Employee Benefits & Executive Compensation 2021 Summer Client Advisory
Click here to view as a PDF. This Client Advisory summarizes developments in the law governing employee benefit plans prompted by the COVID-19 pandemic. We explain what these developments mean for plan sponsors and highlight the need to adopt plan amendments within limited time periods in order to fully...
Do You Understand Your Investment Policy Statement?
The Acme Rocket Sled Company Retirement Plan Administration Committee recently selected a new investment advisor for the company’s 401(k) plan. During the RFP process, the new advisor observed that the Investment Policy Statement (IPS) that the committee adopted many years ago was a bit thin and out of date...
Massachusetts Now Requires Paid COVID-19 Leave for all Employees
Massachusetts now requires all employers, regardless of size, with Massachusetts employees to offer employees paid, job-protected leave for certain COVID-19-related reasons, including to get or recover from a COVID-19 vaccine. Massachusetts also has established a fund to reimburse employers for the cost of providing COVID-19 paid leave required by...
Supreme Court will Hear Northwestern University 403(b) Plan Excessive Fee Case
The United States Supreme Court will weigh in on the spate of recent lawsuits filed against colleges and universities related to the schools’ retirement plans. The Court has granted a request for review from participants in two 403(b) retirement plans sponsored by Northwestern University. The participants seek to overturn...
Primer on Severance Plans Under ERISA and the Tax Code
Many employers maintain formal or informal severance policies or practices that they use sporadically. Other employers may implement a severance program for a limited period of time to reduce the number of employees overall or within a work classification or location. All employers should be mindful that these policies...
Faculty Retirement Incentive Programs: What Does the Law Permit?
A recent survey of full-time college and university faculty found that, as of the beginning of the 2020-2021 academic year, approximately 25% of those surveyed expected to retire later than they had anticipated before the onset of the COVID-19 pandemic, and almost 40% of those aged 50-59 expected to...
DOL Cybersecurity Guidance
This post provides a high-level summary of the Department of Labor’s cybersecurity guidance issued in April and identifies actions retirement plan sponsors and other plan fiduciaries should consider taking now in light of the guidance and the fact that the DOL has started sending information requests under an audit...
COVID-19 Vaccination Incentive Programs: Additional Guidance and Some Comfort
Earlier today the U.S. Equal Employment Opportunity Commission (EEOC) released guidance confirming that employers may offer incentives to employees who voluntarily obtain a COVID-19 vaccination. The guidance (available here ) appears as an update to earlier technical guidance issued by the EEOC and also offers new information regarding an...
ARPA Premium Subsidy: Long-Awaited Details Finally Arrive
The IRS recently issued Notice 2021-31 , which provides much sought-after detail regarding the contours and operation of the temporary premium subsidy for COBRA continuation coverage available through the American Rescue Plan Act of 2021 (ARPA). As enacted on March 11, the basic mechanics of the COBRA premium subsidy...
IRS Notice 2021-26 Clarifies Taxation of Dependent Care Assistance Programs
On May 10, 2021, the IRS issued Notice 2021-26 , which provides guidance regarding the taxation of dependent care assistance benefits provided through a Code Section 125 cafeteria plan, available in tax years ending in 2021 and 2022 due to the application of certain temporary pandemic relief provisions relating...
Understanding Your Fiduciary Responsibilities Under ERISA: A Webinar
Employers have long understood the importance of fiduciary compliance with respect to 401(k) plans and other retirement plans subject to ERISA, and most have sound processes and governance structures in place to ensure the fulfillment of their fiduciary duties. Many employers, however, do not apply the same level of...
Pension Plan Mortality Table Litigation – What’s Next?
The first major settlement of a lawsuit challenging the mortality assumptions used to calculate pension plan benefits was announced earlier this year. According to court filings in Cruz v. Raytheon Company , the settlement will be worth about $59.2 million to more than 10,000 retirees and surviving spouses in...
ESG Ping-Pong®
The recent regulatory back-and-forth over the investment of ERISA-governed retirement plan assets based on environmental, social, and corporate governance (“ESG”) factors has demonstrated that ESG investing will remain under an intense spotlight for some time to come, and the rules can change quickly. As a result, investment fiduciaries should...
Identifying Plan Assets in ERISA Health & Welfare Plans
Last month, we advised readers of this blog to consider efforts to formalize the fiduciary governance of their health and welfare benefit plans. In that post , we described some of the reasons that employers have historically paid more attention to fiduciary compliance for retirement plans than health and...
Establish an Administrative Committee for Your ERISA Health and Welfare Benefit Plans
The fiduciary standards of ERISA apply to all employee benefit plans that are subject to Title I of ERISA. The duty of loyalty, the duty of prudence, and the duty to administer a plan in accordance with its written terms apply equally to “employee welfare benefit plans” and “employee...
Webinar: The Effect of COVID-19 on Employee Benefit Plans – Making Sense of the Abundance of New Legislation and Guidance
Join us on Thursday, March 18 for the next segment in the virtual series that comprises Verrill’s 2021 Employment Law Annual Update! For this segment, employee benefits attorneys Karen Hartford, Bill Jewett, and Chris Lockman will examine the various relief provided by legislation, regulatory action, and agency guidance intended...
IRS Notice 2021-15 Provides Clarity Regarding FSA Relief Available Under Consolidated Appropriations Act
Section 214 of the Consolidated Appropriations Act, 2021 (CAA) provides a substantial amount of flexibility for the operation of health and dependent care Flexible Spending Accounts (FSAs). The CAA did, however, leave many open questions regarding how to implement and apply the added flexibility. IRS Notice 2021-15 , released...
Order of Benefit Deductions from Employee Pay
From time to time we field questions about the order in which deductions for various employee benefits ( e.g. , 401(k) plan elective deferrals and insurance premiums for welfare benefit plan benefits) should be taken from an employee’s pay. The questions range from whether ERISA mandates a specific order...
Partial Plan Terminations – An Update
In our April 2020 post , we detailed how employee layoffs can cause a qualified retirement plan to undergo a “partial termination,” resulting in required 100% vesting of the affected employees’ benefits. As 2020 drew to a close, with the COVID-19 pandemic continuing to affect many businesses, Congress enacted...
DOL Guidance on Missing Pension Plan Participants - Part II
On January 18, we published a blog post regarding new Department of Labor (“DOL”) guidance on missing plan participants. That post is available here , and describes the DOL’s guidance on Missing Participants - Best Practices for Pension Plans (“Best Practices”). This blog post addresses two other pieces of...
DOL Guidance on Missing Pension Plan Participants
The Department of Labor (“DOL”) has undertaken a nationwide compliance initiative to ensure that retirement plan participants receive the benefits that they were promised when they reach their retirement age. To that end, the DOL recently issued three pieces of guidance – (i) Missing Participants - Best Practices for...
Reporting Deferred Compensation on Form 990
Tax-exempt organizations often provide deferred compensation to their officers, key employees, and most highly compensated employees. Like current compensation payable to such employees, deferred compensation must be reported annually on Form 990, Schedule J. For the most part, Schedule J is straightforward. However, it is not always obvious how...
Consolidated Appropriations Act of 2021 Includes Flexible Spending Account Relief
The Consolidated Appropriations Act of 2021 (the “Act”) was signed into law on December 27, 2020. Buried within its 5,593 pages is some welcome flexibility relating to 2020 and 2021 health care and dependent care Flexible Spending Accounts (FSAs). Specifically: Expanded Carry-Over or Grace Period Under the Act, health...
Employee Benefits & Executive Compensation 2020 Year-End Client Advisory
Click here to view as a PDF . This Client Advisory highlights important developments in the law governing employee benefit plans 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 2021. The following...
Target Date Funds: Are You Asking the Right Questions?
Eight years ago, the U.S. Department of Labor (“DOL”) issued “tips” for retirement plan fiduciaries to consider when selecting and monitoring target date retirement funds (“TDFs”). At the time, the DOL noted that TDFs were becoming “increasingly popular.” Who could have predicted how popular? Earlier this year, Barron’s magazine...
Supreme Court Declines to Address Pleading Standards in Stock-Drop Litigation - Retirement Plans Committee of IBM v. Jander
On November 9, 2020, the Supreme Court declined to consider an appeal from the Second Circuit Court of Appeals in Retirement Plans Committee of IBM v. Jander , leaving unresolved for now questions about the specificity required by the “more harm than good” pleading standard in stock drop litigation...
December 31 Sunset of Safe Harbor Correction Method for Certain Elective Deferral Failures
UPDATE (added July 16, 2021): The IRS announced through the July 16 release of Rev. Proc. 2021-30 that the sunset of the safe harbor correction method for employee elective deferral failures in 401(k) and 403(b) plans with automatic contribution features has been extended by three years, to December 31...
New IRS Guidance Will Help Facilitate 403(b) Plan Terminations
With the publication of Revenue Ruling 2020-23 , the IRS completed a cycle of helpful guidance regarding the termination of 403(b) plans that began with the publication of regulations under Code Section 403(b) in 2007. Revenue Ruling 2020-23, issued pursuant to a direction given to the Secretary of the...
COVID-19 Extension Guidance Makes the Interplay Between COBRA and Medicare (a Bit) Trickier
The rules concerning the interplay between COBRA and Medicare are a frequent source of confusion for employers. The spike in retirements, layoffs, and furloughs attributable to the coronavirus pandemic has produced an environment where employers may be confronted with these rules more frequently. In addition, guidance extending certain COBRA...
IRS announces 2021 plan limits
The IRS has announced adjusted benefit plan limits for 2021. These adjustments reflect inflation, and are important for administrators of employee retirement and health plans. The limit on 401(k) and 403(b) plan elective deferrals remains the same, at $19,500 for 2021, as does the limit on catch-up contributions, at...
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