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On April 3, 2024, the US Department of Labor (“DOL”) published the final amendment (“Amendment”) to Prohibited Transaction Class Exemption 84-14, otherwise known as the “QPAM Exemption” (“Exemption”).1 The Exemption is commonly relied on by “qualified professional asset managers” (“QPAMs” or “managers”) who meet certain requirements and manage US employee benefit and retirement account assets to avoid violations of the prohibited transaction rules under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the parallel provisions under the Internal Revenue Code of 1986, as amended.Continue Reading US Department of Labor Publishes Final Amendment to QPAM Exemption

As recently noted by the US Department of Labor (“DOL”), since the passage of the Employee Retirement Income Security Act of 1974 (“ERISA”), “the retirement plan landscape has changed significantly, with a shift from defined benefit plans (in which decisions regarding investment of plan assets are primarily made by professional asset managers) to defined contribution/individual account plans such as 401(k) plans (in which decisions regarding investment of plan assets are often made by plan participants themselves).”1

Or, in the drama-infused words of Senator Bernie Sanders, “traditional pension plans have become an endangered species, on their way to extinction.”2 Continue Reading Lifetime Income Products in CITs on the Rise

Since the early days of the COVID-19 pandemic, the country has been under both national emergency and public health emergency orders (the “Emergency Orders”).  Pursuant to these orders, the Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) issued guidance in May 2020 that postponed various deadlines that apply to benefit plans and made other COVID-related changes to health plans while the Emergency Orders are in force (the “Emergency Period”).  After three years, the end has finally come: on January 30, 2023, President Biden announced his intent to end the COVID-19 national emergency and public health emergency effective May 11, 2023, and on Monday, April 10, President Biden signed a congressional resolution immediately ending the national emergency. The ending of the national emergency marks the beginning of the end to several temporary changes to employee benefit plans.Continue Reading The End of the National Emergency Spells Big Changes for Employers

Phishing, entrapment, piggy bank stealing...

With more and more retirement plan services moving online, a recent case arising in  the U.S. District Court for the Southern District of New York, Giannini v. Transamerica Retirement Solutions, LLC (“Giannini”),[1] highlights the importance of cybersecurity and anti-fraud considerations for plan fiduciaries and service providers alike. 

In Giannini, the plaintiff was a retirement plan participant who filed suit in a proposed class action against Transamerica Retirement Solutions, a third party administrator/recordkeeper, after the company notified him of a data breach exposing the plaintiff’s personally identifiable information (“PII”). The plaintiff alleged that the breach occurred because unauthorized parties were able to access PII due to a Transamerica system configuration change, which left sensitive information such as social security numbers and retirement fund contribution amounts exposed. The plaintiff also alleged this data breach affected over 11,000 retirement plan beneficiaries and caused spam emails, spam calls, fraudulent credit card and bank account inquiries, and fraudulent purchases made in his name. Continue Reading A Cautionary Tale for Plan Fiduciaries and Service Providers: Cybertheft, Fraud, and Potential Liability

IRA, Roth, 401(k)

With just days to go before the new year, President Biden signed the Consolidated Appropriations Act, 2023, into law on December 29, 2022, which includes the SECURE 2.0 Act of 2022 (“SECURE 2.0”). SECURE 2.0 expands on and, in some cases, modifies changes to the laws governing retirement plans brought about by the Setting Every Community Up for Retirement Act of 2019 (the “2019 SECURE Act”). Key provisions of SECURE 2.0 that amend the Employee Retirement Income Security Act (“ERISA”) and Internal Revenue Code (the “Code”) include a mandatory automatic enrollment and escalation feature for new Section 401(k) and 403(b) plans starting in 2025, updated required beginning dates for taking required minimum distributions, an expansion of the Internal Revenue Service (“IRS”) Employee Plans Compliance Resolution System (“EPCRS”), and more “Rothification” of savings opportunities for retirement plan participants. Plan amendments under SECURE 2.0 are generally required by the last day of the first plan year beginning on or after January 1, 2025 for single-employer plans. SECURE 2.0 also directs the Department of Labor (“DOL”) and IRS to issue various new regulations in accordance with its provisions. This blog post summarizes some of the key features of SECURE 2.0.  Continue Reading SECURE 2.0 – Changes for Retirement Plans

As summarized in our prior post, on November 23, 2021, the Personnel Management Office, the Internal Revenue Service, the Employee Benefits Security Administration, and the Health and Human Services Department issued interim final rules setting forth directives for implementing a new prescription drug reporting mandate under the 2021 Consolidated Appropriations Act (Public Law 116-260). On June 29, 2022, updated submission instructions describing the reporting process were released. The first deadline to comply with the new rules was December 27, 2022. Under that guidance, it was still unclear whether the relevant departments intended to provide general relief for plans and issuers that made good-faith efforts to comply with the new law.

On December 23, 2022, the Departments of Labor, Health and Human Services, and the Treasury issued FAQs addressing this question directly.Continue Reading A Sigh of Relief: FAQs Confirm Relief for “Good Faith” Effort to Comply with New Prescription Drug Reporting Mandate

In response to the ever-increasing cost of prescription drugs, the 2021 Consolidated Appropriations Act (Public Law 116-260) introduced a new prescription drug reporting mandate intended to make prescription drug pricing more transparent and to assist the Departments of Labor, Treasury, and Health and Human Services with preparing a biannual, publicly available report on prescription drug pricing. The first of these extensive reports is due on December 27, 2022.Continue Reading The Time has Come for New Prescription Drug Reporting Mandate

On November 22, 2022, the U.S. Department of Labor (the “DOL”) published a regulation entitled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights” (the “Final Rule”). The Final Rule follows proposed rules regarding ESG investing and proxy voting by plan fiduciaries, issued on October 14, 2021 (the “Proposed Rule”) and amends prior regulations on the same topic issued by the DOL under President Trump in 2020 (the “2020 Rule”).

In the Final Rule, the DOL repeatedly emphasized that the regulation was primarily aimed at removing and remedying the chilling effect on ESG investing by plan fiduciaries created by the 2020 Rule. While the Final Rule takes a more permissive stance on the consideration of climate change and other ESG factors in investment decisions by plan fiduciaries than the 2020 Rule, the DOL cautioned that a plan fiduciary should not subordinate the interests of plan participants and beneficiaries to any collateral benefits (i.e., ESG objectives).

The Final Rule largely tracks the Proposed Rule, with a few notable exceptions summarized below.Continue Reading DOL Finalizes Rule Regarding ESG Investing and Proxy Voting by Plan Fiduciaries

On March 10, 2021 the U.S. Department of Labor (“DOL”) released a policy statement that it will not enforce or otherwise pursue enforcement actions against a fiduciary for failing to comply with the “Financial Factors in Selecting Plan Investments” regulation published on November 13, 2020 (the “ESG Rule”) and the “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights” regulation, published on December 16, 2020 (the “Proxy Voting Rule”). Both regulations were promulgated by the DOL shortly before the Biden administration took office. In the recent policy statement, the DOL stated that certain stakeholders, including asset managers, plan sponsors and consumer groups have expressed concern over whether these rules accurately reflect a fiduciary’s duties under ERISA and appropriately consider the utility of environmental, social and governance (“ESG”) factors in making investment decisions. As a result, the DOL intends to “revisit” each of these rules.
Continue Reading DOL Announces Non-Enforcement Policy of Recent ESG and Proxy Voting Rules

Plan sponsors and fiduciaries may have spent 2020 scrambling to amend their plans and operating procedures to accommodate breaking COVID-19 guidance, but the Department of Labor’s (“DOL”) and federal courts’ wheels continued to turn, churning out decisions and guidance on a variety of ERISA issues—and plan sponsors and fiduciaries should take note. Included in recent DOL guidance are rules for reviewing and selecting retirement plan investments, voting proxies, and distributing retirement plan notices. Meanwhile, various federal appellate court decisions should lead fiduciaries to review summary plan descriptions (“SPDs”) and the inclusion of single-stock fund investment options in defined contribution plan lineups. The following checklist sets out 2020 developments for plan sponsors and fiduciaries to consider in the new year.
Continue Reading 2021 Plan Sponsor/Fiduciary Compliance Checklist