PLANADVISER - July/August 2018 - 14

compliance news
Legislative And Judicial Actions
Bills Addresses Retirement
Plan Access
A package of bills sponsored by
Senators Cory Booker, D-New Jersey,
Tom Cotton, R-Alaska, Heidi Heitkamp,
D-North Dakota, and Todd
Young, R-Indiana, would increase
access to workplace retirement
savings accounts, help workers who
already have retirement accounts
save more, and prevent leakage from
retirement accounts by making it
easier for people to save for shortterm
needs.
Specifically, the four bills would:
* Increase access to workplace
retirement plans by allowing for
pooled employer plans (PEPs),
which will make it easier for small
business owners to offer retirement
benefits to their employees;
* Boost retirement savings by
incentivizing employers to adopt
plans with automatic enrollment;
* Reduce emergency withdrawals
from retirement accounts
and increase short-term savings by
allowing employers to automatically
enroll their workers in emergency
savings accounts (also called
sidecar accounts); and
* Make it easier for individuals
to automatically save their tax
refunds.
The new law
would raise the
contribution limit for
SIMPLE plans from
Court Upholds Rainbow
ESOP Challenge
The U.S. District Court for the
Central District of California has
denied defendants' motions to
dismiss a complex lawsuit involving
the allegedly imprudent and disloyal
sale of employee stock ownership
plan (ESOP) assets.
Several corporate entities are involved in the matter,
$12,500 to $15,500
for the smallest
businesses-those
with one to 25
employees.
including Rainbow Disposal Co., Southeastern Renewables,
West Florida Recycling and Republic Services. In reaching
this decision, the court considered five distinct motions to
dismiss filed by defendants, which the plaintiffs opposed in
a single omnibus brief-in response to which defendants
filed separate replies. After reviewing the extensive written
arguments, the court denied all the motions to dismiss.
Plaintiffs in the lawsuit are participants and beneficiaries
of the Rainbow Disposal Co.
Inc. Employee Stock Ownership
Plan, who seek to restore losses to
the plan and to otherwise remedy
a complicated series of alleged
breaches of fiduciary duty under
the Employee Retirement Income
Security Act (ERISA). In all, some 14
counts are included in the underlying
complaint.
The text of the decision shows
that on July 1, 1995, the plan was first
created and held 100% of Rainbow's
stock. The plan is governed by a plan
document, which was restated most
recently in 2004. As noted in the text
of the decision, the plan document
includes a number of original provisions
and ad hoc amendments made
over a series of years that are relevant
to the court's thinking.
The lawsuit alleges a long and
complicated series of alleged badfaith
dealings made by the executive
leadership of Rainbow, through
which they funded the creation
of new companies and otherwise
redirected ESOP assets. Apart from
allegedly violating the plan document,
these investments caused
losses to the Rainbow ESOP while
benefiting the executives, according
to plaintiffs. Eventually the entire
amount of Rainbow stock was
unilaterally sold to a third party,
triggering the filing of the lawsuit.
District Court Sides with
Checksmart, Cetera
The U.S. District Court for the
Southern District of Ohio has
ruled in favor of the defense in
an Employee Retirement
Income
Security Act (ERISA) excessive fee
lawsuit targeting Checksmart Financial's defined contribution
(DC) plan and Cetera Advisors.
The original lawsuit was filed by a participant in the
Checksmart Financial 401(k) Plan, contending in various
ways that fees for funds offered in the plan are excessive.
The plaintiff accused Checksmart, its plan committee, and
the plan's investment adviser, Cetera Advisor Network, of
offering only expensive and unsuitable actively managed
mutual funds, without an adequate or appropriate number
14 | planadviser.com july-august 2018 Art by Clarissa Liu
http://www.planadviserdigital.com/planadviser/july_august_2018/TrackLink.action?pageName=14&exitLink=http%3A%2F%2Fplanadviser.com
PLANADVISER - July/August 2018

Table of Contents for the Digital Edition of PLANADVISER - July/August 2018
