Although the Trump administration has floated a general tax reform proposal, little detail has been provided. However, it is clear that additional revenue will be needed to fund the tax cuts the president proposed. Retirement plans are a likely target, as they were responsible for a reduction in federal revenues by $83 billion in 2016, according to the nonprofit Tax Policy Center.
The Republican leadership in the House of Representatives has introduced legislation titled the American Health Care Act to repeal and replace the Affordable Care Act. The proposal actually would leave in place a significant portion of the ACA, including those parts affecting Medicare and many insurance reforms.
Among the ACA provisions that have been preserved are the prohibitions against health status underwriting and lifetime coverage limitations. Also preserved are coverage for pre-existing conditions, a cap on out-of-pocket expenditures, coverage for adult children to age 26, and guaranteed availability of coverage.
In an earlier post, I discussed the spread of 401(k) litigation and the fact that smaller plans were becoming targets for aggressive litigators. As the pool of large plans diminishes and the litigation theories become well-known, it is inevitable that the volume of 401(k) litigation will expand. Fortunately, most plan sponsors can avoid 401(k) litigation by taking a few obvious steps. Here are some suggestions.
For the past few years, we have been reading about litigation against large employers and financial institutions regarding fees charged to participant accounts in 401(k) plans. These lawsuits generally allege a breach of fiduciary duty under ERISA by selecting poorly performing funds that carry higher expenses than similar investment alternatives.
A recently decided Fifth U.S. Circuit Court of Appeals case provides employee stock ownership plan (ESOP) fiduciaries and others with an example of how not to undertake an ESOP transaction.
When an employee stock ownership plan purchases the stock of a closely held corporation, the duty of a fiduciary is to act solely in the interest of the participants and their beneficiaries. The case, Perez v. Bruister, details that duty and the consequences of failing to fulfill it.