Working with all types of employers, Morgan Lewis designs, implements, and maintains qualified defined contribution and defined benefit retirement plans. Our clients include small and middle-market companies, Fortune 500 and multinational corporations, financial institutions, start-ups, and tax-exempt organizations and educational institutions, as well as US state and local governments. We regularly counsel multinational companies about benefits for their US employees, and advise on issues that can arise with cross-border mergers and acquisitions among companies with US and non-US employees.
Morgan Lewis guides clients through every step of plan design and administration. We draft and review plan documents, amendments, notices, summary plan descriptions (SPDs), and summaries of material modifications (SMMs). We submit plans to the Internal Revenue Service for favorable determination letters on their tax-qualified status. If an error occurs in the administration of plans, we assist with correcting the problem.
Our services cover the entire spectrum of retirement plans, programs, and arrangements, including traditional defined benefit plans; cash balance, hybrid, and pension equity plans; and defined contribution plans (401(k), profit sharing, money purchase, and employee stock ownership plans (ESOPs), as well as 403(b) and 457(b) plans).
We advise on every variation of plan design. Innovative defined benefit plan designs include lump-sum and early retirement windows. Defined contribution plan designs may involve Roth contributions/in-plan Roth conversions and safe harbor contributions, along with plan investments in employer stock, custom target date fund offerings, and open brokerage windows.
We advise on compliance with governing laws and regulations; counsel on investment of plan assets; assist with funding strategies; prepare plan documents and participant communications; assist with the management and operations of the plans (including internal audits); and negotiate third-party vendor agreements.
Our work with international plan administration for US- and non-US-owned companies gives us a global perspective. We help clients with transfers to and from parent companies around the world, addressing taxation and withholding on distributions to participants abroad.
We also assist companies with Title I issues, advising plan administration and investment committees on issues of fiduciary responsibility.
In outsourcing transactions, we monitor and incorporate developments that can affect administration by a client’s outsourcing providers. Our lawyers help clients draft contracting terms and requirements, and evaluate the compliance abilities of outsourcing providers.
Whether needed as the result of a corporate spinoff or consolidation, or the conversion of a pre-approved plan into an individually designed plan, Morgan Lewis assists employers in drafting, designing, and implementing a variety of qualified defined contribution plans, including profit-sharing plans, money purchase plans, stock bonus plans, and 401(k), 403(b), and 457(b) plans.
We also amend and restate existing plans to reflect changes in the law, to merge one or more plans sponsored by the same employer, or to incorporate new design concepts. We regularly prepare and review SPDs, SMMs, plan administration manuals, and participant communications, notices, and disclosures.
Our team works with clients on tax and operational issues that arise in the day-to-day administration of defined contribution plans. We help them manage compliance, and meet requirements applicable to domestic relations orders, loan programs, and other features. We also advise with regard to participant claims and appeals, and claims that arise in litigation under the Employee Retirement Income Security Act (ERISA).
Morgan Lewis advises on the tax qualification of defined contribution plans as well. We help companies ensure that their plans do not discriminate against nonhighly compensated employees; submit these plans to the IRS for favorable determination letters on their tax-qualified status; and correct administrative errors. We also assist with negotiating contracts with third-party vendors, such as third-party administrators and investment managers.
We help sponsors to operate their plans in accordance with the fiduciary requirements of ERISA, as well as the extensive reporting and disclosure requirements under Title I of ERISA. We routinely attend scheduled meetings of plan administration and investment committees to advise on issues of fiduciary responsibility.
Morgan Lewis makes defined benefit plans a central focus of our practice. We have a deep bench of practitioners who design and implement all types of single-employer plans, including collectively bargained plans and plan conversions. We understand the issues that can arise during spinoffs, mergers, and divestitures.
Our benefit advisers help some of the largest employers in the United States turn their traditional defined benefit plans into various hybrid offerings. Often, companies undergoing mergers or acquisitions need to integrate a diverse set of incompatible benefit programs. Clients sometimes rationalize these programs by establishing new hybrid plans or converting traditional defined benefit plans into a cash-balance formula. We assist with these sometimes-difficult processes by examining various plan options and assessing all potential issues for each plan, ranging from tax qualification to age discrimination.
Given the recent landscape of asset volatility, retiree longevity, and burdensome benefit liabilities, we work with our clients to “de-risk” their defined benefit pension plans. Together we consider a variety of strategies, including asset-based strategies (liability-driven investment, funding policy, insurance annuity buy-ins), and liability-based strategies (freeze of participation and/or benefit accruals, lump-sum payments, insurance annuity buy-outs, and plan termination). In addition, we help clients undertake mergers designed primarily for funding purposes.Our advisers are skilled at finding creative methods for companies to employ pension surpluses as well, such as establishing qualified supplemental executive retirement plans (QSERPs).
Our work guiding clients through federal correction programs—including the IRS's Employee Plans Compliance Resolution System (EPCRS) and the US Department of Labor’s (DOL’s) Voluntary Fiduciary Correction Program (VFCP) and Delinquent Filer Voluntary Compliance Program (DFVCP)—provides us key insight regarding common errors, permitted corrections, and potential sanctions. And we share that perspective through our knowledge-sharing platforms.
With this core resource, we counsel clients in how to address and correct any fiduciary compliance and prohibited transaction issues. Where applicable, we help clients to obtain exemptions from the DOL and/or the US Securities and Exchange Commission (SEC). We also help clients to amend and update policies and procedures to minimize the chance of future errors.
Technical requirements affecting employee benefit plans under ERISA and the Internal Revenue Code (IRC) are numerous and increasingly complex. Companies must maintain compliance with these requirements, while also dealing with multiple benefit plans that cover thousands of employees, often in a wide range of locations. When companies must juggle hundreds of daily transactions involving various types of internal and external recordkeeping and different sets of administrative personnel, even the most conscientious employer can make an inadvertent error.
Our professionals, who include former employees of the government agencies charged with enforcement of ERISA and IRC requirements, advise employers on how to identify design and administrative errors. As a starting point, we offer an employee benefit plan audit program, through which we help clients discover errors or potential issues, assess the nature and scope of those issues, and evaluate any business risks they may pose.
When necessary, we counsel clients about appropriate corrections, through self-correction or governmental agency approval (for example, through the IRS’s EPCRS and the DOL’s VFCP). We also have helped many clients to prepare nonroutine governmental filings, such as requests for IRS private letter rulings to obtain advanced approval of fact-specific actions and applications for prohibited transaction exemptions from the DOL.
We represent public retirement plans and tax-exempt organizations. Our clients include US state benefits programs and related boards, as well as county and city entities (including major metropolitan areas). Due to our many public plan representations, we are familiar with the ordinances and statutes that regulate state, municipal, and local systems, and are highly cognizant of the unique issues related to benefits in a public environment. We also work with a wide range of tax-exempt organizations, including small nonprofits, educational institutions, and large US national organizations.
To address the unique needs of each client, we assist with plan design issues; draft plan documents, amendments, summaries, and participant communications; analyze tax and administration issues that arise in the day-to-day plan administration; negotiate contracts with third-party administrators, recordkeepers, and other vendors; prepare determination letter applications and resolve any correction issues; and routinely attend and participate in board or committee meetings.
We help clients with 401(a), 403(b), 415(m), and 457(b) plans, and assist our public plan clients in complying with applicable state and local laws. We provide critical counseling for tax-exempt and governmental employers in designing and administering compensation agreements for their executives, often using tax-deferred vehicles such as split-dollar arrangements, and other innovative programs.
Our job is to enable clients to meet the imposing standards of conduct demanded by ERISA and its state law equivalents. Informed by our experience representing clients in periodic reviews, audits, and investigations by the DOL, IRS, Pension Benefit Guaranty Corporation (PBGC), and state agencies, we audit employee benefit plans to help ensure that our clients align their operating procedures with plan documents and fulfill all of their fiduciary obligations.
Today’s employee benefit plan fiduciaries operate in a dense legal and regulatory environment. Clients must grapple with a set of increasingly complex regulations, often using only small administrative staffs or outsourced administrators. Applicable regulations require fiduciaries to operate plans in strict accordance with governing documents and instruments. This puts employers at risk for liabilities stemming from the actions of internal employee benefits personnel, as well as any outside service providers.
We perform a variety of audits of employee benefit plans, and we evaluate all procedures to guide clients through best practices. When appropriate due to the scope of the audit, we partner with other service providers, such as consulting or auditing firms. These tasks are a critical piece of due diligence in a merger or acquisition. When clients use Morgan Lewis to conduct audits and to coordinate with other professionals, this type of legal audit is more likely to be considered privileged.
Outsourcing projects often mean that employees associated with the outsourced processes will be displaced. Our advisers have the real-world background to assist clients with all benefits-related issues that arise from outsourcing transactions. We draft and assess severance arrangements, and can tackle all benefits-related issues for employees who are offered subsequent employment with a client’s outsourcing provider, as well as all benefits- and severance-related issues for terminated employees.
While there are many advantages to using an outsourcing provider, there are also risks. A provider can expose a client to potential liability or become a drain on a client’s administrative resources. Today, outsourcing is often a complex exercise, typically involving the transfer of retirement and welfare administration, payroll, or human resource functions.
Our professionals monitor and apply employee benefits–related legal developments that could affect outsourcing providers’ administrative capabilities. We draft contracting terms and requirements and evaluate the compliance abilities of outsourcing providers, particularly during the critical vendor requirements process. Our goal is to ensure that each outsourcing provider adheres to contract terms and incorporates any underlying subject-matter legal rules into their requirements.
Guiding a client through the outsourcing process also helps us gain extensive knowledge about the organization, its plans, and, naturally, the outsourcing arrangement itself. We leverage this information to help improve ongoing projects related to the design, qualification, and operation of the client’s employee benefit plans overall.
Retirement plans are a rich source of valuable personal data about participants and beneficiaries, including Social Security numbers, addresses, dates of birth, bank account records, and pension benefit information. This collection of information presents an attractive and potentially exploitable opportunity for hackers and cybercriminals. Breach of personal information from a retirement plan could harm participants and beneficiaries through identity theft, theft of pension benefits, or access to other financial accounts and information. For the employer, plan sponsor, or plan administrator, a security incident can be expensive, harmful to its business and reputation, and damaging to its relations with employees and retirees.
While there is no comprehensive data privacy or cybersecurity law or regulation that expressly covers retirement plans, the Employee Retirement Income Security Act’s (ERISA) fiduciary duties of loyalty and prudence impose broad duties and obligations on plan fiduciaries to act in participants’ best interests and to undertake diligent efforts to protect these interests. Any fiduciary that breaches these duties and responsibilities may be responsible for making affected participants whole for any losses or damages. Specifically under ERISA, a fiduciary’s liability for a breach of its duties can include:
We help retirement plan fiduciaries, sponsors, and administrators address and manage these risks. We assist with identifying sources of data privacy risk; preparing and implementing protective administration policies and procedures; evaluating service provider relationships and negotiating contractual provisions and protections to address data privacy issues; addressing the monitoring of service providers on an ongoing basis; and creating, implementing, and maintaining comprehensive information and data security breach response plans. Our risk management strategies account for requirements under ERISA and, in collaboration with our colleagues in other practices, other applicable federal, state, and local laws and regulations. In addition, we continue to monitor new requirements and developments from the US Department of Labor, the US Department of Homeland Security, Congress, state legislatures, state and local regulators, and industry and trade associations.