PLANADVISER - January/February 2018 - 6

compliance news
Legislative and Judicial Actions
Rutledge Takes EBSA Helm
The Department of Labor (DOL) has
appointed Preston Rutledge head
of its Employee Benefits Security
Administration (EBSA). Rutledge
is former senior tax and benefits
counsel on the Majority Tax Staff
of the Senate Finance Committee
and top aide to Republican
Senator Orrin Hatch.
This puts Rutledge at the helm
of one of the lead regulatory bodies
tasked with policing the tax-qualified
retirement investing industry.
It will take some time for
Rutledge to make an impact in the
DOL, and within EBSA, but his longstanding
ties to the government,
and particularly to a legislator
known for being active on retirement
and labor issues, have many
in the retirement benefits industry
cautiously looking forward to his
tenure.
What Lies Ahead in Litigation
According to Nancy Ross, partner
and head of the Employee Retirement
Income Security Act (ERISA)
litigation practice at Mayer Brown
LLP in Chicago, the last year in litigation
saw excessive fee cases starting
to divide themselves fairly neatly
into a few different categories.
" The most active subcategory
Richard Neal, D-Massachusetts,
is
the Retirement Plan Simplification
and Enhancement Act of 2017.
The bill is tied to another recently
published by Neal, the Automatic
Retirement Plan Act of 2017 (see
this issue's cover story, page
24), which is also garnering the
support of retirement plan industry
lobbying groups. Broadly speaking,
the Simplification and Enhancement
Act includes provisions aimed
at expanding retirement plan
coverage, increasing savings levels,
preserving lifetime
retirement
Among the
retirement
reform proposals
submitted late
last year ... is the
Retirement Plan
is probably the lawsuits being filed
against financial services providers
regarding self-dealing within their
own retirement plans, " Ross observes. " During 2017, we saw
the district courts react in a fairly open manner to these allegations.
Many of the cases, as we have discussed ..., have
avoided various preliminary motions to dismiss. As a result,
there are cases involving Franklin Templeton, Allianz, BBT
and Deutsche Bank, just to name a few, that will likely move
ahead in 2018. "
According to Ross, these proprietary fund lawsuits are
Simplification and
Enhancement
Act of 2017.
income, simplifying and clarifying
qualified retirement plan rules and
implementing a more limited set of
defined benefit (DB) plan reforms.
The bill seeks to eliminate the
current 10% cap on automatically
increased deferral rates of
employees who are automatically
enrolled into a plan. Related to this,
the bill would require the Treasury
Department to issue regulations or
guidance " simplifying the timing for
providing notices to automatically
enrolled employees[,] in particular,
in plans that permit immediate
participation or that have multiple
payroll systems. "
The bill would require employers
to expand retirement coverage in
a variety of ways. Perhaps most
significantly, employees who work
for three consecutive years with at
least 500 hours of service each year,
would have to be made eligible to participate in an employer's
plan but would be excluded from coverage, top-heavy
and nondiscrimination testing.
viewed by plaintiffs' firms as, indeed, " one of the types of
excessive fee cases that are likely to get past motions to
dismiss, " meaning more cases are likely.
Details From the Simplification Act
Among the retirement reform proposals submitted late last
year by House Ways and Means Committee Ranking Member
6 | planadviser.com january-february 2018
Art by Samuel Berenfield
Allianz Settles Self-Dealing Suit
According to the text of a settlement motion filed in the U.S.
District Court for the Central District of California, Allianz
Asset Management has agreed to settle a sizable Employee
Retirement Income Security Act (ERISA) fiduciary breach
lawsuit dating back to 2015.
Two participants in an Allianz retirement plan
initially filed the claims, suggesting the company and its
asset management partners, including PIMCO, misused
employees' 401(k) plan assets for their own financial benefit.
To industry observers, the lawsuit represented one of the
http://www.planadviser.com
PLANADVISER - January/February 2018

Table of Contents for the Digital Edition of PLANADVISER - January/February 2018
