PLANADVISER - July/August 2018 - 15

of passively managed and less expensive mutual fund investment
options. According to the complaint, most investment
options in the plan had expense ratios of 88 basis points (bps)
to 111 bps, which, the complaint says, are four or more times
greater than retail passively managed funds, the latter not
being made available to the plan and its participants during
the class period. In addition, the average expense of all funds
was 104 bps, according to the complaint.
Simply put, the decision states that the plaintiff's
claims " are foreclosed by ERISA's statute of limitations. "
The court explained that it has applied the shorter of
ERISA's statute of limitations periods, based on date the
plaintiff gained " actual knowledge " of the alleged breaches
of fiduciary duty. Two issues orbit around this question,
the decision explained. These are, one, the nature of the
alleged breaches of fiduciary duty, and two, the definition
of " actual knowledge. "
A Boost for Plans at Small Businesses
The SIMPLE [Savings Incentive Match PLan for Employees]
Plan Modernization Act has been introduced by Senators
Susan Collins, R-Maine, and Mark Warner, D-Virginia, to
provide greater flexibility and access to small business
employers and employees seeking to use SIMPLE plans to
save for retirement. SIMPLE retirement plans were first
introduced by Congress for businesses with 100 or fewer
employees in the Small Business Job Protection Act of 1996.
The new law would raise the contribution limit for
SIMPLE plans from $12,500 to $15,500 for the smallest businesses-those
with one to 25 employees-along with an
increase in the catch-up limit from $3,000 to $4,500.
It would give businesses with 26 to 100 employees the
option of the higher limits. Should they move to the higher
limits,
it would increase their SIMPLE plan mandatory
employer contribution requirements by 1 percentage point.
Further, it would allow for a reasonable transition period
for employers whose hiring goes above 25 employees. It
would also make the limit increases unavailable if the
employer has had another defined contribution (DC) plan in
the past three years.
The law, additionally, would modernize the SIMPLE plan
form filing requirements and modify the transition rules
from SIMPLE plans to traditional plans to facilitate and
encourage such transactions.
Finally, it would direct Congress to study the use of
SIMPLE plans and report to Congress on such use, along
with any recommendations.
Retirement Savings Lost and Found Act
U.S. Senators Elizabeth Warren, D-Massachusetts, and
Steve Daines, R-Montana, have reintroduced legislation
previously introduced in 2016, aimed at addressing the
retirement plan missing participant problem.
The Retirement Savings Lost and Found Act of 2018
would set up a lost and found online database that uses
the data employers are already required to report, so that
any worker can locate all of his former employer-sponsored
retirement accounts. According to the bill text, the Retirement
Savings Lost and Found Act will enable individuals to
view contact information for only the plan administrator of
any plans of which he is a participant or beneficiary, sufficient
to let him locate his plan.
Under the bill, a plan that failed to find a missing
participant would not be treated as violating the required
minimum distribution (RMD) rules and the Employee
Retirement Income Security Act (ERISA) fiduciary rules if
it has fulfilled certain requirements. These include making
at least one-i.e., unsuccessful-attempt to contact the
individual at the most recent address for him in the plan
records, by certified mail or other similar delivery service
if that address is a physical address, and by electronic mail
or other electronic communication if the only address on
record is an electronic one, plus taking at least one-or two,
if the plan records contain only an electronic address-
additional measure.
Allergan Wins Stock Drop Case Dismissal
The U.S. District Court for the District of New Jersey has
ruled strongly against plaintiffs in a stock drop lawsuit filed
by employees of Allergan in the wake of the firm's acquisition
by Actavis.
Plaintiffs had filed their class action challenge more than
a year ago against the Allergan Inc. Savings and Investment
Plan and the Actavis Inc. 401(k) Plan, claiming breaches
pursuant to Sections 404, 405, 409 and 502 of the Employee
Retirement Income Security Act (ERISA). According to the
initial complaint, the defendants " permitted the plans to
continue to offer Allergan Stock as an investment option to
participants even after the defendants knew or should have
known that Allergan Stock was artificially inflated during
the proposed class period, " which ran from February 25,
2014, to November 2, 2016.
Ruling in favor of a detailed motion to dismiss filed by
defendants, the court cites a long list of precedent-setting
cases, including the U.S. Supreme Court (SCOTUS)'s 2014
decision in Fifth Third Bancorp v. Dudenhoeffer. While SCOTUS
made clear in that ruling that there should be no special
presumption of prudence for employee stock ownership
plan (ESOP) fiduciaries, it also determined that " allegations
that a fiduciary should have recognized from publicly
available information alone that the market was over- or
under-valuing stock are implausible as a general rule, at
least in the absence of special circumstances. " In addition,
for claims alleging a fiduciary breach based on nonpublic
information, the Supreme Court held that plaintiffs must
" plausibly allege an alternative action fiduciaries could have
taken and would not have viewed as more harmful to the
plan than helpful. "
As in other stock drop cases, the plaintiffs here have
flatly failed to meet this high bar for proving standing.
For example, on the matter of proving that plan fiduciaries
should have known that the employer stock price was
inflated, the court concludes that the plaintiffs' examples,
do not rise above the speculative level of misconduct. -PA
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