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 SEC Staff Speaks Out on Standards for Rollover Recommendations, below.
Tag: ERISA Fiduciary
ERISA Moments Ep. 26: DOL’s Rules Are Stayed: What Remains in Their Place?
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, DOL’s Rules Are Stayed: What Remains in Their Place?, below.
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Eleventh Circuit Holds That Burden of Proof of Loss Causation is on Plaintiffs in ERISA Actions
In an August 2, 2024, decision in Pizarro v. The Home Depot, Inc., No. 22-13643 (11th Cir. Aug. 2, 2024), the Eleventh Circuit reaffirmed its position — and the position of the majority of federal circuit courts to address the issue — on the burden of proving loss causation for purposes of an ERISA claim for fiduciary breach. Loss causation is an element of a plaintiff’s claim for damages because of a breach of fiduciary duty, and the plaintiff bears the burden of proving causation of loss.
Pizarro involves claims by a putative class of Home Depot employees (Plaintiffs) who participated in Home Depot’s 401(k) plan. Plaintiffs alleged that the plan had excessive fees and imprudent investment options, but the United States District Court for the Northern District of Georgia granted summary judgment in Home Depot’s favor because Plaintiffs could not prove that they suffered any losses caused by a fiduciary’s alleged breach. To make such a showing, Plaintiffs would have to prove that a hypothetical “prudent” fiduciary would have not made the same choices that the defendants made. The District Court held that Home Depot’s investment decisions were “objectively prudent,” whether or not those decisions resulted from the right process, and thus Plaintiffs could not prove damages.
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.
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.
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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.
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”
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.
Can ChatGPT be Your ERISA Counsel?
Is ChatGPT sufficiently reliable to provide advice on employee benefits matters? Not yet, but ChatGPT and generative Artificial Intelligence may likely be useful tools for employee benefits attorneys in the future.[1]
As it is late March, we asked ChatGPT 3.5 to solve a common issue: an individual made deferrals above the Internal Revenue Code § 402(g) limit (although typically these are referred to as “excess deferrals,” in the ChatGPT 3.5 reply it uses both “excess contribution” or “excess deferral” interchangeably. In the Faegre comments, we use the term “excess deferral.”). As background, the Internal Revenue Code limits the amount of employee deferrals that can be made within a participant’s taxable year (almost always the calendar year). In 2023, that limit was $22,500. An individual who participates in more than one 401(k)/403(b) plan is responsible for monitoring whether they exceed the limit with respect to all plans in which the individual participates.