PLANSPONSOR - February/March 2018 - 26

Major Legislation and
Regulatory or Other Influential
Retirement-Plan-Related
Developments
1993
Omnibus Budget
Reconciliation Act
1994
Age Discrimination
in Employment Act
amended to eliminate
mandatory retirement
for tenured college
and university faculty
1994
IRS finalizes
nondiscrimination
regulations
1996
Small Business Job
Protection Act
1997
Taxpayer
Relief Act
1998
IRS Restructuring
and Reform Act
2001
Economic Growth
and Tax Relief
Reconciliation Act
Mid-to-Late 1990s
Plans move away from
quarterly valuation to daily
valuation
Early and Mid-2000s
U.S. Reps Portman and Cardin lead bipartisan
effort to revise employer- sponsored retirement
plans and IRAs
2002
First wave
of stock
drop lawsuits
2002
Sarbanes-
Oxley Act
2001
Sun America DOL
Advisory Opinion
2003
New York
State attorney
general
launches
late- trading/
market- timing
investigations
2004
American
Jobs
Creation
Act (IRC
Section
409A)
2004
Pension
Funding
Equity
Act
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2014
" While SCOTUS struck the
Supreme Court
Dudenhoeffer Decision
ON June 25, the U.S. Supreme Court
(SCOTUS) issues its decision in the
case Fifth Third Bancorp v. Dudenhoeffer,
concluding by unanimous decision that
employee stock ownership plan (ESOP)
fiduciaries are not entitled to a presumption
of prudence for keeping company
stock in their plan. For over two decades,
federal courts had embraced what was
called the Moench presumption of
prudence-holding that fiduciaries of
plans that require or encourage investment
in employer stock are entitled to a
presumption that they acted prudently.
Former employees of Fifth Third
Bancorp contended that the bank had
become a riskier lender and that plan
fiduciaries should have divested the
employer plan from its company stock.
Stephen Saxon, partner with Groom
Law Group, Chartered, in Washington,
D.C., and PLANSPONSOR columnist,
will write extensively about this decision,
in one column, for instance:
presumption entirely, the court provided
new and potentially useful guidance
regarding the duties of plan fiduciaries,
particularly fiduciaries of publicly traded
companies.
" The ruling eliminates the presumption
of prudence entirely, holding that
ESOP fiduciaries are provided with a
statutory exemption from ERISA's duty
of prudence 'only to the extent it requires
diversification,' The court also rules that
the normal pleading rules-rather than
a presumption of prudence-was the
appropriate way to sort the 'plausible
sheep from the meritless goats' at the
motion to dismiss stage.
" Where plan fiduciaries of publicly
traded companies have knowledge of
material and nonpublic information, the
court's opinion makes clear that ERISA
does not require that they violate securities
laws by trading on such information.
It suggests, though, that fiduciaries may
need to evaluate whether to freeze investment
in employer stock or to publicly
disclose material, nonpublic information,
as well as whether either action would
cause more harm to the plan than good. "
26 PLANSPONSOR.com February-March 2018
2016
A New Fiduciary
Standard
TO be defined as an investment fiduciary,
as outlined in ERISA, one needed
to fulfill all parts of a five-part test. This
led to certain disconnects between plan
sponsors and those they believed to be
fiduciaries but were not. The definition
of fiduciary began evolving in 2010,
when the DOL released an initial rule
designed to limit conflicts of interest for
financial advisers working with clients in
retirement accounts and stemmed from
the 2010 Dodd-Frank Act.
Powerful industry criticism led the
DOL to withdraw the rule and, in 2013,
the Securities and Exchange Commission
(SEC) released a request for comment on
the costs and benefits of a uniform fiduciary
duty rule and the harmonization of
adviser and broker regulations.
In 2015, when no re-proposed rule
had yet been released, President Obama
directed the DOL to re-propose its fiduciary
duty rule. The agency proposed
a new rule requiring brokers working
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