Dentist asks U.S. Supreme Court to change retirement law

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A dentist and owner of a practice in California and its small retirement plan, who have been battling with a former recordkeeper over a surrender charge for years, has petitioned the U.S. Supreme Court to change the Employee Retirement Income Security Act of 1974 (ERISA) guidelines.

After having lost several appeals, D.L. Markham DDS MSD of Aurora, CA, wants the U.S. Supreme Court to clarify what is a prohibited transaction and what is a party in interest under ERISA. The clarification has been sought because the lower courts have been "splintered on what service transactions between plans and providers are prohibited by Section 1106 unless exempt," according to a petition filed on March 13.

Currently, the list of exemptions is broad-ranging, authorizing plans to handle certain transactions, including contracts for annuities and loans to employee stock ownership plans. The practice wants the highest U.S. court to address the lower court differing views by instituting a uniform standard, according to the petition.

The request stems from the dental practice and its 401(k) plan, an ERISA plan that provides retirement benefits to practice employees, and its ongoing fight with its former recordkeeper, Variable Annuity Life Insurance Company and VALIC Financial Advisers, which provides administrative and investment management services to ERISA plans. D.L. Markham DDS MSD has disputed a $20,703 surrender charge that the recordkeeper imposed on the dental practice when it switched to another investment management company, according to court records.

"This Court can bring much needed uniformity to the law and confirm that (Section) 1106 applies categorically to service transactions that are not exempted," according to the petition.


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