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Tuesday, October 27, 2020

Defined Benefit Plan Participants Must Have “Standing” to Sue Plan Fiduciaries


Can a participant in a defined benefit plan sue the plan’s fiduciaries under ERISA without first showing an individual financial loss or an imminent risk of such harm? The Supreme Court of the United States recently decided the question in the negative, holding a participant must have “standing” to bring suit. That means the participant must show that he or she suffered an actual injury or have some concrete stake in the matter.

In Thole v. U. S.
Read more . . .


Monday, October 19, 2020

Abuse of Discretion – ERISA’s Standard of Review You Do Not Want to Lose


When a court reviews the decision of an ERISA plan (both health and welfare and pension plans), it must first determine the standard of review: abuse of discretion or de novo. Under an abuse of discretion standard, the court gives the plan’s sponsor (or trustees) more deference and looks at whether the decision was reasonable under the plan’s terms and available evidence. The court will also pay attention to the weight the sponsor or trustees gave to any available evidence. 

On the other hand, the deference is gone under a de novo standard of review and the weight the plan sponsor placed on any factors when rendering the determination is ignored. This difference is large from a legal standpoint and plans will look to protect themselves by including language in the plan document calling for the higher standard review.
Read more . . .


Friday, October 16, 2020

How many Non-Bargaining Employees is Too Many?


A Multiemployer Plan under the Employee Retirement Income Security Act (“ERISA”) is a plan in which one or more employers contribute, is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and one or employer, and satisfies other requirements set forth by the United States Department of Labor. However, and despite this definition, you will often find non-bargaining employees covered under a multiemployer plan. For example, the employees of the Union, employer organization, or the fund office are often covered under the plan through a participation agreement. Which raises the question: how many non-bargaining employees can the plan cover?

For health and welfare plans, this question is very important. If a plan has too many non-bargaining employees, the plan risks being reclassified as a “Multiple Employee Welfare Arrangement,” or “MEWA.
Read more . . .


Tuesday, September 29, 2020

Why Beneficiary Forms are Not Static


Filing out a beneficiary designation form seems like a simple task. And in all honesty, it is; you simply list the name of the person or persons you want to inherit the account, designate percentages, make sure they add up to 100%, and then sign and date the form. However, getting this message across to participants is different story. And any plan administrator or trustee of a multiemployer plan can explain how these challenges are amplified in a collectively bargained setting. While this issue only affects defined contribution plans, it is critical that participants are aware of these rules.
Read more . . .


Monday, September 21, 2020

Are PCORI fees refundable?


By now, I am sure you have heard or read that the Supreme Court of the United States has recently agreed to revisit the Affordable Care Act to determine its constitutionality. If you have not, the Court agreed to hear the case of California, et al., Petitioners v. Texas, et al., No.
Read more . . .


Monday, September 14, 2020

Defined Benefit Plans & Collecting Overpayments


Richardson vs. IBEW Pacific Coast Pension Fund - District Court bars a pension plan from recovering overpayments made as a result a benefit miscalculation

Anyone that works with defined benefit pensions plans, whether it be as an administrator, fund counsel, trustee, or actuary, knows just how complicated these plans can be. And like any complicated task, mistakes and errors occur in the administration of a defined benefit pension plan.

One of the most common mistakes involves incorrect benefit calculations. If the participant was underpaid, the resolution is simple; increase the benefit to the proper amount and repay the participant the wrongfully withheld amount (plus interest) in one lump sum.
Read more . . .


Wednesday, September 9, 2020

New Model COBRA Notices, Emergency Regulations, & Considerations for Health & Welfare Plans


In May of 2020, the Department of Labor (DOL) issued two separate pieces of guidance that both affect how health & welfare plans comply with the COBRA regulations. First, the DOL updated the model COBRA notices that must be provided to participants when they enroll and when they experience a “qualifying event.” Second, and in response to the COVID-19 pandemic, the DOL issued emergency regulations that extends many of the deadlines that apply to ERISA plans, including the ability to elect COBRA continuation coverage. We will discuss both these changes.

Updated Model Notices

The COBRA regulations require ERISA health and welfare plans to give participants two different notices: (1) upon enrollment and (2) after the participant experiences a “qualifying event.
Read more . . .


Monday, July 30, 2018

Are Quarterly Board of Trustee Meetings Enough?


Trustees Should Consider Forming Committees to Meet Fiduciary Duties

 

The majority of all multiemployer employee benefit plans are managed by a Board of Trustees, comprised of an equal number of members from the applicable Union(s) and representatives from Employers who employee union members.  Such Trustees are charged with significant responsibilities that range from overseeing the delegated administrator of their employee benefit plans, monitoring the collection of plan contributions to eligibility for and approval of all types of plan distribution requests by participants and beneficiaries.  Many Boards of Trustees normally meet only once every three months to collectively meet these fiduciary responsibilities. These meetings are often jam-packed, require intense discussions to present important voting issues, may last anywhere from two to 8 hours and can burn out well-intentioned Trustees. 

In an effort to better fulfill their fiduciary commitments while reducing meeting times, retaining high-quality Trustees and prevent rushing into important decisions, many Boards have agreed to form committees to handle the business of their employee benefit plans between full Board of Trustee meetings.
Read more . . .


Tuesday, June 26, 2018

Group Health Plan’s Residential Treatment Exclusion Violates Mental Health Parity Requirements


The Mental Health Parity Act (“MHPA”) was enacted in 1996.  The principal goal of MHPA was to bring parity to the treatment of mental health disorders by imposing the same aggregate lifetime and annual dollar limits for mental health benefits as for medical and surgical benefits.  In Munnelly v. Fordham Univ. Faculty and Admin.
Read more . . .


Tuesday, May 1, 2018

Internal Revenue Service Requests Comments on Expansion of Determination Letter Program for Individually Designed Retirement Plans


The Internal Revenue Service (“IRS”) has asked for comments on whether it should expand the determination letter program for individually designed plans for 2019. Currently, determination letter applications for individually designed tax-qualified retirement plans (including 401(k) plans) may be submitted only for initial plan qualification—i.e., submissions by plans that have never received a determination letter—and for terminating plans. The guidance establishing those rules anticipated that the IRS would annually consider whether to expand the scope of the program; this Notice is the first request for comments on this topic since the current rules were adopted.
Read more . . .


Tuesday, March 27, 2018

Restrictions on Hardship Withdrawals Eased under 2018 Budget Act


On February 9, 2018, Congress passed, and President Trump signed, continuing appropriations legislation (the “Budget Act”) to allow the United States Government to continue to operate.  The Budget Act includes changes to some of the current restrictions on hardship withdrawals from 401(k) plans and similar defined contribution plans.

Background.  Under current rules for 401(k) and similar defined contribution plans, hardship withdrawals are limited to the amount of a participant’s elective deferrals contributed to a plan, and participants are prohibited from making new elective deferral contributions to the plan for six months after they receive a hardship withdrawal.  Pursuant to the Budget Act, however, participants will be permitted to withdraw not only the amount of their elective deferrals but also—

  • the earnings on those deferrals, plus

  • any employer contributions, including matching and profit-sharing contributions

as part of a hardship withdrawal, and the mandatory six-month suspension of elective deferrals to a plan following a hardship withdrawal has been eliminated.
Read more . . .


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