Peter Gulia

So our samples are over 300, 180, 175, 166, and 145 pages. A follow-up query: If we concur that almost no sponsor reads the plan document, does an employer read the summary plan description? And if it reads the SPD, does it use that reading as a way to check that the plan document states the provisions the employer intended?

ESOP Guy, thank you for the useful (and interesting) response. (And I share your liking one comprehensive definitions part and disliking provisions stated by assembling cross-referenced provisions.) I'm interested in your (and other BenefitsLink mavens') thoughts about how realistic it is to believe that a plan sponsor's executive or employee read the whole document before deciding to adopt it.

Thank you for the helpful responses. (My opening example, which isn't even in the running for the longest I've seen, is 193 pages without policies, procedures, or forms, and without the summary plan description.) So should we have a contest on which preapproved document is the shortest, and which is the longest?

I'll start the sampling: For a small-business employer's "plain vanilla" safe-harbor plan, the prototype is 193 pages.

Quick (we hope) and unscientific survey: If a plan's sponsor were to read all of its plan document, how many pages would that be? In the prototype or volume-submitter set you regularly use, counting the adoption agreement, base document, and all appendixes and supplements that state provisions of the plan, how many pages (in total) is it?

David Rigby's point is most important: Be picture-perfect about following the plan's claims procedure (and double-checking that the procedure conforms to ERISA section 503).

The Labor department's grant of a prohibited-transaction might relieve a fiduciary from one or more of the prohibited-transaction consequences, but does not relieve a fiduciary from any other responsibility, including duties to act prudently and for the exclusive purpose of providing the plan's benefits. The conditions the Labor department might require could include not only using an independent appraiser or other valuation expert but also engaging an independent fiduciary to oversee at least the conflicted transaction and perhaps later years' valuations.

Using only the FederalRegister.gov public website (for 1994 and later), restricting the search to notices, and requiring “prohibited transaction” and “real property” to appear in such a source, that search yields 350 documents. (Going back to September 1974 might increase it some.) For a good search, you’d want a professional librarian using an editorially-enhanced database tool designed for professional researchers. And a good librarian can help you design search terms and qualifiers that filter out sources that would waste your time and attention while not missing sources that are useful. I suggest Jenkins Law Library https://www.jenkinslaw.org/research/help/pricing-information/research-pricing.

kcbirm and WCC, thank you for your good help. Any others' observations?

When a retirement plan’s fiduciary (whether it’s the plan’s sponsor/administrator, a § 3(38) manager, or a § 3(21) advisor) evaluates investment funds to consider which should be added to or removed from a plan’s menu for participant-directed investment, which sources of information does a fiduciary use? Does a fiduciary look at the Beta, R2, Sharpe Ratio, Standard Deviation? How does these measures aid, or distract from, one’s analysis? Does a fiduciary use Morningstar? Lipper? Bloomberg? Litman Gregory? Zacks? Zephyr? Others? Which sources do you like, and why?

MoJo, thank you for the information. If you can indulge my curiosity: What questions does an EBSA examiner to test whether a plan’s fiduciary really understands the indirect compensation?

If (to complete the plan's termination) the plan pays and delivers the plan's final distributions of money and property before the end of 2017, won't everything be distributed? If so, would the Form 1099-R tax-information reports be one report for the year's minimum-distribution amount and another report for all else?

If the plan's fiduciary decides the plan no longer wants the life insurance contract and would surrender it, the plan may sell, for fair-market value, the contract to the participant. A class prohibited-transaction exemption sets conditions for doing this.

In 26 C.F.R. § 1.401(k)-1(d)(3)(iii)(B)(3): the enumeration of “or the employee’s spouse, children, or dependents” is disjunctive; the mentions of IRC § 152 are in a parenthetical phrase that refers only to “dependents”; and the noun “children” is unmodified by an adjective or a reference to a definition. As always, this is not advice to anyone.

Here's a link to an advisory committee's report on a need to update the Treasury department's rule. https://www.irs.gov/pub/irs-pdf/p4344.pdf

I remember the Florida Bar’s request that Florida’s Supreme Court approve a proposed advisory opinion. Through trade associations, I participated in several opposition briefs. One of our arguments became the court’s reasoning. The court refused, completely, to approve the proposed opinion, and even to publish a revised line-drawing. The Florida Bar re Advisory Opinion – Nonlawyer Preparation of Pension Plans, 571 So.2d 430 (Fla. Nov. 29, 1990). If anyone is wondering, I have for many years held (and published) my view that anyone should be free to provide legal advice, and whoever provides advice should be responsible for it.

No, I'm suggesting that one wishes the "ROBS" providers put into their service the kinds and degrees of quality controls and caring I believe austin3515 puts into his or her services. What matters is not the attorney-at-law or CPA designation or license, or even the education leading to it; what matters is a sincere recognition that a client or a service recipient relies on our communications.

In the Federal employment-tax rule, 26 C.F.R. § 31.3121(b)(7)-2 https://www.ecfr.gov/cgi-bin/text-idx?SID=7c05ec91250a858b871fea37a8379202&mc=true&node=se26.17.31_13121_2b_3_27_3_62&rgn=div8, my word-processing search found no use of the word "spouse".

From sales materials and implementation kits I’ve seen from the transactions I’ve undone, it seems those “ROBS” service providers are somewhat careful about describing how a retirement plan may buy employer securities, and don’t say that any particular business is a good investment. So reality might be closer to austin3515’s observation. That frame might suggest another of the available remedies: A nonlawyer is liable if his, her, or its “client” suffered harm because the “client” relied on the nonlawyer’s inappropriate advice. Courts have not hesitated to impose liability on a nonlawyer for giving incorrect, or even incomplete, advice. A nonlawyer is held to at least the same standard of care and expertise as a competent lawyer. And at least one court decision suggests a nonlawyer’s standard of care “should be no less than that required of a licensed attorney, and conceivably even a higher standard would be appropriate – strict liability, for example, to deter those who might be otherwise tempted to profess a competence they have no right to claim.” Wright v. Langdon, 274 Ark. 258, 623 S.W.2d 823, 826 (1981). In other contexts, doing without a license an activity that lawfully is done only by those with the license is presumed hazardous. So a court might treat a nonlawyer’s unlicensed practice of law as negligence per se to result in strict liability. As MoJo suggests, stating and proving a claim is hard work.

A local-government employer, as a political subdivision, agency, or instrumentality of the State (or of the State's political subdivision or its agency or instrumentality) has only the powers provided by State (and local) law. And a local-government employer's duties or obligations, if any, concerning collective bargaining or collective discussion, if any, is governed by State law. The employer will want its lawyers' advice on those sources of law.

For a fiduciary-breach claim, ERISA § 413 states a statute of limitations and a statute of repose. For a participant’s, beneficiary’s, or alternate payee’s claim for a benefit, ERISA’s text specifies no limitations period, but courts have invented Federal common law. Courts’ interpretations vary widely. Many try to follow the court’s perception of some relevant State’s limitations period for a claim under a written contract. Also, a court might apply a limitation stated in the plan’s governing document. Different law applies for the PBGC’s claims against an employer. If anyone is considering arguing a statute-of-limitations defense or a statute-of-repose defense, even as a negotiating tactic, that person should lawyer-up.

To spark some further discussion, let’s imagine one can prove that the “ROBS” service provider was both an IRC § 4975(e)(3)(B) fiduciary of the rolled-away Individual Retirement Account and an ERISA § 3(21)(A)(ii) investment-advice fiduciary of the retirement plan that bought employer securities. But even if one can prove that the “ROBS” service provider was such a fiduciary, what remedy does that set up?

Thank you, RatherBeGolfing, for calling our attention to this information. For those who want to read beyond the good summary, here's a link to Judge Lamberth's opinion: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2014cv1523-78

Beyond others’ observations, consider (and get your lawyer’s advice on) two further ideas about how to illustrate past performance: If you intend a communication as one meant to follow 29 C.F.R. § 2550.404a-5 for disclosures to directing participants, one counts average annual total return and total annual operating expenses for an investment alternative that is not an SEC-registered fund as if it were. Even if an RIA’s model is not an investment alternative, someone might prefer to illustrate it as if it were. Consider how the RIA would comply with investment-adviser law standards for making a communication not misleading.

I don’t venture answers to your questions, but suggest one aspect for the plan administrator’s interpretation of the Form 5500 Instructions. In applying the bit you quoted, one might separate IRC § 72(p) from ERISA § 408(b)(1). For at least some plans and some circumstances, a participant loan might fail to meet a condition concerning income tax treatment under IRC § 72(p) without necessarily failing to meet the conditions for the ERISA § 408(b)(1) exemption. For example, if a participant’s vested account balance when the loan was made was $300,000, a loan of $100,000 could be adequately secured under 29 C.F.R. § 2550.408b-1(f)(2) and, depending on the plan’s and a procedure’s provisions, could meet all conditions of 29 C.F.R. § 2550.408b-1.