April 2017 Archive

Money market and stable value fund litigation

April 25, 2017

In addition to (and, sometimes, as part of) plaintiffs’ 401(k) plan fee lawsuits, some plaintiffs have sued sponsors challenging the prudence (under ERISA) of the use of money market funds as capital preservation vehicles. Plaintiffs have also filed suits against providers and (in at least one case, a plan sponsor) challenging stable value fund investment strategy. In this article we briefly review the status of this litigation and discuss two recent “wins” for plan sponsors, in Bell v. Anthem and Barchock v. CVS. Read More


April 02, 2017

It is being reported that House Republicans are considering, as part of their tax reform effort, converting the current 401(k) system to “Roth-only,” primarily as a way to raise revenues to finance reductions in marginal tax rates and reform of the corporate tax. In this article we review: (1) the difference between the tax incentives provided by non-Roth and Roth 401(k) contributions; (2) the reasons why House Republicans are considering this change (why converting to Roth-only, or simply increasing the portion of 401(k) contributions that get Roth treatment, increases revenues); and (3) possible effects on retirement savings resulting from such a change. Read More

Retirement savings tax incentives – the current system

April 03, 2017

After the failure of the House to vote on repeal and replacement of the Affordable Care Act, it appears that Congress will now turn to consideration of tax reform. In any case, both Treasury Secretary Steven Mnuchin and House Speaker Paul Ryan (R-WI) have stated that they intend to move on tax reform before August of this year. As we have discussed in prior articles, reform of the Tax Code is likely to have a significant effect on retirement savings policy. Read More

Current outlook – April 2017

April 10, 2017

In this Current Outlook we review DOL’s 60-day delay of the applicability of its Fiduciary Rule, Congressional Review Act legislation voiding the Obama DOL’s “path forward” for state-mandated private sector retirement programs and the recent decision for plaintiffs in Bell v. Anthem. Read More

Viability of stock drop claims based on public information

April 25, 2017

On March 30, 2017, the United States District Court for the Eastern District of Missouri granted defendants’ motion to dismiss in Lynn v. Peabody Energy. Peabody is a “stock drop” case – a case in which defined contribution plan participants investing in a company stock fund sue after the company stock loses significant value. In this article we discuss the Peabody court’s decision, generally holding, under Fifth Third, that “impending bankruptcy” does not constitute “special circumstances” allowing such a suit. Read More

March 2017 Pension Finance Update

April 03, 2017

The short version is: good month, good quarter. Pension sponsors made it three for three so far in 2017 with another modestly positive month for pension finance. Stocks gained a bit last month, while interest rates also edged up, shaving pension liabilities. Both model pension plans we track gained ground again in March: Plan A improved 1% and is now up 3% this year, while Plan B added a fraction and is now up 1% through the first quarter of 2017. Read More

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