Compliance June 27, 2013

DOL Extends Lifetime Income Comment Period

June 27, 2013 (PLANSPONSOR.com) - The U.S. Department of Labor (DOL) is allowing stakeholders more time to comment on lifetime income illustrations given to participants in defined contribution (DC) retirement plans.
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On May 7, the DOL’s Employee Benefits Security Administration (EBSA) issued an advance notice of proposed rulemaking on lifetime income illustrations for DC plan participants to provide an opportunity for stakeholders to give early input into the development of regulations (see “DOL Seeks Comments About Lifetime Income Data”). The deadline for comments was July 8. 

The EBSA has extended the comment period to August 7.  

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Last week, nine organizations sent a letter to the agency asking for more time to comment (see “More Time Needed for Lifetime Income Comments”).
Compliance June 27, 2013

Caterpillar Investigated for Potential ERISA Suit

June 27, 2013 (PLANSPONSOR.com) – A law firm announced it is investigating the Caterpillar Inc.'s 401(k) plan for potential Employee Retirement Income Security Act (ERISA) violations.
Reported by

Zamansky & Associates LLC commenced an investigation into whether there were violations of ERISA by plan fiduciaries in connection with the acquisition of EMA Mining. According to the plan’s annual report filed with the Securities and Exchange Commission (SEC) on June 24, 2012, there was $3 billion invested in company stock, the law firm said. 

On January 18, 2013, Caterpillar issued a press release announcing it had “uncovered deliberate, multi-year, coordinated accounting misconduct concealed at [ERA Mining Machinery Limited],” a company which it acquired in June 2012 through a tender offer. As a result, Caterpillar announced that it was taking “a non-cash goodwill impairment charge of approximately $580 million, or $0.87 per share,” for the fourth quarter.    

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“Caterpillar employees who purchased company stock in the 401(k) plan after the ERA acquisition but before news of the accounting fraud, may have done so at artificially inflated prices,” said attorney Jacob Zamansky. The investigation concerns whether the plan fiduciaries breached duties owed to Caterpillar employees through the due diligence failures which resulted in this announcement and write-down, according to Zamansky.

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