Benefits Counselor ' June 2020

• Published date: 24 June 2020
• Subject Matter: Employment and HR, Coronavirus (COVID-19), Retirement, Superannuation & Pensions, Health & Safety, Employee Benefits & Compensation, Operational Impacts and Strategy
• Law Firm: Reinhart Boerner Van Deuren s.c.
• Author: Mr Employee Benefits Group

Retirement Plan Developments

DOL Releases Final Regulations for Electronic Delivery of Retirement Plan Disclosures

On May 27, 2020, the U.S. Department of Labor (DOL) released final regulations addressing the electronic delivery of retirement plan disclosures. The final regulations are similar to the proposed regulations the DOL released in October 2019, but create an additional safe harbor method for electronic disclosure, called the "notice and access" safe harbor, which applies to documents the plan administrator is required to furnish. The safe harbor allows electronic disclosures to be provided to any covered individual who provides an email address, including employer-provided email addresses, or mobile telephone number to the plan administrator. The final regulations require plan administrators to send a notice of internet availability to covered individuals whenever a disclosure is made available on a website. The final regulations take effect on July 27, 2020. For more information, please see Reinhart's alert on the subject.

IRS Provides Temporary Relief for Witnessing Spousal Consents

On June 3, 2020, the Internal Revenue Service (IRS) issued Notice 2020-42, which provides temporary relief from the requirement that a notary public or plan representative be physically present to witness spousal consent to certain participant elections if certain conditions are satisfied. The relief is effective from January 1, 2020 through December 31, 2020.

The relief permits online notarization, provided the notarization process is executed via live audio-video technology that otherwise satisfies the requirements for participant elections and complies with state law requirements applicable to the notary.

The relief also permits elections witnessed by a plan representative to be made remotely if four requirements are satisfied:

• The individual signing the participant election must present a valid photo ID to the plan representative during the live audio-video call.
• The audio-video call must allow for direct interaction between the plan representative and the signing individual. The relief explicitly prohibits prerecorded video of the signature.
• The signing individual must send, by fax or electronic means, a legible copy of the signed document directly to the plan representative on the same date it was signed.
• After receiving the signed document the plan representative must acknowledge the signature has been witnessed and transmit the signed document back to the individual.

Supreme Court Rules Retirees who Have Received All Promised Payments Lack Standing to Sue Pension Fiduciaries

On June 1, 2020, the Supreme Court of the United States issued a 5‑4 decision in Thole v. U.S. Bank. Justice Kavanaugh authored the majority opinion, ruling that the putative class action must be dismissed for lack of standing. Justice Sotomayor authored a dissent. Although the district court and U.S. Court of Appeals for the Eighth Circuit previously ruled the case should be dismissed, the Supreme Court's opinion adopted new reasoning for the dismissal, stating that defined benefit plan participants whose benefits have not been reduced or limited do not have standing to bring a suit for breach of fiduciary duty.

Background

Two retired employees of U.S. Bank, James Thole and Sherry Smith (Plaintiffs) filed the putative class action in 2013. The Plaintiffs alleged that U.S. Bank and certain fiduciaries mismanaged the U.S. Bank Pension Plan (Plan) between September 30, 2007 and December 31, 2010. The complaint alleged that U.S. Bank breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by failing to diversify Plan assets and by adopting an investment strategy that directly benefitted U.S. Bank. The Plaintiffs sought to recover Plan losses and the disgorgement of profits, along with equitable and injunctive relief.

Supreme Court Decision

Writing for the five-justice majority, Justice Kavanaugh ruled the Plaintiffs lacked Article III standing to bring the suit because "win or lose, they would still receive the exact same monthly benefits they are already entitled to receive." The majority rejected the Plaintiff's argument that ERISA participants have an equitable or property interest in their plan, analogous to the interests of beneficiaries of a private trust. Justice Kavanaugh noted that...