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Guest Article

(From the August 18, 2008 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

DOL Enforcement Manual Updated to Address Fiduciary Gifts & Gratuities

The Employee Benefits Security Administration of the Department of Labor (DOL) updated its ERISA enforcement manual to include new provisions regarding gifts to fiduciaries. While the manual does not serve as public guidance, DOL employees use it for internal administrative purposes such as in conducting plan audits.

ERISA § 406(b)(3) prohibits a fiduciary from receiving “any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan.”

A DOL investigator who identifies a possible fiduciary violation involving a plan fiduciary’s acceptance of meals, gifts, entertainment, or educational expenses from a party dealing with the plan is advised in the Enforcement Manual to determine whether ERISA § 406(b)(3) has been violated. The investigator is further advised to determine whether the plan maintains a “reasonable written policy ” regarding the receipt of the items.

The Enforcement Manual carves out two circumstances where investigators are generally to conclude that no violation of ERISA § 406(b)(3) has occurred:

$250 de minimis amount: where a fiduciary and its family members receive consideration (i.e., gifts, gratuities, meals, entertainment, other non-cash consideration, or reimbursement of expenses associated with educational conferences) of an aggregate annual value of less than $250 and their receipt does not violate any plan policy or provision. Educational expenses: where the plan is reimbursed for expenses associated with a plan representative’s attendance at an educational conference, provided that: a fiduciary reasonably determined – in advance and without regard to whether the expenses would be reimbursed – that the plan’s payment of the expenses was prudent and consistent with a written plan policy or provision designed to prevent abuse, the conference had a reasonable relationship to the duties of the attending plan representative, and the expenses were reasonable in light of the benefits afforded and unlikely to compromise the plan representative’s ability to carry out his or her ERISA duties; and the determination is in writing.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Erinn Madden 202.572.7677, Bart Massey 202.220.2104, Mark Neilio 202.378.5046, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Tom Veal 312.946.2595, Deborah Walker 202.879.4955. Copyright 2008, Deloitte.

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