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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
For purposes of compliance with a Labor Department investigative audit under ERISA §504, the fiduciary exception to the attorney-client privilege rule extends to communications regarding plan administration between an ERISA trustee and a plan attorney, the U.S. Court of Appeals in Richmond (CA-4) has ruled in Solis v. The Food Employers Labor Relations Association. Accordingly, two multiemployer funds must comply with a district court's order to turn over certain plan administration materials related to the funds' ill-fated decision to invest in entities related to Bernard Madoff.
DOL investigation
As part of an ERISA §504 audit, the DOL ordered two multiemployer plans to turn over documents relating to a $10 million loss of plan assets as result of investments in entities related to Bernard Madoff. The funds refused, citing both attorney-client privilege and the work-product privilege. The district court held that the privileges did not apply and ordered the documents to be produced. The funds appealed.
Fiduciary exception
The fiduciary exception to the attorney-client privilege stems from trust law and is based on the rationale that the benefit of any legal advice obtained by a trustee regarding matters of trust administration runs to the beneficiaries of the trust, and not to the trustees.
While the exception is limited, the funds conceded that the exception extends to the DOL when it acts on behalf of beneficiaries in the context of an ERISA enforcement action under ERISA §502. However, the funds argued, the fiduciary exception should not extend to a DOL compliance investigation under ERISA §504.
The Fourth Circuit disagreed, finding no "principled basis" on which to differentiate between enforcement actions and investigative actions when applying the fiduciary exception. As a practical matter, effective enforcements under ERISA §502 will depend upon effective investigations under ERISA §504.
Work product privilege
The work-product privilege belongs to the attorney and confers a qualified privilege on documents prepared by an attorney in anticipation of litigation. While the appellate court noted several courts have found the fiduciary exception to apply to the work-product privilege in the ERISA context, it declined to make any ruling and allowed the district court's order to remain in effect. The funds bore the burden of proving the applicability of the privilege to specific documents, yet they failed to provide "privilege logs" or identify the litigation for which specific documents were prepared.
For more information, visit http://www.wolterskluwerlb.com/rbcs.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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