Monitoring the Activities of a Plan Fiduciary Committee: Recommendations to a Board of Directors
It is axiomatic that a person who has fiduciary responsibility with respect to an ERISA benefit plan must monitor the performance of any plan service provider or other person to whom it has delegated fiduciary duties on an ongoing basis. This obligation is inherent in the core “duty of...
Spence v. American Airlines: A Texas Court’s View of the Duty of Loyalty under ERISA
Since we last discussed environmental, social, and corporate governance (“ESG”) developments in the context of ERISA retirement plans (see our post here ), ESG litigation has taken a rather unexpected turn. Although the plan lineup in Spence v. American Airlines [1] did not include ESG funds, the court concluded...
Solo 401(k) Plans: A Quick Fix-It Guide
“Solo 401(k)” is a marketing term used for a 401(k) plan that is adopted by a sole proprietor or an incorporated business with no employees other than the owner. These plans offer a greater retirement savings opportunity compared to other individual accounts such as IRAs. If the business owner’s...
DOL Announces Temporary Enforcement Policy Regarding Transfer of Small Retirement Benefit Payments of Missing Participants to State Unclaimed Property Funds
Retirement plan fiduciaries have a new option for handling small benefit payments owed to missing participants and beneficiaries thanks to a temporary enforcement policy announced by the Department of Labor (“DOL”) earlier this month in DOL Field Assistance Bulletin No. 2025-1 (“FAB 2025-1”). [1] The Policy Under the policy...
The Gag Clause Quandary for Self-Insured Group Health Plans—New FAQ Guidance
The Departments of Labor, Health and Human Services, and the Treasury, with the Office of Personnel Management (the “Departments”) jointly released FAQs About Consolidated Appropriations Act, 2021 Implementation Part 69 (“FAQs Part 69”) on January 14, 2025. In addition to providing guidance pertinent to the ever-evolving federal independent dispute...
DOL Updates Cybersecurity Guidance for ERISA Plans
On September 6, 2024, the U.S. Department of Labor (DOL) issued a press release announcing that it was publishing updated cybersecurity guidance in the form of Compliance Assistance Release No. 2024-01 for all plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The new guidance updates...
Department of Labor Launches Retirement Savings Lost and Found
The SECURE 2.0 Act of 2022 added new Section 523 to the Employee Retirement Income Security Act of 1974 (“ERISA”), requiring the Department of Labor (the “Department”) to establish an online database called the Retirement Savings Lost and Found (“RSLF”). The RSLF is intended to help individuals find unclaimed...
Retirement Plan Overpayment Corrections Continue to Evolve
For over twenty years, the IRS has provided guidance on correcting overpayments from retirement plans through its correction program, the Employee Plans Compliance Resolution System, currently set forth in Revenue Procedure 2021-30 (“EPCRS”). [1] In 2022, new statutory provisions were passed addressing overpayments, and on October 15, 2024, in...
Final Mental Health Parity Rule Spells Compliance Changes
The long-anticipated final rule under the Mental Health Parity and Addiction Equity Act (MHPAEA) was published on September 9, 2024. The MHPAEA prohibits group health plans that provide mental health and substance use disorder (MH/SUD) benefits from imposing more restrictive coverage limitations on such benefits than the plan imposes...
IRS Provides Helpful Answers Regarding Long-Term Part-Time Employees in 403(b) Plans
In November 2023, the IRS issued proposed regulations addressing the SECURE 2.0 long-term part-time (LTPT) employee eligibility requirements applicable to 401(k) plans knowing that further guidance would be needed to explain how those requirements would apply to 403(b) plans—you can read our summary of the proposed regulations here...
A Brief Guide to Qualified Disclaimers for Retirement Plan Administrators
A “qualified disclaimer” is a tax-effective way to refuse a transfer of property that would otherwise occur on someone’s death. From time to time, retirement plan administrators may be contacted by a beneficiary who wants a deceased participant’s benefit to go to a contingent beneficiary or the participant’s estate...
Student Loans and Code Section 127 Educational Assistance Programs: A Reminder from the IRS, FAQs, and a Sample Plan Document
On August 28, the IRS issued IR-2024-227 , reminding employers of the following key aspects of educational assistance programs under Internal Revenue Code Section 127: They can be used to help reimburse the costs of or pay for employees’ student loans through December 31, 2025; They must be established...
Prepare for Cooler Weather, Annual Enrollment, and 2025
Summer is ending and fall is rapidly approaching. For employee benefit professionals with calendar-year health and welfare benefit plans that means preparing for annual enrollment and year-end compliance requirements. This post provides a high-level overview of significant health and welfare benefits compliance issues new in 2024 that plan sponsors...
IRS Issues Guidance Addressing Matching Contributions on Student Loan Payments
Section 110 of the SECURE 2.0 Act of 2022 (“SECURE 2.0”) permits employers maintaining a 401(k), 403(b), governmental 457(b), or SIMPLE IRA plan to make matching contributions based on qualified student loan payments (“QSLPs”), effective for plan years beginning after December 31, 2023. [1] On August 19, the IRS...
HHS Issues Model Attestation Required by Final HIPAA Regulations Supporting Reproductive Health Care Privacy
On April 26, 2024, the U.S. Department of Health and Human Services (HHS) and Office for Civil Rights (OCR) published Final Regulations under HIPAA’s Privacy Rule introducing greater protections for information related to reproductive health care. One aspect of the Final Regulations requires all covered entities, including self-insured group...
A Primer on COBRA Continuation Coverage for Health Care Flexible Spending Accounts
It is a common practice for employers to offer employees a health care flexible spending account (“Health FSA”) option under a cafeteria plan. However, employers (and their COBRA administrators) may not be aware that Health FSAs are subject to COBRA continuation coverage requirements and may inadvertently fail to provide...
Proposed Rules for Maine Paid Family and Medical Leave Provide Some Helpful Information for Employers
Maine’s comprehensive paid family and medical leave (PFML) law, enacted in October 2023, establishes a state benefits program funded by employer and employee contributions (the “Program”). The PFML law provides for implementation of the Program in phases over several years: January 1, 2024–January 1, 2025 —Setting up the administrative...
Novel 401(k) Plan Lawsuits Over the Use of Forfeitures—Swinging for the Fences or Plausible Claims?
In our December 7, 2023 post , we noted five class action lawsuits, all filed by the same law firm within two months, in which 401(k) plan participants allege plan fiduciaries violated ERISA by using plan forfeitures to offset employer contributions instead of paying plan expenses. Recently, judges in...
Can a Self-Funded Group Health Plan Exclude Coverage for Gender-Affirming Care?
We are sometimes asked whether a self-funded group health plan is required to cover gender-affirming medical services. As this post explains in detail, it is generally impracticable for a self-funded ERISA-covered plan to exclude coverage for gender-affirming care as there are significant risks of litigation, penalties, or loss of...
Section 457(f) Plans and Noncompete Clauses: What the IRS Gave, the FTC May Take Away
When the IRS published proposed regulations harmonizing key provisions of Code Sections 409A and 457(f) in 2016, executive compensation lawyers and consultants rejoiced. It was not just that a long wait was over (roughly nine years from the publication of IRS Notice 2007-62, which promised guidance on these issues...
Why Is There No IRS Correction Program for Non-Governmental 457(b) Plans?
This post examines excess deferrals under non-governmental 457(b) plans, including the approved method for correcting them and the penalty for failing to correct them, to make the case for a change in IRS policy on correcting administrative errors in such plans. Non-governmental 457(b) plans are sometimes called “eligible deferred...
RxDC Reporting in Light of June 1, 2024 Deadline and Recent PBM Litigation
Under the Consolidated Appropriations Act of 2021 (“CAA”), employer-sponsored group health plans, including medical-only plans, must submit information about their prescription drugs and health care spending. [1] This submission is often referred to as the Prescription Drug Data Collection report, or the RxDC report. The deadline for RxDC reports...
Health and Welfare Benefit Plan Fiduciary Governance in the Wake of the Johnson & Johnson Lawsuit
For the past few years, we have encouraged plan sponsors to focus on matters of fiduciary governance for their health and welfare benefit plans ( see our 2021 blog post ). Yet many plan sponsors overlook the fact that the fiduciary standards of ERISA apply equally to retirement plans...
Retirement Plans: What Categories of Employees may be Excluded?
We are often asked about the permissibility of excluding certain categories of employees from participating in an employer’s tax-qualified retirement plan. [1] This post provides a high-level summary of what is and is not permitted. Excludable by Statute . Certain categories of employees, by statute, may be excluded from...
Cross-Plan Offsetting in Group Health Plans—The DOL Makes its Position Clear
Under Section 404 of ERISA, plan fiduciaries must act for the exclusive benefit of plan participants and beneficiaries and use plan assets only to provide benefits and defray reasonable expenses of administering the plan. In addition, Section 406 of ERISA prohibits a plan fiduciary from engaging in self-dealing. The...
ACA Compliance When Employees Move from Full-Time to Part-Time Mid-Year
We are well into the Affordable Care Act (“ACA”) information reporting season. Forms 1095-B/1095-C must be provided to employees by March 1, 2024, and the deadline for electronic transmittal of Forms 1094-B/1094-C to the IRS is April 1, 2024. A common fact pattern that frequently results in ACA reporting...
Safe Harbor Exception for De Minimis Dollar Amount Reporting Errors
As part of the routine administration of employee benefit plans, shortly after the end of a calendar year, many transactions must be reported to the federal government (“information returns”) and participants (“payee statements”) using forms such as Forms W-2, 1099, 1094, and 1095. As benefits professionals know, errors can—and...
IRS Issues Practical Guidance for Implementing SECURE 2.0 Provisions
The Internal Revenue Service gave retirement plan sponsors end-of-the-year gifts by providing guidance under twelve sections of the SECURE 2.0 Act of 2022 (“SECURE 2.0”). Although Notice 2024-2, released December 20, 2023 (the “Notice”), expressly does not provide “comprehensive guidance,” it does address urgent, practical questions for the implementation...
SECURE 2.0 Provisions with 2024 Implementation Dates
This post summarizes provisions of SECURE 2.0 that retirement plans may need or want to implement for 2024. While no amendments are required for plans heading into 2024, plan operations may see some updates, especially if the plan sponsor wishes to implement some of the new optional features. We...
Proposed Regulations Regarding Long-Term, Part-Time Employees
Newly issued IRS Proposed Regulations regarding the special eligibility and vesting requirements for long-term, part-time employees provide guidance that 401(k) plan sponsors have been waiting for since these requirements were established under SECURE 1.0. Though it has been three years since SECURE 1.0 was enacted, the Proposed Regulations were...
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