Need to Know: Tibble vs. Edison International

Robin Weingast benefits plans    While most of the country was focused on decisions that would impact the Affordable Care Act as well as marriage equality, The Supreme Court’s unanimous ruling in Tibble vs. Edison International changes the amount of fiduciary responsibility that is expected from plan administrators.

The basic framework of the decision asserts “that fiduciaries who select investment options for 401(k) plans have a continuing duty under ERISA to monitor their selections and remove imprudent options.”

For many administrators in the industry, that statement seems fairly obvious; good plan advisors have an obligation to perform a routine evaluation of their investment choices and must make choices that will benefit those covered by the plan.

The piece of the decision that caught the eye of plan administrators nationwide was the justice’s further assertion that prior rulings from the court had “erred by applying a 6-year statutory bar based solely on the initial selection of the three funds without considering the contours of the alleged breach of fiduciary duty.” This has plan administrators wondering what will now be considered sufficient due diligence when it comes to monitoring and removing investment options. Will this decision “reset” ERISA’s six-year review clock?

The long-term implications of the decision are unclear, and some legal analysts are critical that the decision is not that practically applicable and signals a new era of judicial involvement in plan administration.

What is outlined clearly are certain general trust principles that would apply to an ERISA investment fiduciary. These include that:

– A regular review of investments is required with the nature and timing contingent on the circumstances

– A systematic review of investments must occur at regular intervals

– An investment review is to be done in a manner that is reasonable and appropriate to the particular investments, courses of action and strategies involved

– If investments are inappropriate, they must be disposed of within a reasonable time

As plan administrators, The Robin S. Weingast & Associates team takes fiduciary responsibility seriously. Our goal is to be thorough in our review process while being nimble enough to respond what’s happening in real-time. We have the experience and expertise to strike the perfect balance between being fiscally responsible, timely, and cognizant of our client’s business goals.

If you have questions about what this decision means for your plan, please contact the Robin S. Weingast & Associates team today.

Need to Know: IRS announces Determination Letter deadlines for Pre-Approved Defined Contribution Plans

Weingast 401k newsQualified Retirement Plans are required to be compliant with current laws and regulations.  The IRS, recognizing that it would be burdensome for Plan Sponsors to re-write their Plan documents every time a new requirement appears, allow Sponsors to comply operationally with any new requirements while only restating their formal Plan documents periodically.  For Pre-Approved Documents such as yours, a formal restatement is required every six years. Your current document must be restated no later than April 30, 2016.

A Pre-Approved Plan Document is one which the IRS has reviewed and confirmed as compliant with current requirements.  It may offer Plan Sponsors the option to choose among different features, but all of the features are IRS-approved.

The IRS recently made several key announcements about Pre-Approved Defined Contribution Plans, including:

– The IRS is in the process of  issuing final approval letters (“opinion and advisory letters”) for Pre-Approved Defined Contribution Plans that were previously restated for the law known as EGTRRA.

– In the period beginning May 1, 2014, and ending April 30, 2016, the IRS will accept applications for individual determination letters from employers restating in the current six-year period.

– An adopting Employer whose Defined Contribution Plan is eligible for the six-year remedial amendment cycle, who adopts by April 30, 2016, a Master & Prototype or Volume Submitter Defined Contribution  Plan that was approved based on the 2010 Cumulative List (i.e., current requirements), will be considered to have adopted the plan within the employer’s six-year remedial amendment cycle.

To read the full announcement from the IRS, click here.

The Plan Documents you received from Robin S. Weingast and Associates, Inc. were drawn up in template form by the software company DATAIR.  DATAIR is in the process of modifying its software to reflect any final instructions from the IRS.  We expect to begin receiving the new software within the next few weeks.

This resource further explains what this may mean for your business.

The Robin S. Weingast and Associates, Inc. team is here to help throughout this process. We will be working with each of our clients to make sure they understand this announcement and comply with IRS restatement requirements in an orderly, painless and timely manner.

If you have any questions, please contact us and we would be happy to assist you!

Sources: IRS, Wolters Kluwer Law & Business, American Society of Pension Professionals & Actuaries, DATAIR