T. Rowe Price Retirement Plan Services, Inc. announced the
launch of the Essential Choice sales tool, described by the firm as a
Web-based application that allows retirement plan advisers to create pricing
proposals for the T. Rowe Price Essential Choice retirement plan solution in
real time.
Essential Choice is a prepackaged retirement plan solution suited
for small businesses with up to $5 million in assets. T. Rowe Price says the
product package includes support from an experienced plan services team, life stage participant
education on preparing for retirement readiness, flexible investment options,
and fixed pricing.
The new mobile-enabled tool will help advisers sell
Essential Choice to small businesses faster and simplifies the sales process
for busy plan sponsors looking for straightforward plan features, according to
T. Rowe Price.
“We recognize the time advisers spend with a prospective
client is valuable and are committed to helping them deliver retirement plan
solutions effectively,” explains Diana Awed, head of product and marketing for
T. Rowe Price Retirement Plan Services, Inc.
According to Awed, with less time spent on the
administrative work involved in creating proposals, advisers have “more
capacity to focus their attention on growing their business and finding the
right solutions for plan sponsors and ultimately their plan participants.”
Key functionalities of the Essential Choice tool include
automated proposal generation that allows advisers to generate custom proposals
based on simple variable inputs and a fixed pricing model, as well as advanced
analytics and reporting capabilities and consolidated conversion reporting.
More information is available from T. Rowe Price here.
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Top-Hat Plan Participant Can Get ERISA Help With Denial of Benefits
ERISA Section 502(a)(3) may extend to remedy inequitable conduct pertaining to a supposed waiver of plan rights and to a breach of the general good faith standard of contract law by the plan administrator, a court found.
U.S. District Judge William Alsup
of the U.S. District Court for the Northern District of California ruled
equitable remedies under Section 502(a)(3) of the Employee Retirement
Income Security Act (ERISA) can be used to enforce provisions of a
top-hat retirement plan.
The case involves Steven K. Buster,
former president and chief executive officer of Mechanics Bank, who in
2012, when terminated, was presented with a separation agreement that
released the bank of all claims including “claims arising under the
Employee Retirement Income Security Act.” During his employment with the
bank, Buster participated in several of Mechanic Bank’s retirement
plans including the Mechanics Bank Supplemental Executive Retirement
Plan (SERP). In 2008, Mechanics Bank froze the accrual of new benefits
pursuant to the SERP, and adopted a separate Executive Retirement Plan
(ERP), in which Buster also participated.
Upon termination, the
agreement provided for a lump-sum payment to Buster of one million
dollars designated as “Retirement Pay,” as well as a separate payment of
$1.8 million under the ERP, and a one-year severance payment of just
over one million dollars, for a total payment of $3.8 million. The
agreement made no mention of the SERP. Allegedly, Buster was expressly
informed by Mechanics Bank Board Member Diane Felton that his benefits
under the SERP, his 401(k) plan, and his pension plan would be
unaffected by the agreement.
Relying on that representation,
Buster signed the agreement. That evening, after Buster signed the
agreement, Garrett Lambert, senior vice president and treasurer of
Mechanics Bank, sent an email to Daniel Albert, chairman of the
Directors Compensation Committee, quantifying the amount of benefits
Buster accrued under his pension, SERP and ERP plans. Buster was copied
as a recipient on that email. The email made no mention of the
agreement.
In May 2015, Buster sent an inquiry to the director of
human resources at Mechanics Bank asking for an estimate of his
retirement benefits. She responded stating that Mechanics Bank had no
obligation to pay any benefits under SERP due to the release in the
agreement. After an appeal, Buster filed a lawsuit in March 2016.
NEXT: Ambiguity in the separation agreement
Buster’s first amended complaint
alleges three claims for relief: (1) denial of benefits under ERISA, (2)
equitable estoppel, and (3) reformation of the agreement. Defendants
moved to dismiss the second and third claims.
Alsup noted in his opinion
that Section 502(a)(3) of ERISA provides that a civil action may be
brought: “[b]y a participant, beneficiary, or fiduciary (A) to enjoin
any act or practice which violates any provision of this subchapter or
the terms of the plan, or (B) to obtain other appropriate equitable
relief (i) to redress such violations or (ii) to enforce any provisions
of this subchapter or the terms of the plan.” He added that Section
502(a)(3) does not, however, “authorize ‘appropriate equitable relief’
at large, but only ‘appropriate equitable relief’ for the purpose of
‘redress[ing any] violations or . . . enforc[ing] any provisions’ of
ERISA or an ERISA plan.”
He pointed out that ERISA exempts
top-hat plans from several requirements of Title I of ERISA, which
address participation, vesting, funding, and fiduciary duties. All
agreed that the administrator of a top-hat plan is exempt from ERISA’s
fiduciary duties, and all agreed that the terms of the SERP are
unambiguous. However, Buster does not seek any equitable relief as to
the SERP; he seeks equitable estoppel and reformation regarding the
agreement, which defendants have interpreted as waiving benefits under
the SERP.
Defendants argued that Buster failed to identify any
ambiguity in the agreement that could give rise to a claim for equitable
remedies. Alsup found that it is plausibly ambiguous whether the term
“claims arising under the Employee Retirement Income Security Act” in
the agreement encompassed claims for benefits from a plan governed by
ERISA, as defendants now contend. Alsup noted that Felton’s alleged
statement unambiguously disclaiming that scope exacerbated that
ambiguity. In addition, the Lambert email, which detailed the extent of
Buster’s pending SERP benefits, lends further plausibility to the
allegation that Felton informed Buster the agreement had no effect on
his SERP benefits.
NEXT: Equitable relief is available
Defendants contended that the
equitable relief that Buster seeks is not available because he does not
allege an interpretation of a plan provision, citing Gabriel v. Alaska Elec. Pension Fund. “Defendants myopically read Gabriel
to limit equitable estoppel to interpretations of ambiguous terms in
the plan document as against any other statement relating to a plan. But
Gabriel does not reach so far,” Alsup wrote in his opinion. He held
that “appropriate equitable relief” under ERISA Section 502(a)(3) may
extend to remedy inequitable conduct pertaining to a supposed waiver of
plan rights.
Defendants also argued that Section 502(a)(3) cannot
apply in the context of a top-hat plan, in as much as the fiduciary
duties of ERISA do not extend to such a plan. According to Alsup, the
plain language of Section 502(a)(3) does not support defendants’
interpretation. By its terms, that section authorizes “appropriate
equitable relief . . . to enforce any provisions of this subchapter or
the terms of the plan.” Defendants contend they need not make payments
required by the terms of the SERP in reliance on the agreement, but
Alsup said to the extent equitable relief is otherwise available,
Section 502(a)(3) authorizes the appropriate relief to enforce the terms
of the SERP.
He noted that defendants’ arguments primarily rest on a narrow understanding of CIGNA Corp. v. Amara, as well as Gabriel.
Those decisions discussed the availability of equitable remedies under
Section 502(a)(3) in the context of information provided by a fiduciary.
Neither decision required a fiduciary breach. Each merely addressed the
defendant as the plan fiduciary as appropriate under the circumstances.
Nothing in those decisions excluded the possibility that the
administrator of a top-hat plan could escape the reach of equitable
remedies under Section 502(a)(3) simply because it was exempt from the
higher fiduciary standard of care. Alsup held, consistent with the
uniform trend of decisions addressing Section 502(a)(3) in the context
of a top-hat plan, that equitable remedies there under are available for
a breach of the general good faith standard of contract law by the plan
administrator.