The U.S. Department of Labor (DOL) has proposed a rule on employee benefit plan proxy voting and the exercise of other specific shareholder rights. The new DOL proposed rule is intended to clarify the duties of Employee Retirement Income Security Act of 1974 (ERISA)-covered plan fiduciaries regarding proxy voting.
Per the DOL’s proposed rule: “This document also states that Interpretive Bulletin 2016-01 no longer represents the view of the Department regarding the proper interpretation of ERISA with respect to the exercise of shareholder rights by fiduciaries of ERISA-covered plans, and notes that it will be removed from the Code of Federal Regulations when a final rule is adopted.”
The proposal would amend ERISA Regulation Section 2550.404a-1 (“Investment Duties”) and is intended to resolve what the DOL describes as, “a persistent misunderstanding among some stakeholders that ERISA fiduciaries are required to vote all proxies, and in light of recent actions by the Securities and Exchange Commission (SEC) related to the proxy voting process.”
Benefit Plan Proxy Voting Confusion
The existing confusion has been a perception that fiduciaries must vote all proxies. As a result of this misperception, plans have unnecessarily spent funds researching items of no material economic significance.
The new proposal would require that fiduciaries not vote in situations where plan assets would be expended in course of activities that do not impact the plan economically. As the proposal states, “The Department has tried to convey in its sub-regulatory guidance that fiduciaries need not vote all proxies. A fiduciary’s duty is only to vote those proxies that are prudently determined to have an economic impact on the plan after the costs of research and voting are taken into account.”
#proxyvoting #ERISA #benefitplan #DOL
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.
Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through CapAcuity, LLC; Lion Street Advisors, LLC (LSF) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI, LSF and CapAcuity, LLC. are non-affiliated entities and separate entities from OneDigital and Fulcrum Partners.
Unless otherwise noted, VAI/VSI, LSF are not affiliated, associated, authorized, endorsed by, or in any way officially connected with any other company, agency or government agency identified or referenced in this document.