With a New Administration, Will the Department of Labor’s Fiduciary Rule Once Again be Revised?

The Department of Labor’s (the “DOL”) attempts to regulate the conduct of fiduciaries under ERISA and the Code has been mired in controversy.  In 2010, the Obama administration’s DOL proposed a fiduciary regulation that was met with so much criticism that it was subsequently withdrawn in 2011.  In 2015, the DOL re-proposed a fiduciary regulation that imposed a fiduciary standard on financial advisors giving clients advice about their retirement plan investments.  The DOL issued final regulations and the final rule was being implemented when it was struck down by a federal appeals court in June 2018.

In June 2020, the DOL proposed a new fiduciary rule which significantly revises the Obama administration fiduciary rule.  Read More ›

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Is Your Safe Harbor Section 401(k) Plan Required to Provide an Annual Notice?

Sponsors of safe harbor Section 401(k) plans should consider whether they are required to provide their annual safe harbor notice in 2020 for the upcoming 2021 plan year.  The Setting Every Community Up for Retirement (“SECURE”) Act, which was enacted on December 20, 2019, changed the annual notice requirements for some safe harbor Section 401(k) plans.

Prior to the SECURE Act, safe harbor Section 401(k) plans were required to meet certain annual notice requirements regardless of whether they relied on matching or nonelective contributions to satisfy the safe harbor requirement.  The Internal Revenue Code requires that this annual safe harbor notice be provided to participants within a reasonable period before the beginning of the plan year.  Read More ›

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Final DOL Rule Imposes Fiduciary Limitations on Social Investing

The DOL recently issued a final rule (“Rule”) providing guidance on the long-standing issue of whether ERISA fiduciaries are permitted to consider non-pecuniary factors while making investments (or selecting investment funds) that promote one or more environmental, social or corporate governance goals (so called “ESG Investments”).  The preamble to the Rule acknowledges that ERISA fiduciaries must act solely in the interest of plan participants/beneficiaries and that courts have consistently interpreted this interest to refer to pecuniary, rather than non-pecuniary benefits.

Prior DOL ESG Investment guidance also required ERISA fiduciaries to place financial returns over other non-financial goals and prohibited a fiduciary from subordinating the interests of participants/beneficiaries in their retirement income to “unrelated objectives.”  However, the DOL previously stated that, when comparing ESG and non-ESG investments, if the financial returns were comparable, it was not a breach of fiduciary duty to select the ESG Investment.  Read More ›

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Department of Labor Issues Final Electronic Disclosure Rule

On May 21, 2020, the Department of Labor (the “DOL”) announced a final rule establishing a new electronic disclosure safe harbor.  The new safe harbor permits retirement plan administrators to deliver certain plan documents by one of two methods: (1) a “Notice and Access” method; or (2) a direct email method.  The new safe harbor is unavailable to health and welfare plans.  The regulatory electronic delivery safe harbor established by the DOL in 2002 is not superseded by the new safe harbor and is still available as an option for plan sponsors.  A brief summary of the new safe harbor follows. Read More ›

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In Case You Missed It … Recent Posts From the SW Benefits Update

We periodically consolidate our prior blog posts and push them out as a single package to help individuals catch up on what they might have missed with respect to important health and welfare, qualified retirement plan, and executive compensation issues.  The posts highlighted here largely focus on the CARES Act and the impact the COVID-19 pandemic is having on employee benefit and executive compensation plans.  As always, please feel free to reach out to any member of our employee benefits and executive compensation group with questions.  Please enjoy (and have a safe) Memorial Day weekend!

  Read More ›

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IRS Continues to Extend Key Filing Deadlines in Response to COVID-19

On April 9. 2020, the Internal Revenue Service (the “IRS”) issued Notice 2020-23, which extends a number of key filing deadlines in the wake of the COVID-19 pandemic.  The guidance provides welcome relief to individuals and plan sponsors who must perform certain “time-sensitive actions” on or after April 1, 2020 and before July 15, 2020.  For Notice 2020-23 purposes, “time-sensitive actions” are described, in part, in Revenue Procedure 2018-58, and include key filings such as Forms 5500, 990, and Section 83(b) elections.  Because the relief is provided only for filings due during the period from April 1, 2020 to July 15, 2020, certain individuals and plan sponsors will remain subject to normal filing deadlines.  Read More ›

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Salary Deferrals in the Time of COVID-19

As the saying goes, “drastic times call for drastic measures” and, from an economic standpoint, these are drastic times. To fight the battle to stay in business many employers are considering a wide range of alternatives, including employee furloughs, layoffs and terminations. While some employers may also consider sweeping salary reductions, other employers may consider reducing current salaries with the promise to pay those salaries in the future. Employers taking this latter approach must understand that deferring salaries from 2020 to 2021 (or to some other future year) can create compliance issues under Section 409A of the Internal Revenue Code (“409A”). Read More ›

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U.S. Supreme Court to Decide Standing Question on ERISA Pension Lawsuits

The U.S. Supreme Court is mulling over whether retirement plan participants must demonstrate individual or imminent risk of financial loss before seeking a breach of fiduciary duty action under the Employee Retirement Income Security Act of 1974 (“ERISA”).  On January 13, 2020, the U.S. Supreme Court heard oral arguments in the matter of Thole v. U.S. Bank, N.A. (No. 17-1712), and the Court’s coming decision could have wide-reaching implications for participant standing in ERISA causes of action.

The plaintiffs in Thole, who are participants in a U.S. Bank defined benefit pension plan (the “Plan”), allege that the defendants breached their fiduciary duties by mismanaging and failing to diversify the Plan’s assets.  Read More ›

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Congress Giveth and They Taketh Away — Recent Health Plan Changes

In enacting the Further Consolidated Appropriations Act, 2020, (the “Act”), Congress, among other changes, enacted the following key changes affecting employer group health plans:

  • Repeal of the Cadillac Tax:  Most notably, and a huge relief to most employers, Congress repealed the Cadillac tax.   The Affordable Care Act (“ACA”) added a requirement requiring employers to pay a 40% excise tax on the value of “rich” health plans (i.e., those that exceed $10,200 for an individual and $27,500 for a family, indexed for inflation).  The excise tax was originally scheduled to take effect for taxable years beginning after 2017, but it was delayed two years by subsequent legislation.
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New Year, New Age: the SECURE Act Increases the Required Minimum Distribution Age to 72

On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act, 2020, a spending bill that includes the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”).  The SECURE Act initially passed the House in May, as discussed in our S&W Benefits Blog “The SECURE Act – A Primer on the top Six SECURE Act Changes that could be coming to Retirement Plans Next Year”, but fizzled out in the Senate.  The SECURE Act was later added to the Further Consolidated Appropriations Act, 2020, which passed Congress and was sent to the White House on December 19. Read More ›

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