Source: https://www.hodgsonruss.com/newsroom-publications-EmployeeBenefitsDevelopmentsNovember2009.html
Timestamp: 2019-04-25 21:08:39+00:00

Document:
Enforcement Rules Issued on Multiemployer Plan Funding. The Department of Labor, through the Employee Benefits Security Administration (EBSA), issued a proposed regulation dealing with the procedures for assessing civil penalties on the boards of trustees of multiemployer plans that have not complied with mandatory funding improvement rules and requirements for rehabilitation plans for underfunded trust funds. The rules are directed toward plans that are considered in either endangered or critical status under rules adopted in the Pension Protection Act of 2006. While these rules have become more controversial following the downturn in financial markets that occurred in 2008, all trustees of multiemployer plans should take notice of the potential civil penalties. A multiemployer plan is required to provide an actuarial certification if the plan is or will be in endangered or critical status because of underfunding and must also provide progress reports where the plan is undergoing funding improvement or rehabilitation. Notifications are required to be made to participants, the bargaining parties, the Pension Benefit Guaranty Corporation, and the Department of Labor. If a plan is in endangered or critical status under its actuarial certification, it has 240 days to adopt a funding improvement plan or a rehabilitation plan. DOL Proposed Regulation on Civil Penalties Under ERISA Section 502(c)(8). Published in Federal Register of September 4, 2009.
Delivery of a Summary Prospectus Sufficient Under an ERISA § 404(c) Plan. In Field Assistance Bulletin 2009-3, the EBSA concluded that a plan fiduciary of a participant-directed individual account plan (e.g., a 401(k) plan) may use a mutual fund’s summary prospectus to satisfy the plan administrator’s prospectus delivery obligations under the ERISA § 404(c) regulations. In the case of an individual account plan that permits participants or beneficiaries to exercise control over the investment of assets in their accounts, ERISA § 404(c) provides that no person who is otherwise a fiduciary will be liable under ERISA for any loss, or by reason of any breach, that results from the participant’s or beneficiary’s exercise of control. The ERISA § 404(c) regulations require, among other things, that a participant or beneficiary be provided, or have the opportunity to obtain, sufficient information to make informed decisions with regard to investment alternatives available under the plan. In the case of an investment alternative subject to the registration requirements of the Securities Act of 1933 (e.g., a mutual fund), the ERISA § 404(c) regulations provide that a participant or beneficiary must be furnished by the identified plan fiduciary (or a person or persons designated by the plan fiduciary to act on his behalf), a copy of the most recent prospectus that was provided to the plan, either immediately before the participant’s or beneficiary’s initial investment in the investment alternative, or immediately following that investment. Although the Department of Labor (DOL) has not defined the term “prospectus” in the ERISA § 404(c) regulations, in DOL’s view, the term “prospectus,” wherever used in the regulation, includes a summary prospectus published under Rule 498 of the Securities Act of 1933. The summary prospectus is a short-form document, written in plain English in a clear and concise format, and its required contents provide a summary of key information about a mutual fund that is useful to participants and beneficiaries in evaluating and comparing their plan investment options. Moreover, if a participant or beneficiary wishes additional information, the summary prospectus provides an Internet address that leads directly to the statutory prospectus as well as a toll-free (or collect) telephone number and e-mail address for obtaining, free of charge, by traditional mail or e-mail, the statutory prospectus and other information.

References: § 404
 § 404
 § 404
 § 404
 § 404
 § 404