Cohen & Buckmann Insights

Latest from Cohen & Buckmann Insights

Can ERISA plan participants be denied their day in court? Title 1 of ERISA allows participants to sue fiduciaries who breach their fiduciary duties. The permissible venues, the statutes of limitations for claims and available remedies to apply in “civil actions” are set out. However, courts have increasingly held that plan sponsors may impose contractual restrictions of the exercise of those ERISA rights. The Supreme Court has held that plans may contractually shorten the period participants have to raise claims, and provisions requiring participants to bring suit in a particular place-such as where the plan is administered- have been upheld.…
One of the novel claims in 401(k) and 403(b) plan litigation has been that vendors violate ERISA when they use participant data to cross sell other products and services to plan participants.  These can include products such as annuities, life insurance, brokerage accounts and wealth management services. A closely watched case was filed in Texas against Shell Oil Company and a number of Fidelity entities-all referred to as Fidelity here- alleging that Fidelity, the plan’s recordkeeper, engaged in a prohibited transaction by profiting from the use of participant data through its cross selling practices.  A ruling for plaintiffs would have…
In the spring 2021 issue of 401k Specialist magazine, Carol Buckmann explains why outsourcing investment responsibilities to an investment manager or outsourced chief investment officer is trending. The interview stemmed from Carol’s popular blog posts on fiduciary responsibilities, where she has advised, “fiduciaries who take a ‘do-it-yourself’ approach face huge potential exposure from underperforming investments and excessive plan fees.” In this article Carol is quoted about why some plan sponsors still refuse outside help and reasons for them to overcome their reluctance to partner with professional fiduciaries. Read the full 401k Specialist interview here.…
Surveys show that the overwhelming majority of 401(k) plans offer target date funds as part of their investment lineup. Usually, target date funds are the plan’s designated qualified default investment alternative, or QDIA, which means that large numbers of participants who don’t make their own investment decisions are invested in these funds.  Yet despite their popularity, target date funds in different fund families vary greatly in management styles, fees and the proportion of equity, fixed income, and other asset classes at different ages. Custom funds are different from off the shelf funds. In addition, target date funds often have unappreciated…
One of the most important responsibilities of plan fiduciaries is hiring the right service providers. These providers must do competent-hopefully, superior- work for a fee that is reasonable in relation to the services provided. The best way to fulfill this responsibility is by doing an RFP (Request for Proposals). Engaging in RFPs can help fiduciaries demonstrate that they haven’t hired inappropriate or overly expensive plan providers if their choices are challenged. In contrast to considering friends or relatives, who often are not the best people for the job, an RFP allows fiduciaries to conduct an objective search for the best…
ERISA fee litigation seems out of control. In fact, the number of lawsuits filed in 2020 was double the number filed in 2018. While some of the fiduciaries who were sued didn’t take their fiduciary responsibilities seriously, many others who tried to do a good job were caught in the sights of aggressive class action attorneys. There have been fewer decisions on the merits than you might expect in these cases, relative to the number filed.  Many are settled without a final decision. This may leave fiduciaries wondering if it is ever possible to avoid a trial or extensive discovery…
This is the time of year when we see lots of articles on hot plan trends for 2021 and what benefits innovations plan sponsors are adopting. This is all well and good, but the beginning of the new year is also a good time for fiduciaries to review basic plan policies and operations to see how they can be improved. The better these are, the greater the chances your plan will survive an audit with no change or prevail in a fiduciary breach lawsuit.  We all know that 2020 was a banner year for ERISA litigation, and there is no…
The SECURE Act put in place important steps to close the retirement savings gap. These included many provisions encouraging plan adoption and retirement income accumulation. Building on the framework of the SECURE Act, Representatives Richard Neal and Kevin Brady have introduced the Securing a Strong Retirement Act of 2020, already being referred to as SECURE Act 2.0. SECURE Act 2.0 contains changes that would further encourage plan adoption and retirement savings, as well as solutions to operational problems that have bedeviled plan sponsors for many years. Incentives to Increase Retirement Savings. 1. Require New Plans to Have Automatic Enrollment. Surveys…
Investment Advisers: Are you ready for your next SEC Examination? A Recent OCIE Risk Alert points out  “Notable Compliance Issues” relating to the Compliance Rule.  Last week, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert, the 9th Risk Alert issued this year.   Titled “OCIE Observations: Investment Adviser Compliance Programs”, the Risk Alert provides examples of deficiencies related to the Compliance Rule (206(4)-7), which OCIE finds are common among examined investment advisers.   You may remember that the Compliance Rule says it is unlawful for an RIA to provide investment advice unless the adviser’s operations are …
PLANSPONSOR Magazine interviewed Carol Buckmann for her take on records retention policies. ERISA requires U.S. plan sponsors to keep records, including plan and trust documents, annuity contracts, 5500 forms and more, for at least six years from the report filing date. Some records must be kept in paper format. Records needed to determine benefits must be kept longer. Read the article and Carol’s recommendations here.…
Plan litigation looks poised to set new records in 2020, and DOL enforcement recoveries are on the rise. A recent DOL enforcement report indicates that DOL recoveries increased by 310% from fiscal 2016 to fiscal 2020.  Investment News just reported that fiduciary liability premiums are skyrocketing. Fiduciaries are personally liable for losses caused by their fiduciary breach, and advice from their plan vendors about investments is not fiduciary advice required to be in their best interests. There is nothing wrong with this business model, but vendors receive fees from their proprietary investments and aren’t required to warn you away from…
Cohen & Buckmann, PC, a boutique New York-based law firm, has garnered upgraded national and regional New York rankings in the 2021 U.S. News – Best Lawyers ® “Best Law Firm” lists in the area of Employee Benefits (ERISA) Law. The firm is honored with a Tier 1 ranking in the New York Metro area, and Tier 2 National ranking.   Sandra Cohen and Carol Buckmann, the firm’s co-founding partners, also have been recognized by Best Lawyers in America© in this practice area. Founded in 2016, the firm has earned national attention for its innovative focus on executive compensation and employee…
A new report in Pensions and Investments should be an eyeopener for sponsors of 401(k) and 403(b) plans who haven’t yet gotten the message that even responsible fiduciaries can be sued. I previously wrote that 2020 promises to be a banner year for 401(k) plan litigation. Now P&I reports that fiduciary liability insurance premiums are up 35% as a result of costly awards and settlements. Plan sponsors are also being required to pay more-P&I gives an example of a $2 million payment- just to be able to renew policies. This trend can only accelerate as 2020 fiduciary breach lawsuits continue…
Partners Sandra Cohen & Carol Buckmann were recognized in the “Elite Boutique” category for their achievements in establishing a leading boutique focused on providing sophisticated advice on employee benefits, executive compensation, health plans, and pension plans. This honor was published in the National Law Journal October 2020 issue. Sandra and Carol co-founded Cohen & Buckmann in 2016 after recognizing that, even though their practice skill set is usually found at large Wall-street type law firms, many other firms also deserve sophisticated ERISA and compensation advice for their clients and transactions. Cohen adds, “We have since become the go-to employee benefits…