October 28, 2013 § Leave a comment
If a plan such as a disability plan provides for two mandatory levels of appeal, the participant must have 180 days from the date of the initial determimation within which to file his first level of appeal.
The plan does not have to provide 180 days for the participant to file his second mandatory appeal following the determination upon the first level of appeal. While there is nothing in the DOL regulations that would lead one to this conclusion, the court in Price v. Xerox Corporation, 445 F.3d 1054 (8th Cir. 2006), held that only the initial denial of benefits is to be considered an “adverse benefit determination” and a decision on appeal is not. (Yes, this seems to defy all logic and common sense, but that is, in fact, what the opinion says.) The court then holds, “Accordingly, an ERISA plan need not provide a claimant with at least 180 days to file a mandatory second appeal.”
The Xerox plan in question provided 60 days in which the participant could file the mandatory second level of appeal, which the claimant argued was unreasonable. The opinion states, “Price contends that 60 days is unreasonable, because it restricts new evidence and adequate dialogue with the administrator. However, this argument ignores the fact that he had over 180 days to present evidence and contest the denial in the first appeal.”
While this was true for Mr. Price, who had requested and received a 90-day extension to file his first appeal, what about a participant who files his first appeal promptly? What if the plan only allows 30 days for the second appeal? In that case, a participant who filed his first appeal in 15 days could be limited to a total of 45 days in which to appeal.
Nevertheless, I suspect a court would still apply the holding in Price to preclude that participant from having additional time to prepare a second appeal. As a result, participants would be wise to prepare their initial appeals carefully, and plan sponsors would be wise to shorten the time frame for the second level of appeal to 60 days (for which Price serves as precedent) or even less for plan sponsors who are more aggressive.
October 25, 2013 § Leave a comment
I had a client call today with a question I’ve never considered before. The client’s employee is married, and the employee’s spouse is about to be incarcerated for about a year. The employee has asked if she can drop the spouse from health coverage. The employee has also asked if she will have a special enrollment right under HIPAA and be able to reenroll her spouse when he is released.
I did not find IRS guidance that specifically adresses the issue of changes in coverage related to incarceration, but the prevailing view (based on internet boards such as benefitslink.com, which I generally am hesitant to rely too much on) seems to be:
1) When a spouse or dependent is incarcerated, the incarceration itself is not a life event that would permit the employee to change coverage, and the inmate can only be dropped during open enrollment. (Apparently, the government provides medical care to inmates but can seek reimbursement from a plan that covers the inmate, and so the government does not want to encourage dropping coverage.) The fact that incarceration probably coincides with loss of employment doesn’t seem to change this because the employee’s loss of employment would generally not be a reason to drop coverage, and it’s possible that the employee is covered under the spouse’s plan because he either wasn’t employed or his employer didn’t offer him coverage.
2) If an inmate is housed in a facility that is “out of area,” the change in residence could be a change that would permit the employee to drop coverage, but many provider networks (Anthem, BCBS, UHC) are effectively nationwide, so the prison is likely to be in an area that the network covers.
3) When an inmate is released from incarceration, I think that generally would be considered a loss of government coverage, and the employee would be allowed to make a change to cover the spouse or dependent again based on the inmate’s loss of coverage. The authority for this is in Treas. Regs. section 1.125-4(f)(5), which is a final regulation (not part of the 2007 proposed regulations) and refers to loss of “group health coverage sponsored by a governmental or educational institution”.
My client is going to tell the employee that she can’t drop her spouse from coverage (at least until a divorce, which seems like it could happen in these circumstances) but she can decide not to reenroll him at their upcoming open enrollment and then wait until he’s released to add him again.
Has anyone else answered this question differently? If so, why? With the shockingly high percentage of our population that we incarcerate, it would be really helpful if the IRS would issue some guidance on this issue.
October 23, 2013 § Leave a comment
I don’t do a lot of work for non-profits, but I recently drafted an employment agreement for a honcho at a fairly well-known non-profit, and I learned a few things about the interaction of Code section 457(f) and Code section 409A that I’d like to note here. My facts were that the honcho was entitled to a pension payment when he separates from service. The entitlement to this payment “vested” after he worked for the entity for five years. Under Code section 457(f), the amount would therefore be taxable to him after five years. As a part of his new contract, he wanted the right to payment at that point without having to wait until he separates from service. My initial sense was that this would be a problem under Code section 409A, but I wanted to look at how the interaction between Code sections 457(f) and 409A played out.
First off, there is some language in the preamble to the final 409A regulations about this, which states:
For purposes of determining the the time of payment, the term ‘payment’ generally refers to an actual or constructive payment of cash or property. However, the final regulations provide that for purposes of the short-term deferral rule, an amount is treated as paid when it is included in income under section 457(f) whether or not an actual or constructive payment occurs. Accordingly, where the income inclusion under section 457(f) stems from the lapse of a substantial risk of forfeiture that is also treated as substantial risk of forfeiture for purposes of section 409A, the amount included in income will be considered a short-term deferral for purposes of section 409A.
(See 72 FR 19235.) At first, I wasn’t sure what this meant, and the language in the actual regulations did not clarify it for me. The regulations themselves address section 457(f) plans in three places. First. Treas. Regs. section 1.409A-1(a)(4) provides in part:
A nonqualified deferred compensation plan under section 457(f) may constitute a nonqualified deferred compensation plan for purposes of this paragraph (a). The rules of section 409A apply to nonqualified deferred compensation plans separately and in addition to any requirements applicable to such plans under 457(f). [...] For purposes of the application of section 409A to a plan to which section 457 applies, a payment under the plan generally means the provision of cash orproperty to the service provider, provided that for purposes of application of the short-term deferral rule set forth in paragraph (b)(4) of this section, the inclusion in income of an amount under section 457(f) is treated as payment of the amount.
The short-term deferral rule in Treas. Regs. section 1.409A-1(b)(4) cited above states, “A payment is treated as actually or constructively received if the payment is includible in income, including if the payment is includible in income under section 83, the economic benefit doctrine, section 402(b), or section 457(f).”
Thus, amounts included in income under Code section 457(f) are not treated as deferred for purposes of Code section 409A, which seems fairly straightforward until you reach the exceptions from the antiacceleration rules. Treas. Regs. section 1.409A-3(j)(4)(iv) provides:
A plan subject ot section 457(f) may provide for an acceleration of the time or schedule of a payment to a service provider, or a payment may be made under such a plan, to pay Federal, state, local and foreign income taxes due upon a vesting event, provided that the amount of such payment is not more than an amount equal to the Federal, state, local and foreign income tax withholding that would have been remitted by the employer if there had been a payment of wages equal to the income includible by the service provider under section 457(f) at the time of vesting.
If the amounts included in income under a 457(f) plan are not treated as deferred compensation, then why should there be an exception to the anti-acceleration rules for tax withholding when such amounts are included in income? I was honestly mystified.
I discussed this with a colleague who does significantly more non-profit work than I do, and his explanation is that the definition of “substantial risk of forfeiture” under Code section 457(f)(3)(B) is limited to future performance of substantial services. Thus, once future performance of substantial services is no longer required — for example where the participant has satisfied a five-year vesting requirement (which was the case for the executive I was working with), the amount is includible in income for purposes of section 457(f). However, it is possible to conceive of vesting requirements that would not satisfy section 457(f), such as vesting upon attainment of certain performance commitments, that would require an amount to be included in income under Code section 457(f) but also not payable until a future date.
If an amount ceases to be subject to a substantial risk of forfeiture under section 457(f)(3)(B) and is included in income, then the amount is no longer treated as deferred for purposes of Code section 409A, but rather as paid. As a result, the actual time of payment could be moved up from separation from service to the effective date of the new contract.
This was a surprising outcome for me, but a happy one for the honcho.
Quick update: while looking for something else last night, I came across a brief article about the interaction of Code sections 409A and 457(f) here: https://www.americanbar.org/newsletter/publications/aba_health_esource_home/gallagher.html The conclusion (as much as there is one because the writing is muddy at best) seems to be, “Such ‘vested’ [for purposes of 409A but not 457(f)] amounts might still be eligible for deferral of taxation under Section 409A, provided that distribution cannot occur until a statutory permissible event. However, if amounts are vested under both Section 409A and Section 457(f), taxation under Section 457(f) will be required.” This article either breezes by (or perhaps misses entirely) the bigger issue that an amount is not subject to Code section 409A after having been included in income under Code section 457(f). But perhaps someone else will see value that I don’t here? If I’ve missed true genius in this article, please let me know.
October 22, 2013 § Leave a comment
This post is just a few short thoughts about differential wages, which are the wages that some employers will pay to reservists called to active duty in order to make up the difference between a reservist’s military pay and his or her civilian pay.
Section 3401(a) of the Code defines “wages” for income tax withholding purposes, and the FICA and FUTA definitions in Code sections 3121(a) and 3306(b), respectively, contain very similar definitions. Prior to 2008, differential pay did not fall within the definition of “wages” because the payments were made to idividuals who were not performing services for the employer. The Heroes Earnings Assistance and Relief Tax Act of 2008 (the “HEART Act”) added section 3401(h) to the Code. Section 3401(h) defines the term “differential wage payment” and provides that differential wage payments are treated as a payment of wages from the employer to the employee for income tax withholding purposes. However, no similar Code sections were added to cause differential wage payments to be treated as “wages” for FICA and FUTA purposes.
Rev. Rul. 2009-11 provides that differential wage payments are supplemental wages because they are not payment for services in the current pay period. (This may be true for some pay periods, but it would be possible for someone to work one week of a two-week pay period and to receive differential wages for the second week.) Still, on the basis of Rev. Rul. 2009-11, the employer can (and should) treat the differential wage payment as supplemental wages for income tax withholding purposes. As a result, the employer can withhold at either the aggregate W-4 rate or the supplemental wage withholding rate, which is 25% unless supplemental wages for the calendar year exceed $1,000,000, which seems unlikely. Rev. Rul. 2009-11 also provides that differential wage payments must be reported as income on Form W-2.
That’s the black-letter law as it stands, and the Revenue Ruling is very helpful. Going a step further, into more interesting territory, I have a client that continues to calculate 401(k) contributions and match on the employee’s aggregate wages so that employees’ retirement savings will not be disrupted by deployment. I’m not sure that this works as a technical matter, but their plan, which obviously provides for this deferral and match, just received a determination letter. The employer feels strongly about this issue because if only the differential wages were counted, the employee would be eligible for a substantially lower match, and they view the point of differential wages as allowing the employees called to active duty to avoid financial disruption.
I was surprised by the level of emotion that the employer mustered on this topic. Certainly, I see his point. I also suspect that he’s right when he says the Service will never, ever, ever want to pick this fight with an employer so committed to his employees and his country. I felt like an unpatriotic ninny for advising against this. I just can’t find the basis for it in Code.
August 29, 2013 § Leave a comment
This is a post where I will confess to being wrong and learning something new. This time I learned about catch-up contributions.
I was asked the following question about a senior executive starting a new job – can he make catch-up contributions in the new employer’s plan if he has already contributed the maximum catch-up contribution in his former employer’s plan for the plan year?
Well, I looked at Code § 414(v) and the accompanying Treasury Regulations and saw what looked like a plan limit, not an individual limit. I also checked the Tax Management Portfolios, where I read, “Unlike the § 402(g) limit, the § 414(v) catch-up limit does not apply on a taxpayer-by-taxpayer basis, but rather on an employer-by-employer basis. [Cite to Code § 414(v)(2)(D) and Treas. Regs. § 1.414(v)-1(f)(1).] As a result, a catch-up eligible participant that works for two unrelated employers may make catch-up contributions that in total exceed the general dollar limit on catch-up contributions.”
Based on this, I gave advice to my client, and was – SMACK – contradicted by the guy’s advisor, who said that the limit is a personal limit like the Code § 402(g) limit. This made me go back and look again, and what I found was very interesting, so I’d like to share it here in the hope that either (1) now I understand it and this will be helpful to someone else or (2) I’m wrong and someone will explain to me exactly why. There are definitely respected practitioners on both sides of this issue, but at this point, I am inclined to agree with the advisor that the limit is a personal limit and is note merely like the Code § 402(g) limit — it is the the Code § 402(g)(1)(C) limit.
First, let me set out the argument in favor of allowing the executive to make a second catch-up contribution in his new employer’s plan.
- The limit in Code § 414(v)(2)(A) is specifically a plan limit. However, under Code § 414(v)(2)(D), all plans other that 457 plans maintained by a single employer are aggregated, and all 457 plans maintained by an employer are aggregated. Employer for this purpose is the controlled group, so that if an employer had two separate 401(k) plans in the controlled group (for example for Division A and Division B), they would be treated as a single plan, and no employee could contribute more than $5,500 (or whatever the annual limit for the year in question is) total catch-up contributions to both plans. There is nothing about aggregation of plans by unrelated employers. Thus, if I worked for three unrelated employers and participated in a 401(k) plan at each employer, it looks like I could make $5,500 in catch-up contributions to each plan.
- However, if an individual is employed by two separate employers and makes catch-up contributions to two plans, the amount that is excludable from taxable income is limited to the Code § 402(g)(1)(B) limit, which is what we all think of as the Code § 402(g) limit ($17,500 for this year) plus the dollar amount under Code § 414(v)(2)(B)(i). (See Code § 402(g)(1)(C).) Thus, an individual who makes catch-up contributions to two plans of two separate employers will not be able to defer more than $5,500 of catch-up contributions on a pre-tax basis.
- The Technical Explanation of the Job Creation and Worker Assistance Act of 2002, prepared by the Staff of the Joint Committee on Taxation, provides the evidence that I found most persuasive in support of this side of the argument. The Technical Explanation states:
Additional salary reduction catch-up contributions.–Under the Act, an individual aged 50 or over may make additional elective deferrals (“catch-up contributions”) to certain retirement plans, up to a specified limit. A plan may not permit catch-up deferrals in excess of this limit. The provision clarifies that, for this purpose, the limit applies to all qualified retirement plans, tax-sheltered annuity plans, SEPs and SIMPLE plans maintained by the same employer on an aggregated basis, as if all plans were a single plan. The limit applies also to all eligible deferred compensation plans of a government employer on an aggregated basis.
Under the Act, catch-up contributions up to the specified limit are excluded from an individual’s income. The provision also clarifies that the total amount that an individual may exclude from income as catch-up contributions for a year cannot exceed the catch-up contribution limit for that year (and for that type of plan), without regard to whether the individual made catch-up contributions under plans maintained by the more than one employer.
(See page 40 of the Technical Explanation, available here: https://www.jct.gov/publications.html?func=startdown&id=1892 ) The last sentence of the second paragraph suggests to me that an individual with more than one employer might make catch-up contributions to multiple plans, but that individual could only exclude one amount. In addition the first sentence says, “… catch-up contributions up to the specified limit are excluded” which implies that there can be catch-up contributions beyond the specified limit.
- This seems consistent with IRS guidance describing EGTRRA changes that discusses the limit on “pre-tax” catch-up contributions (http://www.irs.gov/Retirement-Plans/Determinations—Summary-of-EGTRRA-Changes-for-Retirement-Plans ) and with a number of discussions on various message boards about how catch-up contributions to multiple plans may exceed the annual limit and be taxable. (See one example here: http://benefitslink.com/boards/index.php?/topic/21256-do-amounts-contributed-as-catch-up-contributions-to-a-simple-ira-affect-the-ability-to-make-catch-up-contributions-to-the-plan-of-another-employer-such-as-a-401k-or-403b/ ) This is also consistent with client alerts from some service providers.
Yeah, all that sounds so reasonable that one could even be forgiven for thinking that it’s right. Can you see why I was thinking this way?
As I was still feeling good about my answer, I came across a client alert from the Groom law group (available here: http://www.groom.com/resources-178.html) that cites Proposed Treas. Regs. § 1.414(v)-1(g)(2), which stated, “Maximum excludable amount. If a catch-up eligible participant participates in two or more applicable employer plans during a taxable year, the total amount of elective deferrals under all plans that are not includable in gross income under this paragraph (g) because they are catch-up contributions shall not exceed the applicable dollar catch-up limit under paragraph (c)(2)(i) of this section for the taxable year.” (The proposed regulations are here: http://www.gpo.gov/fdsys/pkg/FR-2001-10-23/html/01-26566.htm )
This sent me back to the final regulations, and this language is not in the final regulations. I think the drafters of the regulation thought it was unnecessary by then.
Catch-up contributions were introduced by the Economic Growth and Tax Relief Reconciliation Act of 2001, or “EGTRRA”. EGTRRA said participants could make catch-up contributions in 401(k) plans. However, EGTRRA did not amend Code § 402(g) to exclude the contributions from income. Initially, Code § 414(v)(3) (A)(i) included Code § 402(g) in the list of limits that did not apply in the case of catch-up contributions.
That didn’t last long. Section 411(o) of the Job Creation and Worker Assistance Act of 2002 (which is Technical Corrections) amended Code § 402(g) to add the current Code § 402(g)(1)(C), excluding catch-up contributions from income. The text of the Job Creation and Worker Assistance Act of 2002 (P.L. 107-147) is here: http://www.gpo.gov/fdsys/pkg/PLAW-107publ147/pdf/PLAW-107publ147.pdf .
And this caused me to go back and look more closely at the statute, which is when I had my epiphany: Code § 414(v)(1) permits catch-up eligible employees to make additional “elective deferrals”.
For this purpose, “elective deferral” is defined in Code § 414(u)(2)(C), which provides, “… the term elective deferral has the meaning given such term by section 402(g)(3); except that such term shall include deferral of compensation under an eligible deferred compensation plan (as defined in section 457(b)).”
Code § 402(g)(3) defines elective deferrals as the sum of (1) employer contributions “not includible in gross income for the taxable year” under Code § 402(e)(3) plus (2) employer contributions “not includible in gross income for the taxable year” to a simplified employee pension plus (3) employer contributions used to purchase an annuity under Code § 403(b) plus (4) elective employer contributions to a simple retirement account.
Because the amounts deferred under a 401(k) plan must be “not includible in gross income for the taxable year” in order to count as elective deferrals, the limits on exclusion from income in Code § 402(g)(1) mean that amounts in excess of the annual limit in Code § 414(v)(2)(B)(i) cannot be catch-up contributions by definition.
First, there are no dire consequences for the plan(s) if a participant makes multiple catch-up contributions to multiple plans of unrelated employers. If a participant makes catch-up contributions in multiple plans of different employers, then each plan is fine.
Second, the amounts that exceed the Code § 402(g) limit will be excess deferrals and will be identified because of how they will be reported on the participant’s Form W-2. Thus, if the participant doesn’t ask the plan to distribute them, he or she will owe additional taxes.
Third, it is not possible to avoid this result by having after-tax catch-up contributions since catch-up contributions are, by definition, “not includible in gross income” or, alternatively, may be designated as Roth contributions, but in either case, they are subject to the Code § 402(g) limit.
So the advisor was right and I was wrong – the executive could not start over with his catch-up contributions when he changed employers.
August 2, 2013 § 1 Comment
I was talking to one of my colleagues today. He’s one heck of a good lawyer, and he reviews a lot of third party administrator, or “TPA” contracts for self-funded health and welfare plans. (Hey, we all have our weird little niches in the ecosystem around here.) I have a client for which I’ll be reviewing some of those, and so I asked him what I should focus on in my review. This post is to help me remember what he told me and, if I’m diligent, perhaps to serve as the beginning of a checklist for review of TPA agreements when I am reviewing on behalf of a self-funded plan.
• Check the parties to the contract.
- The TPA always tries to make the company a party to the contract because they think this will improve their chances of getting paid.
- If the plan should be the party, push back and insist that the contract should be with the plan. The TPA will always roll over on this.
• Has the TPA tried to avoid entering into a HIPAA Business Associate Agreement?
- The TPA will need to sign a Business Associate Agreement.
- Use the form provided by the DOL because there is really no point in trying to do anything else. This clearly works from the DOL’s point of view and it is a fairly neutral document as far as favoring one party or the other.
• For health plan TPA’s, the contract will always contain a “gross negligence” standard.
- You can push back and try for “negligence,” but my colleague has rarely had any success with that. TPAs pretty much all hold the line at gross negligence.
- Rather than fighting a losing battle about negligence vs. gross negligence, he suggests a careful review of the performance standards in the agreement. The more you can tighten the performance standards by insisting on strong performance guarantees, the better off the plan will be.
• Make sure the TPA is a fiduciary. A TPA that handles appeals should be a fiduciary.
- Really, a TPA that handles claims decisions at all should be a fiduciary because in approving a claim, the TPA is making a decision about plan assets.
- There is no question that a TPA making final appeals decisions is a fiduciary, and the contract should reflect this.
• The contract should not allow the TPA to outsource any functions it has agreed to perform without notice to the plan and consent from the plan.
- This is a fiduciary issue for the plan administrator. Presumably your plan administration committee has performed some due diligence before hiring the TPA. That due diligence is not worth very much if the TPA can then turn right around and outsource to another provider. (Just think about this – what’s to stop them from outsourcing to the cheaper provider your committee decided not to hire in that case?)
• Some TPAs will try to include provisions that they control litigation. These provisions should not be included in the contract.
- Specifically, the plan administrator should not permit the TPA to settle claims without approval. That ensures that the plan administrator is aware of and informed about any disputes that proceed to litigation and further ensures that the plan administrator is exercising proper oversight.
- In addition, the plan administrator should retain the right to hire outside counsel and to pick the counsel. If the plan is getting sued, then the plan administrator should be choosing counsel and determining what litigation strategy is most appropriate for the plan as a whole.
- Some TPAs will try to include provisions that they control litigation. These provisions should not be included in the contract.
• Make sure that the right person signs the contract. Whoevr signs on behalf of the plan should be properly authorized, for example by a resolution from the plan administration committee.
• On a slightly different note, to the extent that you are appointing an assistant plan administrator to handle appeals, that person should not work in the benefits administration group.
I am sure that there are other things one should look out for. If you read this and know of any, please comment.
July 19, 2013 § Leave a comment
In Advisory Opinion 2013-03A (available here: http://www.dol.gov/ebsa/pdf/AO2013-03A.pdf ), the Department of Labor offers some clarification of its position about whether revenue sharing payments received by recordkeepers are plan assets, and in general, I think the news is very good.
The facts set forth in the Advisory Opinion, which was issued to the Groom Law Group on behalf of Principal Life Insurance Company, describe what I think is a fairly typical fee sharing arrangement. Principal provides recordkeeping services to a plan. The investment options of the plan include Principal insurance company separate accounts and both “affiliated and unaffiliated mutual funds”. Principal receives revenue sharing payments from these investment options and then provides the client plan with credits to a bookkeeping account that can be used to pay certain plan expenses.
The Advisory Opinion concludes:
- Based on the terms of the contract between Principal and the plan (which specifically do not require revenue sharing payments to be segregated for the benefit of any plan), the revenue sharing payments are not a plan asset.
- The credits to the bookkeeping account are a plan asset because they are a contractual right owned by the plan to either receive amounts agreed to with Principal or to have such amounts applied to plan expenses.
- ERISA’s general fiduciary standards still apply. This isn’t exactly a bombshell conclusion, but it sets up the following sentence, “It is the view of the Department that the responsible plan fiduciaries must obtain sufficient information regarding all fees and other compensation that Principal receives with respect to the plan’s investments to make an informed decision as to whether Principal’s compensation for services is no more than reasonable.”
- This really reiterates the point made by the district court (ad nauseaum) in Tussey v. ABB, Case No. 2:06-CV-04305-NKL (W.D. Missouri March 31, 2012) where the court repeatedly, and somewhat nastily, faults the ABB employees for not having obtained dollar amounts for the fee sharing amounts that Fidelity received. One of several rants on this subject from the opinion is, “ABB never calculated the dollar amount of the recordkeeping fees the Plan paid to Fidelity Trust via revenue sharing arrangements, nor did it consider how the Plan’s size could be leveraged to reduce recordkeeping costs. In fact, it did not obtain a benchmark cost of Fidelity’s services prior to choosing revenue sharing as the Plan’s method for compensating Fidelity Trust. It did not even do so in 2005, when an outside consulting firm, Mercer, told ABB that it was overpaying for recordkeeping and that it appeared the Prism Plan’s were subsidizing the corporate service provided to ABB by Fidelity.” (The Tussey opinion is available here: http://docs.justia.com/cases/federal/district-courts/missouri/mowdce/2:2006cv04305/80120/623/0.pdf?1333347483 ) Thus, plan fiduciaries need to review fee disclosures carefully. Of course, the savvy plan fiduciaries got this message after the Tussey decision.
Three thoughts about these conclusions:
- A plan fiduciary may want to review the terms of the plan’s contract with its recordkeeper to ensure that the contract terms are similar enough to the facts here to prevent the fee sharing amounts from being considered plan assets. I think this is very likely to be the case for most recordkeeping agreements, which is why I’d characterize this Advisory Opinion as being generally good news.
- Plan sponsors may be well served by hiring a fiduciary to review the terms of their service provider contracts. This is particularly true if their plans have significant assets. After this Advisory Opinion, plus the Tussey decision and the settlement in the George v. Kraft Foods Global, Inc., No. 10-1469 (7th Cir. Apr. 11, 2011), case, then the cost of hiring an advisor to review the fund line-up and the fees paid to service providers starts looking like a pretty good investment.
- I would recommend getting this service from a provider that is absolutely not affiliated with the recordkeeper in any way. I know some big investment providers (I’ll let you guess which ones) say that they can offer investment advice as a service, but I would caution strongly against an investment advice provider that also has affiliated mutual funds. Even if their analysis is good, the optics are not.