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On August 18, 2020, the Department of Labor (“DOL”) announced new guidance on lifetime income disclosures that must be included in pension benefit statements furnished to participants in defined contribution plans, such as 401(k) and 403(b) plans.  This guidance, issued in the form of an interim final rule, sets forth the rules that plan administrators must follow in implementing the lifetime income disclosure requirement that was added to ERISA by Section 203 of the 2019 SECURE Act.

  • The disclosures required by the interim final rule must be provided starting one year after publication of the interim final rule in the Federal Register. (As of publication of this post, the rule has yet to be published in the Federal Register.)
  • As used in the interim final rule (and this blog post), the term participant includes an beneficiary with a plan account, such as an alternate payee or the beneficiary of a deceased participant.

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Continue Reading New SECURE Act Guidance: Lifetime Income Disclosures for 401(k) and 403(b) Plans

In October, the U.S. Department of Labor released a proposed rule that would increase plan administrators’ ability to make certain required ERISA pension disclosures through electronic, rather than paper, delivery.  Below is a summary of the proposed rule with some highlights on aspects of the proposal that have been questioned by interested parties and might be changed.
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Continue Reading DOL Proposal for Electronic Disclosure of ERISA Pension Documents

On August 5, 2015, the Securities and Exchange Commission adopted, by a three-to-two vote, a rule that will require most public companies to disclose, annually, the ratio of the median of the annual total compensation of the company’s employees to the annual total compensation of the company’s principal executive officer. Companies must comply with the…

The U.S. Court of Appeals for the Sixth Circuit recently affirmed the crucial importance of accurate plan summaries in the post-Amara world. To date, part of the legacy of CIGNA v. Amara has been an uptick of cases in which ERISA plaintiffs allege a material mismatch between a plan document and a summary plan description (“SPD”). Plaintiffs petition the court to use the broad equitable remedies available under ERISA § 502(a)(3) after Amara to reform the plan document to reflect the interpretation the plaintiff favors—even if the plan’s terms on the subject were crystal clear.
Continue Reading Reformation Claim May Proceed Despite Clear Plan Terms, Sixth Circuit Holds

On February 9, 2015 the SEC proposed rules, as required by Section 955 of Dodd-Frank, that would require disclosure regarding whether directors, officers and other employees are permitted to hedge or offset any decrease in the market value of equity securities granted by the company as compensation or held, directly or indirectly, by employees or directors.  The purpose of the rules, according to the SEC, is to elicit disclosure regarding whether employees or directors are permitted to engage in transactions that mitigate or avoid the incentive alignment associated with equity ownership.  Companies may wish to review their trading policies in light of the proposed rules.
Continue Reading SEC Hedging Disclosure Proposal Could Cause Companies To Review Trading Policies

A recent GAO Report offers interesting insight into the Department of Labor’s thinking on electronic disclosure.

For the better part of the last ten years, many plan sponsors and service providers have been pushing for more flexibility to provide required disclosures electronically.  In particular, they have asked the Labor and Treasury Departments to replace an existing “opt in” regime with an “opt out” regime.  Instead of requiring affirmative consent to distribute communications electronically, many plan sponsors and service providers would like the default to be electronic disclosure–with an opportunity to elect to receive paper.

In 2011, the Department of Labor issued a public request for information regarding electronic disclosures.  The responses included thoughtful suggestions for moving toward an “opt out” regime while still ensuring that important communications are actually received.  The Department has not formally taken action in response to the RFI, but comments included in the GAO report offer insight into the Department’s thinking.

The GAO report summarizes the existing Labor and Treasury rules on electronic disclosure, and offers three suggestions for improvement:…
Continue Reading Electronic Disclosure: Which Way Are We Going?