Askew v. R.L. Reppert, Inc., 2016 WL 447060 (E.D. Pa. 2016)
A trial court has ruled that a 401(k) plan administrator violated ERISA when it failed to furnish a copy of a custodial agreement between the plan sponsor and a trust company in response to a participant’s request. As background, ERISA § 104(b) requires plan administrators to furnish participants and beneficiaries with specified documents upon request, including the plan’s trust agreement and its most recent SPD and Form 5500—as well as documents in a catch-all category that includes “other instruments under which the plan is established or operated.” Courts generally have agreed that the catch-all provision refers only to formal documents governing the plan, not to all documents under which the plan operates. Thus, for example, courts have not required disclosure of IRS determination letters, trustee expense policies, lists of retired participants, or claim forms.
The court found that the custodial agreement in this case was a formal, legal document that dictated important aspects of participants’ benefits under the plan. Although it primarily governed the relationship between the plan sponsor and the trust company, it listed the plan’s investment funds; its default investment; and the duties, responsibilities, and obligations of two service providers handling and investing plan contributions. In other words, from a participant’s perspective, the custodial agreement established where and how participants’ accounts would be invested, and who would manage and administer them. The court also considered a number of other types of documents (including periodic benefit statements) the participant claimed to have requested and not received, finding that the administrator had satisfied its obligations with respect to those documents. The court deferred a decision on whether to impose penalties and, if so, their amount, noting unresolved factual disputes regarding whether there was bad faith or intentional misconduct on the part of the plan administrator, or harm to the participant.
EBIA Comment: ERISA obligates plan administrators to furnish copies of trust agreements upon request—but custodial agreements are not mentioned in the statute, requiring reference to the catch-all provision. The court’s characterization of its decision as a “close call” highlights the challenges for plan administrators receiving requests for documents arguably within the catch-all category. Given the potential for penalties of up to $110 per day, plan administrators should review all document requests carefully and seek legal advice to clarify the gray areas. In determining whether particular documents must be provided, DOL advisory opinions on this topic are a helpful resource in addition to the cases analyzed in this decision. Plan administrators may also be interested in the court’s conclusion that the administrator was not liable for penalties regarding ERISA § 404(c) disclosures, since those disclosures are required by regulation and penalties can be assessed only for statutory violations. For more information, see EBIA’s 401(k) Plans manual at Section XXIX.H (“Participant and Beneficiary Right to Request and Examine Documents”); see also EBIA’s ERISA Compliance manual at Sections XXV.A.4 (“What Are ‘Other Instruments Under Which the Plan Is Established or Operated’?”) and XXV.F (“Table of Cases Involving Penalties for Failure to Furnish Documents”).
Contributing Editors: EBIA Staff.