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...
Update on the Debate over Environmental, Social, and Corporate Governance Investing
The debate over investment of retirement plan funds based on environmental, social, and corporate governance (“ESG”) factors continues to make waves. This post provides a high-level overview of the current state of play for plans that are subject to ERISA. We last wrote about this topic in October 2021...
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...
Alternatives for Sponsors of Defined Benefit Pension Plans
For decades, it was common for employers to maintain employer-funded defined benefit pension plans (“DB Plans” or “Plans”) to provide retirement benefits to their employees. In recent years, DB Plans have become increasingly expensive and difficult to administer due to funding, insurance premiums, and government filing requirements. As a...
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...
SECURE 2.0 Provides New and Expanded Retirement Plan Correction Rules
With the passage of the SECURE 2.0 Act of 2022 (“SECURE 2.0”) on December 29, 2022, Congress has made several changes related to the correction of errors in administering retirement plans. These changes include expansion of the IRS’s self-correction program for retirement plan failures, changes related to recovery of...
Pension-Linked Emergency Savings Accounts: Something Old, Something New, Something Borrowed, Something Forthcoming
Following the initial flurry of publications summarizing the retirement plan enhancements under the SECURE 2.0 Act of 2022 (“SECURE 2.0”), this post takes a deeper dive into one of those enhancements: the optional “pension-linked emergency savings account” (“PLESA”). Plan sponsors may add PLESAs to their defined contribution retirement plans...
Next Steps for Making Collective Investment Trusts Available to More Retirement Plans
Collective investment trusts (“CITs”) have become an increasingly popular choice for 401(k) plan investment menus over the past decade, consistent with a trend toward lower-cost investment options that has been driven, in part, by widespread litigation. However, certain technical restrictions have kept CITs from being offered as investment options...
A Last-Minute Gift – Prescription Drug Reporting Grace Period and Good Faith Relief
In a move akin to last-minute gift-giving, the Departments of Labor, Health and Human Services, and the Treasury (the “Departments”) released FAQ 56 on December 23, 2022, which provides relief regarding the Prescription Drug Data Collection (“RxDC”) reporting requirements under the Consolidated Appropriations Act, 2021. The relief arrives a...
When Cash is not King: Holiday Gifts as “De Minimis” Fringe Benefits
To celebrate the holiday season, this post highlights the tax consequences of employer-sponsored holiday perks such as gift cards, turkeys, hams and gift baskets. Under the current tax rules, employers may give infrequent low value gifts of property or services to employees on a tax-free basis. [1] Cash and...
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...
IRS Guidance Expands Access to ACA Premium Tax Credit, Allows Cafeteria Plan Sponsors to Permit Employees to Revoke Family Coverage Mid-year
Final Regulations under Section 36B of the Internal Revenue Code On October 11, 2022, the Internal Revenue Service (IRS) issued Final Regulations under Code Section 36B relating to eligibility for the Affordable Care Act’s (“ACA’s”) premium tax credit (“PTC” or “subsidy”). The Final Regulations expand eligibility for the PTC...
New IRS Determination Letter Program for 403(b) and 401(a) Plans
On November 7, 2022, the IRS issued Revenue Procedure 2022-40 , which allows certain tax-exempt employers (such as schools, charities, and churches) to apply for IRS determination letters on their individually designed section 403(b) retirement plans (“403(b) plans”) in substantially the same manner as plan sponsors of individually designed...
ERISA Section 404(c) Protection: A Refresher for Fiduciaries
The Employee Retirement Income Security Act (“ERISA”) imposes both (i) significant responsibilities on fiduciaries of participant-directed individual account plans, including 401(k) plans, and (ii) personal liability for losses suffered by a plan if those responsibilities are breached. Fortunately, ERISA provides important relief from liability for investment losses for these...
Proposed Changes to Massachusetts Paid Family & Medical Leave Regulations
The Massachusetts Department of Family and Medical Leave has proposed changes to the regulations governing the state’s paid family and medical leave program. The proposed changes are intended to clarify the requirements related to maintaining health insurance benefits for employees on family or medical leave. While the proposed changes...
The How and When of Separations from Service Under Section 409A
Readers who regularly work with deferred compensation plans will know that Section 409A of the Internal Revenue Code (“Section 409A”) prescribes six events or times at which deferred compensation may be distributed to participants in a deferred compensation arrangement. The first, and perhaps most frequently used, of these permissible...
Amending Your Retirement Plans this Year for SECURE Act and CARES Act Changes
This post was updated on September 29, 2022. On August 3, 2022, the IRS extended the deadline for retirement plan sponsors to adopt amendments necessary to comply with the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) and the Bipartisan American Miners Act of...
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...
DOL Proposes Amendments to QPAM Exemption
On July 27, 2022, the Department of Labor (DOL) proposed a set of amendments to Prohibited Transaction Class Exemption 84-14, the so-called “QPAM Exemption,” which permits an investment fund [1] holding assets of ERISA plans and IRAs that is managed by a Qualified Professional Asset Manager (“QPAM”) to engage...
Agencies Heed President’s Call to Take Action to Protect Access to Sexual and Reproductive Health Care Post-Dobbs
Within days of the Supreme Court’s June 24 th Dobbs decision, which held that the Constitution does not guarantee the right to an abortion, key government agencies have taken action to protect access to sexual and reproductive health care: On June 27, the Secretaries of the Departments of Health...
What Employers Need to Know About Access to Reproductive Care After Dobbs
The United States Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization , No. 19-1392 (June 24, 2022) overturning Roe v. Wade and Planned Parenthood v. Casey, has led to a host of different responses from employers across the country—specifically those with employees in states that now ban...
Health Plans: PCORI Fee Is Due August 1, 2022
What is the PCORI Fee? The Affordable Care Act created a non-profit corporation, the Patient-Centered Outcomes Research Institute (“PCORI”), to conduct research to help individuals, providers, and policymakers make better healthcare choices by advancing comparative clinical effectiveness research. PCORI is financed by a fee imposed under Internal Revenue Code...
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