Category: Plan Administration
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...
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...
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...
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...
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...
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...
Use of Retirement Plan Forfeitures: The IRS Proposed Regulations, Recent Litigation, and the DOL’s Position
In five recently filed class action lawsuits, [1] 401(k) plan participants allege that plan fiduciaries violated ERISA by using plan forfeitures to offset employer contributions instead of paying plan expenses. The use of forfeitures to offset employer contributions is a long-standing practice expressly approved by IRS proposed regulations issued...
Retiree Medical Coverage: Just Get the COBRA Waiver
The interaction between employer-provided retiree medical coverage and COBRA [1] is complex. Many employers incorrectly assume they do not have to offer COBRA at retirement if they offer a retiree medical plan or a retiree health reimbursement arrangement (HRA), but the calculus is not that simple. Whether there is...
Catch-Up Contributions: IRS Provides Relief from Roth Requirements of SECURE 2.0
On August 25, 2023, the IRS issued IRS Notice 2023-62 , providing much needed relief for employers who have been struggling to implement Section 603 of the SECURE 2.0 Act of 2022 (“SECURE 2.0”), which requires high income employees to make all catch-up contributions to 401(k), 403(b), or governmental...
DOL Continues Enforcement of Non-Quantitative Treatment Limitation Requirements
Introduction : Fifteen months ago, we wrote that the U.S. Department of Labor (“DOL”) had informed Congress that it intended to devote substantial resources to enforcing the new comparative analysis requirement for non-quantitative treatment limitations (“NQTLs”) required under the Mental Health Parity and Addiction Equity Act. (Read our blog...
How to Comply with the Health FSA Debit Card Claims Substantiation Rules
The IRS’s recent Chief Counsel Advice Memorandum 202317020 (the “Memo”) brings into focus the importance of compliance with the debit card claims substantiation requirements for medical care expenses reimbursed or paid for through a health flexible spending account (“health FSA”) offered under a cafeteria plan. [1] The risk of...
Establishing Practices and Procedures to Support Self-Correction of Operational Failures
The self-correction of retirement plan operational failures under IRS correction principles has been conditioned upon a plan sponsor’s establishment of compliance practices and procedures since the creation of the Employee Plans Compliance Resolution System (“EPCRS”) 25 years ago. This condition was articulated in IRS Revenue Procedure 98-22, which refined...
Reasonable Compensation Under ERISA: Thoughts on Two Recent Cases
Two recent court decisions bring into focus two seldom-asked questions about the reasonable compensation requirement under ERISA. When must an ERISA plan’s service provider compensation be reasonable? And why shouldn’t a plan fiduciary be able to receive reasonable compensation from the plan even if the fiduciary had a hand...
Gag Clauses – New Guidance and Litigation Will Inform Compliance
Certain provisions of the Transparency in Coverage Final Regulations and the Consolidated Appropriation Act, 2021 (“CAA”) require group health plans and/or their vendors to report information to federal agencies. On December 31, 2023, group health plans will have to provide an attestation concerning compliance with the prohibition on gag...
New Options for Retirement Plan Distributions Under SECURE 2.0
This post summarizes the new distribution options, including penalty-free withdrawals, applicable to defined contribution plans under the SECURE 2.0 Act of 2022 (“SECURE 2.0”) and provides a timeline of their effective dates. The new options further evidence Congress’s growing appetite for approving legislation that allows greater pre-retirement access to...
The End of the COVID-19 Emergency Declarations Raises Questions, but We’ve Got Answers
It seems the COVID-19 pandemic is ending in the benefits world the same way it started: in a flurry of new laws, announcements, and notices intended to offer clarity but sowing confusion. To begin, it is important to remember that COVID-19 triggered not one, but two federal emergency declarations...
Proposed Regulations on How to Use Forfeiture Accounts: Helpful Guidance and a Great Reminder to Plan Sponsors
On February 27, 2023, the IRS published proposed regulations on the use of forfeitures in qualified retirement plans. [1] For defined contribution plans, the regulations provide welcome clarity on what forfeitures can be used for and the date by which forfeitures must be used. In addition, they provide a...
Casting a Wider Net: SECURE 2.0 Gives “Long-Term Part-Time Employees” Faster Access to 401(k) Plans and 403(b) Plans
The SECURE 2.0 Act of 2022 (“SECURE 2.0”) promotes and expands access to retirement plans for American workers in several ways. Among other things, SECURE 2.0 strengthens and expands the special 401(k) plan eligibility requirements for long-term part-time workers established by the Setting Every Community Up for Retirement Enhancement...
401(k) Plan Matching Contributions: To True Up or Not True Up?
As a matter of plan design, for purposes of matching contributions some 401(k) plans provide that a participant’s compensation for the entire plan year is taken into account (regardless of whether the participant makes elective deferrals with respect to each payroll period during the year), while other 401(k) plans...
2025 Is the New 2022: IRS Extends Deadline to Adopt SECURE Act Amendments and CARES Act Waiver of 2020 RMDs Amendment
This post was updated on September 27, 2022. On August 3, 2022, the IRS released Notice 2022-33 , which extends the deadline for plans to adopt: all SECURE Act [1] amendments, optional or required (a summary of SECURE Act changes can be found here ); CARES Act [2] amendments...
Page 1 of 5
