ML BeneBits

As the US Department of Labor (DOL) continues its investigation of retirement plans and their fiduciaries, we outline nine issues that the DOL has focused on in those investigations as a guide for plan fiduciaries in navigating fiduciary compliance, including top-of-mind areas such as cybersecurity and data privacy and ESG investing.

Based on new ERISA disclosure rules, now is a good time to review the compensation paid to your health plan’s consultant and broker. ERISA Section 408(b)(2)(B) requires brokers and consultants expecting $1,000 or more in direct and indirect compensation for services provided to group health plans to make detailed disclosures to the “responsible plan fiduciary” regarding their services and compensation.

One of the most common questions we receive from buy-side clients in mergers and acquisitions (M&A) is how to handle the 401(k) plan of the target company in the context of a stock purchase acquisition: Should they require the target to terminate the 401(k) plan prior to closing? Or should they keep the 401(k) plan in place for a short period of time following closing and then merge it into their own existing 401(k) plan?

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), new rules directing national securities exchanges, including the New York Stock Exchange (NYSE) and Nasdaq Stock Market (Nasdaq), to adopt listing standards for compensation recovery (clawback) policies were announced on October 26, 2022 by the US Securities and Exchange Commission (SEC).

Much has been written, on ML BeneBits and elsewhere, about the US Department of Labor’s (DOL’s) so-called “ESG Rule” issued in November 2022 (the DOL Rule). The DOL Rule, in part, addressed the appropriate factors for an ERISA fiduciary to consider when making investment decisions, including the potential use of environmental, social, and governance (hence, ESG) factors in ERISA investment decision-making. But there was more to that rule than the ESG topics that seem to dominate the spotlight.

In 2021, the US Department of Labor (DOL) issued cybersecurity guidance (the DOL Guidance) that sets out the DOL’s views on what processes fiduciaries of benefit plans regulated by the Employee Retirement Income Security Act of 1974, as amended (ERISA) should follow to protect plan assets and information from cybersecurity risks. In addition, the DOL has engaged in continuing enforcement efforts on such cybersecurity risks with respect to both retirement plans and health and welfare plans.

The COVID-19 public health emergency and presidential declaration of national emergency are intended to end on May 11 and the US government recently issued guidance on unwinding these emergency declarations.

We invite ML BeneBits readers to join us for programs on employee benefits and executive compensation. Our lawyers will also be participating in the firm’s Global Public Company Academy series.

The Internal Revenue Service (IRS) recently issued proposed regulations that would require forfeitures in defined contribution plans—i.e., unvested benefits forfeited by terminating defined contribution plan participants—to be used to offset employer contributions or pay reasonable plan administrative expenses, or otherwise be allocated to participants, by the end of the year following the year of forfeiture.

The US Department of Labor (DOL) released an extensive regulatory agenda in January 2023 laying out the agency’s priorities for the year. The DOL has faced scrutiny from Congress this legislative session, demonstrated most recently by the congressional repeal of the DOL’s so-called “ESG Rule” in early March. President Joseph Biden’s veto of that repeal on March 20, 2023, rescued the ESG Rule from the congressional chopping block. Luckily for the DOL, however, many of the other 70-plus priority items for 2023 appear to be less controversial. Below we summarize a few of those items that have direct relevance to Employee Retirement Income Security Act (ERISA) regulated retirement plan sponsors.