Allocation of Medical Loss Ratio Rebates and Premium Refunds
One consequence of the current COVID-19 crisis for group health plans has been the significant reduction in employee preventive care and elective medical procedures as people shelter in place and socially distance. When group health plan premiums were established last year, the underwriters could not have foreseen 2020’s underutilization...
DOL Proposed Regulation Highlights the Risks of ESG Investing for ERISA Fiduciaries
On June 23, 2020, the U.S. Department of Labor (“DOL”) issued a proposed regulation outlining the duties of an ERISA fiduciary when considering an investment that incorporates environmental, social, and corporate governance (“ESG”) factors. [1] Some believe that the DOL will likely move quickly to finalize the regulation before...
A Chronology of COVID-19 Relief for ERISA Plans
This chronology traces the major ongoing relief provided by legislation, regulatory action, and other agency guidance to assist ERISA plan participants, fiduciaries, and sponsors during the ongoing COVID-19 pandemic through August 10, 2020. Superseded agency guidance is not included in the chronology. Terms/acronyms used: COVID-19 – Includes statutory and...
Proposed Regulations Clarify Application of Excise Tax under Code Section 4960
Proposed Regulations published by the Treasury Department last month provide helpful clarifications regarding the application of the excise tax under Section 4960 of the Internal Revenue Code of 1986, as amended (the “Code”). The content of the Proposed Regulations is generally consistent with the guidance provided early last year...
IRS Allows Tax-Advantaged Leave Donation to COVID-19 Relief Organizations
UPDATE (added July 22, 2021): The IRS has extended the deadline for employer contributions to charitable organizations for the relief of victims of COVID-19 as part of a leave donation program. In Notice 2021-42 , the IRS announced that employees will receive favorable tax treatment for donated leave if...
IRS Issues New Guidance on CARES Act Retirement Plan Distributions and Loans
The IRS recently issued Notice 2020-50 , which expands relief provided for retirement plan distributions and loans under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Distributions Under the CARES Act, a retirement plan may allow participants affected by COVID-19 to elect cash distributions in an amount...
Supreme Court Holds Pension Plan Participants Lack Standing to Sue Fiduciaries for Breach of Duties
In Thole v. U.S. Bank , a 5-4 Supreme Court decision issued on June 1, the Court held that retired participants in a defined benefit pension plan lack constitutional standing to sue the plan fiduciaries for alleged breach of their ERISA fiduciary duties. What was key for the Court’s...
DOL E-Disclosure Rule Recognizes Our New (Digital) Reality
The COVID-19 pandemic has forced us to find new ways to work through digital technology. Now, more than ever, an enormous percentage of our communications occur over the phone and online. The Department of Labor’s recent publication of final rules permitting electronic disclosure by retirement plans as a default...
IRS Relaxes Rules for Cafeteria Plans and Clarifies Relief for High Deductible Health Plans
In response to the 2019 novel coronavirus outbreak (COVID-19), earlier this week the IRS issued two notices allowing certain changes to cafeteria plans. Notice 2020-33 increases the limit on unused amounts remaining at the end of the plan year in a health flexible spending arrangement (FSA) that may be...
IRS and DOL Extend Certain Health & Welfare Benefit Plan-Related Deadlines
This post summarizes the health and welfare benefit plan-related deadline extensions described in IRS Notice 2020-23 issued April 9, 2020 and the DOL and Treasury Joint Notice issued April 28, 2020 (the “Joint Notice”). IRS Notice 2020-23 expands upon previously issued guidance extending certain tax filing and payment deadlines...
Employee Layoffs May Vest Retirement Plan Benefits
Increasing numbers of employers are being forced to shutter places of business and lay off workers as the coronavirus pandemic continues. When laid off workers are participants in their employer’s qualified retirement plan, one consequence of the aggregate layoffs may be a partial termination of the plan under ERISA...
CARES Act Imposes Limits on Executive Pay over $425,000 for Businesses Seeking Financial Assistance
On Friday, March 27, 2020, the $2 trillion assistance package known as the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides a variety of relief programs to companies and, similar to the Troubled Asset Relief Program (“TARP”) implemented during...
With CARES Act, Congress provides retirement plan relief and group health plan changes
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, includes a number of provisions that affect retirement plan sponsors and participants. These provisions are designed to provide relief to participants and employers facing financial difficulty as a result of the coronavirus pandemic...
Paying Health Insurance Premiums for Furloughed or Laid Off Employees
Employers of all sizes in nearly every industry have had to lay off or furlough employees in an attempt to deal with the massive business disruptions caused by the spread of COVID-19. Facing this reality, many employers have asked whether they can pay monthly health insurance premiums on behalf...
Congress Passes Emergency Paid Leave Laws in Response to Coronavirus Pandemic
On March 18, Congress passed and the President signed into law the Families First Coronavirus Response Act , a temporary measure designed to increase the availability of paid leave during a time when many employees are being directed to stay at home. The following is a brief summary of...
Leave Sharing Programs: A Critical Bridge for Employees Affected by COVID-19
The federal government may soon be providing paid leave assistance to employees affected by COVID-19. In the meantime, however, employers that maintain leave sharing programs can leverage those programs to help soften the financial impact on employees forced to miss work because of COVID-19. Leave sharing programs allow employees...
High-deductible health plans can cover coronavirus costs
Recognizing the need to eliminate potential administrative and financial barriers to testing for and treatment of the 2019 Novel Coronavirus (COVID-19), in Notice 2020-15 , posted today on IRS.gov, the IRS advised that high-deductible health plans (HDHPs) can pay for COVID-19-related testing and treatment, without jeopardizing their status. This...
Supreme Court: written disclosures not enough to show actual knowledge in ERISA suits
The United States Supreme Court unanimously decided last week that a plan participant who received written disclosures about the plan’s investments, but does not remember reading them, does not necessarily have “actual knowledge” of the content of the disclosures. This is important because ERISA imposes a shorter statute of...
Supreme Court – Updates for 2020
We are barely two months into the new year and already there are significant updates to the 2020 Supreme Court Preview included in our December 2019 Client Advisory (available here ). Below are updates regarding the employee benefit cases before the Court previously mentioned in our Advisory: IBM v...
SECURE Act: Change to RMD Trigger Age Should Trigger Your Attention Now
As summarized in our January 7 Client Advisory , the SECURE Act includes many changes that affect the design and administration of retirement plans. One of those changes is the increase to the trigger age for required minimum distributions (“RMDs”) from age 70½ to age 72. The change is...
What You Need to Know About the SECURE Act
The Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) is the most far reaching new law affecting retirement benefits in more than a decade. Due to its importance, we have developed a client advisory highlighting key aspects of the SECURE Act that affect the...
December 2019 Client Advisory
This Client Advisory, originally distributed in December 2019, highlights important developments in the law governing employee benefit plans and executive compensation over the past year. It offers insight into what these developments mean for employers and plan sponsors and previews developments we expect to see in 2020. The following...
Final Regulations on 401(k) Hardship Withdrawals
In September, the Treasury Department issued final regulations governing hardship withdrawals from 401(k) plans. The final regulations update the existing 2004 regulations to reflect recent statutory changes made to the hardship withdrawal rules under Section 401(k) of the Internal Revenue Code (“Code”), including: permitting the withdrawal of earnings on...
DOL Proposes New Electronic Disclosure Rules for Retirement Plans
At long last, the Department of Labor (DOL) has issued an update to its safe harbor rules governing electronic distributions of retirement plan disclosures. When finalized and adopted, the new safe harbor rules will update guidance that has been in place since 2002. The new rules do not apply...
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...
Plan Sponsors: You Should Have a Model QDRO
ERISA Section 206(d)(3)(G)(ii) requires sponsors of qualified retirement plans to maintain written procedures for the administration of qualified domestic relations orders ("QDROs"), and the plan administrator has an obligation to ensure that a domestic relations order received by the plan is "qualified" before making the payments or taking other...
UPDATED: Summer Break - Massachusetts Employers Get Extension on Paid Family and Medical Leave Implementation
UPDATE: The Massachusetts Department of Family and Medical Leave announced that along with the start of contributions being delayed from July 1, 2019 to October 1, 2019, the following aspects of the program are also delayed: the deadline for providing notice to employees is delayed from June 30, 2019...
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...
Recap of Change to Retirement Plan Rollover Rules for Plan Loan Offsets
The Tax Cuts and Jobs Act of 2017 ("2017 Tax Act") includes a provision that changed the rollover rules for certain plan loan offset distributions and that may not be well known to retirement plan sponsors and participants. Money purchase, profit sharing, 401(k) and 403(b) plans may make loans...
Revenue Procedure 2019-19: Enhancements to EPCRS are Great News for Plan Sponsors
Newly published Revenue Procedure 2019-19 modifies and supersedes prior IRS guidance regarding the Employee Plans Compliance Resolution System (EPCRS) to allow plan sponsors to self-correct an expanded number of problems that may affect retirement plan operations or documents. The new guidance, which took effect April 19, 2019, provides a...
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