Employer + ERISA Attorney = ???

March 8, 2016

If you ever wondered how you can strategically and cost effectively partner with an ERISA Attorney to improve and protect your retirement plan, my conversation with Sherrie Boutwell, ERISA Attorney and partner at Boutwell Fay, a boutique ERISA law firm should be very helpful to you.  See below for notes I took away from my conversation with Sherrie on ways to enhance your 401(k) plan and maximize your relationship with an outside ERISA attorney.  

 

1. Many employers only reach out to ERISA attorneys when something goes bump in the night.  Having an ongoing relationship can be beneficial to the health of your plan because if something does come up, it is important to act quickly. With an ongoing relationship, you can just pick up the phone rather than start a search for counsel. 

2. Lawyers are trained and duty bound to advocate and act in the best interest of their client, without conflict of interest and may provide a level of confidentiality that is not otherwise available.  

3. Plan document, service contract and authority delegation reviews can be the most cost effective way to open a relationship with an ERISA Attorney.

4. Plan document review

a. Plan documents are continuing to shift to some form of preapproved documents sponsored by service providers.  

b. While they are designed to fit most plans, they do not fit all plans.  Ensuring your plan document is written and designed to meet your needs is imperative.  

c. Keep signed plan copies of your document from the inception of your plan.  

d. Ensure you are following the provisions in your plan document, if not it might make sense to explore self-reporting options to correct mistakes.  

e. Ensure protected benefits are appropriately recognized during provider changes, document restatements or during M&A activity. 

f. Plan document failures can result in plan disqualification which is essentially a “nuclear bomb” for your retirement plan.  

5. Service contract reviews 

a. Service provider agreements are being negotiated now more than ever. 

b. Indemnity, standards of care and cybersecurity/privacy are key contractual issues to explore.  

c. Arbitration clauses have pros and cons. 

d. Termination clauses should be reasonable and give you enough time move to a new vendor and/or get out of a relationship with a current service provider in a reasonable period of time if needed.  

e. Attempting to negotiate more favorable terms for the company or plan, could be evidence of good fiduciary process, even if you don’t get everything you ask for.  At least you asked.

6. Delegation of authority is paramount in mitigating and appropriately placing fiduciary responsibility and risk.  

a. Effective committee structure to govern processes and decision making is key.  

b. Good evidence (documentation) can help you successfully defend against a lawsuit before it goes to trial.  

c. Having a good, ERISA compliant and prudent process (and documentation of that process) is your best defense, even if in hindsight your decision did not have the best possible outcome.  

7. Properly structured fiduciary liability insurance program is important to ensure it will respond properly when and if there is a need.  

a. Ensure you have the correct named insured listed.  

b. Some policies may cover legal fees to prepare Voluntary Correction filings or first dollar defense of a regulatory investigation.  Policies will not cover required employer contributions to fix plan errors.  

c. If there is a fact or circumstance that could result in a claim, consult with counsel and be sure you notify your provider in a timely and thoughtful fashion.  

8. Correcting plan errors

a. Attorney client privilege can be a powerful advantage of working with an ERISA attorney to fix plan errors.

b. Have conversations with your attorney early after the discovery of a problem

c. If there is an error caused by a service provider, it only makes sense that the service provider might not be the most objective source for resolution to fix the problem.

d. Self-correction options are largely formulaic and are designed to address common plan errors.  Although these programs are not a “Trojan horse” to invite a full blown IRS or DOL investigation, it is important to understand and evaluate the risks before filing.  

e. For more complex or costly problems, with the help of an ERISA attorney, you might be able to negotiate a better and less costly outcome.  

f. Statute of limitations for liability varies depending on the type of problem – but plan qualification defects remain until corrected, that does not change with the passage of time.  

9. Based on conversations with government regulators, having outside counsel present at a DOL or IRS investigation is not in and of itself viewed as an admission of guilt in the eyes of the investigators.  

10. Train your employees, send them to seminars, webinars and conferences.  

11. For employers with limited resources, a document review is the best way to get the most bang for your buck in working with an ERISA attorney.  

 

Click here to listen to my interview with Sherrie Boutwell.  

 

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