairly stiff penalties.

Audioconference on CD&A Set for Dec. 14

On Dec. 14, BNA will host an audioconference with J. Mark Poerio, partner, Paul Hastings Janofsky & Walker; David G. Johnson, national practice leader-Compensation Strategy & Design, at Ernst & Young; and Richard L. Alpern, a principal at Frederic W. Cook & Co., titled "Getting Started With Writing the 2007 CD&A."

The Defined Benefit Plan System: What Does the Future Hold?

In the year 2005 we saw a national debate on the nation's most important defined benefit plan, Social Security. The nation overwhelmingly expressed its sentiment that the system of work-related, guaranteed lifetime benefits provided the security that people wanted for themselves, members of their family, and the nation as a whole.

Fee Disclosure

ERISA fiduciary litigation isn't calming down, it is just switching subjects.  As the stock drop cases  wind down, they will be replaced (in fact, are already being replaced) by hidden or excessive fee cases.

Pension Protection Act Redux?

With the dust clearing on the recent mid-term elections, we thought it might be beneficial to speculate on what, if any, effects the Democratic takeover of Congress might have on the recently enacted Pension Protection Act.

New Proxy Pension Benefits Table

Many public companies are now drafting their proxies and dealing with the new proxy disclosure rules.  One of the tables for many companies is the Pension Benefits Table.

Oh yes, oversight ...

How could I overlook the possible impact of the shift in power in the Congress on Congressional oversight mission, and, in turn, the possible impact of Congressional oversight on the world of employee benefits?  If nothing else, we're less likely to see a resurrection of the Department of Energy's announcement that it would not reimburse contractors for defined benefit plan costs, or for the cost of more than a minimal health coverage package.

Election Impact?

I'm still yawning from staying up late (for a school night) to see what happened, how The American People made their views known to the governing class. There are any number of levels to the question, what will be the impact "on us" of the transfer of power. "Us" includes, of course, all of us as citizens -- will the election outcome hasten the day that we stop precipitating and experiencing deaths and mutilations in Iraq?

A Change in Perspective

This posting comes in from a different perspective - that of the benefit plan auditor.  Since the reporting season for the calendar 2005 plan year is pretty much over, I thought it might be valuable to go over some of the problems that cropped up this year on such audits


To me, an ERISACRAT is someone who takes the concept of the law very seriously, to work towards Employee Retirement Income Security.

PPA Issue

Much has been written and discussed as to what steps should be taken to avoid or minimize potential exposure to the issues and many plan sponsors have made changes to their plans and/or committee structures.   But before they can catch their breath, along comes the new kid on the block-the Pension Protection Act of 2006.

String Theory of Healthcare - The Solution to Everything.

a. There should be National Health Insurance to cover basic insurance for everyone; employed, unemployed, uninsured and people like me.

b. Employers may also provide "wrap around" policies in addition to the Basic policy.

Some Random Reflections on the PPA and Cash Balance Plans

The PPA has some interesting cash balance provisions, including a prohibition on cash balance plans whose interest credits exceed market rates of return.   The reason for this prohibition is clear enough: if an interest credit is higher than investment returns available in the market, the interest rate will favor younger plan participants, since they will have the benefit of the above-market rate for a longer period of time than older plan participants.


Dana Muir, a professor at University of Michigan's business school, has co-authored an interesting article on the use of the efficient market hypothesis in two areas, one of which relates to ERISA retirement plans that hold employer stock.

Hedge Funds and Plan Asset Regulations

The ERISA Advisory Counsel has devoted one of its study projects this year to issues surrounding the prohibited transaction rules and hedge funds (and also cross-trading).

Denial of States

While I wasn't paying much attention, on July 19 the U.S. Supreme Court entered a short order, without opinion, denying Texas and several other would-be co-plaintiff states leave to file a complaint challenging the constitutionality of part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). Texas v. Leavitt , No. 135 Orig. (U.S.) (15 HLR 735, 6/22/06). The part of the MMA under attack is embedded in the program familiar to even the lay public, and more so to the elderly, as Part D of Medicare.

A Turning Point for Labor?

Since the signing of the Pension Protection Act, the aura of pessimism that continues to hang over the future of private-sector DB plans has been relieved in many quarters by bullish excitement over the potential that the DC plan provisions of the PPA may hold in store for the American workforce -- particularly for the majority of working Americans who are unprotected by any income floor in retirement other than Social Security.

Prohibited Transactions and IRAs

While DOL generally does not have jurisdiction over IRAs, it does have regulatory authority to determine whether a prohibited transaction exists in connection with an IRA. Given the fact that a prohibited transaction may disqualify the entire IRA, a cautious approach with IRA investments in the IRA owner’s business is warranted.

PPA Health Plan Relief

One of the more obscure provisions of the Pension Protection Act is Section 843, which amends IRC §419A(c) by adding new subsection (6). The new provision permits a health benefit plan sponsored by a “bona fide association” (as defined in 42 U.S.C. 300gg-91(d)(3)) to maintain a reserve of up to 35% of current operating costs. Prior to the amendment no reserve was permitted.

DOL and Service Provider Fee Disclosure

 On May 16, 2005, the SEC issued a Staff Report Concerning Examinations of Select Pension Consultants. In connection with the SEC report, on June 1, 2005,  DOL and the SEC jointly released tips to help ERISA plan fiduciaries in selecting and monitoring fiduciaries.

Benefits Related Blogs

I thought you might be interested in other benefits-related blogs. I'm sure I've missed some, so if you know of other benefits-related blogs, please add it through a comment.

SEC Mutual Fund Settlements

Beginning in 2003, the SEC and state officials brought enforcement actions for improper trading practices involving mutual funds.

ERISA Hotties

We wanted to start the BNA Pension and Benefits Blog with something a little light hearted that you might not see in the regular BNA publications.


Welcome to the BNA Pension & Benefits Blog: Insight from the Advisory Board.