Free Weekly 401k eNewsletter

Legal, Legislative and Washington DC

A directory and index of articles that review what is happening in the courts, U.S. legislature and Washington DC.


When It's Time to Hire an ERISA Attorney

Summary: ERISA attorneys are an excellent resource and there are many reasons why a plan sponsor should hire one. This article will inform you on when it's the best time to call an ERISA attorney.

Source:, April 2014

Questions Remain After Decision in Float Income Case

Summary: A recent federal appeals court decision favoring Fidelity Investments, Boston, has produced more uncertainty than finality about the use of float income in record keepers' administration of defined contribution plans.

Source:, April 2014

ING Settles ERISA Class Action Lawsuit Over Revenue Sharing Practices

Summary: the parties in Healthcare Strategies v. ING Life Insurance and Annuity Co. filed a motion indicating they have settled their lawsuit and are now seeking approval of the district court. In total, ILIAC agreed to pay $14,950,000 in damages and agreed to significant changes to its business practices regarding fees and revenue sharing.

Source:, April 2014

Industry Group Defends Retirement Tax Incentives

Summary: The Coalition to Preserve Retirement sent an open letter to Representative David Camp, chairman of the House Ways and Means Committee, expressing the hope that as tax reform discussions continue, Congress will consider the success of the current retirement tax structure as it weighs comprehensive tax reform legislation, but also pushing back on certain tax reforms floated by the lawmaker.

Source:, April 2014

Attorneys Make Predictions on Fee Litigation, Questions of Constitutional Standing

Summary: Plan fee litigation, questions of constitutional standing and the fate of the pro-fiduciary presumption of prudence are the big issues currently driving fiduciary litigation under the Employee Retirement Income Security Act, practitioners said during a webcast.

Source:, April 2014

Eighth Circuit Upholds Fiduciary Liability for Excessive Recordkeeping Fees but Not for Investment Mapping

Summary: This decision serves as a reminder that fiduciaries overseeing plans with revenue sharing arrangements must understand these arrangements and determine whether their service providers are receiving more than “reasonable” compensation for their services. Recordkeepers subject to the service provider disclosures are required to provide plan fiduciaries with a separate disclosure of recordkeeping costs. Plan fiduciaries will want to carefully review these disclosures.

Source:, April 2014

Battle Over Presumption of Prudence Heats Up Ahead of High Court Arguments

Summary: The question of whether a judge-made presumption of prudence should protect fiduciaries of employer stock plans from liability for declining stock prices will be front and center at the U.S. Supreme Court next week, with the court receiving nine amicus briefs in the months leading up to oral arguments.

Source:, April 2014

Post-Windsor Guidance for Qualified Retirement Plans in Pipeline, Treasury Official Predicts

Summary: More guidance for qualified plans on same-sex marriage post-Windsor, is in the pipeline, a senior Treasury official told tax professionals at the 38th Annual Tax Law Conference of the Federal Bar Association in Washington, DC. Robert Neis, deputy benefits counsel, Office of Benefits Tax Counsel, Treasury Department, indicated that this guidance is expected to be issued shortly.

Source:, April 2014

Eighth Circuit Finds That Float Generated by 401k Plan Contributions Is Not a Plan Asset

Summary: The Court concluded that, since neither the float or float income was a Plan assets, Fidelity could not have breached its ERISA fiduciary duties based on the way it handled the float.

Source:, March 2014

Court: Investment Representative Was Not ERISA Fiduciary

Summary: A registered investment advisor representative who recommended the investment of plan assets in a risky start-up venture that eventually failed was not subject to suit as a fiduciary under ERISA, according to U.S. Court of Appeals in New Orleans. The registered representative did not actually exercise discretionary authority with respect to the transaction at issue, the court stressed.

Source:, March 2014

Supreme Court Signals Interest in 401k Plan Fiduciary Case

Summary: The U.S. Supreme Court signaled its interest in deciding whether 401k plan fiduciaries can be in breach of their duties over investment choices. The justices asked lawyers for the Labor Department and Justice Department to weigh in on Glenn Tibble et al. vs. Edison International et al. That request, announced Monday, is considered a strong indicator that the high court will take the case.

Source: (free registration may be required), March 2014

Supreme Court Requests DOL Opinion in Tibble v. Edison Petition

Summary: The Supreme Court announced the results of their Friday conference where the plaintiffs' cert petition from the Tibble v. Edison International case was considered. In a surprise move, the Supreme Court has asked the Solicitor General of the United States, working in conjunction with the Secretary of the Department of Labor, to file a brief offering their view on the issues.

Source:, March 2014

Eighth Circuit Gives Plan Sponsors a Lot to Like in Tussey Decision

Summary: Despite the fact the Eighth Circuit upheld the $13.4 million judgment against the Plan fiduciaries for failure to control recordkeeping costs, many aspects of the Circuit Court's ruling are favorable for plan sponsors -- the appellate court recognized that the determinations of plan administrators are owed deference by courts, the $21.8 million judgment against the Plan fiduciaries was vacated, and the judgment against the Plan fiduciaries which was undisturbed was based on facts specific to the case.

Source:, March 2014

Eighth Circuit Issues Widely Anticipated Excessive Fee Decision in Tussey v. ABB

Summary: In Tussey v. ABB, Inc., the US Court of Appeals for the Eighth Circuit upheld, vacated and remanded, and reversed in part a decision from the District Court for the Western District of Missouri regarding breach of fiduciary duty claims for excessive recordkeeping fees and the imprudent selection of plan investment funds.

Source:, March 2014

Tussey v. ABB Affirmed, Reversed, and Vacated in Part by 8th Circuit

Summary: On March 19, 2014, the 8th Circuit Court of Appeals affirmed, reverse, and vacated the trial court's decision in Tussey v. ABB. The decision is effectively a mixed bag for plan sponsors, participants, and service providers. Here is a summary.

Source:, March 2014

Fifth Circuit: Investment Advisor Paid By a Third Party Is Not an ERISA Fiduciary

Summary: The U.S. Court of Appeals for the Fifth Circuit recently held that an investment advisor was not a fiduciary for purposes of ERISA because he did not receive any fees from the retirement plan for his advice regarding the investment at issue in the case, but received a commission from the third-party broker/dealer used to make the investment recommended by the advisor.

Source:, March 2014

Plan Sponsor Sued Over $6 Million Paid to Broker

Summary: Aa class action ERISA lawsuit, Kruger v. Novant Health, Inc., was filed in the Middle District of North Carolina by a group of current and former participants in two 401(k) plans sponsored by Novant Health, Inc., a major hospital system in the southeast. The plaintiffs allege that the plans' fiduciaries violated ERISA by (1) allowing excessive fees to be paid to the plans' broker, D.L. Davis & Company, Inc., (2) allowing excessive fees to be paid to the plans' recordkeeper Great West, and (3) including more expensive share classes for all of the plans' mutual funds.

Source:, March 2014

Eleventh Circuit Joins Fourth Circuit in Rejecting Continuing Breach Approach to ERISA's Statute of Limitation

Summary: As the Fourth Circuit Court of Appeals was careful to do in Alphin, the Fuller Court declared that it was declining to decide "whether a fiduciary had an ongoing duty to remove imprudent investment options from a Plan in the absence of a material change in circumstances." Rather, it described its ruling as limited to the prevention of a "continuing violation theory," which could thwart the purpose of ERISA's six-year statute of repose.

Source: Southeastern ERISA Watch, March 2014

Obama Budget Includes MyRAs, Auto IRAs, Would Limit Retirement Savings Tax Breaks

Summary: President Barack Obama's proposed $3.9 trillion fiscal year 2015 budget includes requirements that employers offer individual retirement accounts and provisions that would reduce tax benefits on certain retirement accounts for high-income earners. The tax provisions, part of the budget plan released March 4, would cap how much Americans could accumulate in tax-preferred retirement savings, putting a ceiling of about $200,000 on the annual retirement income that could be generated by such savings.

Source:, March 2014

Fiduciary Breach Claims Barred by ERISA's Six-Year Statute of Limitations

Summary: The Eleventh Circuit recently dismissed a participant's fiduciary breach claims against SunTrust's 401k plan fiduciary committee members on the ground that the claims for imprudently selecting certain investment options was time barred by ERISA's six-year statute of limitations.

Source:, March 2014

Senator Harkin's USA Retirement Funds Proposal

Summary: On January 30, 2014 Senator Harkin (D-IA) introduced the USA Retirement Funds Act. The bill includes Senator Harkin's USA Retirement Funds proposal and a variety of other proposals. This article focuses on two of the major parts of the Act: the USA Retirement Funds proposal itself and provisions on hybrid plans. It also summarize briefly other provisions of the Act.

Source:, March 2014

Morgan Stanley Dodges a Bullet: ERISA Lawsuit Dismissed

Summary: A proposed ERISA class action lawsuit filed against Morgan Stanley was dismissed in the Southern District of New York. Morgan Stanley, the broker to the Skin Pathology Associates, Inc. 401k Profit Sharing Plan, was alleged to have received unreasonable compensation because of a "pay to play" or "kickback" scheme involving the plan's recordkeeper. The court, citing the new ERISA 408(b)(2) regulations, found that although a claim could be brought against a non-fiduciary broker like Morgan Stanley, here the additional compensation had been disclosed to the plaintiffs. Thus, as a consequence, no claim could be brought against Morgan Stanley as a party in interest.

Source:, February 2014

Recent Pension Legislative Proposals

Summary: We have seen the introduction of two pieces of pension legislation, Senator Harkin's long-awaited USA Retirement Funds Act and Senator Collins's Retirement Security Act of 2014. The Administration also unveiled a new auto-IRA initiative, the "myRA." This article briefly discusses the RSA 2014 and myRA initiatives.

Source:, February 2014

More States Look to Mandate Retirement Plans for Private Employees

Summary: Lawmakers in Maryland and Wisconsin are working to make retirement plans more readily available to private sector employees. Their efforts follow recently enacted California legislation that requires employers to contribute 3% of a worker's salary to a retirement account.

Source:, February 2014

Bankruptcy and Inherited Retirement Accounts

Summary: Jenner & Block filed an amicus brief in the U.S. Supreme Court in the case of Brandon C. Clark and Heidi K. Heffron-Clark v. William J. Rameker, Trustee, et al. The Bankruptcy Code exempts a debtor's "retirement funds" from claims of creditors. In Clark, the Supreme Court will decide whether that exemption applies to a retirement account that a debtor has inherited from its original owner. The amicus brief, written on behalf of estate and tax expert Professor Seymour Goldberg, explains that the tax treatment of inherited retirement accounts differs substantially from accounts in the hands of their original owners.

Source:, February 2014

Rewriting Retirement Readiness: Will the USA Retirement Funds Act Amend Your Plan?

Summary: The USA Retirement Funds Act would have a significant impact because all employers with 10 or more employees would be required to offer a retirement plan with automatic enrollment and a lifetime income option. If Milliman's recordkeeping clients can be used as a representative sample, a quick look would tell us that only 2% of plans currently offer both features, which indicates the substantial majority of plans would be required to be amended if this core provision is enacted.

Source:, February 2014

Plan Fee Litigation Burned Hot in 2013, But Some Decisions Baffling, Speakers Say

Summary: Plan fee litigation had a big year in 2013, with divisive appellate court decisions affecting standards of judicial review, statutes of limitations and functional fiduciary status that may open the door for increased and novel litigation, employee benefits attorneys said during a conference panel presentation.

Source:, February 2014

An SPD Can Be a Plan Document

Summary: The participant claimed that under Cigna v. Amara, the SPD could not be the plan document and that the plan document therefore had to be the administrative services contract. The federal district court disagreed, stating that if there is only an SPD, then the SPD is the plan document and it can be enforced.

Source:, February 2014

Retirement Savings Proposals -- Summary of Key Provisions

Summary: Three different proposals have recently emerged from Washington D.C., each seeking to improve access to retirement plan savings vehicles. Each of these proposals is primarily targeted at employees of small employers who do not currently sponsor defined benefit or defined contribution retirement plans. This Aon Hewitt bulletin provides a high-level summary of the following three proposals.

Source: , February 2014

401k Committee Minutes, and Attorney-Client Privilege

Summary: A Massachusetts district court articulated two guiding principles for attorney-client exceptions to the general rule that favors disclosure, to participants, of the minutes of plan committee meetings. The decision in this case highlights the difficulty of establishing attorney-client privilege.

Source:, February 2014

ERISA Lessons in the Supreme Court's Heimeshoff Decision

Summary: In Heimeshoff v. Hartford Life & Accident Ins., the Supreme Court held that an ERISA disability plan's three-year limitations period, running from the date of proof of loss, was enforceable even though the statute of limitations began to run before the participant's cause of action accrued. The case contains important lessons for plan sponsors, well beyond the narrow ruling of the case.

Source:, February 2014

Harkin Retirement Plan Would Force Some Employers to Alter Current 401k Offering

Summary: Sen. Tom Harkin's retirement plan proposal has some flaws, not the least of which is that employers who offer 401k plans would have to change their current plans to be more like defined benefit plans if they didn't want to be forced to adopt Harkin's USA Retirement Fund, according to the National Association of Plan Advisors.

Source:, February 2014

Harkin Retirement Bill Gets Mixed Reaction

Summary: Sen. Tom Harkin, D-Iowa, unveiled new legislation this week that would help tackle the retirement crisis in America and shore up the private pension system. Industry reaction to the bill was mixed; some cheered while others thought it too complex.

Source:, February 2014

Harkin Unveils Legislation to Address Retirement Crisis, Rebuild Private Pension System

Summary: Harkin, Chair of Senate Pensions Committee, Proposes "Universal, Secure, Adaptable (USA) Retirement Funds Act" to Expand Access to Privately-Run, Portable Retirement Plans. Harkin's legislation would create a new type of privately-run retirement plan that combines the advantages of traditional pensions -- including lifetime income benefits and pooled, professional management -- with the portability and ease for employers of a 401k.

Source:, January 2014

Obama Unveils Savings Proposal for Workers Lacking 401k

Summary: President Barack Obama is offering more Americans the chance to put away money for retirement through payroll deductions with a plan for new government-sponsored savings accounts. The accounts, which Obama announced yesterday in a State of the Union address that concentrated on expanding economic opportunity, will be aimed at workers who don't have access to a 401k plan.

Source:, January 2014

Year in Review: 2013 in ERISA Litigation

Summary: Several U.S. Supreme Court rulings broke new ground for employee benefits in 2013, and decisions in 2014 are also expected to push these issues into new territory. In addition to its landmark ruling recognizing same-sex marriage under federal law, the U.S. Supreme Court also issued two significant opinions under the Employee Retirement Income Security Act in 2013—one involving contractual limitations periods, and the other involving Section 502(a)(3)'s equitable remedies provision.

Source:, January 2014

What Extent Can An ERISA Fiduciary Rely on Legal Advice?

Summary: The D.C. Circuit concluded that ERISA's adoption of the common law's standard of fiduciary care in Section 404(a)(1)(B) permits prudent fiduciaries making important decisions to rely on the advice of counsel in "appropriate circumstances."

Source:, January 2014

Retirement Policy Issues for 2014

Summary: This article reviews key retirement benefits issues that policymakers will focus on in 2014 including: Legislation -- budget and tax battles, Retirement income, Definition of fiduciary, Litigation -- fees and fund menus, Windsor, stock-drop cases, and a variety of DB issues.

Source:, January 2014

Reliance On Counsel's Advice Was Reasonable, DC Circuit Rules

Summary: In affirming the district court's decision, the court pointed out that the defendants -- the retirement plan fiduciaries -- had relied on the advice of counsel when determining the amount payable to Clark from the plan. The district court found that since the fiduciaries rightly relied on counsel's advice, there was no breach of ERISA fiduciary duties.

Source:, January 2014

Fidelity is Sued Again Over In-House 401k Plan

Summary: On January 7, 2014, FMR LLC or Fidelity Investments, was sued again by participants of its in-house 401k profit sharing plan. (Previously, 29 participants had sued Fidelity in the Bilewicz v. FMR LLC back in April 2013.) The plaintiffs here generally allege that the fiduciaries to the Fidelity in-house plan violated ERISA sections 404 and 406 because Fidelity failed to rebate back the revenue sharing it collected from the all Fidelity mutual fund lineup in the plan beyond what would have been reasonable and permitted.

Source:, January 2014

401k Committee Minutes and Attorney-Client Privilege

Summary: It is generally smart to presume that the records of 401k and other ERISA plan committee meetings will be disclosed if plan participants commence litigation contesting plan administration or investments. There are attorney-client exceptions, however.

Source:, January 2014

Fiduciary Questions in the MassMutual Case, Part Two

Summary: Author discussion last month focused on the failure to administer the plan in accordance with the governing plan documents and the selection of unreasonably priced and imprudent investment options. In this month's column, he discusses certain allegations in a specific paragraphs of the complaint and how the business temptation for entities such as MassMutual to use their own proprietary mutual funds must be overwhelming, and yet acting on this temptation, at its core, appears to be thoroughly conflicted, fiduciary-wise.

Source:, January 2014

Video: Vanguard's Delaplane Discusses the Politics of Retirement

Summary: Vanguard's James Delaplane speaking at DC West provided an update on the Obama administration's regulatory agenda for the retirement industry. Interesting eight minute video.

Source:, December 2013

Supreme Court to Decide Applicability of the "Prudence Presumption" in ERISA Stock Cases: Fiduciaries Take Note

Summary: In Fifth Third Bancorp v. Dudenhoeffer, the U.S. Supreme Court will decide whether investments in employer stock are entitled to a "prudence presumption" under ERISA. The outcome of the Court’s ruling will have important implications for employee stock ownership plans (ESOPs) as well as other ERISA-eligible individual account plans (EIAPs), such as 401k plans that offer employer stock as an option on the menu of investment funds.

Source: , December 2013

Regions Financial Settles 401k Case for $22.5 Million

Summary: Regions Financial Corp agreed to a $22.5 million settlement with employees who claim to have lost lose money in their 401k retirement accounts because the regional bank exposed them to risky home loans and mismanaged some bond mutual funds ahead of the financial crisis.

Source:, December 2013

Plan Design Is Key to Fixing Retirement Crisis

Summary: Witnesses during a U.S. Senate committee hearing argued that defined contribution plan design is key to solving the retirement crisis in America.

Source:, December 2013

Supreme Court to Settle Circuit Split Over Fiduciary Presumption of Prudence in Stock Drop Suits

Summary: The Supreme Court has granted certiorari to petitioners in Fifth Third Bancorp v. Dudenhoeffer. to settle a circuit split over whether and at what stage in the litigation fiduciaries who continued to offer employer stock as an investment option in a 401k-style plan as the stock price declined are presumed to have acted prudently.

Source: , December 2013

Top U.S. Court Declines to Review Lockheed Employee Class Action

Summary: The U.S. Supreme Court on Monday opted not to hear an appeal filed by Lockheed Martin Corp which was contesting a class action lawsuit brought by potentially 56,000 employees. The lawsuit claims that Lockheed is liable for poor management of its employee retirement plan under ERISA.

Source:, December 2013

Supreme Court Accepts 401k Employer Stock-Drop Case

Summary: The U.S. Supreme Court has agreed to revisit the issue of fiduciary prudence in managing employer stock investment options in defined contribution plans. The Labor Department had petitioned the court to hear a case regarding Fifth Third Bancorp that sought to settle a recent split between judicial circuits on the issue that could make it easier for participants to challenge employers when company stock loses value.

Source: (free registration may be required), December 2013

No Jury Trials in ERISA Cases

Summary: ERISA defendants have long maintained that there is no statutory or constitutional right to a jury trial in ERISA cases. Almost always, the courts have agreed, citing ERISA's trust law origins and the Seventh Amendment's application only to suits seeking legal, not equitable, relief. The reasoning goes that because under ERISA you may obtain only relief that was traditionally available in courts of equity, the right to a jury trial does not exist.

Source:, December 2013

'Presumption of Prudence' In ERISA Cases at Risk?

Summary: The U.S. Supreme Court must soon decide whether to grant Fifth Third Bancorp's petition for writ of certiorari, and review the Sixth Circuit's 2012 decision in Dudenhoefer v. Fifth Third Bancorp. The petition presents two significant issues in the realm of ERISA litigation: (1) whether the "presumption of prudence" regarding employer stock is a proper legal standard for evaluating breach of fiduciary duty claims; and (2) whether SEC filings become actionable ERISA fiduciary communications merely by incorporating them by reference into plan documents.

Source: , December 2013

Solicitor General Asks High Court to Strike Pro-Fiduciary Presumption of Prudence

Summary: The U.S. Supreme Court should strike down the pro-fiduciary presumption of prudence that some federal courts have used to shield fiduciaries of employer stock plans from liability for declining share value, the U.S. solicitor general said in a brief filed with the high court (Fifth Third Bancorp v. Dudenhoeffer, U.S., No. 12-751, brief filed 11/12/13).

Source:, December 2013

Appeals Court Allows Boeing 401k Plan Case to Proceed as Class Action

Summary: On November 26, 2013, the Seventh Circuit Court of Appeals rejected the Boeing Company's request to appeal the order of Chief Judge David R. Herndon of the United States District Court for the Southern District of Illinois, which granted class certification to participants in Boeing's 401k Plan for their claims that Boeing personnel responsible for managing the plan breached their fiduciary duties under ERISA.

Source:, December 2013

Senators Voice Concern Over Retirement Savings Reg

Summary: Two U.S. senators sent a letter to U.S. Secretary of the Treasury Jacob Lew this past week expressing concern over a regulation that they believe could weaken retirement security for many American workers. The regulation has to do with not allowing new employees to enroll in defined benefit pension plans and, instead, enrolling them in defined contribution plans.

Source:, November 2013

DOL Seeks High Court Action on Company Stock in 401ks

Summary: The appeal of company stock as an investment option in defined-contribution plans could dim considerably if the Labor Department succeeds in having the Supreme Court revisit the issue of fiduciary prudence in managing that option. The department's petition to the Supreme Court, asking it to hear a Fifth Third Bancorp case, was filed Nov. 12 by the U.S. solicitor general's office. It seeks to take advantage of a recent split in judicial circuits that could make it easier for participants to challenge employers when company stock loses value.

Source: (free registration may be required), November 2013

Chesapeake Stock Drop Suit Dismissed

Summary: A federal district court dismissed a class action complaint alleging Chesapeake Energy acted imprudently by offering company stock to retirement plan participants.

Source:, November 2013

District Court in Tenth Circuit Adopts Presumption of Prudence

Summary: A district court in the Tenth Circuit adopted the presumption of prudence in dismissing a class action alleging that the defendants violated their fiduciary duties by allowing participants to continue investing in company stock at a time when the employer was allegedly experiencing significant financial difficulties.

Source:, November 2013

The Moench Presumption Headed to the US Supreme Court

Summary: Since Moench v. Robertson was decided in 1995, every Circuit that has addressed the issue of whether ERISA fiduciaries are entitled to a presumption of prudence for holding employer stock has concluded that a presumption was warranted. But there have been disagreements over when the presumption applies, what must be alleged to overcome the presumption, and other differences in approach. And recently, the DOL has taken the position that the Moench presumption should not apply at all. It now looks likely that the applicability of the Moench presumption will be decided by the US Supreme Court.

Source:, November 2013

Capping Small Business Retirement Savings

Summary: White House officials earlier this year unveiled the Obama administration's Fiscal Year 2014 budget proposal, which included a cap on tax-deferred retirement savings. Changes in tax policies can trigger responses from employers, but a proposed cap on retirement savings could have a particularly severe impact on small businesses, according to an analysis by the nonpartisan Employee Benefit Research Institute.

Source: , November 2013

MassMutual 401k Suit Takes Litigation Into New Territory

Summary: A recently filed case involving allegations that 401k plan sponsors charged excessive fees is raising questions on whether general account products, group annuities and stable-value products might also become a focal point in future litigation. The suit is no ordinary 401k fee case.

Source: (free registration may be required), November 2013

New Excessive Fee Case Filed by MassMutual Employees

Summary: Employees of MassMutual filed an ERISA class action lawsuit against their employer alleging self-dealing and excessive fees. The plaintiffs allege that the fiduciaries to the plan were conflicted because of their roles as executives to MassMutual. In particular, the plaintiffs attack the CFO as well as the fact that three investment managers from the very products being offered to participants were on the fiduciary investment committee.

Source:, November 2013

Mixing SEC Filings and SPDs? Could Lead to a Fiduciary Hangover

Summary: While "stock-drop" cases are not new these days, a recent Ninth Circuit case added a new spin that retirement plan fiduciaries should be aware of. In Harris v. Amgen, the court found that statements made in SEC filings and expressly incorporated into a plan's SPD are fiduciary activities that can form the basis of liability under ERISA.

Source:, November 2013

Judge Orders Restoration of More Than $1.6 million to Sunkist Growers Retirement Plans

Summary: The department previously filed a lawsuit alleging that from January 2006 through April 2011, the defendants used retirement plan assets to improperly reimburse the company for expenses including salaries and benefits for employees and managers working in various departments at Sunkist Growers.

Source:, October 2013

Ninth Circuit: Incorporation of SEC Filings by Reference in SPDs is Fiduciary Act

Summary: A three-judge panel of the US Court of Appeals for the Ninth Circuit reissued its opinion in Harris v. Amgen, adding that the incorporation of SEC filings by reference in a summary plan description (SPD) qualifies as an act performed in a fiduciary capacity under the Employee Retirement Income Security Act.

Source:, October 2013

SunTrust Plan Participants' Stock-Drop Claims Tossed a Second Time

Summary: A federal district court in Georgia recently dismissed a suit brought by participants in the SunTrust Bank 401k savings plan alleging fiduciary breaches based on defendants' decision to continue permitting investment in SunTrust stock while its value declined during the subprime mortgage crisis. The court had previously granted in part and denied in part SunTrust's motion to dismiss, and SunTrust appealed.

Source:, October 2013

Stock Drop Case Dismissed Because Purpose and Risk of Employer Stock Fund Made Clear

Summary: This case illustrates that strong plan language setting forth the purpose and guidelines for an employer stock fund, coupled with repeated warnings to participants of the risks involved in investing in that fund, can be powerful defenses to a fiduciary breach claim. As a broader principle, carefully drafted plan language and full disclosure to participants can significantly decrease a plan sponsor's exposure to benefit plan claims and litigation.

Source: Thomson Reuters/EBIA, October 2013

Prudential, Cigna in $35 Million 401k Suit Settlement

Summary: Prudential Retirement Insurance and Annuity Co. and Cigna Corp. have agreed to pay $35 million to settle a class action in which Cigna workers claimed their 401k fees were too high and that the plan engaged in self-dealing at the expense of its workers. The deal ends six years of litigation in the U.S. District Court for the Central District of Illinois.

Source: (free registration may be required), October 2013

Lockheed Martin Asks US Supreme Court to Review Class Cert Decision

Summary: On October 9, 2013, the defendants in Abbott v. Lockheed Martin Corporation filed a petition for writ of certiorari in the United States Supreme Court seeking to have the 7th Circuit's recent class certification decision reversed. Lockheed Martin argues that the Seventh Circuit's holding that Plaintiffs do have standing even though they "do not appear to have suffered any damages," conflicts with decisions by the Third, Sixth, Eighth, Tenth, and Eleventh Circuits.

Source:, October 2013

You Cannot Take the Embezzler's 401k Plan Balance

Summary: Many employers know that a participant's benefit in a tax qualified retirement plan is protected, but there are several exceptions. However, there is no exception that allows an employer to keep an account balance if the participant has committed a crime against the employer. A recent federal district court case made that point clear.

Source: , October 2013

Third Circuit: Once Again Proper Documentation Saves the Day for an ERISA Plan Sponsor

Summary: Recently, former unionized employees cried foul over their failure to receive defined benefit pension plan benefits subsequent to their termination. Relying on clear, unambiguous documents contradicting the employees’ claims, the Third Circuit concluded was entitled to judgment as a matter of law.

Source: Seyfarth Shaw, October 2013

ERISA -- Second Circuit: Effective Exhaustion of Remedies Defense

Summary: What does it take to assert an effective exhaustion of remedies defense in ERISA cases? Properly drawn plan documents that expressly impose the duty upon the claimant to exhaust remedies before bringing a lawsuit.

Source:, October 2013

Court Rules on Same-Sex Spouse's Rights Under DC Plan

Summary: In Cozen O'Connor, the United States District Court for the Eastern District of Pennsylvania held that a marriage between two women validly celebrated in Canada and (the court found) recognized in the participant's domicile of Illinois must be recognized for purposes of Cozen O'Connor's profit sharing plan. This article briefly reviews the case and then discuss its implications for plan sponsors and administrators.

Source:, October 2013

The Moench Presumption: An Examination of the Third Circuit's Standard of Prudence

Summary: This article, which appeared in Benefits Law Journal, discusses the standard of prudence formulated by the Third Circuit for employer stock cases brought under ERISA and the Circuit Courts' subsequent treatment of that standard. Although a number of Circuit Courts have adopted the Moench presumption of prudence, there is still significant disagreement over the procedural stage at which the presumption applies and how the presumption can be rebutted.

Source: McDermott Will & Emery , October 2013

SEC Settles With Nebraska RIA Over Fiduciary Breach

Summary: The SEC determined that Manarin Investment Counsel, of Omaha, and its founder and president, Roland Manarin, arranged for the investment vehicles at issue -- which are funds of funds -- to purchase Class A shares of underlying mutual funds while cheaper, institutional shares of the same funds were available.

Source:, October 2013

International Paper Settles Excessive Fee Case for $30 Mil.

Summary: The parties in Beesley v. International Paper filed papers indicating they have settled their lawsuit and are now seeking approval of the district court. In total, International Paper agreed to pay $30 million and submit to extensive affirmative relief. The Beesley case was one of the original excessive fee cases filed on September 11, 2006 by current and former participants in IP's hourly and salaried 401k plans.

Source:, October 2013


Press Center | Glossary | Privacy Policy | Terms of Use | Contact Us

Creative Commons License
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.