Month: June 2005

Can a plan fiduciary who has been deemed liable under a plan seek either contribution or indemnification from a co-fiduciary of the plan under ERISA? The question was thoroughly discussed in the recent Opinion and Order issued by the federal district court in Houston approving the $85 million partial settlement on behalf of the Enron participants. The Court pointed out that there is no express right to contribution or indemnity under ERISA in contrast with securities laws where there is an express right. (See fn. 15 of the opinion.) However, after discussing how the federal Circuit Courts of Appeals and the district courts that have addressed the issue are split, the court then adopted the Ninth Circuit view, stating as follows:

After reviewing the law, this Court is persuaded by the reasoning of courts agreeing with the Ninth Circuit’s approach and by the Supreme Court’s consistent reiteration of the exclusivity of the express remedies available under ERISA’s civil enforcement section, and concludes that a remedy for indemnification or contribution among plan fiduciaries is not available under ERISA.

The Court agreed with the view that ERISA is a “comprehensive and intricate statute into which Congress could have injected provisions for indemnification or contribution among fiduciaries but chose not to” and went on to state that “ERISA’s silence about contribution indicates an intent not to recognize remedies not expressly incorporated.”

For those who want to delve further into the issue, try:

ERISA Remedies: Background Materials and Update by Maria O’Brien Hylton and Dana M. Muir (from BNA.com).

Fiduciary Litigation under ERISA by Robert Eccles (also from BNA.com).

Can a plan fiduciary who has been deemed liable under a plan seek either contribution or indemnification from a co-fiduciary of the plan under ERISA? The question was thoroughly discussed in the recent Opinion and Order issued by the federal district court in Houston in connection with the $85 million partial settlement on behalf of the Enron participants. The Court pointed out that there is no express right to contribution or indemnity under ERISA in contrast with securities laws where there is an express right. (See fn. 15 of the opinion.) However, after discussing how the federal Circuit Courts of Appeals and the district courts that have addressed the issue are split, the court then adopted the Ninth Circuit view, stating as follows:

After reviewing the law, this Court is persuaded by the reasoning of courts agreeing with the Ninth Circuit’s approach and by the Supreme Court’s consistent reiteration of the exclusivity of the express remedies available under ERISA’s civil enforcement section, and concludes that a remedy for indemnification or contribution among plan fiduciaries is not available under ERISA.

The Court agreed with the view that ERISA is a “comprehensive and intricate statute into which Congress could have injected provisions for indemnification or contribution among fiduciaries but chose not to” and went on to state that “ERISA’s silence about contribution indicates an intent not to recognize remedies not expressly incorporated.”

For those who want to delve further into the issue, try:

ERISA Remedies: Background Materials and Update by Maria O’Brien Hylton and Dana M. Muir (from BNA.com).

Fiduciary Litigation under ERISA by Robert Eccles (also from BNA.com).

Yesterday, the SEC and DOL published Tips for Plan Fiduciaries related to examining practices of pension consultants. The DOL has also provided a Fact Sheet entitled “Tips for Selecting and Monitoring Service Providers for your Employee Benefit Plan..” DOL states that the tips are designed for fiduciaries of 401(k) plans and other types of pension plans to assist them in “carrying out their responsibilities under ERISA to prudently select and monitor plan service providers.”

In response to the SEC’s recent release of a “Staff Report Concerning Examinations of Select Pension Consultants” (read about it here and here), the SEC and the DOL have collaborated and developed a set of questions to assist plan fiduciaries in evaluating the objectivity of the recommendations provided by pension consultants. You can access the Tips for Plan Fiduciaries here as well as the press release here. The DOL warns plan fiduciaries that the Staff Report raises “serious questions concerning whether some pension consultants are fully disclosing potential conflicts of interest that may affect the objectivity of the advice they are providing to their pension plan clients.” Thus, plan fiduciaries are urged to use the questions provided in order to gather and analyze information about pension consultant practices in order to help plan fiduciaries prudently select and monitor their pension consultants so as to fulfill their fiduciary duties and obligation under ERISA.

The SEC provides the same Tips for Plan Fiduciaries on their website as well as an announcement here.

On May 31, 2005, the Joint Committee on Taxation issued a Bluebook entitled “General Explanation Of Tax Legislation Enacted In The 108th Congress (JCS-5-05) [pdf].”

Benefitslink.com has posted the Bluebook here providing very helpful links to all of the laws impacting benefits.

Today’s Wall Street Journal reports:

Sen. Baucus, a Montana Democrat, recently joined Finance Committee Chairman Chuck Grassley and others to propose legislation that would repeal the alternative minimum tax. Sen. Baucus said millions of Americans recently have “watched in suspense as Anakin Skywalker was lured to the dark side and became Darth Vader. What millions of those same Americans may not be aware of is another Darth Vader lurking in our tax code; that is the AMT.”

“Both Skywalker and the AMT started off with good intentions, but eventually they went astray. Now, the Darth Vader of the tax code is bearing down on millions of unsuspecting families,” Sen. Baucus said. “It’s time to put the AMT in a galaxy far, far away and erase it from the tax code.”

Read more about the “dark side” of AMT in previous posts here.