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Welcome to the Snell & Wilmer Benefits Blog. We will be posting about current employee benefits and executive compensation topics and issues. We invite you to contact the authors with your thoughts or questions.Blog Contributors
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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Obama administration’s DOL proposed a fiduciary regulation that was met with so much criticism that it was subsequently withdrawn in 2011.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 ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged DOL, ERISA, fiduciary duty, financial institutions, iras, plan investments
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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 ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged diversify, fiduciary duty, overfunding, pension plan, standing, Supreme Court, thole, us bank
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Dealing with Long-Winded Out-of-Network Provider Nuisance Letters
Over the past couple years, more and more of my clients with self-funded plans have received letters from out-of-network providers appealing denied claims. The letters are usually 20 to 30 pages long, not very specific, and make various accusations against the plan and its fiduciaries.
Most of the letters follow a standard approach. They start by alleging breaches of fiduciary duty, they request all sorts of plan documents, and they request additional appeals to which the participant may or may not be entitled. The biggest problem is that these letters are never very specific in exactly what they want. Instead, they make vague accusations, and hope some or all will stick. Read More ›
Posted in Employee Benefits, Health & Welfare Plans
| Tagged anti-assignment, due diligence, ERISA, fiduciary, fiduciary duty, out of network, out of network provider, provider
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Supreme Court Confirms that Plan Fiduciaries have a “Continuing Duty of Some Kind” to Monitor Investments
In Tibble v. Edison International, Justice Breyer held, for a unanimous Supreme Court, that “a fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones.” In so ruling, the Court reversed a decision from the Ninth Circuit, which held, in essence, that plan fiduciaries could not be held responsible for imprudent investment decisions made more than six years prior to the filing of the complaint.
In Tibble, the fiduciaries of the Edison 401(k) Savings Plan added three mutual funds to the plan’s investment lineup in 1999. The fiduciaries added an additional three investment funds to the fund lineup in 2002. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 401(k) plan, duty to monitor, fiduciary duty, plan investments, Supreme Court, Tibble v. Edison International
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401(k) Plan Fiduciaries – Have you thought about your continued offering of the PIMCO Total Return Fund?
The abrupt departure of Bill Gross from PIMCO leaves many investors pondering their next move. Should an investor stay the course and see how PIMCO’s new investment team performs? Should an investor leave and follow Mr. Gross to Janus Funds? Should an investor rush to find a new bond fund manager?
These questions are particularly important for fiduciaries of 401(k) and other qualified retirement programs that offer PIMCO Total Return Fund as an investment option. Mr. Gross was the lead manager of the Total Return Fund, which reportedly is the second largest bond fund in existence and is a very common and popular choice for 401(k) and other defined contribution retirement plans. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 401k) plans, Bill Gross, fiduciary, fiduciary duty, fiduciary standards, PIMCO, prudent person standard, qualified retirement plans
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Supreme Court Decision Changes Standards for Employer Stock in Retirement Plans
The Supreme Court recently decided a case that eliminates the “presumption of prudence” for plan fiduciaries relating to their investment in employer stock in retirement plans. In Fifth Third Bancorp v. Dudenhoeffer, the Supreme Court determined that fiduciaries of an employee stock ownership plan (“ESOP”) are not entitled to a presumption of prudence. Rather, the ESOP fiduciaries must comply with same standard of prudence that applies to all ERISA fiduciaries, except that an ESOP fiduciary is under no duty to diversify the ESOP’s investments.
In its decision, the Supreme Court provided a roadmap for the lower courts in applying the pleading standard. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged Dudenhoeffer, employee stock ownership plan, employer stock, ESOP, fiduciary duty, presumption of prudence, Supreme Court
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