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Katten Muchin Rosenman LLP Comment Letter to IRS on Proposed Regs Regarding Calculation of UBTI for VEBAs (PDF)

"[U]nless Q&A-5 is revised, VEBAs which have been operating in a permissible manner will find that their investment income which was earned during the current year in which the regulation is promulgated, and perhaps even prior to the date that the regulation is enacted, will be subject to tax. I respectfully request that Q&A-5 be revised to provide that the effective date of the regulation be the first taxable year STARTING (not ENDING) on or after the date of publication of the final regulation[.]" [Editor's note: The author was the principal author of the 1980 proposed VEBA regulations.]

Half of All States Sue DOL Over ESG Rule, Foreshadowing Challenges to the SEC's ESG Agenda

"[T]wenty-five states, plus a publicly traded energy company with a subsidiary that is a fiduciary and trustee under ERISA, a trade association for the oil and gas industry, and a participant in an ERISA plan sued the [DOL] ... in connection with DOL's recent ESG rulemaking.... The suit ... alleges that the Rule conflicts with ERISA ... because it 'contravenes ERISA's clear command that fiduciaries act with the sole motive of promoting…financial interests' by permitting reference to ESG considerations." [Utah v. Walsh, No. 223-00016, (N.D. Tex. complaint filed Jan. 26, 2023)]

Second Circuit: ERISA Anti-Alienation Provision Does Not Protect 401(k) of Shkreli Co-Conspirator Lawyer

"A former Katten Muchin Rosenman LLP lawyer convicted of conspiring with Martin Shkreli to commit securities fraud can be forced to put part of his $921,000 retirement accounts toward his $10.4 million restitution order, the Second Circuit ruled ... In allowing portions of Greebel’s retirement accounts to be garnished, the Second Circuit acted in line with earlier decisions by the Fourth and Ninth circuits." [United States v. Greebel, No. 21-993 (2d Cir. Aug. 24, 2022)]

Recent Developments in Employee Benefits Law (PDF)

10 pages. "This article surveys recent developments in employee benefits law from Fall 2018 through Fall 2019. In particular, this survey reviews six decisions issued by United States Circuit Courts of Appeals during this time frame. Last year, the Circuit Courts provided important analysis regarding ... the 'actual knowledge' standard under Section 413(2), the pleading standard of employer 'stock drop' lawsuits, cross-plan offsetting of overpayments, fee investment litigation, and mandatory arbitration provisions. This article surveys key cases from the last year on these topics."

A Closer Look at the Fifth Circuit Decision Vacating the Fiduciary Rule

"It appears the Fifth Circuit's ruling will apply nationwide ... While the Tenth Circuit upheld the rule ... [it] did not address the initial threshold issue of whether the action to redefine the term 'investment advice fiduciary' was a proper exercise of the [DOL's] power. The plaintiffs in the Fifth Circuit ... did directly challenge the Department's statutory authority, and the Fifth Circuit determined that the action to redefine the term 'investment advice fiduciary' exceeded the [DOL's] power under ERISA."

Are Your Qualified and Nonqualified Employee Benefit Plans in Compliance with the New ERISA Disability Claims Regs?

"[W]here a plan does not provide for its own fiduciaries to make a determination of disability -- but instead defers to the determination made by the administrator of another plan (like the employer's long-term disability plan) -- then only the terms of the other plan need to be amended. Examples include health plans that extend eligibility, or deferred compensation plans that provide accelerated vesting, to claimants who are receiving benefits under the employer's long-term disability plan or Social Security Disability Insurance (SSDI)."

Robo-Advisers: More Complex Than They May Appear (PDF)

"What is a robo-adviser? ... How are robo-advisers regulated? ... What special challenges do robo-advisers confront in satisfying their disclosure obligations? ... Can robo-advisers satisfy their fiduciary duties to their clients? ... Are robo-advisers operating unregistered investment companies? ... Can robo-advisers satisfy their compliance responsibilities?"

DOL Proposes to Delay Fiduciary Advice Rule, Requests Comments on Delay and on Costs, Benefits of the Rule

"In the Proposal, the DOL itself recognized the disruptions that could arise if there were 'two major changes in the regulatory environment rather than one.' Therefore, interested persons may wish to urge the DOL [1] to continue to delay the Rule's effective date until the review required by the Presidential Memorandum is completed; and [2] that any extensions of the delay be announced as soon as practical."

IRS Continues to Expand, Encourage and Simplify Correction Program in 2015 Updates to EPCRS

"Under the 2015 updates, the IRS is continuing to provide incentive for plan sponsors to correct errors promptly, rather than wait for a governmental auditor to discover the error and require correction along with a hefty sanction."

Novel IRS Guidance on HRAs, VEBAs and Domestic Partner Benefits (PDF)

"[An IRS private letter ruling to be published later this year] addresses the technical tax and benefit issues that arise when a Health Reimbursement Arrangement (HRA) (funded through a Voluntary Employees' Beneficiary Association (VEBA)) provides coverage to a domestic partner who does not qualify as a dependent under the Internal Revenue Code.... [1] The federal and state income and employment taxes reportable to the employee as a result of the coverage may be paid from the participant's individual HRA account.... [2] The VEBA will not lose its qualified tax-exempt status [provided certain requirements are met] ... [3] The VEBA is considered the 'employer' and is thereby obligated to conduct the tax withholding and reporting ... [4] The fair market value of the coverage provided to a non-dependent domestic partner is includible in the employee- participant's gross income, and is considered wages for FICA, FUTA and income tax withholding purposes."