PLANSPONSOR - August - September 2022 - 38

FIDUCIARY FORUM
A Time to Amend
Committee members may want to get ahead of some plan changes
W
hether it's selecting and monitoring the investment
lineup for a defined contribution plan or reviewing
the service provider disclosures to make sure the
plan is paying reasonable fees, plan committee members have
fiduciary responsibilities. We regularly try to provide helpful
advice so those serving in that capacity can satisfy these obligations
(have we mentioned process, process,
process lately?). We also suggest steps
to help prevent or minimize the effects of
fiduciary breach, and fee litigation that
continues to run rampant. But committee
members often have nonfiduciary responsibilities
for retirement plans, too.
Many committees have been deleremoving
individual board members from fee litigation cases.
* CARES/SECURE Act changes. The IRS recently extended
... committee
members
often have
gated authority to adopt plan amendments.
Sometimes this delegation is for
full amendment authority. Other times it
is more limited, such as for those changes
that are legally required or won't generate
significant costs to the company. In any
event, amendment authority is considered
a settlor function and is not a fiduciary duty. But that doesn't
mean it isn't important. As the summer winds down and we
head into the last quarter, we thought it might be helpful to chat
about plan amendments that committees may be considering.
* Class action waiver/Mandatory arbitration. As discussed
in more detail in our February/March column, these provisions
may help stop a class action fee claim. In that piece, we laid out
the pros and cons for those considering this type of provision.
* Forum selection. Even if you aren't interested in imposing
mandatory arbitration, it may be helpful to designate the applicable
jurisdiction for any plan litigation. Courts have upheld plan
provisions that specify the location should a situation involving
litigation arise. This means you may specify the courts most
convenient for the plan sponsor, such as near its company headquarters.
(Or, if you want to pick Hawaii, we would be happy to
come help defend a case there!)
* Governance structure. Plan sponsors may consider
amending plan documents to hard-wire-in the committee as
the named fiduciary and excise any implication that the board
of directors is a plan fiduciary with monitoring responsibilities.
While this approach is untested in courts, it may be helpful in
38 PLANSPONSOR.COM August - September 2022 Art by Joseph Ciardiello
nonfiduciary
responsibilities
for retirement
plans, too.
the deadline for some, but not all, amendments under the
Coronavirus Aid, Relief and Economic Security Act and the
Setting Every Community Up for Retirement Enhancement Act. It
is important to confirm which amendments may still be required
by December 31 for calendar year plans. For
example, no further extension applies to
plans that offered the coronavirus-related
distributions or related loan relief that
many plan sponsors implemented in 2020.
Additionally, even for those provisions that
are further delayed, plan sponsors may
want to consider adopting the amendment
now to make sure they get it done. And
remember, even though the deadline for
amendments is delayed, the plan must be
operated in accordance with the changes.
* Discretionary changes. As a general
rule, any amendment to reflect a discretionary
change implemented operationally
during the year must be executed by the last day of the
plan year-i.e., December 31 for calendar year plans. On the
other hand, some changes must be adopted prospectively with
the provisions in effect for the whole plan year. For example,
for calendar-year-plan sponsors considering adding an eligible
automatic contribution arrangement, the amendment must be
executed by December 31 to be effective January 1, 2023.
For plan sponsors that adopt plan amendments, the next step
is to update the summary plan description or issue a summary
of material modifications. Supplying these communications is a
fiduciary responsibility and an important follow-up in this process.
Further, for those deciding to implement the class action waiver/
mandatory arbitration provisions, communicating those provisions
to plan participants is a helpful component of enforcement.
By starting to think now about what, if any, changes should
be made to the plan, committees can avoid scrambling at the last
minute to get amendments prepared and executed.
Summer Conley is a partner in the Los Angeles office of
Faegre Drinker Biddle & Reath LLP. Michael Rosenbaum is
a partner in the firm's Chicago office.
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PLANSPONSOR - August - September 2022

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