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April 19, 2000

Which Governmental Employers Can Maintain 401(k) Plans? IRS Ruling Adopts Liberal Position
The ruling dealt with a situation in which two state departments had 401(k) plans that were grandfathered by the Tax Reform Act of 1986. It holds that the state can now adopt a 401(k) plan which covers not only all of state government, but also political subdivisions of the state. The ruling treats the state and its political subdivisions as being part of one "employer."

Labor Reporting and Disclosure Regulations, As Amended to Conform to New Form 5500s (PDF Version)
Excerpt: " ...intended to reduce the annual reporting burdens on employee benefit plans while ensuring that the Department has access to the information it needs to carry out its administrative and enforcement responsibilities under ERISA and that participants and beneficiaries have access to the information they need to protect their rights and benefits under ERISA." (U.S. Department of Labor)

Labor Reporting and Disclosure Regulations, As Amended to Conform to New Form 5500s (Text Version)

6th Cir: Health Plan's Subrogation Language Not Clear Enough to Avoid Common-Law "Make Whole" Rule
Excerpt: "... controlling case law in the Sixth Circuit had previously recognized a default 'make-whole' rule, which meant that a participant had to be made whole for an injury or accident (including attorneys' fees) before a plan could enforce its subrogation rights, although a plan could draft around this result by creating a clear contractual provision to the contrary." (EBIA Weekly)

10th Circuit: Employer Must Pay Lifetime Medical Benefits, Per Its Early Retirement Incentive Plan
Excerpt: "The plaintiffs' former employer sent letters to eligible employees stating that if the employees took early retirement, the employer would provide the employees and their eligible dependents with lifetime medical benefits ... The court first held that the letters created a new and separate ERISA welfare benefit plan." (EBIA Weekly)

Exhaustion of Administrative Remedies Not Required If Plan Doesn't Follow ERISA Claims Procedures
Excerpt: "The [Federal district] court [for the Southern District of NY] also commented that ERISA does not require the disclosure of the entire claim file; rather, a plan must disclose only those documents upon which a benefits denial is based." (EBIA Weekly)

Court Won't Dismiss Fiduciary Breach Claim Re Plan's Investment of Employer Match in Employer Stock
Excerpt: "Many 401(k) plan administrators that invest matching contributions in company stock give participants the right to redirect the match into other investments as a means of lessening the fiduciary risk." (EBIA Weekly)

SBC Communications Sued by Workers on Stock Sale
Excerpt: "California employees of SBC Communications, the nation's largest local telephone company, sued the company yesterday, accusing it of costing 45,000 employees and retirees $1.1 billion by selling shares of a lucrative investment that was in their company-controlled retirement accounts." (New York Times; free registration required)

Employees Sue SBC Over Stock in 401(k)
Excerpt: "A group of current and former employees of telephone giant SBC Communications Inc. sued the company yesterday, charging that SBC sold off top-performing stock they held in their 401(k) retirement accounts without permission and replaced it with SBC stock, which has not performed as well." (Washington Post)

The CEO makes WHAT? The Return of a Fair-Pay Debate
Excerpt: "It's proxy time for corporate America. That means companies must reveal the earnings of their top executives. Those numbers can be startling." (Christian Science Monitor)

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