Retirement Plans
As younger generations place more emphasis on private savings over government programs, retirement plans have become an increasingly important part of the employer’s total benefits and compensation package. Our attorneys handle the entire spectrum of legal and operational issues related to all types of qualified and nonqualified retirement plans, including defined benefit and cash balance pension plans, 401(k) plans, and profit sharing plans.
Defined Contribution Plans
The marketplace is becoming predominately focused on 401(k) savings plans as the primary retirement vehicle for employees, and our attorneys remain ahead of the curve in this area. Our team is well-versed in the design, operation, and fiduciary issues related to 401(k) plans. We advise clients on the many complex issues they face in this area:
401(k) Fee Matters. We are actively involved in advising fiduciary committees on issues related to the increased focus on fees charged to 401(k) participants. Navigating the field of ERISA obligations is difficult. Our attorneys educate fiduciaries on their ERISA obligations and advise clients regarding improvements they could implement to better position themselves to defend against future claims.
Plan Design. Plan design can have a big impact on a company’s budget, compliance risk, and business practices. We work with clients in the design and implementation of plan features constructed to (1) reduce administrative burdens and costs, (2) coordinate with other existing or terminating retirement arrangements, (3) increase participation and contribution rates, (4) address non-discrimination testing risks, and (5) comply with new legislative requirements, including the Pension Protection Act of 2006.
Employer Stock Funds. Our team of attorneys has helped many of our publicly traded clients review the potential liabilities associated with maintaining an employer stock fund as an investment option under their 401(k) plans. We also advise clients regarding options for reducing those potential liabilities and assist publicly traded clients in converting existing employer stock funds into employee stock ownership plan components to take advantage of the favorable tax benefits related to the payment of dividends.
Plan Transactions. We assist clients in addressing 401(k) matters associated with merger, acquisition, divestiture, and other corporate transactions. This type of work can also include plan terminations, spin-offs, and mergers.
Participant Communications. A well-designed plan may not meet its full potential if participant communication is deficient. We assist clients in the design and implementation of effective participant communication programs for their 401(k) plans with more “user friendly” disclosures and processes, which helps to streamline delivery and reduce confusion among participants.
Our lawyers are also among the most experienced Employee Stock Ownership Plan (ESOP) professionals in the country, representing all parties to ESOP transactions.
Defined Benefit Plans
The law surrounding defined benefit plans is very complex and non-compliance can result in significant liability. Congress has repeatedly changed the playing field for these plans, most recently in the Pension Protection Act. Our team is extremely well-versed in the design, operation, and fiduciary issues related to defined benefit plans. Examples of recent work in this area include the following:
Plan Design. We assist clients in the design and implementation of plan features constructed not only to reduce plan costs and future liabilities, but also to comply with new legislative and regulatory requirements, including the Pension Protection Act.
Plan Investments. When selecting investment strategies and investment professionals, plan fiduciaries need to be particularly mindful of their ERISA obligations and responsibility. In addition to advising clients on these matters, we negotiate with hedge fund and other investment managers and advise on limited partnership interests and other advanced investment techniques. We also advise plan fiduciaries regarding their ERISA obligations and responsibilities when considering terminal annuities and investment programs designed to reduce funding volatility.
Plan Transactions. Parallel to our transactional work specific to 401(k) plans, we assist clients in addressing defined benefit plan matters associated with mergers, acquisitions, divestitures, and other corporation transactions. This work also includes plan terminations, spin-offs, and mergers.
Participant Communications. Our attorneys assist clients in the design and implementation of participant communication programs for changes to their defined benefit plans, helping to ensure successful plan execution and administration.
Hybrid Plans
Hybrid plans combine features of both defined benefit and defined contribution plans. A significant number of cash balance plans (one form of hybrid plan) have been established by converting a traditional benefit plan into a cash balance plan. For some employees close to retirement, the conversion to a hybrid plan may upset future expectations. This change in expectations has led to accusations of discrimination. The outcome of litigation in this area has been inconsistent and has increased the risk of sponsoring a hybrid plan. These issues have made crafting the proper hybrid plan a challenge.
Our attorneys understand these complex legal issues and the potential pitfalls surrounding hybrid plans and help clients manage the associated risks. We frequently assist companies to strategically devise plans that mitigate risks while achieving their business goals. Our attorneys have extensive experience in:
- Design and implementation of cash balance and other hybrid plans
- Plan administration and reporting issues
- Appropriate plan documentation
- Integration of the plan into an effective employee educational program
- Full support in ongoing management of the plan
Seyfarth attorneys also have a long tenure representing Multiemployer Plans in a wide variety of matters.