WHAT IS A PLAN? – E §3(1,2,3) – Mass v. Morash – SCt held that whether a payment to an EE is a welfare benefit or current
compensation may depend on whether the method used to provide the payment generates the kinds of problems ERISA was
designed to regulate. Thus whether vacation pay is treated as regular compensation may depend on whether payment is made from
a trust fund or from general assets of the ER. Dillingham Factors – if from the surrounding circumstances, a reasonable person
can ascertain: intended benefits, intended beneficiaries, a source of financing and a procedure to apply for & collect benefits, then it
is a plan under ERISA. Fort Halifax – CT did not preempt a statute requiring a one time severance payment bc it only mandated a
benefit, not an “ongoing arrangement needing administration.”Akau – 4 severance payments a plan b/c it place significant
administration burdens on plan.DoL Regulations – an ER who facilitates the purchase of group life ins. through an outside insurer
does not operate an ERISA plan if the ER makes no contributions & EE participation is voluntary. E §402(a)(1) – generally a plan
must be written in order to be a plan, cts are reluctant to enforce unwritten plans. Gov Plans are Not Plans!
WHO IS AN EE? – E §3(6) – defines but is circular. Darden – to determine if an EE under ERISA then apply common-law test, if
the hiring party has the right to control the manner and means by which the product is accomplished then EE. IRC test basically the
same. Leased EE = EE. Vizcaino v. Microsoft – can’t just label people as independent contractor to exclude them from plan.
COMPENSATION – I §415(c)(3) – treasury regulations allow for any definition of compensation w/ respect to individuals who are
not self-employed if it is (1) reasonable, (2) does not favor HCE, (3) if the avg % of compensation under the defin for an ER’s HCE’s
as a group does not exceed the avg % of total comp in the def for NEC.
DISCLOSURE & REPORTING – COBRA Disclosure – notice & disclosures regarding the continuation of healthcare benefits. Plan
Disclosure - E §103 – annual financial statements & for DBs actuarial statements. E §104(a) – administrator of each ERISA plan
must file annual report with the DoL. E §105 – plan administrator must supply to a part or bene, upon written request, that person’s
accrued benefits & vesting status. Summary Plan Description – E §102 – every plan must prepare and furnish a SPD; which must
include identity of plan administrator & trustees, set forth eligibility & vesting rules, describe claims and appeals procedure, &
sufficiently accurate and comprehensive to reasonably apprise such parts and benes of their rts and obligations under the plan.
Written in a manner calculated to be understood by the avg plan part.
VESTING – Immediate Vesting – EE’s acct fully vested, no forfeiture occurs. Cliff Vesting – E §203(a)(2)(A) – after a specified
waiting a period (max 5 yrs), during which the EE’s pension is wholly forfeitable, the pension then becomes fully vested. Graduated
Vesting DC – E §203(a)(2)(b) – (floor) - yos<3 = 0%, 3 = 20%, 4 = 40%, 5 = 60%, 6 = 80%, 7 = 100%. Graduated Vesting DB – E
§204(b)(1)(c) – Fractional Benefit Accrual - projected benefit * (yrs in plan/yrs until NRA) = z; z * vested % as shown for DC. E
§203(a) – EE’s rts to normal retirement benefit is non-forfeitable upon attainment of NRA (65 or 5 yrs of plan participation). E
§203(a)(1) – accrued benefit from EE contribution is non-forfeitable. E §203(c)(1) – can’t amend vesting schedule to reduce vested
portion. E §203(a)(3)(A) – if part dies before vest no protection; if part dies before commencement & married then QPSA; if part dies
after commencement QJSA.
MIN PARTICIPATION – E §202(a)(1)(A)(i, ii) – may refuse participation to person under 21 or the completion of 1 yr of service
whichever is the later. E §202(a)(1)(B) – if plan allows 100% vesting after 2 yrs participation then the plan can require 2 yos before
participation. Measuring Participation – E §203(b)(2)(A) – yos = 12 months in which the EE works not less than 1000 hrs. Break
in Service – (3)(A) – not more than 500 hours of service in 12 months (maternity leave doesn’t count). (B) – all yos before break
count for vesting, but not until the completion of 1 yos after EE returns. (D) – if part has no vested rights and break exceeds greater
of 5 yrs or yos before break then EE can lose credit for yrs before break. Cash-Out, Buy-Back – E §204(d,e) – if cashed out &
forfeited part of benefit then can buy back for the cash out value. Bad Boy Clauses – no exceptions to vesting rules for bad boy
clauses, but they are enforced in Welfare Benefit Plans. WBP – E §201(1) – excludes from vesting rules
Protections Against ER Misconduct – I §411(d) – protects against ER misconduct associated with the administration of pension
forfeiture rules (sub principle of anti-discrimination norm). I §411(d)(1)(A,B) – proscribes a pattern of abuse, such as sacking EE’s to
keep their pensions from vesting, when the pattern would tend to discriminate in favor of HCE. Termination - I §411(d)(3) –
requires as a condition of tax qualification that, upon termination or partial termination, accrued benefits must vest (to extent funded
for DB). Vertical Partial Termination – the exclusion by severance or plan amendment of previously covered participants. Must be
a significant %, old bright line test, exclusion greater than 20% investigate, exclusion greater than 50% then it happened. Horizontal
Partial Termination – cut-back in future benefits for EE”s who continue to participate in the plan. In re Gulf Pension Litigation –
10% reduction in future projected accruals enough. Flanagan – if a former EE is within time to return to ER & regain yos for vesting,
then vested under partial termination. Discrimination – E §510 – it is unlawful to discharge, fine, suspend, expel, discipline, or
discriminate against a participant for exercising any right to which he entitled under the provisions of an EE benefit plan or for the
purpose of interfering w/ the attainment of any right to which such participant may become entitled. E §510 is individually
actionable. Intent – to establish a §510 violation an EE must show specific intent to violate his rights. Impact alone is insufficient.
EE need not show that interference was sole reason, but that it was a determining factor. Burden - Once EE establishes a prima
facie case, burden shifts to ER to show a legitimate non-discriminatory reason, if ER meets burden then EE may show that the
reason is pretextual.
BENEFIT ACCRUAL – main purpose of rules to prevent back loading. DB Plans – Accrued Benefit – E §3(23)(A) – the
individual’s accrued benefit determined under the plan…expressed in the form of an annual benefit at NRA. Must satisfy 1 of 3 tests.
3% Rule – E §204(b)(1)(A) – (Hypothetical retirement benefit * .03) * (part’s actual participation in the plan up to 33.333 yrs) = y; if
actual benefit is greater than or equal to actual benefit; satisfied. 133 1/3 % Rule – (B) – the benefit accrual rate for a part for any
future yos may not be more than 1/3 higher than the accrual rate for the current yr; if amend plan to increase the accrual rate then
treat previous yrs like you had increased also; accrued benefit payable at NRA must = the normal retirement benefit. Fractional
Rule – (C) - Hypothetical retirement benefit * (yrs of actual participation/possible yrs of participation until NRA) must be less than or
equal to actual accrued benefit. NRA = later of 65 or 5 yrs participation; or stated in plan.
WELFARE BENEFIT PLANS – E §3(1) Defines (Look to What is a Plan) – E §201 & 301 – excludes from funding & vesting
requirements. E §514 – Preemption applies. E §510 – protects rights in benefits even though they don’t vest – Intermodal.
McGann/Schoonejongen – cts generally permit ER to terminate or amend WBP to eliminate coverage of an expensive illness,
even after a participant has contracted it, the plan should be careful to follow plan procedure for amendment though. Retiree Health
Benefits – ER should retain rts to amend the plan if it want to amend a plan later; Sprague v. GM. Bankruptcy – if ER is going into
CH II, must pay all retiree medical and life unless an order for relief is granted.
COBRA – E §601–603 – requires a sponsor of a group health plan to make available continuing coverage following an event that
might otherwise result in loss of coverage. Qualifying Beneficiaries – E §603 – spouse of a covered EE who dies or divorces EE;
covered EE who is terminated for reasons other than the EE’s gross misconduct; a dependent child who ceases to be dependant,
and a few other cases. Duration – 18 to 36 months, purpose is to provide transitional coverage. Premium – plan may charge up to
102% of regular premium charged to everyone else. QMCSO – E §609 – plan must comply. Notice - E §606 – plan must notify
participant of COBRA rts when a qualified event occurs and part must notify plan when qualifying event occurs.
QUALIFIED PLANS – A plan is either qualified or it is not. Must meet the requirements of I §401(a) or if annuity plan then I
§404(a)(2). If qualified then: 1. EE is subject to income tax only when amts are distributed. 2. ER receives a current income tax
deduction for contributions. 3. The trust is exempt from tax on its investment income. 4. If EE contributions are not counted in EE
gross income then taxable at distribution. Traditional IRA – contributions up to 2,000 are deductible if EE covered by a plan may not
deduct if income over threshold. Roth IRA – contributions taxed, withdrawal not taxed. Qualifications: plan is written, assets in
trust, plan operated for exclusive benefit of beneficiaries, minimum participation, minimum accrual and vesting, compliance with
commencement of benefit times, provide spousal annuities, comply with plan merger rules, no assignment or alienation, (no ERISA
equivalent) permanency (Tres. Reg. §1.401-1(b)(2)) must have recurring & substantial contributions, incidental benefits (primarily
provide retirement income), minimum coverage, non-discrimination (HCE), full vesting upon plan termination, minimum distributions,
limits on contributions and benefits, limit on includible compensation, direct transfer roll-overs, defined benefit plan forfeitures, top
heavy plan. Mechanics of Qualification – Form 5300 – get a determination letter from the IRS, must also give notice to EE’s of
request for determination letter. Remedial Amendment – if there is an error in the plan then the plan may be retroactively amended
up to the last day for filing the ER tax return for the tax yr in which the error was made. EE Plans Compliance Resolution System –
due to the severe impact of being disqualified the IRS has created a # of resolution systems to assist plans in becoming compliant.
QSLOB – I §410(b)(5) - the minimum coverage tests are normally applied to the entire workforce. However, an ER operating
qualified separate lines of business may elect to have the tests applied to EE’s of each QSLOB individually. For the election to be
available, all the ER’s property and services provided to customers must be provided through separate lines of business and every
EE must be treated as an EE of exactly one line of business. More requirements I §414(r).
NON-DISCRIMINATION COVERAGE – Highly Compensated EE – I §414(q) – 5% owner of the ER at anytime during the yr or
previous yr; or preceding yr compensation greater than 80k, and if ER elects was in the top 20% of EE’s on the basis of pay.
Mimimum Coverage – must satisfy 1 of 2. Ration % Test – I §410(b)(1)(A) – (% of NCE who benefit under plan/% of HCE who
benefit under plan) >= 70%; or Average Benefits Test – I §410(b)(2) – Two Prongs – Non-Discriminatory Classification Test –
such EE’s as qualify under a classification set up by the ER & found by the Secretary not to be discriminatory in favor of HCE’s;
reasonably classification includes job categories, geographic location, nature of compensation; category must be established under
objective business criteria; Safe Harbor = ( NCE / Total EE ) then apply this % to table to get the safe harbor %, then [(# of HCE
who benefit / # of HCE)*(safe harbor %)] * total NCE <= # of NCE that benefit then pass, if fail then fail, if between the harbors then
the IRS will do more investigation; Average Benefit % Test – Benefit % = (EE’s benefit / EE’s salary); Average Benefit % = (sum of
benefit % for HCE or NCE/# of HCE or NCE); Test = (NCE Avg Benefit % / HCE Avg Benefity %) >= 70%. Employee that Benefits:
DC = EE that receives a contribution; DB = EE that accrues a benefit; 401k = if eligible to participate. Excluded EE’s – (5) basically part timers, non-resident aliens who receive no earned US source of income, collective bargaining agreement people.
LOOK to WHO is an EE to determine if included in Calcuations! [Min Participation Requirement for DB Plans – I §401(a)(26) – a
qualified DB must benefit at least the lesser of (1) 50 EE’s, or (2) the greater of 40% of all EE’s or 2 EE’s. The minimum participation
must be met on each day of the yr.]
CONTRIBUTIONS & BENEFITS – Non-Discrimination – I §401(a)(4) – A trust shall constitute a qualified trust if the contributions
or benefits provided under the plan do not discriminate in favor of HCE’s. Generally, contributions must be non-discriminatory in
amt; all benefits, rights, and features provided in a non-discriminatory manner; effects of [amendments] must be non-discriminatory.
DC Plans – 2 safe harbors – Uniform Allocation Formula – plan allocates the same % of compensation, same dollar amt, or
same dollar amt per unit of service. Uniform Points Allocation – formula must take either age or yos or both into acct & may take
compensation into acct in a specified manner, avg of allocation rates of HCE <= for NCE. Unsafe Harbor – Minimum Coverage
Tests – I §410(b) – each rate group must satisfy the Ratio % Test or Average Benefits Test. Rate Group = an HCE and all other
EE’s in the plan that have greater than or equal to allocation rate than the HCE. Allocation Rate = the sum of the allocations of the
ER’s contributions to the EE’s account / total compensation. DB Plans – 3 safe harbors – to qualify for any of the safe harbors, a
plan must satisfy uniformity requirements. Plan must have uniform normal and post normal retirement benefits, uniform vesting and
service crediting, no EE contributions. Limits - I §401(a)(17) - $200k limitation on includible income taken into account for ER
contributions. SS Integration – DC – I §401(l)(2)(A) – normal distribution plus a % of compensation in excess of maximum tax wage
base of SS (76,200) and up to 200k, that does not exceed the lesser of the base contribution %; or the greater of: 5.7% or the % =
to the ER portion of the FICA tax attributable to old age insurance. DB – two forms – Excess Plan, is similar to an integrated
defined contribution plan look to I §401(l)(4)(A). Offset Plan – integrates by reducing the participant’s accrued benefit by an amount
specified in the plan. Permissible Offsets are severely limited. I §401(l)(3)(B). A plan that integrates is not discriminatory. Annual
Additions – DC – I §415(c)(2) – must not exceed the lesser of 40k or 100% of compensation in a calendar yr unless ER elects 12
month period (Tres Reg), does not affect growth though. DB – I §415(b) – must not provide benefits that, when expressed as an
annual benefit, exceed the lesser of 160k of 100% of participant’s average compensation for his high 3 consecutive yrs. Dollar limit
is adjusted if payments begin before or after SS age. Fractional Reduction of Dollar Limitation for EE who have participated for less
than 10 yrs. (Yop/10)*Dollar Limitation.
MINIMUM FUNDING – ERISA’s minimum funding rules now require that money be set aside to pay for the benefits that are
promised under defined benefit plans. I §412(a) - The basic funding rule is that, at the end of each plan yr, a plan may not have any
accumulated funding deficiency. The amt of accumulated funding deficiency is the excess of total charges to the funding standard
acct for all plan yrs to date, over the total credits to that acct for the same period. An ER whose plan is qualified and violates the rule
is subject to a tax which is not waive able by the IRS– I §4971(a). Funding Standard Acct – I §412(b)(1) – 3 main classes of
charges – normal cost for the plan for the yr, the amts necessary to amortize; the amt necessary to amortize each waived funding
deficiency. Credits – I §412(b)(3) – 3 main classes of credits – ER contributions, amts necessary to amortize (decrease in amt), amt
of waived funding deficiency for the yr. Alternative Minimum Funding Standard – if you never have deficiency you can use a
different method – I §412(a)&(g)(1). Actuarial Assumptions – Citrus Valley Estates, Inc. – actuaries funding decisions may fall
within a range of reasonableness to meet the substantive provisions of I §412(c)(3); best estimate. Actuarial Funding Methods – a
funding method is a device for allocating to each yr a portion of the cost of providing the benefits under the plan. E §3(31) - there are
6 acceptable funding methods. 2 major funding methods: Projected Unit Credit Cost Method – has low early contributions and
high later contributions; Entry Age Normal Cost Method – has level payments like a mortgage. Relief Provisions – Waiver of
minimum funding standard - I §412(d) – waiver may be granted if an ER is unable to satisfy the minimum funding standard w/o
substantial business hardship and enforcing the minimum funding standard would be adverse to the interest of the plan participants
in the aggregate. No more than 3 waivers in 15 yrs. Factors for hardship – I §412(d)(2): operating at an economic loss, substantial
unemployment in the industry, sales or profits are depressed in the industry, it is reasonable to expect that the plan will be continued
only if the waiver is granted. Waiver is then amortized over 5 yrs. Extension of Amortization Period – I §412(e) – IRS can extend
period up to 10 yrs. Retroactive Plan Amendments – I §412(c)(8) – permits an amendment within 2.5 months of the close of the plan
yr to be retroactive to the 1st day of such plan yr, can reduce accrued benefits in that yr up to what is necessary.
TAX TREATMENT – General rule, tax deductible contributions are taxable at distribution, taxed contributions are deductible.
Distributions from qualified plans, annuities, SEP’s, & IRA’s are all taxed under I §72. Cost Recovery - I §72 - provides two methods
for recovering the participant’s cost basis in the plan depending on whether the or not the payment is periodic. Periodic Payment –
I §72(d) – Simplified Exclusion Ratio – if distributees are under 75 when payments begin or if older than 75 but less than 5 yrs of
guaranteed payment then use the tables in I §72(d)(1)(B). Take distributee’s cost basis in the plan (taxed contributions – amts
received prior to annuity that were excluded) / # of anticipated payments per the table. This amt can be excluded from GI each
month. Once basis is recovered then the full amt is taxable. I §72(b)(3) – if annuity payments cease on acct of death of the
annuitant, and not all investment has been recovered, a deduction for the unrecovered investment is allowed on the annuitants final
tax return. The deduction may be carried back, via I §172, to prior yr if not enough income to absorb exclusion. Non-Periodic
Payment – I §72(e) – (cost basis in trust/total value of trust)*distribution =excludable amt; performed on the date of distribution.
Separate Contracts – I §72(d)(2) – EE & ER contributions & respective earnings may be elected as 2 separate contracts thereby
increasing the amt excludable. Withholding Tax – distributions from qualified plans and IRA’s are subject to income tax withholding.
Except for distributions that are eligible rollover distributions the recipient can elect to not have the withholding apply – I §3405.
Periodic payments are withheld at the rate applicable to wages, and non-periodic payments are withheld at 10% except that eligible
rollover distributions are withheld at 20%.
Eligible Rollover Distributions – I §402(c) – taxable portion of a distribution from a qualified plan is not taxed currently if it is
transferred to an IRA or another qualified plan within 60 days of receipt. The advantage of a rollover is not only the deferral of tax
liability on the distribution, but also the continuing deferral of tax liability on the future earnings of the rolled over assets. Ineligible
for Rollover - I §402(c)(4) – substantially = annuity payments, substantially = installment payments over ten yrs or more, required
minimum distributions under the rules of I §401(a)(9), hardship distributions from 401(k) and 403(b) plans. Limited – I §402(c)(1)(A)
– only distributions to the EE may be rolled over. Exceptions – I §402(c)(9) – a spouse may rollover distributions paid after the EE’s
death to an IRA. I §402(e)(1)(B) – if an alternate payee under a QDRO receives a distribution then they may rollover as if the were
the EE. Caveats to Rollover – IRA may not be protected from creditors, while ERISA plans are, a participant who is not a 5% owner
who works past 70.5 is not required to commence receiving a distribution from ER qualified plan but is with an IRA, Spouse Rights
are Different, Participant’s can borrow from a qualified plan but not an IRA. Direct Rollover – I §401(a)(31) – move money directly
from qualified plan to IRA or other qualified DC (no withholding tax). If not direct then gov withholds 20%, in order to avoid the tax
the total amt must be placed in qual plan and then the 20% becomes a tax credit. IRA to IRA - allowed, Inherited IRA no rollover or
receive rollovers, IRA to QP only if all IRA assets are from a QP, IRA to Roth limited to AGI <= 100k, ER Securities – I §402(e)(4) –
if lump sum distribution then the net unrealized appreciation of the ER securities during the time they were held in trust is not taxed
until realized. Lump Sum defined – I §402(e)(4)(D)(i).
LOANS – In order to avoid the tax on distributions before 59.5 [72(t)], an individual may borrow against his accrued benefits. Avoid
Prohibited Transactions – E §408(b)(1) – loans are available to all beneficiaries/participants on a relatively = basis, the amt
available to borrow for HCE is not greater than to NCE, loan is in accordance w/ plan, reasonable rate of interest, adequately
secured. Security – Regulations permit up to 50% of a participant’s vested accrued benefit under the plan to be used a security for
a participant’s loan. Qualifying Loan – I §72(p) – 1) a loan from a plan to a participant or beneficiary will be treated as a distribution
unless the: loan does not exceed the lesser of 50k; or the greater of 10k or .5 of the pv of the non-forfeitable accrued benefit. 50k
must be reduced by the excess of the EE’s highest outstanding loan balance on the date of the loan, 2) loan must be repayable over
5 yrs with payments made quarterly, substantially level amortization, 3) 5 yrs won’t apply if loan for principle residence.
Limitations on Distributions – Consent – I §411(a)(11) – if the pv of a part’s vested benefit is in excess of 5k, a plan must obtain
his written consent to distribute any part of it before he has reached NRA or 62. Delay – E §206(a) – a part may delay the
commencement of benefits, but unless he does a plan must begin payment no later than the 60 th day after the latest close of the
plan yr in which the part: 1)attains the earlier of 65 or NRA, 2) completes 10 yrs of participation, 3) terminates service w/ ER. Limits
on Delay – I §401(a)(9)(A) – a qualified plan must provide for distribution of a participant’s entire interest: 1) by the required
beginning date: or 2) commencing by the required beginning date & extending over the life of the participant or the lives of
participant and a designated beneficiary. Required Beginning Date – I §401(a)(9)(C) – generally April 1 of the calendar yr following
the calendar yr in which the participant attains age 70.5 or retires. Death Distributions – I §401(a)(9)(B)(i) – if part dies after
commencement of benefits, the remaining portion must be distributed at least as rapidly as under the method of distribution that was
being used at the time of death. (ii) – if part died before payment commenced then must be distributed over 5 yrs. Exception to 5 yr
rules (iii, iv, v). Tax on Early Distributions – I §72(t) – 10% additional tax on the taxable portion of any distribution made before the
EE attains age 59.5. Exceptions in supplement.
AGE & SEX – Normal Retirement Age – E §3(24) – NRA as specified in plan, but not later than attainment of age 65 & completion
of 5 yrs of participation. Benefit Accrual Beyond NRA – E §204(b)(1)(H) – forbids the cessation or reduction of benefit accrual b/c
of the attainment of an age, (ii) plan may still impose a limitation on yos included in benefit formula, I §401(a)(9)(C)(ii) - at 70.5 ER
must adjust benefits if still working to acct for the foregone benefits. Age Discrimination -  shows prima facie case of
discrimination, then ER bears burden to show disparity is justified by significant cost consideration (= spending for young and old but
different benefits b/c of age), then if ER met burden  may show it is a pretext. Releases & Waivers – OWBPA §201 – an
individual may not waive any right or claim under the ADEA unless the waiver is knowing & voluntary. Involuntary unless: written in a
manner calculated to be understood, specifically refers to rts or claims arising under ADEA, waiver isn’t prospective, must receive
fresh consideration, 21(ind) or 45(grp) day cooling off period to accept, 7 day to revoke after accept. OUBRE – releases no effect
unless complies with OWBPA. Hazen Paper – no disparate treatment under the ADEA when the factor motivating the ER is some
other factor than the EE’s age. Sex Discrimination – Manhart – can’t use actuarial tables based on sex to charge one gender more
than another for benefits. Unisex Pensions – basically can’t have one sex pay more or less based on sex.
PREMPTION – Relates to Pension and Welfare Plans in order to ensure a uniform body of law and minimize admin and financial
burdens to comply with conflictin state/federal laws. E §514(a) – ERISA shall supersede any & all state laws insofar as they may
now or hereafter relate to any EE benefit plan. MUST BE A PLAN, CHECK IF A PLAN. Worker Comp Compliance Plans – not an
ERISA plan. QDRO – E §206(d) – allows for enforcement. Crime – generally applicable criminal laws not preempted. Alessi –
ERISA preempts state laws inconsistent with its provisions. Shaw – the relate to language of 514(a) is given its broadest sense of
having a connection with or reference to a plan, therefore ERISA preempts state laws of general application, such as contract & tort
law, to the extent they affect claims processing or other internal affairs of a plan. Travelers – there must be more than indirect
economic influence alone to strike down a state law. If state law doesn’t: 1)mandate an EE benefit structure or plan, 2)seek to bind
an administrator to particular choices or preclude uniform administrative practice, 3)provide alternate enforcement mechanism to
obtain ERISA benefits it looks ok. Pilot Life – a state law claim for an alleged wrong that would constitute a breach of ERISA or of a
plan is preempted. Boggs – community property transfers to non-participants are preempted, Slayer statutes – not preempted,
Divorce Revocation Statutes – Eglehoff – prempted. Law Regulating Insurance - Savings Clause – E §514(b)(2)(A) – nothing in
this title shall be construed to exempt or relieve any person from any law or any state which regulates, insurance, banking, or
securities. Deemer Clause – E §514(b)(2)(B) - EE benefit plans are not to be considered insurers for purposes of the insurance
savings clause. McCarran-Ferguson Act – 3 criteria for determining whether a practice constitutes the business of insurance that
states can regulate: 1) whether the practice has the effect of transferring or spreading policyholder risk, 2)whether the practice is an
integral part of the policy relation between the insurer & insured, 3) whether the practice is limited to entities within the insurance
industry. Met Life – state may make requirements regarding the benefits of insurance policies sold in the states, but if a plan is self
insured then the requirement won’t apply (deemer clause). FMC Corp – deemer clause is broad and in order for state law to be
saved must be directed towards regulating insurance. Tort & Contract Law – Ingersol Rand – SCt held that a state wrongful
discharge law preempted to the extent it would allow recovery by the EE against the ER for a discharge motivated by the desire to
avoid contributions to a pension plan. Pacificare of Oklahoma – if suing HMO then go for malpractice.
SPOUSE & 3rd PARTY – Anti-Alienation – E §206(d)(1) – requires every pension plan to provide that the benefits under it may not
be assigned or alienated. Does not extend to benefits already paid out, does not cover welfare benefit plan, protects from
bankruptcy. Qualified Domestic Relations Orders – E §206(d)(3)(A) – is a domestic relations order (child support, alimony, marital
property rts) that provide for an alternate payee’s rights to receive all or part of the benefits payable with respect to a participant, &
that meets certain requirements. Alternate Payee – spouse, former spouse, child, or other dependent (taxable under 72). QDRO
Procedure – E §(d)(3)(c) – order must contain the name & address of the participant and alt payee, amt or % of the benefits to be
paid to each alt payee, # of payments or the period for which it should apply. (D) – can’t require benefits not available under the
plan, or payment of benefit owed to another alt payee. Notice – (G) – whenever a plan receives a QDRO the admin must promptly
notify the participant & atl payee of receipt & procedures for determining whether the order qualifies within a reasonable time. Plan
may not charge for determination. Limbo – while the status of QDRO is being determined, plan must acct for all payments, etc. 18
Months – (H) – if QDRO approved within 18 months of payment commencement then segregate & pay to alt and part. QDRO after
18 months is prospective only. Early Payment – (E) – require payment before EE is separated from service at the earlier of: date
EE entitled to benefits under the plan; or later of 50 or earliest date on which EE could begin to receive benefit upon separation of
service. (Only get PV though). Voluntary Assignment – E §206(d)(2) – 10% voluntary & revocable assignment of any benefit
payment after benefits have commenced. (garnishment or levy is not voluntary). Benefit Offsets – Guidry – ct can not impose a
constructive trust on pension benefits payable to a part in favor of the union from whom the part embezzled funds. E §206(d)(4) –
provides that a part’s benefits may be offset by the amt he is required to pay to the plan under a conviction for a crime involving the
plan, violation, for a fiduciary rule, & judgment must specifically provide for offset. (5) – if spouse (not convicted) the spouse must
consent or retain survivor annuity. Spousal Annuities – E §205(a) – requires every DB & every money purchase plan to provide
accrued benefits payable to a vested participant who lives until the annuity starting date to be in the form of a QJSA & QPSA. QJSA
– (d) – annuity for life of participant + survivor annuity = to 50% but <= 100% of initial annuity. QPSA – E §205(e) – if part dies
before distribution commences then QPSA, QPSA >= to QJSA survivor annuity calculated as if participant retired on the later of
earliest RA or the day before the date of death. QPSA – DC – actuarially = to at least 50% of vested acct balance at time of death.
Waiver & Election – E §205(c)(1) – part and spouse must be allowed to waive & revoke the waiver of QJSA & QPSA. (7) – waiver
of QJSA must be within 90 day period ending on the annuity starting date of annuity, waiver of QPSA made between the first day of
the plan yr in which part turn 35 & part’s death. Spousal waiver must be in front of notary or plan rep. Explanation – (3) – plan must
provide each part and spouse an explanation of spouse’s rights. QMCSO – E §609.
FIDUCIARY – E §(3)(21) – Fiduciary if: exercises any discretionary authority or discretionary control respecting management of
such plan or exercises any authority or control respecting management or control of assets, investment advice, has any discretion in
administration of plan (if fiduciary under 3(21) only to extent of determination). Named Fiduciaries – E §402(a) – plan will name a
fiduciary or fiduciaries that will jointly and severally have control the operation & admin of the plan. Trustee – E §403(a) – plan will
create a trust which will hold the assets under a trustee, the trustee will be named in the plan, must accept the appointment, and will
be exclusively authority to manage assets to the extent provided in 403(a)(1,2). Delegation - §402(c)(3) – trustee may delegate
fiduciary duties to an investment manager. Administrator – E §3(16) – if plan fails to name one then by default it is ER, is a
fiduciary b/c has discretion in administering plan, if tasks are purely ministerial then no discretion no fiduciary. Professionals –
typically not fiduciaries, auditors (Price Waterhouse), accountants (Roth), actuaries (Pappas). ER – can be a fiduciary, be careful
which hat the employer is wearing; settlor or fiduciary – Variety – making intentional misrepresentations about future plan benefits is
an act of plan administration, ER violated fiduciary duty to EE’s. Substantive Fiduciary Law – Duty of Loyalty – Exclusive
Benefit Rules - E §404(a)(1) – “shall discharge his duties w/ respect to the plan solely in the interest of the participants and their
beneficiaries.” Non-inurement Rule - E §403(c)(1) – “the assets of the plan shall never inure to the benefit of any ER and shall be
held for the exclusive purpose of providing benefits to participant’s and their beneficiaries.” Prohibited Transactions – E § 406(a) –
prohibits a fiduciary from causing the plan to engage in a financial transaction of a specified kind where he knows that it would be w/
a party in interest. Fairness is irrelevant. Therefore a fiduciary must always make a prudent investigation to ensure that a party in
interest is not involved in a transaction – Marshall. Parties in Interest – E §3(14)(A) – fiduciaries, counsel, & EE’s of a plan, (B) –
Service Providers to a Plan, (C) – ER of covered EE’s, (D) – EE organization of covered EE’s. Prohibited Transactions - Property
– E §406(a)(1)A), Loans – (a)(1)(B), Goods & Services – (C), Asset Transfer – (D), ER Stock & Real Property – (E) & 407(a). SelfDealing – E §406(b) – fiduciary shall not “deal with assets of the plan in his own interest or for his own acct. Kickbacks – 406(b)(3).
Exemptions – E §408 – Participant Loans – (b)(1), Operating Contracts – (2), Banks & Insurers – (4, 5,6,8). Impartiality – not
specifically in ERISA but commonly held to be a part of duties and clearly a part of trust law. Prudence – E §404(a)(1)(B) – fiduciary
must exercise the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like
capacity & familiar with such matters would use in the conduct of an enterprise of like character and like aims. Diversification – E
§404(a)(1)(C) – duty to diversify plan investments. Liability – E §409(a) makes the fiduciary who commits a breach of fiduciary
responsibility rules personably liable to make good to the plan any losses, as well as restore any profits made through use of assets
of the plan. Also subjects the breaching fid to such other equitable or remedial relief as the ct may deem appropriate. §502 permits
participants, beneficiaries, fiduciaries, and the SoL to enforce §409. Obedience – E §404(a)(1)(D) – requires an ERISA fiduciary to
act in accordance with the documents and instruments governing the plan, only insofar as they are in compliance with ERISA,
therefore trust documents may not excuse a fiduciary from a violation. Disclosure – Fischer II – must make truthful disclosures, if
going to make a plan change, in order to disclose to EE it must be under serious consideration: 1)a specific proposal, 2)is being
discussed for purposes of implementation, 3)by senior management w/ authority to implement change. Requirement of Written
Terms – E §402(a)(1) – plan must be in writing and amendments must be in writing.
ENFORCEMENT – E §502 – Recovering Benefits – 502(a)(1)(B) – authorizes a Part or Bene to bring a civil action “to recover
benefits due to him under the terms of plan, to enforce his rts under plan, to clarify his rts or future benefits under plan. Enforcing
409 – 502(a)(2) – permits parts, benes, & fids, and SoL to enforce 409. Equitable Remedies – 502(a)(3) – parts, benes, fids may
seek equitable remedies such as injunctive relief against any act or practice that violates ERISA or the plan terms, or other
appropriate relief to redress such violations or to enforce any provisions. Statutory Penalty – 502(c)(1) – authorizes a statutory
penalty of up to $100 a day against plan admin who refuse to supply required info, part or bene may sue to enforce penalty.
Criminal Sanctions – 501. Jurisdiction & Venue – 502(e, f) – create federal jurisdiction, exception 502(e)(1) – grants concurrent
jurisdiction to state & federal under 502(a)(1)(B). Preemption – Avco Doctrine – 502 completely preempts the field of enforcement.
Damages – Mertens – 502(a)(3) does not authorize damages. Recovery – Russell – if recovery under 409, recovery goes to plan
not to individual. Attorney’s Fees – 502(g)(1) – in any action under the title by p,b, or f, the ct in its discretion may allow reasonable
atty’s fees. 5 factors from Eaves. SOL – E 413 for fid litigation otherwise most analogous limitations statute for the type of claim.