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Chang, Ruthenberg and Long's Letter to IRS on Advanced Notice of Proposed Rulemaking Regarding the Definition of 'Governmental Plan'

"The advanced notice indicates that a plan would be treated as a governmental plan under Code section 414(d) if the only participants covered by the plan are employees of that governmental entity. However, the Service has requested comments on the treatment of a plan that covers nongovernmental employees. The Service should consider allowing a plan that covers a de minimis number of nongovernmental employees as being a governmental plan, regardless of whether the employees were previously employed by a governmental employer."

ESOPs In Changing Times: Stock Value Fluctuations Bring Operational Issues

"The always uncertain economy puts pressure on the dynamics of the ESOP appraisal process and company stock values. It is not simply an issue of the fair market value, per se, but how fluctuations in company stock values are handled. The valuation process raises fiduciary and management issues, including employee communications, benefits calculations, procedural prudence, and strategic planning."

ESOPs In Changing Times; C'est LaRue?

Excerpt: Even though the LaRue case involved a drop in the value of a 401(k) account, the impact of the case can be significant in any context where a plan participant believes that by fiduciary action or inaction, his or her individual benefits were negatively impacted. This means that a participant may directly and immediately bring suit for breach of fiduciary duty without moving through the benefit claim and appeal process. The presumption of correctness for fiduciary defendants and the requirement that plaintiffs prove that a benefit denial was 'arbitrary and capricious,' simply does not apply in a breach of fiduciary duty claim.

Want an ESOP But Have an LLC? Convert!

"[T]he downside for LLC owners considering an ESOP is that an ESOP must be invested primarily in 'employer securities' and LLC membership interests don't count. The solution is to convert the LLC into a corporation. It can be done, but it has to be done carefully ... This article is an overview of the five most important considerations for an LLC conversion to corporate status: [1] The 80% Continuity of Ownership Rule; [2] Timing; [3] Partnership versus corporate tax; [4] Mechanics of conversion; [5] Governance changes."

Deadline Finally Set for New 408(b)(2) Fee Disclosure Rule Compliance

[What To Do After The Deadline.] Be sure to: Go through the process again for each new arrangement, for any extension or renewal of an existing arrangement, and for any changes; If a disclosure failure is discovered, follow the steps in the prohibited transaction exemption that is part of the final regulations, to include notifying the DOL if appropriate, reporting the failure on Form 5500, and deciding whether to terminate the arrangement with the covered service provider.

Saving on Employee Benefit Costs While Gauging the Pitfalls Involved

Excerpt: If you are seriously questioning whether your company can afford to continue providing some or all of these types of benefits or must balance the scale, be mindful of the Do's and Don'ts of making benefits changes.

Rules of Conduct for the New World of Deferred Compensation

Excerpt: The end of 2008 was also the end of the good faith reliance period for bringing deferred compensation plans into operational and documentary compliance with Code section 409A. It also ended the transitional guidance that permitted certain changes to existing plans without violating section 409A. This means that options are limited for correcting noncompliance, as well as for amending existing arrangements or designing new arrangements. This article offers some suggestions for operating under the new regime.

Seeing the Forest for the Trees: A Bird's Eye View of Pension Investing

"[This article will] equip you for the perilous journey with some lessons and guidelines for surviving in the investment jungle. We'll talk about: [1] Those you're likely to run into along the way who may offer investment advice (or directions) for reaching your plan's investment goal. [2] The alternative modes of transportation available to you (i.e., investment vehicles). [3] Basic concepts, rules, and terminology used in portfolio management theory (i.e., the law of the jungle) that may help you to make some sense of the various claims of would-be advisors and the wide variety of investment choices."

Problems to Avoid in ESOP Distributions

"ESOP distributions can be the most complex and challenging area of ESOP design and administration.... The impact of ESOP distribution provisions on company profits must be balanced with the company's desire to provide meaningful benefits to plan participants.... Unfortunately, when the plan administrator exercises discretion to delay distributions or eliminate a single sum payment, it is usually because the company's profitability has declined.... The worst case scenario involves some plan participant special circumstances that may result in an allegation of discriminatory treatment."

Finally, a Little Bit of Sanity in ESOP Litigation: Harris V. GreatBanc Trust Company

"GreatBanc is a Central District of California case in which the DOL asked the court to void an indemnification agreement between an ESOP fiduciary and a 100% ESOP-owned company. The DOL based its request on the purported rationale of the [Johnson v. Couturier case in the 9th Circuit] that ERISA section 410(a) barred such an agreement. The court declined the DOL's request.... The GreatBanc decision returned to the traditional understanding of the DOL's plan asset regulations that distinguish corporate assets from plan assets -- a view that allows plan sponsors to indemnify ESOP fiduciaries."