She Isn’t Afraid of ERISA

In 1976, the Employee Retirement Income Security Act (ERISA), which established minimum requirements for private industry pension plans, went into effect. A slew of additional laws followed, and attorneys working in labor and tax law were buried under a mountain of confusing new regulations. “Everyone was throwing up their hands just going, ‘I can’t deal with this anymore!’” says attorney Mary Jo Larson. It became clear that law firms would need a more specialized practice area focused on the intricacies of employee benefits law. In the mid-1980s, when Detroit firm Cross, Wrock, Miller & Vieson offered Larson—then only a third-year associate—the chance to become the firm’s attorney focusing on ERISA law, she accepted.

But it wasn’t easy. “It takes probably 10 years before you’re comfortable in this area and feel like you get what’s going on. Five years at least before you don’t feel like an idiot,” she says. “The devil’s all in the details … because it’s not always logical. … The problem is that there are many laws that are enacted for a good reason, but once you implement them, the consequences are much more complex than anyone anticipated.”

She cites one complex consequence: When participants get a notice regarding spousal consent in benefits distributions, they must adhere to very specific rules regarding the timing of their response to that notice. “The social goal is to protect spouses when their retirement security may well depend on the participant. … If you don’t say the exact right thing at the exact right time, the notice fails and the distribution is bad, and any bad distribution can disqualify the whole plan for everyone.”

Yet she saw ERISA as a frontier, where other attorneys saw it as a quagmire. “It’s kind of nice to have an area of law that everyone else backs away from,” Larson says, “because pretty early on I got a lot of independence, and I was able to work directly with clients.”

For more than 30 years, Larson, a partner at Warner Norcross & Judd in Southfield, has worked on employee benefits and executive compensation for companies like Dow Corning and PulteGroup. She does everything from answer questions (for example, about methods of repaying 401(k) loans and merging mismatched plans), to helping companies completely redesign their benefits. She understands the Internal Revenue Code and she can translate that for her clients, some of whom she’s worked with for decades.

In order to best serve her clients and keep herself up-to-date, Larson tracks the ever-evolving mass of benefits laws. “Congress cannot stop from tinkering with retirement benefits because there are trillions of dollars involved.”

She also makes sure to maintain a healthy relationship with the IRS. “They’re the other side and the judge and the jury,” she says. However, she notes that the IRS doesn’t always deserve its ominous reputation. “They are very strongly driven by a mission to protect the retirement system. … They don’t want to disqualify them and then get a bunch of tax money.”

One recent challenge involved a company who’d been referred to her after an IRS audit found an unacceptable provision in their plan. The IRS had gone along with the plan for more than 40 years without noticing the illegal provision. “They wanted [the company] to change it in a way that the plan sponsor thought would put them out of business,” Larson says. “We were able to devise a unique and different way of resolving the problem. We haven’t finalized the agreement, but in substance we’ve reached an understanding of what we’re going to do.”

In recent years, Larson has assisted companies reeling from the impact of the recession. She says, “We had some employee communications issues on all the 401(k) and other account-based plans when everybody’s accounts were suddenly worth a lot less than they were before.”  She helped some employers through the tough decision to ditch their pension plans when the market became volatile.

Despite the financial woes some companies have faced regarding benefits plans, in September 2009—when ERISA marked the 35th anniversary since its signing in 1974—the Department of Labor declared it “one of the most significant pieces of legislation ever adopted on behalf of American workers” for its impact protecting private sector workers’ benefits. Private sector retirement plans have grown from 30 million enrolled Americans when ERISA was first enacted to more than 150 million enrolled in pension and health benefits plans, with pension assets around $5 trillion. That is more than enough work to keep Larson decoding the law for years to come until her own retirement.