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A Friendly DOL Amicus Brief on Forfeitures

"The brief stated '… the Secretary's view that a fiduciary's use of forfeited employer contributions in the manner alleged in this case, without more, would not violate ERISA.' This is a powerful statement. This statement reinforces what plan sponsors and fiduciaries have understood and is very helpful. That said, the phrase 'without more' is also important because it notes that there may be situations where forfeitures should be used differently than offsetting employer contributions." [Hutchins v. HP Inc., No. 23-5875 (N.D. Calif. Feb. 5, 2025; on appeal to 9th Cir. No. 25-826)]

What Is an Improper Use of Forfeiture Case Worth? Intuit Settlement Provides Perspective

"From a plaintiff's perspective, each of the impacted participants will receive a minimum of $10 (and possibly more), and the plaintiff's attorneys will receive up to $665,000 for their efforts. These amounts are the reward after proposing a new legal theory on forfeitures, successfully defending that theory in a motion to dismiss, undertaking discovery, and three months of negotiation. While this result can be viewed as a success, it is a modest one." [Rodriguez v. Intuit, No. 23-5053 (N.D. Calif. motion for settlement filed May 16, 2025)]

409A Compliance for Deferred Compensation Plans Is a Year-Round Endeavor

"In January, ensure new salary deferral elections for the current year are implemented timely and correctly. In March and April, companies with annual incentive payments based on the calendar year should ensure that annual bonus deferral elections are properly applied and new bonus deferral elections are implemented.... In January, identify any payments that are required to be made in the current year based on a distribution event in a prior year ... Corrections of 409A failures are allowed up to the end of the second year after the year of the failure."

Plan Administrator's Work Doesn't End When the Check Is in the Mail

"Allowing distributions by wire could reduce the risk of mail fraud, although it has risks of its own.... [H]ave appropriate policies and procedures in place to track and monitor the status of paper checks that have been issued, including with respect to checks that remain uncashed.... [C]onsider sending large checks via certified mail, return receipt requested (or similar manner by private delivery) to evidence actual delivery."

Give Your Severance Plan a Spring Cleaning

"Done correctly, severance plans reduce employer exposure to employment law issues and help employees with a soft landing. Done incorrectly, what was intended to be a tool to ease tensions can result in heightened anxiety, mistrust, and litigation.... [1] ERISA plan vs. non-ERISA payroll practice ... [2] Who is covered ... [3] What situations are covered ... [4] Retain flexibility ... [5] Follow plan terms ... [6] Communicate with participants."

What Bed Bath and Beyond's Settlement Means for Retirement Plan Sponsors

"It is critical for fiduciaries to be aware of the liquidity restrictions in their plan's stable value fund and proactively develop a strategy to protect the interests of plan participants and beneficiaries. Some actions fiduciaries can take include: [1] Understand the liquidity restrictions in the stable value fund, and their potential impact ... [2] Consider the timing of future actions such as fund changes, recordkeeper RFPs, plan mergers, and plan terminations." [Harvey v Bed Bath & Beyond Inc 401(k) Savings Plan Committee, No. 23-20376 (D.N.J. motion for settlement filed Feb. 14, 2025)]

EBSA Guidance on Annual Funding Notices: Better Later Than Never

"EBSA updated the formatting of the notice to move contact information up front and uses bullet points so that the notice is easier to read. It is still really long, though. [FAB 2025-02] addresses that reasonable estimates can be used for the participant counts in the notice year (Q&A 8), clarifies how to calculate the average rate of return on plan assets (Q&A 9), and clarifies that the standard for disclosing material events has not changed (Q&A 11)."

J&J Lawsuit Shines Spotlight on Welfare Plan Fiduciary Duties

"[P]lan sponsors should take a proactive and critical look at their welfare plan governance and administration to ensure that fiduciary duties are being satisfied ... [1] Establish and maintain a health and welfare plan committee.... [2] Review and update committee documents and committee composition.... [3] Conduct regular fiduciary training ... [4] Monitor service providers; review and pay reasonable fees.... [5] Follow plan documents.... [6] Fiduciary liability insurance.... [7] Consider cybersecurity obligations.... [8] Highlight your wins."

Supreme Court Overturns Cutbacks in Medicare Prescription Drug Reimbursements

"Most in the healthcare industry are viewing the Court's Opinion as a victory for 340B hospitals and clinics who saw roughly $1.6 billion in annual cuts to reimbursement rates for prescription drugs after the 2018 rule went into effect. Notably, the Court recognized that 340B hospitals can make profits on the differential between their acquisition cost and the reimbursement rate for Medicare. Though the Court declined to dictate remedies, 340B hospitals may be able to recoup some of the payments that were withheld under the rule." [American Hospital Association v. Becerra, No. 20-1114 (S. Ct. Jun. 15, 2022)]

DOL Signals Doubt About Prudence of Cryptocurrency-Based Investment Options

"There remains a problem of interpretation: what is a 'cryptocurrency option'? The Release provides two clues indicating that DOL will define it broadly and view the presence of any cryptocurrency as too much cryptocurrency.... Given both the tone of the Release and the expansive language used by DOL, caution suggests plan sponsors should avoid any cryptocurrency making its way into their investment menus -- in any form and at any level."