I am, by some serious training and long experience, a corporate lawyer, having been put through the paces by two incredible general counsels: Jack Hunter of Lincoln Financial Group and Scott Campbell of Kellogg Company. Each of these gentleman made quite a study of their attendant Boards and the rules (both formal and informal) related to their rarefied status. The expectation was that lawyers dealing with Board matters clearly understood the proper role and culture of "their" Boards.
Every year end I tend to be reminded of this seemingly mundane work (though it is really anything but!) in private practice, as this tends to be the "busy" season when it comes to corporate actions related to plan amendments and other plan activity. Though it may be too late in the year to be useful this year, there are a few thoughts that come to mind which you may hopefully find relevant the next time a plan amendment crosses your desk:
1. Boards do not manage companies. It is fundamental corporate law that corporate officers run companies, not the Board. Board members have the fiduciary obligation to the shareholders to oversee management; but they do not step into the role of management. This means that whatever you are looking for the Board to do, it should be generally "big picture," such as adopting or terminating the retirement plan. When adopting the plan, try to make sure that a corporate officer has the ability to amend the plan. In larger corporations, this authority will often be subject to certain limits, such as where the benefit is increased.
2. Check the minutes. If you are unsure of who has the authority to amend the plan, check the past Board minutes (if you can find them) to see who has that authority to amend.
3. Rely upon general authority. If it is not clear who has the authority to amend, you may find guidance in the general authority granted to officers in the bylaws or enabling resolutions as to who may have the authority to amend a plan, absent a specific grant. If you find yourself needing to go in for a Board resolution, take that opportunity to delegate future amendment authority to an officer.
4. Keep details minimal. I recently saw a board resolution that not only adopted a QACA, but also directed the officers to provide required notices. This is patently unacceptable drafting. The officers should be directed, instead, to take all necessary actions to execute the decision of the board.
5. That fiduciary thing. Make sure that whatever you are asking the Board to do does not constitute a fiduciary action unless you intend it to. One of the worst things you can do to Board members is to inadvertently cause them to have unwanted fiduciary status. Make sure that the authority to act on behalf of the plan is properly delegated to appropriate officers: in the absence of a clear delegation, one would not generally like the DOL or courts to make a de facto finding of inadvertent ERISA fiduciary status of a Bord member.
Related to this are a number of RMD amendments I have been seeing for 403(b) plans, which purport to amend 403(b) plans for the WRERA rule that allowed RMD waivers in 2009. Some vendors are presenting these amendments to plan sponsors for their signature by year end, as the vendor may have taken it upon itself to generally waive these requirements for those 403(b) customers with individual contracts.
First, it is not clear that such an amendment is needed because, at least for now, you can still incorporate a lot of things by reference-and the inclusion of 401(a)(9) in a 403(b) document should suffice.
Secondly, though, is the bigger problem. These these carrier provided amendments purport to amend the entire plan. If there are other vendors in the plan which did NOT offer the RMD waiver, you actually have a plan document problem on your hands if you adopt this broad amendment.
So, be careful; and may your New Year be fruitful, fulfilling and meaningful.