Recent Blog Posts

  • ESOP regulatory update regarding potential plan amendments By Greg Daugherty and Victoria Hanohano-Hong    It has been a busy end of 2023 and first quarter of 2024 for the Internal Revenue Service and Department of Labor when it comes to implementing qualified plan regulatory guidance. You may have heard of some or more of these changes, many of which come from the SECURE Act and more recent SECURE 2.0. Although none of these items require plan document amendments this year, many administrative changes have become effective. ESOP plan sponsors... More
  • Proposed regulation for long-term part-time employees: Plan sponsors act now By Rich Helmreich and Greg Daugherty    Effective Jan. 1, 2024, employers who sponsor 401(k) plans must allow employees who work at least 500 hours a year over a period of consecutive years (“long-term part-time” or “LTPT employees”) to be eligible to make deferrals into the plan. This change requires immediate action by plan sponsors to change the way they administer their plans — specifically, counting service hours and increasing eligibility for LTPT employees. Plan sponsor considerations for long-term part-time employees Our Employee Benefits... More
  • Can sellers be liable for ERISA fiduciary breaches in ESOP transactions? By Greg Daugherty and Rich Helmreich    ESOPs are increasingly a popular succession planning vehicle, and well they should be. When formed properly, an ESOP transaction preserves the legacy of the business that an owner helped create, while providing tax and financial benefits to the former business owner, the company and the employees. Yet, as we have blogged in the past, the Department of Labor (DOL) remains concerned about private company employee stock ownership plan (ESOP) valuations in the formation of ESOPs.... More
  • Unanimous Supreme Court provides victory to plaintiffs in ERISA fee litigation By Greg Daugherty and Rich Helmreich    But just how big of a win is it? The U.S. Supreme Court recently issued a unanimous decision in Hughes v. Northwestern University, reversing and remanding a lower court ruling that had dismissed the case against a retirement plan sponsor. This decision reaffirms that the Employee Retirement Income Security Act’s (ERISA) fiduciary duty of prudence requires continuous monitoring of all investment options under a plan, especially when lower-cost share classes are available for funds. There was... More
  • DOL proposes new ERISA fiduciary ESG and proxy voting rules By Greg Daugherty and Rich Helmreich    In what some commentators are describing as the latest volley in a game of regulatory ping-pong, the Department of Labor (DOL) published proposed regulations that would change the way an ERISA fiduciary should consider environmental, social and governance (ESG) issues and related proxy voting decisions with respect to plan investments (the proposed regulations). The proposed regulations would provide more flexibility than prior guidance and greater encouragement to fiduciaries to consider taking ESG factors into account... More
  • Plan sponsors now have a deadline for providing lifetime income illustrations By Greg Daugherty and Rich Helmreich    Employers who sponsor 401(k) plans and other defined contribution plans in which participants may direct the investments of their accounts now have a deadline to provide lifetime income illustrations in those plans’ benefit statements. The Department of Labor (DOL) recently published guidance addressing these requirements. While helpful, the guidance is still subject to change in a potential final regulation. As such, employers should work closely with their plan administrators and legal counsel to navigate the... More
  • IRS updates Nonqualified Plan Audit Technique Guide—Is a new enforcement initiative on the horizon? By Greg Daugherty, Dave Tumen and Rich Helmreich    The Internal Revenue Service (IRS) recently updated its Nonqualified Deferred Compensation Audit Techniques Guide (NQDC). It released Publication 5528 (NQDC guide) on June 1, 2021. The IRS last updated the NQDC Guide in 2015. Interestingly, the 2015 NQDC Guide was published shortly after the IRS sent information document requests to publicly traded companies to determine how well companies were complying with Internal Revenue Code (IRC) Section 409A. This latest update to the NQDC... More
  • DOL confirms cyber security is an ERISA fiduciary issue and issues guidance for retirement plan sponsors, service providers and participants By Rich Helmreich and Greg Daugherty    The U.S. Department of Labor (DOL) recently announced new guidance for plan sponsors, fiduciaries, record keepers and participants on best practices for maintaining cyber security. This is the first time the DOL has issued such guidance, and it comes in response to a recent General Accounting Office (GAO) report responding to increased cybersecurity risks to retirement plan participant data and plan assets. If there is one central message to the guidance, it is this: The DOL now... More
  • For public companies, the time to update executive compensation practices is now: Final regulations issued under IRC Section 162(m) and American Rescue Plan Act further expands class of covered employees By Dave Tumen and Greg Daugherty    At long last, the Department of the Treasury and Internal Revenue Service published final regulations to explain how changes to Internal Revenue Code Section 162(m) under the Tax Cuts and Jobs Act of 2017 (TCJA) affect the deductibility (or lack thereof) of compensation in excess of $1 million paid to covered employees. We have blogged about these changes and made recommendations to public companies in the past about how to manage these changes. For the... More
  • Public companies may need to amend nonqualified and incentive compensation plans by Dec. 31, 2020 By Greg Daugherty and Dave Tumen    Public company nonqualified plans and incentive plans may need to be amended to avoid a potential violation of Internal Revenue Code (IRC) Section 409A as a result of changes to IRC Section 162(m) under the Tax Cuts and Jobs Act. This amendment most likely is required for employers that mandated deferrals of amounts that exceeded the limit under IRC Section 162(m) but not those whose plans permitted but did not require deferrals of such amounts.... More