The modern investment landscape makes the Employee Retirement Income Security Act’s (ERISA’s) fiduciary standards and its prohibited transaction rules and exemptions increasingly challenging for fiduciaries and service providers to navigate. Morgan Lewis lawyers help corporate, multiemployer, tax-exempt, and public plan clients manage their fiduciary duties related to selection of investments and service providers, plan governance, and plan administration in a manner that helps to manage fiduciary risk while providing high-quality benefits and services.
Our work focuses on fiduciary compliance, including auditing services and prohibited transaction issues. We counsel plan sponsors and fiduciaries on investment matters—such as negotiating and drafting agreements related to plan investments—and we advise our financial services provider clients in connection with the retirement plan products and services they provide. These clients include insurance companies, banks, mutual fund complexes, investment advisers, and broker-dealers. We also provide counseling services regarding individual retirement accounts (IRAs) and related products.
To provide comprehensive fiduciary services, we work closely and seamlessly with our colleagues in other areas of the firm who have experience related to employee benefit plan fiduciary issues, including investment-related matters. These groups include the investment management, business and finance (including securities lawyers), and tax controversy and planning teams.
Notably, we also partner with our ERISA and employee benefits litigation area, which is a separate area comprising approximately 40 seasoned employee benefits litigators. The group handles cases of alleged breaches of fiduciary duty, including those related to 401(k) stock drop, and fees and expenses matters. Incorporating the lessons learned from our benefits litigators, we provide clients with effective risk-mitigation advice.
We routinely advise corporate, multiemployer, tax-exempt, and public plan sponsors and fiduciaries on ERISA fiduciary and prohibited transactions issues, as well as relevant state and local laws as applicable to public plans. Our advice covers fiduciary governance. This includes the following:
For example, in our work involving prohibited transaction exemptions, we help plans and plan sponsors obtain prohibited transaction exemptive relief and error corrections from the DOL and similar guidance from applicable state governing entities.
We also advise plan fiduciaries on ERISA and state law relating to claims administration, service provider retention, minority- and women-owned business requirements reporting, and disclosures. We frequently conduct fiduciary training for boards, committees, and employee benefits personnel.
Our team also counsels clients on fiduciary matters arising in the context of investments. This includes counseling on:
We advise on and negotiate all types of service provider and investment-related contracts, such as investment management, trust, custody, securities lending, and transition management agreements, and various types of trading documentation, including futures, repurchase, and International Swaps and Derivatives Association (ISDA) agreements.
Today’s employee benefit plan fiduciaries often perform the responsibilities of their jobs with lean staffs or outsourced administration. ERISA’s standards of conduct require fiduciaries to operate plans in accordance with governing documents and instruments. Fiduciaries are also required to perform their duties with skill, prudence, and diligence. These stringent standards present risks for liability stemming from the activities of employee benefits personnel and outside service providers.
We represent plans and plan sponsors in responding to DOL audits and investigations. Further, to help our clients avoid breaches of fiduciary duty and prohibited transactions under ERISA, we conduct internal fiduciary audits. These audits include reviewing the operations of the plans and advising the clients on fiduciary restructuring, appropriate delegation of authority, and oversight responsibilities, as well as other best practices.
We also perform audits as a part of due diligence in a merger or acquisition. Many clients choose us to lead an audit and coordinate with other professionals because a legal audit conducted by or through a lawyer is more likely to be privileged.
Given today’s complex and rapidly changing legal and regulatory environment, it is rare for a plan sponsor to be in total compliance from an operational perspective. Fortunately, the Internal Revenue Service’s (IRS’s) Employee Plans Compliance Resolution System (EPCRS) permits plan sponsors to correct qualification failures or failures under section 403(b) of the Internal Revenue Code. The DOL offers a similar program for fiduciary issues. Morgan Lewis lawyers have experience dealing with voluntary corrections efforts (sometimes on an anonymous basis) and with issues raised during an audit.
We counsel employee benefit plan clients, including institutional investors, on key industry issues such as:
We also help clients select investment vehicles and managers, asset allocation services, and default investments, and counsel clients on service provider transition matters, including blackout periods, mapping, and employer stock issues.
In addition to helping institutional investor clients analyze and negotiate their various investments, we also routinely work with clients on special projects involving their investment programs. For instance, we counsel clients on launching hedge fund, private equity, and secondary investment programs; forming captive funds of funds and co-investment funds; and structuring the equity component of complex warehouse financing facilities.
We also advise clients on venture capital funds, funds of funds, and real estate funds, including real estate investment trusts (REITs). Beyond transactional support, we work with our institutional investor clients and their consultants and advisers when analyzing complex fiduciary duty issues and establishing appropriate governance structures and investment policies.
Morgan Lewis lawyers negotiate and draft agreements in connection with all types of plan investments. These include the following:
In partnership with colleagues from our business and finance, investment management, and tax teams, we handle issues arising under federal and state securities laws, US and non-US tax laws, ERISA, and state fiduciary, legal investment, trust, nonprofit, and corporate laws. We guide our institutional investors through all types of regulatory and judicial investigations and controversies, including those brought by the US Securities and Exchange Commission (SEC), DOL, the US Department of Justice (DOJ), and other claimants.
Developing and marketing investment products and services for the benefit plan marketplace require maneuvering through a unique and complex regulatory maze spanning ERISA as well as securities, banking and insurance, tax, real estate, corporate, and other laws. Working closely with our firm’s investment management and broker-dealer team, as well as members of our employee benefits team, we counsel many leading financial service providers’ employee benefit plans.
We advise financial services clients (such as insurance companies, banks, mutual fund complexes, investment advisers, and broker-dealers) on transactions involving retirement plan assets and related prohibited transaction concerns. Our lawyers handle reporting and disclosure, cross-trading securities, electronic trading and alternative trading systems, and swaps and other off-market transactions such as over-the-counter (OTC) derivatives, structured notes, stable value products, and foreign currency (FX) transactions.
We also structure and advise clients about investments in alternative vehicles, such as hedge funds, venture capital funds, funds of funds, and real estate funds.
We counsel clients on their IRAs and related products, such as simplified employee pensions (SEPs), savings incentive match plans for employees (SIMPLEs), Coverdell education savings accounts (CESAs), and health savings accounts (HSAs). For these plans, we help prepare and maintain applications, custodial and trust agreements, disclosure statements, beneficiary forms, and other account documentation, as well as annuity contract endorsements. We also obtain nonbank custodial approvals and notifications; coordinate the acquisition, merger, and transfer of IRA custodians; and navigate complex reporting and filing issues.
Morgan Lewis counsels clients on required minimum distributions, subtransfer agency issues, and related trust and estate issues, as well as investments in alternative vehicles.