PLANSPONSOR - February/March 2021 - 6

RULES & REGULATIONS
Allegations
in the lawsuit
echo those
included in
an emerging
class of cases
being filed
against large
employers
across the U.S.
hiring Alight all fail to actually speak to
whether the Abbott defendants indeed
monitored, or failed to monitor, Alight's
performance as a service provider.
Supporting this point, the ruling notes that
Alight was hired in 2003, while the first
alleged prior cybersecurity incident identified
by the plaintiff as a red flag occurred
in 2013. The latest documents filed in the
case as of the time of publication indicate
a possibility that the parties will enter into
mediation overseen by a federal judge.
IRS Final Regs on QPLOs
The IRS has issued final regulations for
rolling over qualified plan loan offset
(QPLO) amounts. The regulations, which
implement Section 13613 of the Tax Cuts
and Jobs Act (TCJA), extend the rollover
period for QPLOs.
When an employee with an unpaid
loan has what the plan terms a triggering
event-typically, termination of his job-
and he rolls over a distribution of his plan
account, whatever amount he still owes on
the loan is offset, as he has already received
the proceeds, and is taxable. If he rolls it
over, on paper, into a qualifying retirement
savings vehicle and repays it with cash, he
avoids being taxed.
Before passage of the TCJA,
the
participant had 60 days to roll over the
6 PLANSPONSOR.COM February - March 2021
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offset amount from his plan account to an
eligible plan that accepts such rollovers.
The act extended this time period until
the due date (with extensions) for filing
the participant's federal income tax return.
The extension applies only for plan loan
offset amounts resulting from the participant's
termination of employment or the
employer's termination of a qualified
plan-ergo, a QPLO.
The IRS said the applicability date
is also revised to provide that taxpayers,
including those filing a Form 1099-R,
may apply these regulations with respect to
plan loan offset amounts-i.e., QPLOs-
treated as distributed on or after August
20, 2020, the date the proposed regulations
were published.
Raytheon 'Actuarial
Equivalence' ERISA Suit
The settlement details in an Employee
Retirement Income Security Act (ERISA)
lawsuit known as Cruz v. Raytheon Co.
have been filed in the U.S. District Court
for the District of Massachusetts.
The company does not admit any
fiduciary wrongdoing in the settlement,
which bars any future claims related to the
issues and allegations at hand.
Allegations in the lawsuit echo
those included in an emerging class of
cases being filed against large employers
across the U.S. The basic argument is
that these employers are failing to pay
the full promised value of " alternative
benefits, " in that they have neglected to
ensure that various annuity options made
available in their plan are " actuarially
equivalent " to the plan's default benefit,
as ERISA requires.
In this case, during the course of their
arm's-length settlement negotiations, the
parties determined that, if the benefits of
class members were calculated using the
actuarial assumptions endorsed by the
plaintiff's expert in his expert report, they
would, in the aggregate, receive increased
benefits with a net present value of approximately
$150 million.
Plan Sponsor Loses Second
Attempt for Suit Dismissal
A federal judge has denied BBVA
Compass Bancshares' motion to dismiss
an Employee Retirement Income Security
Act (ERISA) lawsuit accusing it of failing
to monitor investments and remove
imprudent ones in its 401(k) plan. This is
the second time the court has rejected the
company's motion to dismiss.
BBVA argued that the court must
dismiss the plaintiffs' claims, for failure
to exhaust administrative remedies.
However, Judge Madeline Hughes
Haikala of the U.S. District Court for
the Northern District of Alabama found
that the plaintiffs were never given clear
instructions on administrative remedies.
Looking at the summary plan description
(SPD) and the plan document, the
judge found that neither contains a provision
concerning administrative procedures
for claims for breach of fiduciary
duty. However, the SPD does state that
employees with questions should address
them in writing to the administrator, and
that is what at least one plaintiff did.
Through her attorney, the plaintiff
asked the administrator to tell her what
procedure was available to her to pursue
her concerns about the management of the
plan and plan investments. She also asked
for " all documents related to the administrative
process. " According to the court
opinion, the administrator replied that her
request was " unclear, " " overly broad " and
did not appear to be within the scope of
the information to which she was statutorily
entitled. The judge pointed out that
the " ERISA Rights " section of the SPD
states: " If a claim for benefits is denied or
ignored, in whole or in part, suit may be
filed in a state or federal court. " -PS
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PLANSPONSOR - February/March 2021

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