Category Archives: Fiduciary Matters

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Seven ways a fiduciary can follow “Procedural Prudence”

“Procedural Prudence” is not a new concept. It’s underlies one of ERISA’s bedrock requirements. A fiduciary must discharge its duties prudently with care, skill, and diligence. It’s the process by which a fiduciary can accomplish this. In other words, it’s the “how” a decision gets made which is what the courts have focused on in ERISA … Continue Reading

Timely reminder why an ERISA fidelity bond is necessary

July 31st, is of course, the due date (unless extended) for calendar year ERISA plans required to file Form 5500 for the 2016 plan year. And, as in the past, there will be many plan sponsors who must indicate on the 5500 they have outdated fidelity bonds or none. Here’s a timely reminder why they … Continue Reading

Non-ERISA 403(b) plans must walk a fine line to avoid losing the ERISA exemption

Last month’s Supreme Court decision, Advocate Health Care Network v. Stapleton, upholding ERISA exemption for church-affiliated pension plans was a reminder that not all benefit plans are subject to ERISA. Indeed, non-profit employers who sponsor 403(b) plans can choose to be exempt from ERISA. But they have to tread carefully.… Continue Reading

401(k) Self-Directed Brokerage Accounts: A Cautionary Tale

A recently filed lawsuit rekindled some old concerns about self-directed brokerage accounts. What are they? Let’s start at the beginning. Self-Directed Brokerage Accounts or “SDBAs” is the name the retirement industry has given to individual participant brokerage accounts maintained either on a stand-alone basis or through the 401(k) provider handling the menu of funds. The … Continue Reading

Boomerang Employees and 401(k) Considerations

We used to call them “rehires” back in the day: those employees who quit and were hired back. And it didn’t happen all that often. Many companies had policies not to. They’re now called “boomerang employees, and now it’s different. Different times, different economy. Employees who left the nest decide they want to come back, … Continue Reading

Stolen Laptop Triggers $1.55 Million Fine for HIPAA Violation

Actually, it was “only” a potential violation of privacy and data security rules imposed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) for which North Memorial Health Care of Minnesota (“NMHC”) agreed to pay $1.55 million. The violation alleged by the Department of Health and Human Services Office for Civil Rights (“OCR”) … Continue Reading

It’s a 401(k) fee state of mind for plan fiduciaries

Class action law suits and Department of Labor enforcement initiatives have created a 401(k) fee state of mind for fiduciaries. How much, who pays for them, and how they are paid are issues about which service providers offer guidance. @GregIacurci in his article, How Should Retirement Plans Pay Their 401(k) Fees? in Investment News (registration … Continue Reading

Enhanced health benefits for executives? That’s another Affordable Care Act issue to consider

A prohibition on discrimination has applied to self-insured plans for years under  Section 105(h) of the Internal Revenue Code. The Affordable Care Act (“ACA”) now extends that ban on discrimination in insured group health plans. What does this mean? Insured health plans  can no longer favor highly compensated employees in terms of eligibility for benefits … Continue Reading

Welfare Benefit Plans: More than just the Affordable Care Act

Many employers sponsoring welfare benefit plans are understandably now totally focused on what they can see in front of them. Namely, the Affordable Care Act. But lurking just below the surface is ERISA and a host of other laws through which employers have to navigate. Let’s start with ERISA. Most welfare benefit plans are subject … Continue Reading

ERISA Employee Benefit Claims: Legislative Goals vs. Litigation Reality

Every Summary Plan Description has to include one, a claims procedure that set forth the requirements for processing benefit claims and appeals. The underlying ERISA statute was written in a paternalistic manner with explicit provisions intended to offer protection to “the interests of participants in employee benefit plans and their beneficiaries…by providing for appropriate remedies, … Continue Reading

Sorry, MacGyverisms can’t solve 403(b) problems, but there are ways to fix them

Back in the 1980s, I thought MacGyver could fix anything. Using everyday items, he invented ways to fix critical problems. These inventions became synonymous with the character and became known as “MacGyverisms”. Just a little more than halfway through Season 1, for example, he had Disarmed a missile with a paper clip Raised a fallen … Continue Reading

Who pays 401(k) fees? Us or them?

        That’s the question employers ask regarding who pays 401(k) fees. The “us” being, of course, the employer, and the “them” being the plan participants. The number of “thems” has been increasing. According to Deloitte’s 2015 Annual Defined Contribution Benchmarking Survey, the number of employers completely covering the cost of fees declined … Continue Reading

ERISA Plans Do Have Their Limitations

That’s limitations as in “limitation periods”. A recent court case reminds ERISA plans to have such limitation periods and to communicate it to someone claiming a plan benefit. Let’s start with the basics. What’s a “limitation period”? In layman’s terms, it’s a law set forth in a State statute of limitations that sets time limits … Continue Reading

Legal Advice on Your 401(k) Plan – Is It Confidential?

Let’s say you have a concern about how your 401(k) plan is operating.  Maybe participant loans aren’t getting repaid or a service provider has neglected to allocate forfeitures on an annual bases.  So you consult a lawyer.  The lawyer writes a memo outlining the situation and advising on corrective steps.  You drop the memo in … Continue Reading

How the re-proposed Fiduciary Rule came to be

As everyone in the ERISA world knows,  the Department of Labor (DOL) on April 20, 2015 published a proposed regulation in the Federal Register relating to the definition of fiduciary within the meaning of ERISA section 3(21)(A)(ii). ERISA section 3(21)(A)(ii) is that part of the definition of fiduciary that addresses investment advice for a fee … Continue Reading

The Fiduciary Hierarchy

The recent Department of Labor’s re-proposed Fiduciary Rule has generated many opinions on how it will affect fiduciary service models. One constant, however, cuts through all of the debate: the Plan Sponsor still has the fiduciary responsibility to select and monitor those service providers. But as you can see, there is a hierarchy of service … Continue Reading

Who is responsible for service provider mistakes?

It took nine years in the case of Butler v. United Healthcare of Tennessee to determine who was responsible for a denied group health benefit claim. The patient, covered by her husband’s ERISA health benefit plan, sought treatment for inpatient rehabilitation for substance abuse. Treatment for which was denied by United. The patient ultimately received … Continue Reading

What Advisors Need to Know About Retirement Plans: Presentation to Illinois CPA Society

I had the opportunity recently to make a presentation on qualified retirement plans to the Illinois CPA Society (ICPAS). Actually, it was using PowerPoint to begin a dialogue with the members of the ICPAS Investment Advisory Services/Personal Financial Planning Forum The ICPAS describes their Forums as being “composed of members with shared interests who interact … Continue Reading
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