Join Morgan Lewis in March for these upcoming programs on a variety of employee benefits and executive compensation topics:

Visit our events page for more of our latest programs.

Two years ago the US Internal Revenue Service (IRS) said in one of its Employee Plans newsletters that plan sponsors were required to retain—for production on audit—documentation to substantiate 401(k) hardship withdrawals. This requirement appeared to be substantially more rigorous than the hardship withdrawal procedures followed by many plan sponsors and service providers. Those procedures typically required retention of summary information, rather than actual documents, critical to substantiation of participant hardships.

A February 23, 2017 Field Directive addressing audit guidelines for substantiation of hardship withdrawals appears to indicate the IRS’s acceptance of those common practices. It says that auditors may substantiate hardship withdrawals based on either source documents themselves or summaries of critical information from source documents. Where summaries are used, the Field Directive provides lists of relevant information that must be contained in the summaries and notifications that must be provided to participants requesting hardship withdrawals. Where summaries are incomplete, auditors are directed to request source documents. The IRS has said informally that those documents may be provided directly to the auditor by participants, rather than through the plan sponsor or service provider. Finally, if summaries are prepared and retained by service providers, the Field Directive says that plan sponsors should receive annual reports from the service providers covering those summaries.

Plan sponsors should familiarize themselves with these new audit standards and ensure that they and their auditors and service providers follow compliant procedures.

Join Morgan Lewis in February for these upcoming programs on a variety of employee benefits and executive compensation topics:

Visit our events page for more of our latest programs.

Happy New Year from the ML BeneBits team! Join Morgan Lewis in January for these upcoming programs on a variety of employee benefits and executive compensation topics:

Visit our events page for more of our latest programs.

Today we welcome three new partners—Rosina Barker, Jonathan Zimmerman, and Steve Witmer—who together will enhance and deepen our employee benefits and executive compensation services for clients. Rosina and Jonathan will practice in Washington, DC, and Steve will practice in Santa Monica, CA. Read more on our press release >

On December 15, the ERISA Industry Committee (ERIC) filed comments with the US Department of the Treasury and the Internal Revenue Service in response to a request for information regarding plan qualification requirements in light of the elimination of the determination letter program for ongoing individually designed plans. The comments, which Morgan Lewis lawyers Mark Simons and John Ferreira helped to draft, urged the agencies to take steps to ease the burden on large employers. Read more on their comments >

Join us in December for these upcoming programs on a variety of employee benefits and executive compensation topics:

Visit our events page for more of our latest programs.

Join us in November for our upcoming programs on a variety of employee benefits and executive compensation topics:


Visit our Events page for more of our latest programs.

On September 26, the US Court of Appeals for the Fifth Circuit ruled that a stock-drop complaint against BP and fiduciaries of its 401(k) plan failed to state a plausible claim of imprudence based on insider information under the pleading standards established in Fifth Third Bancorp v. Dudenhoeffer. See Whitley, et. al. v. BP, P.L.C., et. al

Background

The complaint in Whitley stemmed from the decline in BP’s stock price that followed the Deepwater Horizon oil spill in April 2010. The plaintiffs, participants in BP’s retirement plans, including BP’s employee stock ownership plan (ESOP), filed suit in June 2010 in the US District Court for the Southern District of Texas against the company, its affiliates, the oversight committee for the plan, and several of the company’s executive officers. Plaintiffs alleged that the defendants

  • breached their duties of prudence and loyalty by allowing the plan to acquire and hold overvalued company stock,
  • breached their duty to provide adequate investment information to plan participants, and
  • breached their duty to monitor those responsible for managing the company stock fund.

As covered in our LawFlash published earlier today, the US Department of Labor has released the first of three waves of frequently asked questions regarding the fiduciary rule.