The New York Stock Exchange (NYSE) and Nasdaq, on June 5 and June 6, respectively, amended the proposed listing standards they previously submitted to the US Securities and Exchange Commission (SEC) to extend the compliance deadline. As amended, if the listing standards are approved by the SEC (as expected to happen this week), the clawback rules would be effective on October 2, 2023, and public issuers would be required to adopt compliant policies within 60 days after the effective date, i.e., no later than Friday, December 1, 2023.
ML BeneBits
EXAMINING A RANGE OF EMPLOYEE BENEFITS
AND EXECUTIVE COMPENSATION ISSUES
AND EXECUTIVE COMPENSATION ISSUES
The Internal Revenue Service (IRS) released Notice 2023-43 (Notice) on May 25, which provided guidance regarding the expansion of the IRS’s Employee Plans Compliance Resolution System (EPCRS) mandated by Section 305 of the SECURE 2.0 Act of 2022 (SECURE 2.0).
The SECURE 2.0 Act of 2022 (SECURE 2.0) made a number of changes in law intended to simplify the administration of retirement plans, including through the expansion of the Internal Revenue Service (IRS) Employee Plans Compliance Resolution System (EPCRS), which is currently set forth in Revenue Procedure 2021-30. EPCRS furthers the goal of ensuring that tax-qualified retirement plans operate in compliance with the Internal Revenue Code of 1986, as amended (the Code), by providing a mechanism for sponsors and administrators of those plans to correct certain documentary and operational errors that may arise in plan administration.
As the US Department of Labor (DOL) continues its investigation of retirement plans and their fiduciaries, we outline nine issues that the DOL has focused on in those investigations as a guide for plan fiduciaries in navigating fiduciary compliance, including top-of-mind areas such as cybersecurity and data privacy and ESG investing.
Based on new ERISA disclosure rules, now is a good time to review the compensation paid to your health plan’s consultant and broker. ERISA Section 408(b)(2)(B) requires brokers and consultants expecting $1,000 or more in direct and indirect compensation for services provided to group health plans to make detailed disclosures to the “responsible plan fiduciary” regarding their services and compensation.
One of the most common questions we receive from buy-side clients in mergers and acquisitions (M&A) is how to handle the 401(k) plan of the target company in the context of a stock purchase acquisition: Should they require the target to terminate the 401(k) plan prior to closing? Or should they keep the 401(k) plan in place for a short period of time following closing and then merge it into their own existing 401(k) plan?
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), new rules directing national securities exchanges, including the New York Stock Exchange (NYSE) and Nasdaq Stock Market (Nasdaq), to adopt listing standards for compensation recovery (clawback) policies were announced on October 26, 2022 by the US Securities and Exchange Commission (SEC).
Much has been written, on ML BeneBits and elsewhere, about the US Department of Labor’s (DOL’s) so-called “ESG Rule” issued in November 2022 (the DOL Rule). The DOL Rule, in part, addressed the appropriate factors for an ERISA fiduciary to consider when making investment decisions, including the potential use of environmental, social, and governance (hence, ESG) factors in ERISA investment decision-making. But there was more to that rule than the ESG topics that seem to dominate the spotlight.
In 2021, the US Department of Labor (DOL) issued cybersecurity guidance (the DOL Guidance) that sets out the DOL’s views on what processes fiduciaries of benefit plans regulated by the Employee Retirement Income Security Act of 1974, as amended (ERISA) should follow to protect plan assets and information from cybersecurity risks. In addition, the DOL has engaged in continuing enforcement efforts on such cybersecurity risks with respect to both retirement plans and health and welfare plans.
The COVID-19 public health emergency and presidential declaration of national emergency are intended to end on May 11 and the US government recently issued guidance on unwinding these emergency declarations.