PLANSPONSOR - October/November 2021 - 9

plan management, " Verrall says. " Some
sponsors will have to come up with an
independent assessment, but for those
with big providers to help, this probably
won't be a big deal. "
Brent DeMay, a partner in professional
services firm Sikich's accounting
group in Naperville, Illinois, says the
changes to come are truly new requirements.
These audits have traditionally
made up the bulk of financial audits and
let auditors issue a disclaimer of opinion,
vs. a formal opinion. According to DeMay,
this made what the auditor did unclear.
" But now, auditors may not disclaim
an opinion; they must be clear about
what they did as auditors, " he says. " SAS
136 also creates a two-part opinion. A
certification statement is still allowed
concerning investments and investment
income, although now auditors have to
opine on the form and content of the certified
information. However, auditors must
also give a formal opinion on anything
not in the investment certification. "
This produces a new duty for plan
sponsors, he continues. " To elect to have
a Section 103(a)(3)(C) audit, plan sponsors
have to engage an auditor for that scope
of service; then sponsors have to confirm
with their service providers that they can
offer a complete and valid certification
statement, " DeMay explains.
DeMay says one of the largest differences
in SAS 136, compared with the
previous language, is that, for plan sponsors,
it formalizes performance requirements
that until now were considered
merely best practices.
Another big change, Verrall says,
is that plan sponsors will be required to
supply the auditor with a substantially
complete draft of the plan's Form 5500
and its schedules before the audit so
the auditor can check the form against
its findings and let the sponsor know if
the form needs any corrections. " This
is intended to plug [up] the differences
between information on the Form 5500
and the audit report, " he says.
-Rebecca Moore
More From Washington
And the Courts
Church Plan Exemption
Gets Preliminary Approval
On their third try, the parties in a lawsuit
claiming that Dignity Health improperly
used the Employee Retirement Income
Security Act (ERISA)'s " church plan "
exemption to evade ERISA funding and
reporting requirements for its defined
benefit (DB) plan have been granted
preliminary approval of a settlement
agreement.
A year ago June, Judge Jon S. Tigar of
the U.S. District Court for the Northern
District of California denied for the second
time preliminary approval of a proposed
settlement agreement. Tigar found an
underlying conflict between the vesting
subclass and the rest of the class and said
he could not find that the vesting group's
interests have been adequately protected.
In his order granting preliminary
approval of the newly proposed settlement,
Tigar noted that the only material
changes in the agreement affect the
vesting subclass. According to the court
document, the changes to the agreement
include subclass certification of the
vesting subgroup, a $290,000 increase in
money paid to the vesting subclass, and the
distribution of funds to subclass members
proportionate to their previously accrued
benefits under the plan.
In the agreement, the Dignity Health
defendants deny any and all allegations of
wrongdoing made in the complaint.
FAQ on Rehiring Retirees
To help address COVID-19-related labor
shortages, the IRS is reminding employers
that they generally will not jeopardize the
tax status of their defined benefit (DB)
pension plan if they rehire retirees or
permit distributions of retirement benefits
to current employees who have reached age
59.5, or the plan's normal retirement age.
The IRS is providing two new
frequently asked question (FAQ) documents,
designed to offer technical guidance
to public and private employers
that sponsor pension plans for their
employees. The FAQ highlight existing
ways employers can meet their employment
objectives and still comply with the
plan qualification rules.
The FAQ note that an employer
may generally choose to address unforeseen
hiring needs by rehiring former
employees, even if those employees have
retired and begun receiving pension
benefit payments. Also, if permitted under
plan terms, those employees may continue
receiving those pension benefits after
they are rehired. If an employer chooses
to make retirement distributions available
to existing employees who have reached
age 59.5 or the plan's normal retirement
age, this may assist in the retention of
employees eligible for retirement.
Separation Agreement
Precludes ERISA Suit
A judge has granted summary judgment
to Cumulus Media in a lawsuit over retirement
plan fees because he found that the
plaintiff had waived his right to sue. On
May 31, 2019, the plaintiff signed a separation
agreement with Cumulus Media
that released the company from all claims
held by the plaintiff as of that date. The
plaintiff admitted that, before signing the
agreement, he neglected to read it in its
entirety or consult with an attorney about
the effects of its terms.
A year ago February, the plaintiff
filed a lawsuit claiming that Cumulus
Media breached its Employee Retirement
Income Security Act (ERISA) duties of
loyalty and prudence by offering a 401(k)plan
investment menu composed of
unduly expensive mutual funds and by
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