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The Wagner Law Group

The Wagner Law Group is a nationally recognized practice in the areas of ERISA and employee benefits, estate planning, employment, labor and human resources and  investment management.


Established in 1996, The Wagner Law Group is dedicated to the highest standards of integrity, excellence and thought leadership and is considered to be amongst the nation's most exceptional ERISA and employee benefits law firms. The firm has six offices across the country, providing unparalleled legal advice to its clients, including large, small and nonprofit corporations as well as individuals and government entities worldwide. The Wagner Law Group's 27 attorneys, senior benefits consultant and three paralegals combine many years of experience in their fields of practice with a variety of backgrounds. Seven of the attorneys are AV rated by Martindale-Hubbell and six are Fellows of the American College of Employee Benefits Counsel, an invitation-only organization of nationally recognized employee benefits lawyers.  Seven of the firm's attorneys have been named to the prestigious Super Lawyers list for 2016, which highlights outstanding lawyers based on a rigorous selection process.




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Contact Info

The Wagner Law Group


  Integrity | Excellence



Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Washington, D.C.

Tel: (202) 969-2800


Fax: (202) 969-2568

 800 Connecticut Avenue, N.W.

Suite 810

Washington, D.C. 20006


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Tel: (813) 603-2959

Fax: (813) 603-2961

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Tampa, FL  33602 


San Francisco

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Fax: (415) 358-8300

300 Montgomery Street

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St. Louis

Tel: (314) 236-0065

Fax: (314) 236-5743
100 South 4th Street, Suite 550
St. Louis, MO  63102 








ERISA Law Alert



February 21, 2017




Dear Clients and Friends:



This ERISA Law Alert addresses two recent regulatory developments concerning the administration of retirement plans.



First, the IRS has issued guidance that updates the rules applicable to determining a defined benefit plan's minimum funding status. As a result of the updated guidance, defined benefit plans' minimum funding requirements will increase, and plan sponsors will be required to adopt plan amendments to implement these changes.



Second, the DOL has released updated guidance to clarify how the Employee Retirement Income Security Act of 1974 ("ERISA") impacts plan fiduciaries' decisions on the voting of proxies on securities held by employee benefit plans and other exercises of shareholder rights.



As always, please feel free to contact one of the staff attorneys at The Wagner Law Group for further information or assistance on these topics.



IRS Proposes Update to Mortality Tables for Defined Benefit Pension Plans



The IRS has issued proposed regulations updating the mortality tables used by most defined benefit plan sponsors to determine minimum funding requirements. The proposed regulations also update the rules a plan sponsor must satisfy to obtain IRS approval to use plan-specific substitute mortality tables instead of the generally applicable mortality tables for minimum funding purposes.


Background. Internal Revenue Code (the "Code") Section 430 specifies the minimum funding requirements that generally apply to single-employer defined benefit pension plans. Code Section 430 defines a plan's minimum required contribution by reference to its funding target for the plan year. A plan's funding target for a plan year generally is the present value of all benefits accrued under the plan as of the first day of that plan year.


Code Section 430 requires that the IRS issue regulations prescribing the mortality tables for plan sponsors to use to determine any present value, or make any computation, in connection with the determination of a plan's minimum funding requirements. 

NOTE: Mortality tables indicate the probability of survival year-by-year for an individual based on gender, age and other factors.


For purposes of determining a defined benefit pension plan's minimum funding requirements, mortality tables are used in tandem with other actuarial assumptions to calculate the present value of a stream of future benefit payments.


Code Section 430 requires the IRS to base its mortality tables on the actual mortality experience of plan participants and projected trends in that experience. Accordingly, the IRS must revise the mortality tables at least once every ten years to reflect the actual mortality experience of pension plan participants and projected trends in that experience. The IRS last issued regulations to update its mortality tables and the rules for using substitute mortality tables in July of 2008.


Proposed Regulations. The proposed regulations explain the methodology the IRS used to update the general applicability mortality tables and confirm that the IRS's methodology follows the Code-based requirement that the mortality tables reflect the actual mortality of pension plan participants. As with the 2008 regulations, the IRS's methodology involves a separate determination of base tables, and the projection of longer life expectancies. The proposed base mortality tables are available at Prop. Reg § 1.430(h)(3)-1.


The proposed regulations also update the rules for plan sponsors using plan-specific mortality tables and include several changes to existing regulations on the methodology for developing these substitute mortality tables. In particular, the proposed regulations require a substitute mortality table to be developed by multiplying the mortality rates from a projected version of the general applicability mortality table by a ratio of the actual deaths for the plan population to expected deaths determined using the standard mortality tables for that population. In sum, the method provided under the proposed regulations is more streamlined than the 2008 method and allows for the use of substitute mortality tables by plans with smaller populations.


Plan Sponsor Takeaway. The proposed regulations are to become effective for plan years beginning in 2018, meaning that plan sponsors may no longer use substitute mortality tables after this date unless the IRS has approved such tables.


Defined benefit plan sponsors must be cognizant of the fact that a practical effect of the updated mortality tables, which reflect longer life expectancies, will be increased minimum funding requirements. Moreover, defined benefit plan sponsors must be sure to amend their plans to reflect the updated mortality tables.


Click here to view the proposed regulations.


DOL Releases Updated Guidance on Proxy Voting



The U.S. Department of Labor ("DOL") has issued Interpretive Bulletin 2016-01 ("IB 16-01") , which provides guidance on the legal standards imposed under ERISA with respect to voting of proxies on securities held by employee benefit plans and the exercise of other shareholder rights. In issuing IB 16-01, DOL has withdrawn the proxy voting guidance provided in Interpretive Bulletin 2008-02 ("IB 08-02") and reinstated the guidance it provided in Interpretive Bulletin 1994-02 ("IB 94-02"), with certain modifications. Plan fiduciaries and investment managers must now review IB 2016-01 to determine how they are impacted by the revised guidance.


Background. The DOL first provided guidance in IB 94-02 on how ERISA impacts plan fiduciaries' decisions on proxy votes and other exercises of shareholder rights. IB 94-02 confirmed that a plan fiduciary's duty to manage plan assets prudently extends to proxy voting. In sum, IB 94-02 explained that plan fiduciaries may engage in shareholder activities intended to influence corporate management if there is a reasonable expectation that such activities are likely to enhance the value of the plan's investment in consideration of the costs for taking such action.


In 2008, DOL issued IB 08-02 to replace IB 94-02. Specifically, IB 08-02 explained that plan fiduciaries should only vote proxies if they determined that voting was more likely than not to increase the plan's investment, in view of the costs for voting. Many stakeholders concluded that IB 08-02 prohibited plan fiduciaries from proxy voting unless the plan had performed a cost-benefit analysis and concluded that doing so would increase the economic value of the plan's investment.



After concluding that IB 08-02 created confusion among plan fiduciaries and likely discouraged many from voting proxies, DOL issued IB 16-01 to help fiduciaries better understand their obligations under ERISA with respect to proxy voting.


IB 2016-01. IB 16-01 reiterates that a plan fiduciary's duty to manage plan assets prudently extends to proxy voting, and that proxies should be voted as part of the process of managing the plan's investments, unless the fiduciary determines that the cost and time involved in voting proxies is not in the plan's best interest. Accordingly, a plan trustee has the duty to vote proxies except where:


  • The trustee is subject to the directions of a named fiduciary; or
  • The power to manage plan assets has been delegated to an investment manager



DOL takes the position that fiduciaries should consider whether the plan's vote is expected to have a positive impact on the value of the plan's investment when compared to the costs of voting. In particular, DOL advises that where an investment requires a plan fiduciary to spend significant resources to vote shares, the fiduciary should consider whether this fact is adequately reflected in the investment's price.




Plan Sponsor Takeaway. Under IB 16-01, plan fiduciaries need to determine whether the issues to which the voting relates would have a positive impact on the investment value versus the cost of voting shares.




IB 16-01 may be viewed by clicking here.




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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.