Products March 21, 2016

Principal Offers Fiduciary Tools

The tools can help retirement plan sponsor clients manage their fiduciary responsibilities.
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Principal Financial Group has released a fiduciary management handbook. 

This resource was created to assist plan fiduciaries in identifying and executing their responsibilities in sponsoring a defined contribution plan (such as a 401(k) or 403(b) plan) or a defined benefit retirement plan that is subject to ERISA. The handbook examines the role of the Employee Retirement Income Security Act (ERISA), the definition of fiduciary, general standards of conduct for fiduciaries, guiding principles for fiduciaries and fiduciary protection.

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In addition, Principal provides a fiduciary log report which provides space to record the activities plan sponsors complete during the year for their defined contribution plans. Principal notes, “In the event of a Department of Labor (DOL) or IRS audit, it’s important to have detailed documentation to prove you’ve followed the rules of your plan and those outlined by ERISA.”

The fiduciary document catalog offered by Principal helps plan sponsors keep track of their retirement plan’s fiduciary documents. This list includes documents Principal suggests plan sponsors store and retain.
Compliance March 18, 2016

7th Circuit Says Advocate's Plan Is Not a Church Plan

The appellate court maintained that, under ERISA, a church plan must be established by a church, and Advocate Health Care Network's DB plan was not.
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The 7th U.S. Circuit Court of Appeals has ruled that the defined benefit (DB) plan sponsored by Advocate Health Care Network does not qualify as a church plan exempt from many provisions of the Employee Retirement Income Security Act (ERISA).

The appellate court noted that Advocate is not a church, nor was its predecessor. According to the opinion, Advocate formed in 1995 as a 501(c)(3) non-profit  corporation from a merger between two  health systems—Lutheran General HealthSystem and Evangelical Health Systems. Today, Advocate is affiliated with both the Metropolitan Chicago Synod of the Evangelical Lutheran Church in America and the Illinois Conference of the United Church of Christ, but it is not owned or financially supported by either.

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Using much the same logic as the 3rd U.S. Circuit Court of Appeals in Kaplan v. St. Peter’s Healthcare System, the 7th Circuit decided a church plan established by a church and maintained by a church is a church plan, and a church plan established by a church and maintained by a church-affiliated organization is a church plan—but a church plan established by a church-affiliated organization and maintained by a church-affiliated organization is not a church plan. The appellate court in Advocate agreed with the 3rd Circuit that, according to the language of ERISA, for church plan exemption, there are two requirements—establishment and maintenance—and only the maintenance requirement is expanded by the use of the word “includes.”

The 7th Circuit affirmed a district court’s opinion. The appellate court’s decision in Stapleton v. Advocate Health Care Network and Subsidiaries is here.

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