Benefits Law Update

A blog from the attorneys of Verrill

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Category: Benefit Plans of Exempt Organization

403(b) Plans Must Comply with the “Once In, Always In” Rule This Year

Tax-exempt employers whose 403(b) plans have failed to comply with the “once in, always in” eligibility rule in the past should be well on their way to compliance by now.   IRS Notice 2018-95  granted limited relief from this common administrative failure.  The grace period for non-compliance has ended for...
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Who is a Highly Compensated Employee?

Identifying an employer’s highly compensated employees is crucial to the administration of qualified retirement plans, as well as 403(b) plans that provide employer contributions.  This post provides an overview of the rules for determining who is a highly compensated employee. The dollar amount used in this post is the...
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Voluntary Compliance with ERISA Does Not Preclude Church Plan Status

The IRS has once again confirmed that an employee benefit plan maintained by a church or church-affiliated organization is not subject to ERISA unless the plan sponsor makes an affirmative written election to have ERISA apply to the plan.  That is the case even if the plan historically has...
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IRS Appears Likely to Expand Determination Letter Program in 2019

All signs point to the IRS expanding access to the determination letter (“DL”) program for individually designed plans in 2019.  This would be a welcome move for employers and other plan sponsors, who have been unable to obtain determination letters with respect to most ongoing plans since the DL...
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Controlled Group Rules for Tax Exempt Organizations: A Brief Review

Corporate entities under common control are generally treated as a single employer for purposes of applying the core rules that govern employee benefit plans and executive compensation arrangements.  For that reason, a complete and accurate controlled group analysis can be critical in determining and monitoring the legal compliance status...
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Tax Reform: A Brief Overview of the Final Legislation

Congress passed the Tax Cuts and Jobs Act on December 20, 2017, and President Trump signed the bill into law on December 22nd. As everyone knows by now, the new law makes sweeping changes affecting most areas of income taxation. And while the final legislation contained fewer provisions affecting...
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Noteworthy Federal Cases Relating to Employee Benefit Plans in 2017

Here is a round up of cases decided by the U.S. Supreme Court and the First and Second Circuit Courts of Appeals in 2017 involving ERISA employee benefit plans.  While courts decided a number of cases pertinent to benefit plans, we found these to be noteworthy: United States Supreme...
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Supreme Court’s Church Plan Decision Restores Order (But It May Not End the Litigation)

Earlier this week, in a unanimous decision, the U.S. Supreme Court overturned decisions by three federal Circuit Courts of Appeals and held that an employee benefit plan maintained by a church-controlled or church-affiliated organization can qualify as a “church plan” exempt from ERISA regardless of who establishes the plan...
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PODCAST: 403(b) Plan Fee Litigation Update

Verrill Dana Employee Benefits attorneys Eric Altholz and Chris Lockman provide a brief update on class action lawsuits alleging various breaches of fiduciary duties under ERISA pending against a dozen major universities.  All of these lawsuits are related to the administration of the 403(b) plans maintained by the universities...
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Thirty Years of Church Plan Rulings Challenged

Within the past five months, two federal District Court judges have cast doubt on the validity of IRS letter rulings (and similar DOL opinion letters) issued to church-affiliated employers dating back to 1983.  These federal judges – one in California and one in New Jersey – concluded that the...
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New EPCRS Guidance Expands Scope of 403(b) Plan Corrections

Nearly 20 years after the IRS first established a limited program for the correction of 403(b) plan administrative errors, 403(b) plans have finally been placed on equal footing with qualified plans with respect to the correction of operational, documentary, and demographic failures under the Employee Plans Compliance Resolution System...
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New IRS Church Plan Guidance Should Influence Participant Disclosures

IRS Revenue Procedure 2011-44  imposes a new notice requirement upon any employer requesting a ruling from the IRS to confirm the status of an employee benefit plan as a “church plan” within the meaning of Code Section 414(e).  The notice, for which the IRS has provided a model, is...
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Church Plan Administrators Are Subject to State Law Claims

A “church plan” – whether maintained by an actual church or by a church affiliated organization (such as a college or hospital that is church controlled) – is exempt from ERISA unless it makes an irrevocable electionto subject itself to ERISA.  Most church plans do not make that election...
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Five Things to Consider in Completing Form 990: Tips from an Expert

We are pleased to offer a  guest post by Warren Kerper , Managing Principal in the Boston office of  Sullivan, Cotter and Associates, Inc. Warren advises tax-exempt employers, especially health care organizations and colleges and universities, in the design and establishment of a wide variety of executive compensation arrangements...
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Intermediate Sanctions and Executive Compensation - A Quick Refresher

Executive pay in the exempt organization setting has been subject to scrutiny and regulation since long before corporate bad actors and the financial crisis prompted Congress to pass laws limiting compensation and imposing process requirements for banks, public companies and other for-profit employers.  The basic rules that apply to...
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New IRS Guidance on Terminating Section 403(b) Plans

Those of us who deal with Section 403(b) plans (a/k/a tax sheltered annuity plans) rejoiced when Treasury published Final Regulations under Code Section 403(b) back in 2007.  Those regulations addressed many questions that either had not been dealt with, or had been dealt with only through a collection of...
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The Universal Availability Rule Under Code Section 403(b)

One of the most well known, yet commonly flouted, requirements in the world of 403(b) plans is the "universal availability" requirement.  Section 403(b) plans operate free of the nondiscrimination rules that apply to elective deferrals under 401(k) plans – namely the ADP test and minimum coverage rule – on...
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