ASA supports trustee, appraiser in ESOP litigation

I recently wrote an article about several cases being brought by the Department of Labor (DOL) against Employee Stock Ownership Plan (ESOP) trustees. The cases all related to the DOL’s claim that the ESOP trustees had breached their fiduciary duties by relying on appraisals prepared for the valuation of the ESOP owned stock. One such …

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Plan Terminations and Partial Terminations

Employers are allowed to terminate 401K benefit plans offered to employees for a variety of reasons. Employers are not required by law to provide retirement savings plans, and can terminate them as a part of a bankruptcy or merger, in order to switch to another type of plan, or voluntarily terminate the plan. According to …

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How to Prepare for Your 401(k) Audit

There are a few simple steps that can be taken during the planning phase of the audit in order to gain efficiencies during the fieldwork phase. You should be in communication with your auditor before the Plan’s year-end date. This is the best time to come to an agreement about the terms, timing and fees …

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Forming a 401(k) Plan Committee

As a Plan Sponsor, you have important fiduciary responsibilities which, according to the Employee Benefits Security Administration (“EBSA”) within the Department of Labor (“DOL”), include: Acting solely in the interest of plan participants and their beneficiaries Carrying out duties prudently Following the plan documents (unless inconsistent with ERISA) Diversifying plan investments Paying only reasonable plan …

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How to Handle a Blackout Period

What is a blackout? A blackout is a period of three or more consecutive business days during which participants’ are temporarily limited in or restricted from the ability to perform the following activities: Directing or diversifying investments Obtaining distributions Obtaining loans What actions must Plan Administrators take in order to remain in compliance during a …

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Full Scope vs. Limited Scope Audits

When a 401(k) or other retirement plan requires an annual audit, a plan administrator may have a choice to engage an audit firm to perform a full-scope audit or a limited scope audit of the financial statements. To be qualified for a limited scope audit, a bank or insurance carrier must act as a trustee …

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Supreme Court Rules that Plan Sponsors Have Duty to Monitor Investment Options

On May 18, 2015, the U.S. Supreme Court issued its opinion in the Tibble v. Edison Int’l case. In 1999 and 2002, Edison International added 6 retail mutual fund options to the available investment options for the company’s 401(k) plan. All 6 mutual funds had virtually identical institutional-class mutual funds that charge lower investment fees. …

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Language Barriers of 401(k) Disclosure

I would like to address disclosure versus communication. They are two very different things, but they shouldn’t be. Have you ever tried to read ERISA or DOL regulations? The average person doesn’t read this stuff. Lawyers read it because it is in their language. Lawyers are the ones who write this stuff. Imagine a Company …

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401K Plan Fee Assessment

When companies are selecting the services for their 401K plan, are they assessing the fees that they are paying for these services? As it has been required for these fees to be more transparent, this is something every company with a plan should be evaluating. The question becomes what is the best way to assess …

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