ERISA For Retirement Service Providers[1]


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July 2012

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ERISA For Retirement Service Providers[1]

  1. 1. ERISA Newsletter for Retirement Service Providers July 2012 Dear Reader: about participant disclosures. Josh Waldbeser’s article covers the litigation front by discussing This is a newsletter for service providers to ERISA- how some service providers earn income, that is, governed retirement plans. While this newsletter “float,” on plan money -- and the consequences. focuses on legal issues faced by service providers— such as investment advisers, broker-dealers, third party If you know others who would like to receive administrators, recordkeepers, and banks and trust these newsletters, they can subscribe at www. companies, it also contains valuable information for and use the Publications plan sponsors and fiduciaries. That is because the issues Subscribe option on the homepage. faced by service providers ultimately impact plans. Fred Reish Upcoming Event For service providers, these Chair, Financial Services ERISA Team are particularly challenging (310) 203-4047 times, with mandated Fred.Reish@dbr.comOn August 16, 2012, Fred Reish andBradford Campbell will discuss the latest disclosures to plan fiduciariesdevelopments in Washington, D.C., in the and participants and with In This Issuefirst of a series of “Inside the Beltway” numerous lawsuits aboutpresentations. Click here to indirect payments (such as revenue sharing) and PageSee page 6 for details. unreasonable compensation. 2 Participant Disclosure of Asset Allocations Models The articles in the newsletter 3 Do Service Providers Have An Obligation To Offset Indirect touch on those issues. Compensation? For example, Joe Faucher’s article discusses whether 4 Participant Disclosures for Brokerage Accounts service providers need to offset indirect compensation against their direct compensation—which is an issue 5 Handling “Float” Income raised because of the new plan-level disclosure rules 7 Around the Firm under 408(b)(2). Bruce Ashton’s and Joan Neri’s articles discuss specific issues in the DOL’s recent guidance Financial Services ERISA Team 1
  2. 2. Financial Services ERISA | July 2012Participant the allocations to change, the accounts are periodically restored to the original allocations. The questionDisclosure of Asset addressed by the DOL is whether an AAM is considered an investment subject to the disclosure rules governingAllocations Models DIAs, rather than merely an allocation service. The DOL guidance on AAMs is addressed in a question which uses, as its example, a plan that offers 10 investment choices and three risk-based model By Joan M. Neri portfolios comprised of different combinations of the (973) 549-7393 plan’s investment options. The DOL states that an AAM “ordinarily” is not required to be treated as a DIA if it is clearly presented to participants as a way of allocating among the plan’s investment options and a description of how it functions and how it differs from the plan’sMany broker-dealers, RIAs and recordkeepers have investment options is provided to participants. This isbeen struggling with whether the participant disclosure good news for advisors that offer an AAM using onlyrules apply to asset allocation models (AAMs). The the core line-up. We refer to an AAM of this type asDepartment of Labor has now issued guidance on a “qualifying asset allocation service” because it is notthis issue in Field Assistance Bulletin 2012-02. viewed as an investment. It is important to note, though, that several conditions must be satisfied for the assetIn that guidance, the DOL addressed whether an AAM allocation service to “qualify,” that is, to avoid DIA status.that is presented to plan participants as an asset allocationstrategy among investment alternatives is a designated But what about AAMs that allocate among investmentsinvestment alternative or “DIA.” The significance of that are not otherwise available to participants? Thethat question is that detailed information about DIAs DOL response is not as clear as we would like; formust be provided to participants under the participant example, at one point it says: “if a plan offers only modeldisclosure rules (404a-5), including the DIA’s expense portfolios made up of investments not separately designated underratios and performance history and a website describing the plan, each model would have to be treated as a designatedthe DIA’s principal strategies, risks and portfolio investment alternative.” While this statement could beturnover rates. Even though this obligation is imposed read to mean that, if the AAMs have some investmentson the ERISA plan administrator (typically, the plan from the core line-up and some “outside” investments,sponsor or the plan committee), in many instances the the AAMs are not DIAs, we believe there is risk inplan administrator will look to its service providers for that interpretation. For example, the first sentencethis information. To complicate matters, most service in the answer says: “A model portfolio ordinarily is notproviders (e.g., recordkeepers) do not have systems that required to be treated as a designated investment alternativecan capture and report the information about AAMs under the regulation if it is clearly presented to the participantsfor those disclosures – and will not be able to do so and beneficiaries as merely a means of allocating account assetsfor many months or perhaps even years – which could among specific designated investment alternatives.” Becausecause plan fiduciaries to be out of compliance. of that statement, we believe the safest interpretation of the DOL’s intent is to require DIA status ifUnlike investment education models (under DOL any outside investments are used in the AAMs.Interpretive Bulletin 96-1) that educate participantson ways of managing their own accounts, an AAM is In conclusion, service providers, such as broker-dealers,presented to plan participants as an investment tool RIAs, and recordkeepers who offer AAMs shouldthat allows them to allocate their accounts among the restructure them as qualifying asset allocation servicesplan’s investment line-up by simply electing to use the in order to avoid DIA status. For those advisersAAM’s allocations. On occasion, AAMs may also include who want to use outside investments in participantinvestment alternatives not available for participant accounts, one option is to offer such services as aselection under the plan. Most AAMs also have a 3(38) investment manager. If structured properly, therebalancing feature so that, after market fluctuations cause asset allocations of a 3(38) investment manager will Financial Services ERISA Team 2
  3. 3. Financial Services ERISA | July 2012avoid DIA status. The restructuring process should Whether direct compensation should be reduced orinclude reviewing all written and website material offset by indirect compensation turns largely on whetherdescriptions of the managed account services to make the service provider is a fiduciary – such as a registeredsure they are consistent with the DOL guidance. investment adviser (RIA) that renders investment advice for a fee – or a nonfiduciary. Unlike fiduciaryJoan Neri is in the firm’s Financial Services ERISA Team. service providers, nonfiduciaries provide servicesWith more than 24 years of experience, Joan counsels clients that do not involve discretion over the plan’s assetson all aspects of ERISA compliance including fiduciary or administration, or investment advisory services.responsibility and plan operational issues. A part of Joan’spractice includes representing registered investment advisors Fiduciaries and nonfiduciaries are held to very differentin fulfilling their obligations under ERISA. Joan is a standards. ERISA prohibits a fiduciary from dealing withfrequent speaker throughout the country on legislative and the assets of the plan in his own interest or for his ownregulatory developments impacting ERISA fiduciaries. account, and from receiving any consideration for his own account from any party dealing with the plan in aDo Service plan-related transaction. So, it is a prohibited transaction for a fiduciary to increase his own compensation in a transaction involving the plan. For example, if an RIAProviders Have recommends an investment option to the plan client, and the investment generates indirect compensationAn Obligation To payable to the RIA (such as a commission), a prohibited transaction occurs. By reducing the direct compensationOffset Indirect paid by the plan to the extent of the indirect compensation the RIA will receive, the RIA “levelizes”Compensation? his compensation and negates the prohibited transaction. Conversely, nonfiduciaries – such as third party administrators (TPAs) that do not provide recordkeeping By Joseph C. Faucher services -- are not bound by ERISA’s prohibitions (310) 203-4052 against fiduciaries acting for their own account in connection with plan transactions. As a result, TPAs are not required to (though we are aware that a number voluntarily do) offset their direct compensation by any indirect payments they receive. Indeed, many nonfiduciary service providers set their fees inThe time for service providers to comply with the anticipation of receiving indirect compensation fromdisclosures of services, compensation and fiduciary insurance companies and mutual fund companies. Oncestatus required by the ERISA §408(b)(2) regulation is the 408(b)(2) regulation takes effect, their obligationupon us. Presumably, most covered service providers will be to disclose to their plan clients all direct and– such as third party administrators that receive indirect compensation they expect to receive.indirect compensation, broker-dealers, recordkeepersand registered investment advisers – have taken steps Nonfiduciaries will, however, still be subject to thetoward complying with their disclosure obligations. requirement that their overall compensation be reasonable. Consider, for example, the circumstanceAs the reality of making the disclosures has set in, in which a TPA charges a reasonable fee to its planwe have fielded a stream of questions about how, client. When the TPA receives significant additionalexactly, the disclosure requirement might affect service indirect compensation from the insurance companyproviders’ arrangements with their clients. One source that provides the plan’s investments, it may cause theof confusion concerns when and whether service TPA’s overall compensation in connection with itsproviders may need to offset or reduce the compensation services to the plan to exceed a reasonable amount.they would otherwise receive from plans and plan In that case, it may be appropriate for the TPA tosponsors as a result of indirect compensation they offset or reduce the compensation from the planmay receive from other service providers. The purpose or the plan sponsor, or to pay a portion of theof this article is to clear up some of the confusion. indirect compensation to the plan. Otherwise, the Financial Services ERISA Team 3
  4. 4. Financial Services ERISA | July 2012reasonableness of the compensation may be called performance, benchmarking, expenses, turnoverinto question. To the extent the compensation exceeds ratio etc. required for DIAs, don’t apply.a reasonable amount, it is a prohibited transaction. So what has to be disclosed? The DOL explains thatRecognize, however, that the issue isn’t always so clear in Q&A 13. First, the DOL acknowledges that thecut. Consider, for instance, a TPA firm that provides regulation does not specify exactly what information isnonfiduciary services that is under common ownership required. Instead, it points out that the description mustwith – and has clients in common with -- a fiduciary provide “sufficient information” to enable participantsregistered investment adviser. In that setting, issues to “understand how the [account] works (e.g., howmay arise when the fiduciary investment adviser and to whom to give investment instructions; accountrecommends an insurance company that pays the TPA balance requirements, if any; restrictions or limitationsindirect compensation. In that case, the TPA may need on trading, if any; how the window, account, orto levelize its compensation and negate the impact arrangement differs from the plan’s designated investmentof the indirect compensation that it will receive as a alternatives) and whom to contact with questions.”result of its affiliate’s investment recommendation. Comment: This is helpful, though it is isn’t clearIn addition to handling an active litigation practice, Joe what is needed to explain how the arrangementFaucher regularly consults with third party administrators, differs from the plan’s DIAs. Presumably, theregistered investment advisers and insurance carriers on disclosure would need to say that the fiduciariesERISA and employee benefit matters and fiduciary do not select or monitor the investments in theliability insurance and ERISA bond issues. brokerage account, that the costs may be greater than those for the DIAs and the participant isParticipant on his own for making investment decisions.Disclosures for The DOL also makes it clear (in Q&A 14) that this information must be furnished – both initially and annually – to all eligible employees, notBrokerage Accounts just to those who elect to use the account and not even just those with account balances. The disclosures must include a description of “any By Bruce L. Ashton commissions or fees (e.g., per trade fee) charged in connection with the purchase or sale of a security, (310) 203-4048 including front or back end sales loads if known; but would not include any fees or expenses of the investment selected by the participant or beneficiary (e.g., Rule 12b-1 or similar fees reflected in the investment’s total annual operating expenses).” In the FAB, the DOLThe first participant fee disclosures under the 404(a) says that “in some circumstances the specific amount(5) regulation are due by August 30. Much of the focus of certain fees associated with the purchase or sale ofis on a plan’s “designated investment alternatives” (or a security through a window, account, or arrangement,DIAs), which excludes brokerage windows, self-directed such as front end sales loads for open-end managementbrokerage accounts and the like (which we refer to as investment companies registered under the Investment“brokerage accounts”). But the story doesn’t end there. Company Act of 1940, may vary across investments available through the window or may not be knownThe DOL has issued Field Assistance Bulletin by the plan administrator or provider of the window,2012-02 in the form of FAQs. The FAQs provide account, or arrangement in advance of the purchase oradditional guidance on the required disclosures. sale of the security by a participant or beneficiary.” InSeveral questions bear on brokerage accounts and recognition of that, the DOL concludes that it would beappear to create new challenges for broker-dealers. sufficient to tell the participant that such fees exist and may be charged against the account and to explain howKeep in mind that, since brokerage accounts are to obtain the information from the investment provider,not DIAs, the disclosure requirements regarding along with an admonition to ask for the information. Financial Services ERISA Team 4
  5. 5. Financial Services ERISA | July 2012Now comes the hard part. The regulation requires Bruce Ashton is in the firm’s Financial Services ERISAquarterly disclosures of individual expenses that were and Retirement Income Teams. Bruce’s practice focuses on allcharged against a participant’s account, expressed in aspects of employee benefits issues, especially representing plandollar amounts. For brokerage accounts, the DOL says service providers (including RIAs, independent record-keepers,that the plan administrator must provide a statement of third party administrators, broker-dealers and insurancethe dollar amount of fees and expenses actually charged companies) in fulfilling their obligations under ERISA andduring the preceding quarter against the individual in assisting service providers and plan sponsors in addressingaccount, which must include a description of the the retirement income needs of participants. He is a well-services to which the charge relates. The description known speaker and author on employee benefits topics.of services must clearly explain the charges (e.g., $19.99 Handling “Float”for brokerage trades, a $25.00 minimum balance fee, a$13.00 wire transfer fee, a $44.00 front end sales load). Comment: In our experience, there are two basic structures for brokerage accounts, one in Income which the recordkeeper designates a brokerage firm that participants must use and the other in which participants may select any broker-dealer. By Joshua J. Waldbeser (312) 569-1317 In the first situation, it seems likely that the recordkeeper and broker-dealer will work together to establish systems to capture and disclose the initial and annual information. Without meaning to suggest that this will be easy, it appears that since When funds flow in and out of 401(k) and other ERISA the broker-dealer will have a significant number of plans, they are sometimes held on a short-term basis in accounts with the same recordkeeper, there will be general accounts established by a service provider. This a level of uniformity and some economies of scale occurs, for example, when contributions are held pending that will make the disclosures less problematic. investment, and when checks for benefit distributions are awaiting deposit. These accounts generate interest In the second—where participants can select known as “float” or “float income.” Some recordkeepers any broker-dealer they want – it is not clear what retain float as part of their compensation from plans. information must be provided to participants. However, certainly some information must be given. In a recent lawsuit, 401(k) plan participants were awarded We are advising plan sponsors and broker-dealers $1.7 million from a bundled recordkeeper that the in these circumstances on a case-by-case basis. court found to have violated ERISA with respect to its use of float. (The service provider in question has For the quarterly disclosures of dollar amounts, indicated that it is considering appealing the verdict.) the reporting requirement may be less daunting In that case, the court ruled that the provider was a than it appears because it is possible to provide the fiduciary to the plan with respect to its discretion over information through confirmations that are already the disposition of float income, and that it improperly required by the securities laws. For other types of exercised that fiduciary authority to use float income products, however, such as annuities, CIFs, separate for its own benefit and that of other parties. accounts and privately placed securities, where no similar confirmation requirement exists, broker- This case illustrates an important lesson: Under ERISA, dealers will need to develop alternative approaches. any service provider with the power to determine how plan assets (including float) are used cannot unilaterallyThe additional guidance provided by the FAQs is exercise its fiduciary authority over those assets towelcome and largely helpful, but these examples related pay itself additional compensation without triggeringto brokerage accounts indicate some of the difficulties a prohibited transaction for fiduciary self-dealing.the financial services industry will face, difficulties thatwere not previously anticipated or even contemplated. Financial Services ERISA Team 5
  6. 6. Financial Services ERISA | July 2012As a consequence, to retain float income, a service the hook.” This is because any service arrangement thatprovider must be permitted under the terms of its is not “reasonable” under ERISA Section 408(b)(2), orcontract to retain the float. The Department of that pays a provider more than reasonable compensation,Labor (“DOL”) has noted that the service provider will likewise result in a prohibited transaction.should “openly negotiate” with the responsibleplan fiduciary and “provide full and fair disclosure Under the 408(b)(2) disclosure regulations, no serviceregarding the use of float” to help ensure that contract with a “covered service provider,” a termindependent fiduciary approval will be deemed to which includes recordkeepers to most 401(k) and otherhave been given. More specifically, the DOL has defined contribution plans, will be considered reasonablestated that the service provider may avoid prohibited unless all the 408(b)(2) disclosures are furnished totransactions in this context by following these steps: responsible plan fiduciaries no later than July 1, 2012 (and in the future, with respect to new contracts or • Disclose, to the responsible plan fiduciary, changes, extensions, and renewals). Thus, covered the circumstances under which float service providers should ensure that they account for will be earned and retained; compensation they expect to receive from float income as part of these disclosures. If required disclosures are not • For float on contributions pending investment, provided, the service arrangement will automatically be disclose and stick to established time frames deemed to have resulted in a prohibited transaction. It is for when investment will occur; important to reiterate that all service providers, regardless • For float on distribution checks, disclose when the of whether they are covered service providers subject to float period begins (e.g., the date check is written) the 408(b)(2) disclosure regulations, are required to enter and ends (e.g., when the check is deposited), into reasonable arrangements and to receive no more than including time frames for mailing and other reasonable compensation to avoid prohibited transactions. practices that might affect the float period; and If the DOL finds that a service provider has participated • Disclose the rate of the float or the in a prohibited transaction, it will likely require the manner it will be determined. provider to return the compensation it has received, and the provider may also be liable for civil penaltiesOrdinarily, this information would be set forth in the and for excise taxes under Section 4975 of the Internalservice contract. There may be other ways for a provider Revenue Code. Thus, service providers should reviewto ensure that it is not unilaterally determining its own their contracts and practices relating to float income tocompensation as a fiduciary with respect to retention ensure they meet the requirements discussed above.of float – the key is ensuring that the plan’s internalfiduciary has approved the additional compensation. Joshua has been in the Employee Benefits and Executive Compensation Practice Group at Drinker Biddle & Reath’sWhere these requirements are satisfied, retaining float Chicago office since 2008. Prior to this he worked for thewill not cause a prohibited transaction for fiduciary self- U.S. Department of Labor, Employee Benefits Securitydealing because the payment of the compensation has Administration. Joshua’s practice focuses on working with planreceived independent fiduciary approval. However, even sponsors and service providers with respect to Title I of ERISAin this case, the service provider is not automatically “off and the IRS qualification requirements for retirement plans. Inside the Beltway Drinker Biddle & Reath’s national Employee Benefits & Executive Compensation Practice is pleased to announce a new, engaging and highly informative series, Inside the Beltway, which will discuss political considerations and both recent and anticipated administrative guidance that can impact retirement service providers and plan sponsors. Join us on Thursday, August 16, 2012 beginning at Noon(ET)/11:00 am (CT)/9:00 am (PT) for a one hour inaugural broadcast of Inside the Beltway presented by Fred Reish and Bradford Campbell. Topics will include: DOL’s controversial guidance on brokerage accounts in 401(k) plans; final preparations for participant disclosure; review of DOL’s anticipated 408(b)(2) supplemental guidance; and the future of DOL’s fiduciary advice regulation. Please register here or visit Financial Services ERISA Team 6
  7. 7. Financial Services ERISA | July 2012 Employee Benefits & Executive Compensation Around the FirmFred Reish along with Bruce Ashton and Brad Campbell presented at Insured Retirement Institute (IRI) 2012 Government, Legal& Regulatory Conference in Washington DC on June 26th. Fred spoke on “SEC and DOL Fiduciary Initiatives”; Bruce presented on“Product Developments: Legal and Regulatory Challenge”; and Brad provided a “DOL Fiduciary Update.”Bruce Ashton testified before the ERISA Advisory Council on June13th on retirement income issues.Fred Reish presented during a live webcast hosted by American Society of Pension Professionals & Actuaries (ASPPA) on May 17th.Fred discussed the evolution of target date funds and the potential impact of proposed new measures from the SEC and DOL.Also, Fred was a speaker at the Wells Fargo Advisors National RPAP Meeting held May 22nd in St. Louis, Missouri. His presentationwas titled “408(b)(2) Update--401(k) Plans: The Adviser’s Role Today and Tomorrow.”Bruce Ashton was a featured speaker at PlanSponsor Magazine Conference in Chicago, where he presented a “WashingtonUpdate.”A webinar conducted by Fred Reish in association with the SPARK Institute was reported in BenefitsPro. Fred expressed his concernthat the new 408(b)(2) fee disclosure rules did not include a summary or as was first discussed, but instead proposed the issuanceof a guide.Summer Conley presented at the ISCEBS June meeting on June 6th at the Los Angeles Athletic Club. Her presentation coveredthe new disclosure rules for retirement plans which are effective July 1, 2012.Brad Campbell spoke at the T. Rowe Price 2012 Forum on April 30th held in San Antonio, Texas. The Forum is the primaryannual conference for T. Rowe Price’s retirement plan clients. Brad led a fiduciary training course titled, “Managing Your FiduciaryResponsibilities.” During the Forum, he also spoke on a panel titled “Understanding and Evaluating Plan Fees.”Joan Neri was one of three subject matter experts for the Retirement Income Roundtable hosted by ING Retirement Services onApril 19th in Florham Park, New Jersey. Joan also hosted a breakfast seminar titled “408(b)(2): Challenges Facing Employer PlanSponsors, But With a Silver Lining” on April 18th. The seminar emphasized challenges and new opportunities for plan sponsorsgiven the responsibilities the finalized fee disclosure rules impose on plan service providers.Joe Faucher presented a two-part webcast series co-hosted with Colonial Surety Company which examined the fundamentals ofERISA bonds and fiduciary liability insurance.Fred Reish was interviewed for the May 2012 issue of PIMCO DC Dialogue. In the question and answer article, Fred discussedretirement plan issues on the agenda in Washington, D.C., and how they might be affected by the upcoming election. Fred alsodiscussed how the need to balance the U.S. federal budget may lead to lower limits on the amount that high-income earnerscan contribute to defined contribution plans in the future. He also noted that government officials may back retirement incomesolutions and education to improve DC plans. To read the interview, visit Reish was quoted in RIABiz (April issue) after Merrill Lynch announced plans to allow a select group of its advisors to serveas fiduciaries on 401(k) plans with assets of $25 million or more. Speaking to RIABiz, Fred explained that there’s no question thatmore firms are starting to tiptoe into offering fiduciary advice by letting top advisors offer these services first. Also, a report bywritten by Fred entitled, “Re-Enrolling: Doing Well While Doing Good,” was quoted in LifeHealthPro (March 14, 2012). Fred wrotethe piece for John Hancock Mutual Funds.Fred continues to write his monthly “Out of Reish” column for PlanSponsor Magazine. In January 2012 the column topic was“Careful Endorsements,” in February 2012 the topic was “A Changing World,” and in March 2012 the topic was “Complexity ofDesign.”Bruce Ashton was quoted in the Pension & Benefits Daily (April 20, 2012) on his April 19th presentation during a webcast entitled“Don’t Let the New Vendor and Participant Fee Disclosure Requirements Ruin Your Summer!” hosted by ASPPA.Brad Campbell was quoted in an Economic Times article, “US Labor Dept Ramps Up 401(k) Plan Provider Exams” (April 26, 2012)on increased efforts by the DOL to more closely examine companies that serve employers’ retirement plans, including brokeragefirms, registered investment advisers and third-party administrators.Josh Waldbeser was interviewed by the Chicago Daily Law Bulletin (March 15, 2012) on new retirement income products andservices, including the firm’s new retirement income team. Josh described the current crisis in retirement as “the result of a perfectstorm” with four elements: the millions of baby boomers approaching retirement age; people living 20 or 30 years past retirement;a shift away from lifetime pension plans to plans like 401(k)s; and the stock market investment performance of the last 10-12years. Financial Services ERISA Team 7
  8. 8. Financial Services ERISA | June 2012Financial Services ERISA TeamHeather B. Abrigo Mona Ghude Joan M. Neri(310) 203-4054 (215) 988-1165 (973) Joan.Neri@dbr.comGary D. Ammon Robert L. Jensen Fred Reish(215) 988-2981 (215) 988-2644 (310) Fred.Reish@dbr.comBruce L. Ashton Melissa R. Junge Ryan C. Tzeng(310) 203-4048 (312) 569-1309 (310) Ryan.Tzeng@dbr.comMark M. Brown Sharon L. Klingelsmith Michael A. Vanic(215) 988-2768 (215) 988-2661 (310) Mike.Vanic@dbr.comBradford P. Campbell Christine M. Kong Joshua J. Waldbeser(202) 230-5159 (212) 248-3152 (312) Joshua.Waldbeser@dbr.comSummer Conley Howard J. Levine(310) 203-4055 (312) Howard.Levine@dbr.comJoseph C. Faucher Sarah Bassler Millar(310) 203-4052 (312) Sarah.Millar@dbr.comEmployee Benefits & Executive Compensation Practice GroupCALIFORNIA | DELAWARE | ILLINOIS | NEW JERSEY | NEW YORK | PENNSYLVANIA | WASHINGTON DC | WISCONSIN© 2012 Drinker Biddle & Reath LLP. All rights reserved. A Delaware limited liability partnership. Jonathan I. Epstein and Andrew B. Joseph, Partners in Charge of the Princeton and Florham Park,N.J., offices, respectively.This Drinker Biddle & Reath LLP communication is intended to inform our clients and friends of developments in the law and to provide information of general interest. It is not intended toconstitute advice regarding any client’s legal problems and should not be relied upon as such.Disclaimer Required by IRS Rules of Practice:Any discussion of tax matters contained herein is not intended or written to be used, and cannot be used, forthe purpose of avoiding any penalties that may be imposed under Federal tax laws.