Spotlight on Benefits

New DOL Fiduciary Rule Stayed: What Advisors and Insurance Agents Recommending Rollovers Should Do Now

The stay of the new DOL fiduciary rule will remain in effect until the lawsuits challenging the rule are decided and appeals are resolved. This litigation process is likely to take several years. In the meantime, the fiduciary status of advisors and agents will be measured under the current regulation’s five-part test. However, in some cases the application of that test could result, as this article explains, in apparent one-time recommendations being deemed to satisfy the five-part test. As a result, advisors, agents and their firms should carefully consider where fiduciary status for retirement accounts may apply and, in those cases, should consider complying with the conditions of an applicable prohibited transaction exemption.

To view the full alert, visit the Faegre Drinker website.

Final Regulations Issued on Required Minimum Distributions Under SECURE Act

The Internal Revenue Service (IRS) has issued final regulations for required minimum distributions (RMDs) from certain retirement plans, including tax-qualified plans, Internal Revenue Code (Code) section 403(b) plans, individual retirement accounts (IRAs) and Code section 457(b) eligible deferred compensation plans. The regulations implement changes put into law by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) and the SECURE 2.0 Act of 2022 (SECURE 2.0).

The final regulations apply for distribution calendar years beginning on or after January 1, 2025. However, as some of the RMD changes addressed in the final regulations already have taken effect in accordance with the effective dates set forth in the SECURE Act and SECURE 2.0, plan sponsors should review current plan operations for compliance.

Continue reading “Final Regulations Issued on Required Minimum Distributions Under SECURE Act”

IRS Proposed Regulations for Plan Forfeitures

Today, employees are more likely than ever to seek new employment opportunities and change jobs. These employees may leave a company before becoming fully vested in their qualified retirement plan benefits – which may result in forfeiture of their unvested benefits. What is a retirement plan sponsor supposed to do with the forfeited amount? More importantly, what is the plan sponsor allowed to do with these forfeited amounts? This is an important question, as the use of forfeitures can raise compliance questions under both ERISA and the Internal Revenue Code requirements for qualified retirement plans.

For defined contribution retirement plans, such as 401(k) plans, the IRS has typically allowed plan sponsors to apply forfeitures to offset administrative expenses or reduce employer contributions. In proposed regulations, issued in February 2023, the IRS reiterates this position, indicating that defined contribution plan forfeitures may be used to offset plan administrative expenses or reduce employer contributions, or may be reallocated to participants pursuant to a nondiscriminatory formula.

Continue reading “IRS Proposed Regulations for Plan Forfeitures”

ERISA Moments Ep. 25: The Fiduciary Rules and the Impact on Advisors and Insurance Agents

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. See the newest episode, The Fiduciary Rules and the Impact on Advisors and Insurance Agents, below.

Continue reading “ERISA Moments Ep. 25: The Fiduciary Rules and the Impact on Advisors and Insurance Agents”

ERISA Moments Ep. 24: The Final Fiduciary Regulation and Exemptions Explained

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. See the newest episode, The Final Fiduciary Regulation and Exemptions Explained, below.

Continue reading “ERISA Moments Ep. 24: The Final Fiduciary Regulation and Exemptions Explained”

ERISA Moments Ep. 23: ERISA Litigation Odds and Ends: ESG, Crypto and Forfeitures

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. See the newest episode, ERISA Litigation Odds and Ends: ESG, Crypto and Forfeitures, below.

Continue reading “ERISA Moments Ep. 23: ERISA Litigation Odds and Ends: ESG, Crypto and Forfeitures”

In Case You Missed It: Spotlight on Benefits – 2024 Winter

Written by members of Faegre Drinker’s benefits and executive compensation team, this blog features analysis and information on matters related to retirement plans, health and welfare plans, ESOPs, fiduciary governance, and other benefits issues.

This quarterly digest provides links to our most popular posts during the past few months so that you can catch up on what you missed or re-read them.

ERISA Moments, Ep. 13: Rollover Recommendations Will Be Fiduciary Advice … And What About Withdrawals?

By Bradford Campbell and Fred Reish
We’re looking at the DOL’s fiduciary proposal and the prohibited transaction exemptions associated with it. In this episode, Fred and Brad are talking about rollovers. The proposed definition of fiduciary advice basically says that a one-time investment recommendation can result in an adviser or insurance agent becoming a fiduciary.

Five Habits of the Healthy Health Plan Fiduciary

By Kendra L. Roberson
As it is often said, “the only constant in the world is constant change.” So it is important for health plan fiduciaries to periodically review the fundamentals for consistency and compliance to avoid risk and costly mistakes. We provide a health plan fiduciary checklist — with five actions that health plan fiduciaries can take to help keep an organization safe and successful.

Roth Employer Contributions

By Doug Heffernan and Mark Rosenfeld
On December 20, 2023, the IRS issued Notice 2024-2, which provides question-and-answer guidance on various aspects of the SECURE 2.0 Act. This post focuses on the ability to make employer contributions (match or nonelective) as Roth contributions under SECURE 2.0 Act, Section 604.

DOL Finalizes Changes to the Qualified Professional Asset Manager (QPAM) Exemption: What Investment Managers Need to Know

The changes will primarily impact registered investment advisers, banks, and insurance companies who manage retirement plan or IRA assets directly, or who manage certain types of funds or other vehicles for which the underlying assets are deemed to constitute “plan assets” under the look-through rules in ERISA and DOL regulations.

To view the full alert, visit the Faegre Drinker website.

Strict Construction: Seventh Circuit Affirms Written Pension Obligations

On March 22, 2024, the United States Court of Appeals for the Seventh Circuit issued a ruling in Bulk Transp. Corp. v. Teamsters Union No. 142 Pension Fund, ordering the Teamsters Union No. 142 Pension Fund (the “Fund”) to repay Bulk Transp. Corp. (“Bulk Transport”) $2.3 million in withdrawal liability it had erroneously assessed upon Bulk Transport.

Bulk Transport and the Fund had a collective bargaining agreement (“CBA”) from 2003 to 2006. The CBA included a Construction Agreement and a Steel Mill Addendum. In 2004, Bulk Transport signed a contract for LISCO work – a term used by the parties to describe work hauling commodities. The LISCO work was not explicitly covered by the CBA, but Bulk Transport made contributions for the work using the wage rated and pension terms of the Addendum because the Union threatened to strike otherwise. In 2005, Bulk Transport stopped performing the LISCO work and subsequently stopped making contributions to the Fund for the employees who were performing that type of work. The Fund assessed withdrawal liability on Bulk Transport. Bulk Transport paid the withdrawal liability but requested arbitration.

Continue reading “Strict Construction: Seventh Circuit Affirms Written Pension Obligations”

ERISA Moments Ep. 22: An Update on the DOL Fiduciary Proposals: A Race to the Finish

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. See the newest episode, An Update on the DOL Fiduciary Proposals: A Race to the Finish, below.

Continue reading “ERISA Moments Ep. 22: An Update on the DOL Fiduciary Proposals: A Race to the Finish”