PLANADVISER - July/August 2021 - 8

compliance news //
from stakeholders, it is further clarifying
and expanding the options available
for recouping overpayments.
Previous guidance was revised to
provide that plan sponsors may offer
overpayment recipients the option of
returning the money in a single sum,
through an installment agreement
or through an adjustment in future
payments.
There are also two new overpayment
correction methods: the funding
exception method and the contribumanaged
checking account. The AA
Credit Union Fund consistently failed
to outpace inflation and was at all
times thus a categorically imprudent
retirement investment under ERISA.
Therefore, the defendants violated
their duties of prudence under ERISA
by including it as a retirement investment
option in the plan's menu of
investment options. "
Judge John McBryde of the U.S.
District Court for the Northern District
of Texas had previously denied class
It also observed that
a brokerage window
is not in and of itself a
designated investment
alternative.
tion credit method. " These reduce the
need for defined benefit plans to seek
recoupment from overpayment recipients
and ease the process for [them] ...
while balancing the interest of other
participants in the plan, " the IRS says.
Ruling Supports American
Airlines Defendants
The 5th U.S. Circuit Court of Appeals
has issued a complex ruling in response
to the appeal of an Employee Retirement
Income Security Act (ERISA)
lawsuit involving American Airlines.
The ruling the 5th Circuit reviewed
was filed last August after more than
four years of litigation. Under consideration
was whether the airline should
have offered a stable value fund in its
401(k) plan rather than an allegedly
poorly performing fund known as
the AA Credit Union Fund. The prior
ruling granted summary judgment to
American Airlines.
The original complaint stated the
following: " The AA Credit Union Fund
effectively delivered, at all material
times, the returns of a poorly
certification of
the
case, denied a
motion to dismiss the case and rejected
a proposed settlement as being insufficient.
The August 2020 opinion and
order addressed motions for summary
judgment filed by American Airlines,
its Pension Asset Administration
Committee (PAAC) and American
Airlines Federal Credit Union (AAFCU).
Now, the 5th Circuit has affirmed,
vacated and reversed parts of that
ruling. While this sounds like a mixed
outcome, the appellate ruling benefits
American Airlines.
Industry Groups on New
Regulations Needed for SDBAs
The 2021 Advisory Council on Employee
Welfare and Pension Benefit Plans, also
called the ERISA [Employee Retirement
Income Security Act] Advisory Council,
recently held a meeting in which it
received testimony about brokerage
windows-or
self-directed brokerage
accounts (SDBAs)-in defined contribution
(DC) retirement plans. The council
said it will examine brokerage windows
to gain a better understanding of their
design, prevalence and usage.
In 2012, the Department of Labor
(DOL) issued a revised field assistance
bulletin (FAB) that clarified what information
related to a brokerage window
needs to be disclosed under the participant-level
fee disclosure regulation. It
also observed that a brokerage window
is not
in and of itself a designated
investment alternative. The guidance
did not address ERISA's fiduciary standards
for brokerage windows.
In 2014, the DOL issued a request
for information (RFI) to learn whether
further guidance was appropriate and
necessary to ensure that plan participants
and beneficiaries with access to
a brokerage window were adequately
informed and protected under ERISA;
the RFI focused on why and how often
brokerage windows were offered and
used in ERISA plans. Comments said
no further guidance was needed.
The council's current meeting
report explains this and that the DOL
is continuing its effort to confirm that
additional guidance should not be
supplied, also that the council's examination
is intended to aid in that effort.
Aliya Robinson, senior vice president
of retirement and compensation
policy at the ERISA Industry Committee
(ERIC), gave testimony at the meeting
as a representative for large-plan sponsors.
She told the council that large
employers are confident in their ability
to include brokerage windows as an
option under the current ERISA guidance
and need none further.
Chantel Sheaks, vice president,
retirement policy, with the U.S.
Chamber of Commerce, submitted a
written statement saying brokerage
windows are likely used by more
sophisticated retirement plan investors.
She also called the option an
important tool for plan sponsors to
use to respond to unique participant
investing needs. " Based on member
input, such requests include wanting
more varied investment options
beyond the core lineup or requesting
a specific type of investment, such as
Shariah investing, funds that do not
include specific investments or overall
ESG [environmental, social and governance]
investing, " Sheaks said. -PA
8 | planadviser.com July-August 2021
http://www.planadviser.com
PLANADVISER - July/August 2021

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