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Fiduciary Rule Increases Cost and Oversight, Not Consumer Protection

" 'The DOL's proposal goes far beyond [putting your customer first] standard to limit choice and raise costs, unnecessarily so in our opinion,' said Ken Bentsen, president and CEO [of SIFMA] ... He contended that the DOL proposal implies that 'we are headed in a direction of bifurcated rules, compliance and disclosure regimes imposed on the same market participants from different regulators.' ... Mark Smith, a lawyer at Sutherland, Asbill & Brennan, noted that ... while the administration talks about a simple contract dealing with 'best interest,' it took the administration more than 400 pages to get its point across, meaning that the proposal is far more complex than the administration says it is."

Sutherland Global Services Accused of ERISA Fiduciary Breaches Over Fees

"According to the complaint, 'certain responsibilities in connection with the plan' were delegated to CVGAS LLC during the proposed class period, including the responsibility to select and monitor the array of investment options to be included in the plan. Among other issues, the plaintiffs allege the defendants 'failed to properly minimize the reasonable fees and expenses of the plan.' " [Savage v. Sutherland Global Services Inc., No. 19-6840 (W.D.N.Y. complaint filed Nov. 13, 2019)]

Text of Brief by Cambridge Financial Services, LLP Urging Supreme Court to Overturn Ninth Circuit Decision in Tibble v. Edison (PDF)

"CFS's experience in advising and counseling ERISA fiduciaries and its knowledge and understanding of prevailing and evolving best practices and 3 standards of care yields four key observations: [1] many plan fiduciaries, especially among large plans, already follow good monitoring practices, meaning that reversing the Ninth Circuit will not result in increased costs for these fiduciaries or their employers; [2] the cost of regular monitoring includes a small amount for 'benchmarking' plan fees in all service categories -- investment, administration, trustee, consulting, and the like, and is, in many cases, largely born by plan participants, not employers or fiduciaries; [3] the Ninth Circuit's decision threatens to erode the past decade's progress on fee reductions in defined contribution plans, driven in part by private lawsuits, which has saved plan participants billions of dollars ; and [4] the Ninth Circuit's standard of 'material' changed circumstances is unworkable and illogical."

Katten Muchin Rosenman LLP Comment Letter to IRS on Proposed Regs Regarding Calculation of UBTI for VEBAs (PDF)

"[U]nless Q&A-5 is revised, VEBAs which have been operating in a permissible manner will find that their investment income which was earned during the current year in which the regulation is promulgated, and perhaps even prior to the date that the regulation is enacted, will be subject to tax. I respectfully request that Q&A-5 be revised to provide that the effective date of the regulation be the first taxable year STARTING (not ENDING) on or after the date of publication of the final regulation[.]" [Editor's note: The author was the principal author of the 1980 proposed VEBA regulations.]

Davis & Harman LLP Comment Letter to SEC on Standards of Conduct and Other Obligations of Broker-Dealers and Investment Advisers (PDF)

"Because it is not possible to determine the effects of possible SEC reforms without taking into account the interaction with possible DOL reforms significantly affecting the same conduct and the same IRA market, the responses to the SEC Request will virtually all be incorrect as soon as the DOL acts, thus rendering the SEC's administrative record unhelpful.... [T]here is complete overlap between the two projects with respect to investment services provided to IRA owners. Since IRA assets were approximately $4.9 trillion as of the end of 2011, the degree of overlap between the two projects is enormous."

Witness Statements to ERISA Advisory Council: 'Reducing the Burden and Increasing the Effectiveness of Mandated Disclosures with Respect to Employment-Based Health Plans in the Private Sector'

Testimony submitted for June 6, 2017 meeting: James Gelfand, ERISA Industry Committee [ERIC] Mark Buckberg, Bond Beebe Terry Dailey, Mercer Linda Duvall, Associated Administrators Brennan McCarthy, Willis Towers Watson Elizabeth Queen, Central Data Services Kevin Schlotman, Benovation Mary Ellen Signorille, AARP Anthony Sorrentino, SilverStone Group Michelle Varnhagen, AARP Sandford Walters, Kelly & Associates Insurance Group Peter Wiedenbeck, Washington University School of Law

401(k) Plans -- Is the Story Under-Told or Over-Sold?

"A speech entitled 'The Under-told 401k Story' was delivered on May 2, 2006 at the annual conference of the Society of American Business Editors and Writers in Minneapolis-St. Paul, Minnesota by Vanguard Chairman and CEO John J. Brennan, in which he both examined various ostensible myths regarding traditional retirement income plans and explained why a well-managed 401k plan will effectively meet employees' retirement needs."

Meet the Law Firms Fighting 401(k), Health Plan Class Actions

"For the second year in a row, [Morgan Lewis & Bockius LLP is] the law firm getting the most ERISA class action business.... Dorsey & Whitney LLP follows closely in number of ERISA class actions.... Skadden Arps Slate Meagher & Flom has been hired to defend eight ERISA class actions in the past year.... Proskauer Rose LLP, Alston Bird, Groom Law Group Chartered, and Reed Smith LLP are defending seven class actions, respectively.... Steptoe & Johnson LLP was hired to defend six ERISA class actions.... O'Melveny & Myers LLP and Sidley Austin LLP are defending four class actions each."

Employee Benefit Compliance Priorities for Year End

"Plan sponsors should be collaborating with their payroll vendors and recordkeepers to understand how mandatory Roth catch-up contributions will be processed for high wage earners ... [If] at least one applicable retirement plan within a controlled group permits super catch-up contributions, all controlled group retirement plans must also permit super catch-up contributions.... By February 16, 2026, each HIPAA covered entity and business associate must update its Notice of Privacy Practices (NPP) ... Some section 409A corrections under Notice 2008-113 must be completed by year-end, making now the ideal time to identify and finalize correction of any lingering errors."

IRS Elects to Contribute Complex Final Regs on Super and Roth Catch-Ups

"If a plan sponsor chooses to apply a deemed Roth catch-up election when the participant's combined Roth and pre-tax contributions reach the Code section 402(g) limit, and the participant affirmatively elects pre-tax catch-up ... the plan sponsor will need to develop a process through which the earlier Roth contributions are taken into account in making any correction with respect to the pre-tax catch-up amounts."

Executive Order Will Facilitate Retirement Plan Investment in Alternative Assets

"[1] Direct versus indirect investment ... [2] Digital assets ... [3] Lifetime income ... [4] Adoption of safe harbors and other regulations and guidance ... [5] Coordination among regulators ... [6] ERISA litigation." 

One Not-So-Big Summary of the Compensation and Benefits Law Changes in the One Big Beautiful Bill Act

"After having been left out of the initial House bill, the Act includes the long-awaited telehealth extension.... Although employees may want to take advantage of the increase in the DCAP contribution limit, employers should continue to run and monitor DCAP nondiscrimination testing ... Employers that want to offer [Trump Account] contributions to their employees will need a formal plan document and will need to comply with certain nondiscrimination testing rules."

The One, Big, Beautiful Bill: Benefits-Related Provisions as of May 15

"The OBBB will likely continue to evolve as the bill progresses through the legislative process. [This article provides] a brief overview of some of the most impactful employee benefits items."

Supreme Court Lowers Pleading Standard for ERISA Prohibited Transaction Claims

"[P]laintiffs will likely test the courts, leveraging the advantages this decision has given them and the inherent inconsistency in applying these 'tools.' Plan sponsors should assess their potential risks and consider mitigation efforts, including strategies they would employ in the event of a claim. For example, plan sponsors could consider paying plan expenses from corporate assets rather than plan assets, which would eliminate the possibility of a section 406(a)(1)(C) prohibited transaction." [Cunningham v. Cornell Univ., No. 23-1007 (S.Ct. Apr. 17, 2025)] 

Insurance Company Providing 401(k) Retirement Plans Not an ERISA Fiduciary with Respect to Foreign Tax Credits from Mutual Fund Shares

"Considering ordinary notions of property rights, the court concluded that the foreign tax credits were inalienable and owned by John Hancock as the legal and taxable owner of the shares of the mutual fund. The fact that the foreign tax credits were the result of foreign taxes on the Romanos fund did not make them assets of the fund. This was underscored by the fact that the Romano Law Plan was a tax-exempt plan unable to use the credits." [Romano v. John Hancock Life Ins. Co. (USA), No. 22-12366 (11th Cir. Oct. 30, 2024)]

Proposed Regs Explain the Expansion of 'Covered Employees' Under Code Section 162(m)

"In assembling compensation data for potential covered employees, companies should take a broad view of their employee population to correctly identify the next five highest compensated employees under the Proposed Regulations (i.e., companies should consider individuals that are employed through foreign entities, PEOs or other third parties). Companies should also be prepared to conduct the analysis on an annual basis to redetermine the group of five additional employees."

IRS Provides 'Super' and Roth Guidance

"Plan sponsors that choose not to allow the super catch-up contributions may want to review the language in their plan documents related to catch-up contributions. If the plan document broadly allows catch-up eligible participants to defer the maximum permitted under Internal Revenue Code Section 414(v), the plan document may inadvertently allow super catch-up contributions, even if this is not the plan sponsor's intent."

2024 Qualified Retirement Plan and Health and Welfare Plan Checklist: A Very Demure, Very Mindful Year

"Qualified retirement plans: [1] Long-term part-time employees ... [2] Catch-up provisions ... [3] Forfeitures ... [4] Expanding automatic enrollment in retirement plans ... [5] Roth catch-up contributions ... [6] Required minimum distributions ... [7] Annual notices ... [8] Qualified plan amendments ... Health and welfare plans: [1] Gag clause prohibition compliance ... [2] End of telehealth extension ... [3] Mental Health Parity and Addiction Equity Act requirements ... [4] HIPAA privacy reproductive health protections ... [5] Health and welfare plans cybersecurity."

Understanding the New MHPAEA Regs: What Plan Sponsors Need to Know

"The final rules mark another push by the Departments to implement and enforce mental health parity laws, and impose new requirements on group health plan sponsors to review and analyze any nonquantitative treatment limitations their plans impose on mental health and substance use disorder (MH/SUD) benefits. The new rules are generally effective for plan years beginning on or after January 1, 2025, but certain provisions that require significant plan sponsor effort will not go into effect until plan years beginning on or after January 1, 2026."

Employee Benefit and Employment Law Regs After Loper Bright

"To the extent DOL conceived in its Fiduciary Rule 4.0 that it was appointed by Congress in ERISA to be a universal financial services regulator ... for example, or the Federal Trade Commission conceived in its non-compete rule that Congress had authorized it to displace state law on that issue, the early returns from the courts hearing challenges to those regulations are pointing in the direction of a greater check on agency power." [Loper Bright Enterprises, Inc. v. Raimondo, Sec. of Comm., No. 22-451 (S. Ct. Jun. 28, 2024)]