Proskauer Benefits Brief: Legal Insight on Compensation & Benefits

In this episode, Justin Alex and Adam Scoll discuss the U.S. Department of Labor’s recently issued proposed regulation regarding ERISA fiduciary duties in selecting designated investment alternatives offered under participant-directed defined contribution plans, such as 401(k) plans. They examine the parameters of the proposal’s safe harbor, which reinforces ERISA’s focus on process over outcomes and highlights six key factors for fiduciary consideration when selecting designated investment alternatives. The proposal is designed to facilitate the inclusion of alternative assets within designated investment alternatives.

In the next episode of our ongoing series on withdrawal liability, Neil Shah and Justin Alex are joined by Adam Scoll to explore how the withdrawal liability of a private investment fund’s portfolio company can extend to the fund itself (and potentially others). They discuss the “trade or business” and “common control” tests, the impact of the Sun Capital and Longroad decisions, and how fund structure, governance, and fee arrangements can influence exposure. The conversation also highlights practical considerations for diligence, deal structuring, and risk management, and why active oversight and ownership levels can have unintended consequences for funds and their advisors.

In the second part of their discussion, Neil Shah and Rob Projansky take a closer look at what happens when a Section 4204 transaction doesn’t go as planned. Together, they explore how courts interpret the statute’s requirements, the risks that arise when parties miss key steps, and the potential consequences for both buyers and sellers. They also discuss practical strategies for managing these risks, how staged transactions can complicate the analysis, and why parties may choose not to rely on Section 4204 in certain situations.

In this first installment of a two-part conversation, Neil Shah and Rob Projansky unpack one of ERISA’s most talked-about “cheat codes”: Section 4204. They explain how a properly structured asset sale can avoid triggering withdrawal liability, why the rule exists, and the three core pillars that must be satisfied, including contribution continuity, secondary liability, and bonding requirements. The episode also explores the roles of buyers, sellers, and plans in navigating these transactions, and why careful drafting and timing are critical.

In the second part of their discussion on bankruptcy and withdrawal liability, Neil Shah and Daniel Desatnik examine what plans can recover on withdrawal liability claims in bankruptcy and how debtors may push back. Listen as they cover interest, fees and present value calculations, administrative and priority disputes, distressed employer defenses, third-party releases and successor liability risks in asset sales. For multiemployer plans and their advisors, they also highlight how timing, strategy and careful attention to plan terms and court filings can materially affect recovery.