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Seventh Circuit Holds ERISA Venue Selection Provision is Enforceable

March 26, 2018

Authors

Bard Brockman

Seventh Circuit Holds ERISA Venue Selection Provision is Enforceable

March 26, 2018

by: Bard Brockman

On August 10, 2017, in In re Mathias, the United States Court of Appeals for the Seventh Circuit held ERISA Section 502(e)(2) venue provisions do not invalidate a forum-selection clause contained in plan documents, in a 2-1 split decision.

Case Background

George Mathias sued his employer Caterpillar and its ERISA-governed health plan in the United States District Court for the Eastern District of Pennsylvania, where he resided. The plan documents, however, required any suit to be brought in federal court in the Central District of Illinois, so Caterpillar moved to transfer the case.  Mathias opposed the motion, arguing that ERISA’s venue provision invalidated the plan’s forum-selection clause.  His argument was rejected and Caterpillar’s motion to transfer the case was granted in a decision relying on a Sixth Circuit decision in Smith v. Aegon Cos. Pension Plan, which held that forum-selection clauses in ERISA plans are enforceable and

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Avoiding Beneficiary Befuddlement

April 13, 2017

Authors

Richard Arenburg and Jennifer Stokes

Avoiding Beneficiary Befuddlement

April 13, 2017

by: Richard Arenburg and Jennifer Stokes

Challenges AheadRetirement plans are complicated creatures to administer so it perhaps is not surprising that the process of determining the beneficiary of a deceased participant can present its own set of challenges and, if things go awry, expose a plan to paying twice for the same benefit.

These risks were recently highlighted in an 11th Circuit Court of Appeals decision decided in the aftermath of the Supreme Court case of Kennedy v. Plan Administrator for DuPont Savings and Investment Plan.  In that 2009 decision, the Supreme Court ruled that a beneficiary designation naming a spouse had to be given effect even though the spouse had subsequently waived her interest in any of her husband’s retirement benefits in a divorce agreement.

In the 11th Circuit case, Ruiz v. Publix Super Markets, the question was

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Just Push Pause: Revisiting Proposed Regulations

February 21, 2017

Authors

Katharine Finley and Brian Berglund

Just Push Pause: Revisiting Proposed Regulations

February 21, 2017

by: Katharine Finley and Brian Berglund

On January 20, 2017, President Trump signed an executive order entitled “Regulatory Freeze Pending Review” (the “Freeze Memo“).  The Freeze Memo was anticipated, and mirrors similar memos issued by Presidents Barack Obama and George W. Bush during their first few days in office.  In light of the Freeze Memo, we have reviewed some of our recent posts discussing new regulations to determine the extent to which the Freeze Memo might affect such regulations.

TimeoutThe Regulatory Freeze

The two-page Freeze Memo requires that:

  • Agencies not send for publication in the Federal Regulation any regulations that had not yet been so sent as of January 20, 2017, pending review by a department or agency head appointed by the President.
  • Regulations that have been sent for publication in the Federal Register but not yet published be withdrawn,
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  • Penalty Amounts Adjusted Again!

    January 27, 2017

    Authors

    benefitsbclp

    Penalty Amounts Adjusted Again!

    January 27, 2017

    by: benefitsbclp

    PenaltyLast week, the Department of Labor (DOL) released adjusted penalty amounts which are effective for penalties assessed on or after January 13, 2017, whose associated violations occurred after November 2, 2015.  You might remember that these penalties were just adjusted effective August 1, 2016 (also for violations which occurred after November 2, 2015); however, the DOL is required by law to release adjusted penalties every year by January 15th, so you shouldn’t be surprised to see these amounts rise again next year.

    All of the adjusted penalties are published in the Federal Register, but we’ve listed a few of the updated penalty amounts under the Employee Retirement Income Security Act of 1974 (ERISA) for you below:

    General

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    Now You Can Be Up to Your QNEC in Forfeitures

    January 20, 2017

    Authors

    Sarah Bhagwandin and Chris Rylands

    Now You Can Be Up to Your QNEC in Forfeitures

    January 20, 2017

    by: Sarah Bhagwandin and Chris Rylands

    Money in basket. Isolated over whiteOn January 18, 2017, the IRS issued proposed regulations allowing amounts held as forfeitures in a 401(k) plan to be used to fund qualified nonelective contributions (QNECs) and qualified matching contributions (QMACs). This sounds really technical (and it is), but it’s also really helpful.  Some plan sponsors of 401(k) plans use additional contributions QNECs and/or QMACs to satisfy nondiscrimination testing.  Before these proposed rules, they could not use forfeitures to fund these contributions because the rules required that QNECs and QMACs be nonforfeitable when made (and also subject to the same distribution restrictions as 401(k) contributions).  If you have money sitting in a forfeiture account, then by definition it was forfeitable when made, so that money couldn’t possibly have been used to fund a

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    Top 10 Employee Benefits New Year’s Resolutions for 2017

    January 11, 2017

    Authors

    Chris Rylands and Lisa Van Fleet

    Top 10 Employee Benefits New Year’s Resolutions for 2017

    January 11, 2017

    by: Chris Rylands and Lisa Van Fleet

    new-years-resolutionsIf statistics are any guide, by now a significant number of you have already broken your New Year’s resolutions.  However, there’s still plenty of time to make new ones that you can break, er, keep.  If you sponsor or work with an employee benefit plan (and odds are, if you’re reading this, that you do), then here are some ideas to keep in mind in the upcoming year:

  • Fiduciary, Know Thyself. It important to know your fiduciaries (or know if you are one). Reviewing plan documents, charters, and delegations, among other possible documents, are key to determining who is an ERISA fiduciary. You should make sure that any individuals who have been designated are still willing and able to serve and, if not, they should be removed. While not as much of an
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  • ACA Facelift to Disability Claims Process Could Affect All Plans

    December 20, 2016

    Authors

    Chris Rylands and Steven Schaffer

    ACA Facelift to Disability Claims Process Could Affect All Plans

    December 20, 2016

    by: Chris Rylands and Steven Schaffer

    claimIt might be tempting to conclude that the recent Department of Labor regulations on disability claims procedures is limited to disability plans.  However, as those familiar with the claims procedures know, it applies to all plans that provide benefits based on a disability determination, which can include vesting or payment under pension, 401(k), and other retirement plans as well. Beyond that, however, the DOL also went a little beyond a discussion of just disability-related claims.

    The New Rules

    The new rules are effective for claims submitted on or after January 1, 2018. Under the new rules, the disability claims process will look a lot like the group health plan claims process.  In short:

    • Disability claims procedures must be designed
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    2017 Qualified Plan Limits Released

    October 31, 2016

    Authors

    Julie Wagner and Chris Rylands

    2017 Qualified Plan Limits Released

    October 31, 2016

    by: Julie Wagner and Chris Rylands

    The IRS recently released updated limits for retirement plans.  Our summary of those limits (along with the limits from the last few years) is below.

    Type of Limitation 2017 2016 2015 2014 Elective Deferrals (401(k), 403(b), 457(b)(2) and 457(c)(1)) $18,000 $18,000 $18,000 $17,500 Section 414(v) Catch-Up Deferrals to 401(k), 403(b), 457(b), or SARSEP Plans (457(b)(3) and 402(g) provide separate catch-up rules to be considered as appropriate) $6,000 $6,000 $6,000 $5,500 SIMPLE 401(k) or regular SIMPLE plans, Catch-Up Deferrals $3,000 $3,000 $3,000 $2,500 415 limit for Defined Benefit Plans $215,000 $210,000 $210,000 $210,000 415 limit for Defined Contribution Plans $54,000 $53,000 $53,000 $52,000 Annual Compensation Limit $270,000 $265,000 $265,000 $260,000 Annual Compensation Limit for Grandfathered Participants in Governmental Plans Which Followed 401(a)(17) Limits (With Indexing) on July 1, 1993 $400,000 $395,000 $395,000 $385,000 Highly Compensated Employee 414(q)(1)(B) $120,000 $120,000 $120,000 $115,000 Key employee in top heavy plan (officer) $175,000

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    IRS Overhauls the Retirement Plan Correction Program

    October 20, 2016

    Authors

    Katharine Finley and benefitsbclp

    IRS Overhauls the Retirement Plan Correction Program

    October 20, 2016

    by: Katharine Finley and benefitsbclp

    old-way-new-wayWith the looming end of the determination letter program as we know it, the IRS has issued an updated Revenue Procedure for the Employee Plans Compliance Resolutions System (EPCRS). Released on September 29, 2016, Rev. Proc. 2016-51 updates the EPCRS procedures, replaces Rev. Proc. 2013-12 and integrates the changes provided in Rev. Proc. 2015-27 and Rev. Proc. 2015-28. The updated revenue procedure is effective January 1, 2017 and its provisions cannot be used until that date. Rev. Proc. 2013-12, as modified by Rev. Proc. 2015-27 and Rev. Proc. 2015-28, should be used for any corrections under the EPCRS for the remainder of 2016. Highlights from the new revenue procedure are outlined below.

    Changes

    • Determination Letter Applications. Determination letter applications are no longer
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    Kübler-Ross and IRS Announcement 2016-32

    September 23, 2016

    Authors

    Chris Rylands

    Kübler-Ross and IRS Announcement 2016-32

    September 23, 2016

    by: Chris Rylands

    griefWhen the IRS announced that it would virtually eliminate the determination letter program for individually designed retirement plans, many practitioners moved through the classic Kübler-Ross five stages of grief (see the picture at the right).  Some have yet to finish.  In Announcement 2016-32, the IRS requested comments on how these plans can maintain compliance going forward since determination letters are no longer available.

    As a general rule, the IRS used to deny plans the ability to incorporate tax code provisions by reference (rather than reciting them wholesale in the plan), except for a very short list available here.  The IRS is asking if there are additional provisions that would also be appropriate to incorporate by reference.  This would avoid the need to reproduce these provisions wholesale and run the risk of

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