In past articles in this Blog I reported on decisions of the 9th Circuit Court of Appeals and ultimately the U.S. Supreme Court dealing with a class action for breach of fiduciary duty for selecting retail mutual funds in 1999 for which lower costs institutional funds were available. https://benefitsnotes.com/2013/04/ninth-circuit-decides-selection-of-retail-mutual-funds-was-a-breach-of-fiduciary-duty/ ; https://benefitsnotes.com/2015/05/supreme-court-401k-plan-fiduciaries-have-an-ongoing-duty-to-monitor-2/ The case stalled
Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE
Fiduciary Guidance
No Additional Delay on Effective Date of New Fiduciary Standards – DOL
By Jeffrey Cairns on
This week, new U.S. Department of Labor Secretary Acosta announced that the final fiduciary regulations would go into effect on June 9, 2017. The Department also issued two pieces of guidance with regard to the regulations also referred to as the “Conflicted Advice Rules”. The guidance consists of a set of FAQs issued by the…
Embezzlement of 401(k) Deferrals by COO of Architecture Firm is (Doubly) Costly
By Jeffrey Cairns on
On March 22, 2017, the U.S. Court of Appeals for the Second Circuit ruled against Christine Bodouva that her restoration of funds to her Company’s 401(k) Plan should be offset against the District Court’s order for forfeiture in her criminal trial. U.S. v Christine Bodouva, Case 16-3937, 2nd Cir. 3/22/17.
BACKGROUND
Ms. Bodouva…
Bill Introduced To Delay Effective Date of DOL Fiduciary Rule
By Todd Martin on
On January 6, 2017 Rep. Joe Wilson introduced a house bill that would delay for two years the effective date of the DOL Fiduciary Rule set to take effect on April 1, 2017. http://src.bna.com/ldB. This legislation follows comments from a number of Republican lawmakers critical of the DOL Rule, including members of the incoming…
Owner/Trustee of 401(k) Plan Accused of Having Eyes Wide Shut on Fiduciary Duties
By Jeffrey Cairns on
Last June I blogged about the trend of participant fee class actions moving down to smaller 401(k) Plans. https://benefitsnotes.com/2016/06/inside-trustees-for-small-minnesota-401k-plan-face-class-action-over-excessive-fees/ Occasionally, class actions are brought based on other breaches of fiduciary duties, particularly those involving significant drops in value of concentrated Plan investments such as employer stock referred to as “Stock Drop Cases”. A similar class…
IRS and Treasury Department Seek Input on How Plan Sponsors Can Avoid Plan Document Problems
By Stinson LLP on
On September 16, 2016, the IRS and the Department of the Treasury requested public comment on ways the IRS and Treasury “can improve compliance…by making it easier for plan sponsors to satisfy requirements for qualified plan documents” in the wake of the determination letter program changes (Announcement 2016-32). In June, the Internal Revenue…
Inside Trustees for Small Minnesota 401(k) Plan Face Class Action Over Excessive Fees
By Jeffrey Cairns on
A Minneapolis law firm recently filed a class action complaint against Lamettry’s Collision, Inc. and the Trustees of its 401(k) Plan, CFO Stephen Daniel and President Joan Lamettry for various breaches of fiduciary duty with respect to fees charged to Plan participants’ accounts in the Company’s 401(k) Plan. Specific allegations include: (a) failure to assess…
Federal Court Determines that Employer Use of Employee Health Insurance Premium Payments Breach of ERISA Fiduciary Duties
By Jeffrey Cairns on
On November 9, 2015, Minnesota Federal District Judge Susan Richard Nelson ruled that the president and CEO of Faribault Woolen Mills Company breached his fiduciary duties under ERISA by diverting Employee health insurance premiums toward corporate and personal use. The lawsuit was brought by the U.S. Department of Labor.
Facts:
Faribault Woolen Mills (the…
What Does the Trust Requirement of ERISA Mean?
By Stinson LLP on
ERISA requires that plan assets be held in trust so that they are protected from claims of the employer. With pension plans, it is generally easy to determine when assets become plan assets and when they should be held in trust. For welfare benefit plans, such as health plans, the situation is more complicated. Employers …
Can an LLC Adopt an ESOP? IRS Says Yes
By Jeffrey Cairns on
In a private letter ruling released on September 18, 2015 (PLR 201538021), the Internal Revenue Service concluded that an employer organized as a limited liability company (LLC) under a state statute, upon making a federal tax election to be taxed as a corporation, can adopt an employee stock ownership plan under Internal Revenue Code Section…