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Benefits in the News > By Subject >

Fiduciary duties of trustees, directors, others

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Recent Headlines

University of Chicago Latest College Hit with Retirement Plan Suit
"The lawsuit alleges the university selected and retained investment funds and insurance company annuities that caused the plans to incur far higher administrative fees and expenses relative to the size of the plans, causing participants millions of dollars in economic loss. The university selected numerous underperforming investment options when lower-cost alternatives were available, according to the complaint filed May 18 in federal court in Illinois." (Bloomberg BNA)
[Official Guidance] Text of DOL FAQs: Application of Fiduciary Rule Starting June 9 (PDF)
15 questions and answers, including: "When do firms and their advisers have to comply with the conditions of the new Best Interest Contract (BIC) Exemption and the [Principal Transactions Exemption]? ... When do parties have to comply with the new conditions in PTE 84-24, which was amended in connection with the Fiduciary Rule? ... When do firms and their advisers have to comply with the new conditions in other pre-existing exemptions that were amended in connection with the Fiduciary Rule? ... Will the Department make additional changes to the Fiduciary Rule or exemptions? ... Does the Department's decision to have the Fiduciary Rule and impartial conduct standards become applicable on June 9, 2017 mean it has effectively concluded its review under the President's Memorandum?.... How does the delay in the applicability dates affect the grandfathering relief in Section VII of the BIC Exemption ... Does PTE 84-24 apply to transactions involving IRAs during the transition period? ... The Department postponed the relevant applicability dates of the Fiduciary Rule and exemptions until Friday, June 9, 2017. Does this mean that advisers and financial institutions must be in full compliance before the close of business on June 9, 2017?" (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
[Guidance Overview] Acosta on Fiduciary Rule's June 9 Implementation: 'Deregulators' Must Follow the Law, So Regulators Will Too
"The [DOL] has concluded that it is necessary to seek additional public input on the entire Fiduciary Rule, and we will do so. We recognize that the rule goes into partial effect on June 9, with full implementation on Jan. 1, 2018.... We have carefully considered the record in this case, and the requirements of the Administrative Procedure Act, and have found no principled legal basis to change the June 9 date while we seek public input. Respect for the rule of law leads us to the conclusion that this date cannot be postponed. Trust in Americans' ability to decide what is best for them and their families leads us to the conclusion that we should seek public comment on how to revise this rule. Under the Obama administration, the [SEC] declined to move forward in rule-making. Yet the SEC has critical expertise in this area. I hope in this administration the SEC will be a full participant." (Secretary of Labor Alexander Acosta, via The Wall Street Journal; subscription may be required)
[Official Guidance] Text of DOL FAB 2017-02: Temporary Enforcement Policy on Fiduciary Rule
"The Department is actively engaging in a careful analysis of the issues raised in the President's Memorandum. It is possible, based on the results of the examination, that additional changes will be proposed to the fiduciary duty rule and PTEs. The Department also intends to issue a Request for Information (RFI) in the near future seeking additional public input on specific ideas for possible new exemptions or regulatory changes ... The Department has repeatedly said that its general approach to implementation will be marked by an emphasis on assisting (rather than citing violations and imposing penalties on) plans, plan fiduciaries, financial institutions, and others who are working diligently and in good faith to understand and come into compliance with the fiduciary duty rule and exemptions.... Accordingly, during the phased implementation period ending on January 1, 2018, the Department will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Text of Sixth Circuit Opinion Upholding Denial of Lump Sum Benefits for Retiree Who Died Prior to Lump Sum Election Period (PDF)
10 pages. "Given that no power of attorney exists after death and Mr. Strang did not submit the form, Ford is correct to note that Mr. Strang did not comply with the terms of the plan. Such an interpretation is not arbitrary or capricious.... It is true that the facts here present a tragic case of the sometimes difficult nature of hard-line rules, but there is nothing in the plan that prevents Ford from keeping its structured plan intact so that it could provide an orderly system for the many other retirees that may have wished to elect their own lump-sum option." [Strange v. Ford Motor Co., No. 16-2090 (6th Cir. May 19, 2017)] (U.S. Court of Appeals for the Sixth Circuit)
Reimbursement of Plan Sponsor Expenses
"[S]ome regular plan sponsors do bill their plans for the services the sponsor provides to them. And that practice -- while permitted under certain circumstances -- does present certain issues under ERISA. In this article we briefly review the rules under which a sponsor/fiduciary may be reimbursed for expenses, some of the pitfalls those rules present, and some recent litigation on the issue." (October Three Consulting)
Borzi: Fiduciary Rule Will Prevail Even If Repeal Is Attempted
"If the rule is repealed, consumer groups will challenge the action in court, [according to] Phyllis Borzi, the former assistant Secretary of Labor of [EBSA] ... Borzi maintained that the regulation's opponents 'have no new evidence' ... and won't be able to meet the court's high standards for repeal.... 'We were extremely meticulous in the way we approached the evidence,' she said ... '[The rule's opponents] need to create a record that is as strong as the record we created over six years.' " (Financial Planning)
Former EBSA Secretary Phyllis Borzi Talks About Fiduciary, Fees, Fears
"Borzi began by noting there's no Consumer Reports for achieving a sustainable amount of retirement income, and she decried the plethora of industry designations that too often confuse and confound the general investing public.... One thing she and the department did not do wrong, she emphasized, 'was that we never stopped talking to the public,' throughout the period of the rule's development, both when the first proposed-rule was pulled, and when it was eventually reintroduced." (401K Specialist)
Military-Member Employees Sue FedEx Over Alleged USERRA Violations
"According to the lawsuit, because thousands of service members employed by FedEx regularly work hours and receive compensation that are not fixed, their compensation has been 'not reasonably certain.' ... The lawsuit claims that since 2002 FedEx and the pension plan defendants have applied a policy for making pension and retirement contributions for periods of qualified military service that did not comply with USERRA, because they did not apply the 12-month look-back formula that USERRA requires." (planadviser)
DOL Could See Lawsuit by Fiduciary Rule Supporters
"The department 'should expect to be challenged vigorously in court' if the two provisions of its fiduciary rule that are set to go into effect June 9 -- the revised definition of the term fiduciary and the impartial conduct standard -- are delayed again, Stephen Hall, legal director of the advocacy group Better Markets [said] ... A legal challenge from rule supporters would likely be brought under the Administrative Procedure Act[.]" (Bloomberg BNA)
Trump's 'Lawless' Behavior with Fiduciary Rule Undermines Process, Bullard Says
"[University of Mississippi law professor and founder of Fund Democracy] Mercer Bullard, a strong advocate of the [DOL's] fiduciary rule, argues such a standard should have been adopted 'decades ago' and the department's current 60-day delay could hurt future rulemaking. Bullard ... is puzzled by the delay, arguing the rule had one of the most thorough vettings.... 'Half-a-dozen court rulings have found that the rule is well-justified,' he recently [said].... 'No agency will ever again allow for a compliance period that runs into another administration if it knows this type of lawless behavior will lead to a rule being rejected by the new administration without any analysis.' " (
House Committee: 401(k) Fiduciary Rule 'Hurts Those Intended to Help'
"The House subcommittee on Health, Employment, Labor, and Pensions held a hearing [May 18] to 'examine regulatory barriers facing workers and families saving for retirement.' Members discussed the need to protect workers and small businesses from what they see as a flawed fiduciary rule, which they claim would restrict access to affordable retirement advice. Members also discussed bipartisan solutions to make it easier for small businesses to provide retirement benefits to their employees." (401K Specialist)
Update on University Section 403(b) Cases: Inconsistent Rulings
"A novel theory proceeding in both the Duke and Emory cases is the claim that the defendants were imprudent to hire multiple record keepers, where consolidating services with one record keeper could have resulted in lower fees for participants." (Jackson Lewis P.C.)
Interesting Angles on the DOL's Fiduciary Rule, Part 47
"[M]ost of the objections are to the Best Interest Contract Exemption and not to the rule.... [T]he main issue is the prohibited transaction rules, which are statutory, rather than regulatory. Neither the SEC, nor FINRA nor the DOL, can issue regulations that conflict with a statute. As a result, even if the standard of care is changed, the prohibited transaction exemptions will continue to be written by the [DOL]. In other words, the SEC does not have the statutory authority to create exemptions from the prohibited transaction rules." (
The First 100 Days Are Done. Now What?
"While Trump is expected to sign into law a roll-back of the DOL regulatory exemption for state-run auto-IRA programs (and has already signed a similar provision for state and county auto-IRAs), the effect may be minimal.... it is clear that Trump's tax reform proposal would protect retirement plan tax deductions [and] there are several House proposals that would impact the taxation of retirement savings." (Cammack Retirement Group)
Fiduciary Rule Debate Impacts State-Run Plans for Private Sector
"A new bill introduced by Senate minority Democrats, seeking to protect ERISA exemptions for state- and city-run retirement plans for the private sector, would likely be made redundant with the removal of the Obama-era fiduciary rules." (planadviser)
Court Decisions on Investment Fees Provide Hope for Plan Sponsors
"[I]t is important for plan sponsors to understand that it is not their responsibility to include only the lowest cost investments in each asset category within their retirement plan. It is not required, and it should not be the case, that plan fees are the sole determining factor when selecting investments.... Each investment must be evaluated in the context of its overall performance, cost, and the value received through its role in the plan portfolio. Plan sponsors using cost as the only factor are potentially failing to fulfill their responsibility to finding investments that are reasonable and competitive." (Cammack Retirement Group)
[Opinion] The Incredible Shrinking DOL Fiduciary Rule
"For [DC] plans like 401ks, the DOL rule punctuated a movement already under way where more and more advisors were willing to act as fiduciaries.... The real impact ... is on IRAs over which the DOL has no enforcement jurisdiction -- the undermining of private rights of actions in the recent delay of the DOL rule may have disenfranchised lawyers ready to take up enforcement. But changes by many broker-dealers and RIAs eliminating potential conflicts of interest in IRAs and restricting activities of inexperienced advisors for DC plans will, in effect, bring about changes the DOL intended by the rule now under assault by the White House and possibly the new DOL secretary." (Fred Barstein, via 401kTV)
Fee Litigation 2016 Round-Up: Mitigating Risk in the Face of Expanding Targets and Theories of Fiduciary Liability (PDF)
17 pages. "Employees, not employers, bear the risk of investment performance in defined contribution plans, and they also pay the cost of investment management and administrative fees for the plans. The enhanced role of 401(k) plans has thus put increased pressure on plan performance and, since 2006, has led to multiple waves of [ERISA] litigation challenging the fees and the selection of mutual fund and other investments offered in the plans. The latest wave of litigation began in late 2015 and continued throughout 2016 and also introduced the first large wave of cases challenging the fees and investment offerings in 403(b) plans." (Robert Rachal, Myron D. Rumeld, and Tulio Chirinos, via Benefits Law Journal)
Principal Life Must Defend Class Action Over 401(k) Funds
"In certifying a proposed class of about 41,000 investors, a federal judge ... [held] that the lawsuit involved common issues related to Principal's conduct and potential status as a fiduciary under [ERISA].... The lawsuit attacks Principal's guaranteed interest funds ... The investors say that Principal reaps unreasonable profits from these investments by paying investors too small a portion of the returns Principal receives from the underlying investments." [Rozo v. Principal Life Ins. Co., No. 14-0463 (S.D. Ia. May 12, 2017] (Bloomberg BNA)
Listen to Your Participants: Don't White Label 401(k) Investment Funds
"The process of white labeling obscures the identity of the fund(s) being used.... [It] leads to participant confusion and lack of trust.... Hiding the identity of funds and fund companies would seem to be a stumbling block to achieving better participant understanding.... It hides complex investment strategies ... It obscures fund changes ... It's hard to obtain objective information ... It hides the impact of superstar managers[.]" (Lawton Retirement Plan Consultants)
Fidelity's Approach to DOL Fiduciary Rule Rankles Some Investment Advisers
"For some smaller DC plans with less than $50 million, Fidelity is amending client contracts through negative consent ... This is done via an addendum to existing service agreements authorizing Fidelity to provide ERISA fiduciary investment advice to participants once the DOL rule comes into force ... For larger plans, Fidelity is being more explicit in terms of plan sponsors' ability to opt out of participant-level fiduciary services by presenting employers with a communication that seeks their active confirmation[.]" (InvestmentNews)
Will DOL Continue to Make ESOPs a Compliance Priority?
"A recently filed case ... suggests that the DOL may continue to make a priority out of investigating potential abuses in ESOP transactions.... [E]mployers who are considering the adoption of the ESOP should be mindful of putting together an experienced team to guide them through the fiduciary issues. In particular, it is critical for the trustee of an ESOP to hire an independent appraiser that has not performed a preliminary ESOP feasibility study for the company, and the trustee and other fiduciaries of the ESOP should be engaged with the due diligence process." (Porter Wright Morris & Arthur LLP)
Duke Is Second School to Lose Round in Retirement Plan Lawsuits
"The judge May 11 refused to dismiss allegations that Duke's retirement plan charged excessive record-keeping and investment fees and favored the investment products offered by the school's record keepers over lower-cost alternatives. Other claims were subject to dismissal for being filed too late or for being insufficiently supported by facts, the judge ruled." [Clark v. Duke Univ., No. 16-1044 (M.D.N.C. May 11, 2017] (Bloomberg BNA)
Defined Benefit Plan Considerations for M&As
"Transactions occur regularly and come in a multitude of structures and players.... Properly and quickly assessing the deal landscape under a current lens, as well as a forward-looking post-deal lens, can be crucial for the deal to be successful for all involved.... [A chart describes] a few elements to consider from the buyer's perspective and some examples of the impact they can have on the deal[.]" (Milliman Retirement Town Hall)
Breach of Fiduciary Duty Case Against University Retirement Plan Fiduciaries Survives Motion to Dismiss
"[T]he court ruled that, for most of the claims asserted, the plaintiffs had properly stated a claim that survives the defendants' motion to dismiss.... [However,] the court granted the defendant fiduciaries' motion to dismiss the claim that it was imprudent for the plan to offer 111 investment options. The court ... explained that having too many investment options does not hurt participants, but rather provides them with additional opportunities to choose investments they prefer." [Henderson v. Emory Univ., No. 16-2920 (N.D. Ga. May 10, 2017)] (Ballard Spahr LLP)
Lawyer's Role in Challenged ESOP Transaction May Have Caused Him to be an ERISA Fiduciary
"Evolve Bank & Trust was hired as an independent transaction trustee when the Plan purchased stock from Vinoskey at an allegedly significantly inflated price.... [It] appears that [attorney Michael New] was not acting in his capacity as an attorney or as counsel for Evolve or Sentry, but rather only as an employee employed as a fiduciary. Therefore, it is likely that New's status as attorney was not the critical factor; had a non-attorney filled New's role for Evolve and taken the same action, the court likely would have still found him to be a fiduciary." [Hugler v. Vinoskey, No. 16-0062 (W.D. Va. May 2, 2017] (Robinson & Cole LLP)
TIAA to Pay $5 Million in 401(k) Excessive-Fee Lawsuit
"As part of the settlement [with the class of employees and former employees who have participated in the TIAA retirement plan or the TIAA 401(k) plan], TIAA also agreed to make design changes in the plans, including adding non-proprietary and cheaper investment options. The plans should save more than $2 million a year in fees with the adjustments[.]" [Richards-Donald v. Teachers Ins. & Annuity Ass'n of Am. (TIAA), No. 15-8040 (S.D.N.Y., settlement agreement filed May 10, 2017)] (Pensions & Investments)
All Eyes on Acosta as DOL Rule Clock Winds Down
"The main thrust of the rule -- that anyone working with retirement dollars adhere to a fiduciary standard -- is scheduled to take effect June 9. Industry representatives are furiously lobbying the DOL for another delay. Opponents are pinning their hopes for an 11th hour reprieve from new Labor Secretary Alexander Acosta ... While he hasn't spoken publicly on the fiduciary rule, Acosta wants to freeze the rule permanently, according to an email a Senate aide sent to rule opponents[.]" (
Emory Is First College to Lose in Retirement Plan Lawsuits
"The May 10 decision refusing to dismiss most claims against Emory is the first substantive ruling in the series of proposed class actions filed in August 2016 against the retirement plans of 12 prominent American universities ... Each school is accused of including too many investment options in its retirement plan -- Emory is said to have 111 -- and charging participants excessive fees for record keeping and administrative services, often because of the school's decision to use multiple record keepers." [Henderson v. Emory Univ., No. 16-2920 (N.D. Ga. May 10, 2017)] (Bloomberg BNA)
Fourth Circuit Agrees: Fiduciaries' Faulty Process for Eliminating Stock Funds Did Not Cause Plan's Losses
"This case demonstrates that the 'would have' standard for showing that a plan fiduciary's breach did not cause a loss is difficult, but not impossible, to satisfy.... Process is also crucial when adopting plan amendments, a point highlighted by the dissent, which ... faults the trial court for its handling of the fiduciaries' failure to properly adopt an amendment to eliminate the stock funds. The court majority overlooks that obstacle ... but there seems little doubt that proper adoption of the amendment requiring divestment would have helped the fiduciaries' case." [Tatum v. RJR Pension Inv. Comm., No. 16-1293 (4th Cir. Apr. 28, 2017)] (Thomson Reuters / EBIA)
Eighth Circuit Jimmies the Lid on Pandora's Fiduciary Duty Box
"In an opinion that may result in increasingly complex ERISA benefits litigation, the Eighth Circuit has allowed a breach of fiduciary duty claim premised on alleged faulty claims handling practices to proceed in conjunction with a claim for benefits.... Given how out of step Jones is with longstanding practice, it is likely that Aetna will seek en banc review, or even file a petition of certiorari with the Supreme Court. Nevertheless, while this case continues to work its way through the courts, it is likely that plaintiffs will rely on Jones in justifying pairing routine claims for benefits with claims for equitable relief." [Jones v. Aetna Life Ins. Co., No. 16-1714 (8th Cir. May 8, 2017)] (Seyfarth Shaw LLP)
Preparing DC Investment Menus for the Next Evolution
20 pages. "[T]he next evolution of investment menus needs to be driven through four steps: [1] Consider supplementing low cost, broad index positions with additional sources of diversification and return with white label, factor and rules-based smart beta strategies; [2] Expand the fixed income opportunity set to target the potential for stronger returns and income; [3] Reexamine the target date fund as part of the full menu review; [4] Unlock and realign legacy default assets through reenrollment." (BlackRock, via Pensions & Investments)
Viability of Stock Drop Claims Based on Public Information
"In these cases (and at this point), we have the same question being decided differently by different courts. We have some idea of what the issue is -- is 'impending bankruptcy' a viable basis for a stock drop claim post-Fifth Third? ... One might think that the more cautious approach would be to continue to apply the 'impending bankruptcy' rule, selling company stock when a company's financial condition reaches some critical state. But judging when that critical state has been reached is no easy matter." (October Three Consulting)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 46
"How does an adviser know how to satisfy the Best Interest standard? ... [B]roker-dealers and others should look to training and education materials based on ERISA's provisions, DOL regulations and guidance, and ERISA litigation. Those materials should cover the broad concepts and principles, but should also provide detailed education about the information to be reviewed and the processes to be followed, on a step-by-step basis." (
DOL Chief Looks to Deep Freeze Fiduciary Rule
"Labor Secretary Alexander Acosta wants to freeze the fiduciary rule in a way that will 'stick' ... Acosta told Sen. Tim Scott, R-S.C., that the rule is his No. 1 priority and that he recognized the urgency of the situation, according to an email from Scott's aide. Acosta has not spoken publicly about the rule since his confirmation hearing in March." (
The Evolution of Managed Accounts
"As managed account assets climb, these solutions are seeing major shifts in product development, and they can be especially efficient for certain participant demographics." (PLANSPONSOR)
DOL's Fiduciary Rule Countdown
"Advisers and financial institutions need to answer any lingering questions about whether their services include providing investment 'recommendations' for direct or indirect compensation.... Advisers and financial institutions who will be providing services as fiduciaries must implement programs to ensure that they: Offer advice that is in the investor's best interest (i.e., prudent based on the investment objectives, risk tolerance, financial circumstances, and needs of the investor); Charge no more than reasonable compensation; and Make no misleading statements." (Spencer Fane)
The June 9 Fiduciary Deadline and Key Issues for Broker-Dealers
"[B]roker-dealers need to develop internal policies, procedures, training and supervision as quickly as possible in order to be in compliance by June 9. The areas of focus should be: [1] Fiduciary education for home office management, supervisory, and sales and marketing personnel.... [2] Fiduciary training for advisors.... [3] Reasonable compensation for broker-dealers and for advisors.... [4] Selection of investments." (Fred Reish, for fi360)
Fourth Circuit's 'Would Have' Standard Exonerates Fiduciaries' Decision to Divest Company Stock After Corporate Spin-Off
"Elaborating somewhat on how the 'would have' standard should be applied, the Fourth Circuit stated that the fiduciaries' burden was to show 'by a preponderance of the evidence that a prudent fiduciary would have acted' as they did.... Plan fiduciaries hoping that the Fourth Circuit would further define how to gauge whether a prudent fiduciary 'would have' taken a particular action or the relationship between establishing a breach and loss causation will be left unsatisfied." [Tatum v. RJR Pension Inv. Comm., No. 16-1293 (4th Cir. Apr. 28, 2017)] (Miller & Chevalier)
401(k) Fiduciaries: Is it Time to Hone Your Processes? (Part Two)
"Advisors can help [plan fiduciaries] [1] Establish and run processes that demonstrate they have leveraged the lowest cost fees based on their plan size and servicing needs.... [2] Be market aware and have a basic understanding of industry fees and practices. [3] Articulate why one investment was chosen over the other. [4] Dig down deeper in understanding whether actual fund plan investments align with investment objectives." (Fiduciary Plan Governance, LLC)
NAFA Launches Campaign to Stop DOL Fiduciary Rule
"The National Association for Fixed Annuities has launched a grassroots campaign to appeal directly to the Trump administration as well as to Labor Secretary R. Alexander Acosta to stop the [DOL's] fiduciary rule from taking effect on June 9." (ThinkAdvisor)
Outsourced Chief Investment Officers: Challenging Five Common Myths
"For plans that do not have in-house investment capabilities, the outsourced chief investment officer (OCIO) model is a means of filling the gap between the resources required to run efficient investment strategies and the typically constrained governance budget of a pension plan. The OCIO (also known as a fiduciary manager) implements an investment strategy within boundaries set by the investment committee, allowing high-level decision makers more time to focus on key strategic issues and long-term plan goals. The concept is fairly simple, but the implementation can be less easy to visualize." (Willis Towers Watson)
Second Circuit Upholds Dismissal of ERISA Claims Against Plan Defendants for Alleged 'Cross-Subsidization' Scheme
"[P]laintiffs alleged that Family Dollar negotiated a discount on the basic life insurance premium it paid, and that the Hartford offset some of this discount by increasing the supplemental life insurance premium charged to the employees who purchased supplemental coverage.... The Court determined that Family Dollar used plaintiffs' premiums for the sole purpose of covering insurance costs under the Plan, and that its use of cost-reduction strategies to minimize its cost of providing employees with basic and supplemental life insurance did not constitute a transfer for its own benefit or self-dealing in its own interest." [Hannan v. Hartford Financial Services, Inc., No. 16-1316 (2d Cir. Apr. 25, 2017)] (Robinson & Cole LLP)
CHOICE Act Targets Fiduciary Rule, Dodd-Frank Rollback
"Passage of the CHOICE Act by the House Financial Services Committee could signal a further blow to conflict of interest regulations adopted by the Obama administration.... The legislation is sweeping and would undo or replace much of the Dodd-Frank Wall Street reforms adopted by Democrats when they held significant majorities in the wake of the 2008-09 financial crisis." (planadviser)
3M's $19.7B Pension Plan Under DOL Investigation
"3M Co. announced that its $19.7 billion pension plan is under investigation by the Labor Department. The investigation, which began in April 2015, is related to certain private equity investments, plan expenses, securities lending and distributions of plan benefits ... 3M's pension plan is fully funded, and it currently doesn't have a minimum required contribution. In the past three months, 3M contributed $247 million to its U.S. and international plans and expects to contribute approximately $300 million to $500 million more in 2017[.]" (Bloomberg BNA)
[Opinion] This Little-Known Legal Risk Could Force Big Changes to Our Dysfunctional Health-Care System
"Increased outside scrutiny on how ERISA-regulated health plans spend their dollars could create immense potential liability for both company directors and health insurers across the country.... These legal threats could force employers to actively manage health spending the same way they manage other large operational expenses.... [A]pproaches ... focus on proven benefits-design solutions that make poor care decisions more costly and better care decisions less costly to encourage the right behavior. Most importantly, they don't focus on shifting costs to employees." (MarketWatch)
Senate Halts Rule on State-Run IRAs
"The blocked rule allowed states and their subdivisions to design and operate retirement savings programs that would be exempt from certain [ERISA] provisions -- granting them a safe harbor from ERISA reporting and disclosure requirements that employers, as retirement plan fiduciaries, must abide by." (Society for Human Resource Management [SHRM])
House Financial Services Committee Approves Bill to Replace Dodd-Frank, Repeal DOL Fiduciary Rule
"The Financial CHOICE Act ... makes substantial changes at many financial regulators, including the [SEC] ... The bill would also repeal the [DOL's] new fiduciary rule until 60 days after the SEC issues its own standard, which is not underway ... The DOL fiduciary rule would have to be 'substantially similar' to the SEC's rule." (Pensions & Investments)
Fiduciaries -- Look to the Law of Trusts as Your Guide
"The legislative history of ERISA explains that the law governing qualified retirement plans is tied closely to trust investment law.... Because the trust law standard underlies ERISA, the assets held in the account of participants in, say, a 401(k) plan aren't the participants' in a legal sense; rather, they actually belong to the trust. The assets are held in trust and managed by the plan trustee (whose conduct is governed by the laws of ERISA fiduciary responsibility) on behalf of the participants (and their beneficiaries) who are beneficiaries of the trust." (Morningstar Advisor)
Fiduciary Rule Delay Provides Excellent Opportunity to Negotiate Stronger Indemnities
"This delay, and the confusion swirling around if and when the DOL fiduciary rule will become applicable, is giving plan sponsors a window of time to renegotiate their contractual arrangements with their 401(k) service providers relating to investment advice. This renegotiation should include a review, and a strengthening, of the service provider's indemnification for its fiduciary investment advice." (Orrick)
Are Your Target Date Funds Making You a Target?
"[A]ll too many TDFs are selected by fiduciaries simply because it is convenient, or there is some incentive, to offer their provider's funds. This makes them an easy target for class action lawyers.... These funds may be a ticking time bomb for plan fiduciaries who haven't prudently investigated and compared their plan's TDFs to other options available in the market. There are lots of differences between TDFs.... Here is a short checklist for company fiduciaries[.]" (Cohen & Buckmann, P.C.)
[Opinion] Letter from U.S. Representatives to DOL Secretary Acosta Urging Further Delay of Fiduciary Rule
"The delay that appeared in the Federal Register on April 7, 2017, contravenes the presidential memorandum which directed a new economic analysis of the Rule and the impact it is having on the marketplace. Rather than facilitating an orderly review period, the preamble illogically concludes that the record supports applying major aspects of the Rule before the President's review and updated economic analysis are complete. This is nonsensical. Again, we strongly urge you to delay this rule in its entirety." (124 Members of U.S. House of Representatives, via American Benefits Council)
Starwood Hotels Can't Escape ERISA Lawsuit Over 401(k) Fees
"The participants have sufficiently alleged that Starwood used a flawed process for selecting record-keeping and administrative services for its employees' retirement plan ... The hotel chain, however, successfully argued that the participants were time-barred from pursuing their claim that the hotel breached its duties by failing to exclude from the plan a BlackRock Inc. mutual fund that carried [allegedly] excessive fees." [Creamer v. Starwood Hotels & Resorts Worldwide, Inc., No. 16-9321 (C.D. Cal. May 1, 2017)] (Bloomberg BNA)
[Opinion] DOL Fiduciary Rule: Good for Business But Opposed by the U.S. Chamber of Commerce
"You don't need to dig too deep into the rule to understand it's not just a pro-investor reform -- it's also pro-business. How so? By making it easier for 401(k) plan sponsors to meet their fiduciary responsibilities and lower their plan expenses.... [T]he COC is representing the interests of the financial services industry by opposing the Fiduciary Rule ... they should be supporting the rule to better represent their much bigger constituency of 401(k) plan sponsors." (Employee Fiduciary)
Five Things People Get Wrong About ERISA Fidelity Bonds
"An ERISA fidelity bond is not the same thing as fiduciary liability insurance.... You can't get an ERISA bond from just anybody.... Not every fiduciary needs to be bonded.... The plan can pay for the bond out of plan assets.... You can purchase a fidelity bond for more than the legally required amount." (National Association of Plan Advisors [NAPA])
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 45
"Financial Institutions (such as broker-dealers and IRA firms) should, between now and June 9, focus on the fiduciary processes that will be implemented by the home offices ... In a sense, the Financial Institutions will be co-fiduciaries with the advisers and, therefore, share responsibility for the recommendations that are made to the qualified accounts. As a result, Financial Institutions need to have protective policies, procedures and practices in place." (
Why the Fiduciary Rule Applies to IRAs but Not Non-ERISA 403(b)s
"IRAs are subject to the Tax Code; and Section 4975 of the Internal Revenue Code address prohibited transactions between IRAs an 'disqualified persons' including fiduciaries. The section then goes on to define to define a fiduciary to include any person designated as a fiduciary under ERISA. It is this basis that the DOL is using to affirm that its definition of what constitutes a fiduciary applies to Section 4975 of the Code as well." (PLANSPONSOR)
Despite Fiduciary Rule's Delay, DOL's Measure Has Spurred Changes
"More than six years have passed since the [DOL] first rolled out its fiduciary rule for the retirement industry ... [T]he mere threat of the federal rule going live -- along with a decade of class action litigation -- already has wrought changes to an industry more in the public view than ever before.... [S]ome observers predict many companies will adopt stricter standards for a simpler reason: good business." (Victoria Finkle, in The National Law Journal; free registration required)
Federal Appeals Court Sides with Reynolds on Retirement Plan Dispute
"The ruling from the Fourth [Circuit] Court of Appeals is the latest in a legal case that has lasted 15 years.... Robert Elliot, a Winston-Salem attorney representing Tatum, said in July 2015 that 'the plaintiffs have proven damages in excess of $50 million, which would be increased due to the passage of time since trial.' In February 2016, U.S. District Judge Carlton Tilley ruled for the second time that the committee acted prudently in eliminating the Nabisco funds from its 401(k) plan. Tatum filed an appeal in March 2016 -- his third attempt with the appeals court." [Tatum v. RJR Pension Inv. Comm., No. 16-1293 (4th Cir. Apr. 28, 2017)] (Winston-Salem Journal)

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