In late October 2024, the United States Court of Appeals for the Eleventh Circuit ruled in Romano v. Hancock Life Insurance Company, F.4th 729 (11th Cir. 2024) that certain foreign tax credits that were generated as a result of 401(k) plan investments in separate accounts owned by John Hancock Life Insurance Company (“JHLIC”) were
[Podcast]: ERISA Plan Asset “Hard-Wired” Conduit Feeders
For a number of ERISA, tax and other regulatory reasons, it may be desirable for the manager or sponsor of an investment fund or other structure to utilize what is often referred to as a plan asset “hard-wired” conduit feeder. Tune in to this podcast as partner Ira Bogner and senior counsel Adam Scoll discuss more about these structures, and the advantages they can provide.
U.S. District Court Rules that Float Income Earned by Fidelity Is Not a Plan Asset
Four class actions were consolidated in the U.S. District Court for the District of Massachusetts challenging whether float income earned on monies pending a transaction was a “plan asset.” In re Fidelity ERISA Float Income, No. 13-10222, 2015 WL 1061497 (D. Mass. March 11, 2015). Plaintiffs argued that if float was a plan asset, then Fidelity breached its fiduciary duties and committed a prohibited transaction by keeping this float income for its own benefit. Applying ordinary notions of property rights, the District Court held that float income was not a plan asset.
Unpaid Employer Contributions as Plan Assets: Expansion Of Liability Under ERISA
The Employee Retirement Income Security Act of 1974, as amended (“ERISA”), requires trustees of multiemployer pension and benefit funds to collect contributions required to be made by contributing employers under their collective bargaining agreements (“CBAs”) with the labor union sponsoring the plans. This is not always an easy task—often, an employer is an incorporated entity with limited assets or financial resources to satisfy its contractual obligations. In some instances, an employer will resort to filing for bankruptcy to obtain a discharge of its debts to the pension or benefit funds.
In a distinct trend, federal courts have found that, depending on the text of the underlying plan documents, unpaid employer contributions due under a CBA may be viewed as plan assets, such that the representatives of an employer who exercise fiduciary control over those plan assets can be held individually liable for the unpaid amounts (together with interest and penalties) under ERISA. These cases will no doubt help plan trustees and administrators collect monies owed to the plan. They also should serve as cautionary warnings to contributing employers to ensure that they fully understand the obligations that they are undertaking when they agree to contribute to ERISA funds pursuant to CBAs.