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• Employee benefit questions you didn’t want to ask (but should): Are summary plan descriptions supposed to be easy to read? By Victoria Hanohano-Hong    Managing the complexities of employee benefit plans can raise questions you might hesitate to ask—whether they feel too basic or you’re unsure where to begin. In this series, “Employee benefit questions you didn’t want to ask (but should),” we tackle some of the most common questions about employee benefits to help you navigate the details with confidence. Whether it’s understanding plan documents, clarifying key terms or addressing compliance issues, we’re here to provide the answers you need. Q: Are... More
• Inadequate adequate consideration rules withdrawn By Victoria Hanohano-Hong and Greg Daugherty    For decades, the ESOP community has asked the Department of Labor (DOL) to provide regulations regarding “adequate consideration.” The desired regulations would provide needed guidance to trustees and other fiduciaries on how to ensure that ESOP transaction terms are fair to participants, and that the price paid for company stock does not exceed fair market value. A brief history of DOL regulations on ESOPs The DOL previously proposed adequate consideration regulations in 1988 but withdrew them after... More
• Employee benefit questions you didn’t want to ask (but should): What is a “summary plan description?” By Victoria Hanohano-Hong    Managing the complexities of employee benefit plans can raise questions you might hesitate to ask—whether they feel too basic or you’re unsure where to begin. In this series, “Employee benefit questions you didn’t want to ask (but should),” we tackle some of the most common questions about employee benefits to help you navigate the details with confidence. Whether it’s understanding plan documents, clarifying key terms or addressing compliance issues, we’re here to provide the answers you need. Q: I... More
• Employee benefit questions you didn’t want to ask (but should): What is a plan document? By Victoria Hanohano-Hong    Managing the complexities of employee benefit plans can raise questions you might hesitate to ask—whether they feel too basic or you’re unsure where to begin. In this series, “Employee benefit questions you didn’t want to ask (but should),” we tackle some of the most common questions about employee benefits to help you navigate the details with confidence. Whether it’s understanding plan documents, clarifying key terms or addressing compliance issues, we’re here to provide the answers you need. Q: What... More
• 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