Search the News Archive

Post-Termination of Employment Payments: Which Amounts Are Considered 401(k) Plan Compensation?

"In general, pure severance pay ('Severance Pay') is not considered Plan Compensation, but post-severance payments related to compensation earned and accrued during employment ('Post-Severance Pay') are Plan Compensation.... Some plan documents exclude all post-termination payments, including Post-Severance Pay from compensation, so it's always important to review the plan's definition of Plan Compensation [.]"

Be Careful with Amendments to Your Nonqualified Plans

"An important takeaway for an employer-sponsor of a top hat plan is that the plan's language pertaining to plan amendments, or termination of the plan itself, needs to be carefully drafted to preserve the employer's discretion, otherwise the employer could be contractually limited in its rights to take future actions." [Hoak v. Ledford, No. 24-12148 (11th Cir. Aug. 26, 2025)]

SBCs as Easy as ABCs?

"It's that time of year when employers are finalizing their open enrollment materials. Along with benefit changes and annual disclosures, employers should also review their Summary of Benefits and Coverage (SBC) and understand when it needs to be distributed."

A Plan Document a Day Keeps the Physician Lawsuits Away

"The U.S. Court of Appeals for the Fifth Circuit ... made the following points: [1] When assignment forms are broadly drafted, they may be ambiguous as to who the assignee is, but that does not invalidate the assignments. [2] There is not a requirement that an assignment form include a standalone 'right to sue' provision when the form assigns 'all rights' or 'all insurance benefits.' [3] An ERISA plan administrator may be prevented from enforcing plan provisions ... against a claimant if the administrator refuses to provide the document containing those provisions to the claimant." [Angelina Emergency Med. Assoc. v. Blue Cross and Blue Shield of Ala., No. 24-10306 (5th Cir. Aug. 8, 2025)]

Compliance Reminder for Executive Top Hat Plans

"A recent Sixth Circuit Court of Appeals case reminds us that these plans must satisfy unique compliance requirements to continue to remain exempt from such ERISA provisions. This case determined that plan participants did not have a state law fiduciary duty claim because ERISA preempts state laws, provided that the top hat plan complies with certain requirements[.]" [Aldridge v. Regions Bank, No. 24-5603 (6th Cir. Jul. 17, 2025)]

July 29th Is Deadline for Distribution of SMM for Calendar Year Plans

"In considering whether to distribute the SMM versus an updated SPD, plan administrators should consider the number of modifications that need to be described and whether the use of the SMM alone would sufficiently apprise covered persons of their benefits, rights, and obligations under the plan."

Puerto Rico Supreme Court Rejects Administrative Agency Deference Standard

"The PR Supreme Court determined that, even if a statute's language may be ambiguous, the final interpretation of such statute is ultimately under the courts' purview and not administrative agencies. Similar to U.S. law, Puerto Rico courts are no longer required to provide deference to administrative agencies." [Vázquez v. Consejo de Titulares y Junta de Directores del Condominio Los Corales, 2025 TSPR 56 (May 21, 2025)]

District Court Finds Employer's Incomplete Email Response Creates Liability for Entire Life Insurance Benefit

"The court found that the former employee was asking about his benefits as a whole and the company had a fiduciary duty to respond to his inquiry with complete and accurate information regarding all benefits, including the information that his life insurance policy would need to be converted or else it would lapse, given that he was still within the eligibility window for conversion." [Watson v. EMC Corp., No. 19-2667 (D. Colo. May 7, 2025)]

'Help! I Need Somebody to Tell Me What to Do with This 401(k) Plan!'

"In stock acquisitions and mergers, it is not uncommon for both the target company and the buyer to sponsor 401(k) plans, which requires the buyer to decide prior to closing whether to terminate the target's plan, continue it, or merge it into the buyer's plan.... [T]he options of what to do with a target's 401(k) plan are much more limited after the transaction closes[.]"

SEC Adds 10b5-1 Guidance for 401(k) Plans with Company Stock Investment Options

"The SEC's Division of Corporation Finance recently added a new Exchange Act Compliance and Disclosure Interpretation (CDI) clarifying that when a participant in a Section 401(k) plan who is subject to the insider trading rules sells company stock through a self-directed brokerage window, the sale must satisfy all conditions of Rule 10b5-1(c)(1), including those applicable to purchases and sales of the issuer's securities on the open market."