Compliance August 29, 2005

DoL Proposes Electronic Filing of Form 5500

August 29, 2005 (PLANSPONSOR.com) - The US Department of Labor's (DoL's) Employee Benefits Security Administration (EBSA) office has published a proposed regulation requiring plans to file the Form 5500 reports electronically.
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According to a DoL press release, the requirement would be effective for plan filings due in 2008.  

Electronic filing of the Form 5500 was one of the recommendations issued in June by the Government Accountability Office (See  GAO Calls for Wholesale Form 5500 Changes ).   The EBSA will also update its forms processing system, EFAST, to ensure security of internet-based methods for transmitting the filings, according to the release.

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EBSA, along with the IRS and the Pension Benefit Guaranty Corporation will propose revisions to the 2007 Form 5500’s, to be filed in 2008, to streamline and improve the information filed by plans.   They expect to publish the revised forms for public comment this fall.

The proposal is scheduled to appear in the Federal Register on Tuesday.   Comments on the proposal should be received by October 31, 2005, and can be made by emailing  e-ori@dol.gov .

Compliance August 26, 2005

Recovering Losses For Individual Participants Is Recovery For The Plan

August 26, 2005 (PLANSPONSOR.com) - The US Court of Appeals for the 3rd Circuit has disagreed with a lower court decision that an ERISA case be dismissed because it was seeking financial recovery of losses on behalf of some plan participants and not the plan as a whole.
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In the 3 rd Circuit’s  opinion , it said at issue was “whether the complaint seeks relief for the Schering-Plough Employees’ Savings Plan based on allegations that there were ‘losses to the plan resulting from [a] breach’ of fiduciary duty.   In the opinion, the court pointed out that Section 1109 of ERISA allows recovery of “any losses” to the plan and doesn’t just allow recovery of losses that will be distributed to all participants.

The court also pointed out that a loss to any investment, though held in individual accounts, is a loss to the plan since all assets are held in trust by the plan.

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Two employees of Schering-Plough Corp. sued the plan for breaches in fiduciary duty after company stock prices fell drastically.   Company stock was offered as an investment option in the company’s retirement savings plan.   According to an EBIA report, the employees alleged that the plan fiduciaries breached their duties by continuing to offer company stock when they new the price was “unlawfully and artificially inflated.”  

The lower court dismissed the suit saying it sought relief for individual participant losses and not the plan as a whole.   The 3 rd Circuit now says the suit may go to trial and the plaintiffs may seek monetary relief for their losses.

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