Blog Posts: Benefits Law Update
Visit the Full BlogVerrill’s Benefits Law Update blog delivers timely insights and practical guidance on the ever-evolving landscape of employee benefits and executive compensation. Our blog provides up-to-date analysis and commentary on a wide range of topics to provide timely updates and commentary on developments in law affecting employee benefit plans and executive compensation arrangements.
Monitoring the Activities of a Plan Fiduciary Committee: Recommendations to a Board of Directors
It is axiomatic that a person who has fiduciary responsibility with respect to an ERISA benefit plan must monitor the performance of any plan service provider or other person to whom it has delegated fiduciary duties on an ongoing basis. This obligation is inherent in the core “duty of...
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...
Section 457(f) Plans and Noncompete Clauses: What the IRS Gave, the FTC May Take Away
When the IRS published proposed regulations harmonizing key provisions of Code Sections 409A and 457(f) in 2016, executive compensation lawyers and consultants rejoiced. It was not just that a long wait was over (roughly nine years from the publication of IRS Notice 2007-62, which promised guidance on these issues...
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...
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...
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...
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...
How many participants is too many for a top hat plan?
A client recently reviewed a census of participants in its deferred compensation plan and found that the covered group amounted to nearly 15% of its total workforce. Mindful of the need to limit the number of participants in a top hat plan, this compliance-oriented organization asked whether it should...
Using a Non-Compete to Create a Substantial Risk of Forfeiture Under a Section 457(f) Plan: Limited (But Meaningful) Opportunities
UPDATED (added May 21, 2024): The FTC Final Rule on Noncompete Clauses applies to tax-exempt organizations who become subject to FTC jurisdiction as a result of profit-seeking activities that benefit their members. For more information about the potential application of the FTC Final Rule to tax-exempt organizations, read our...
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...
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...
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...
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...
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...
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...
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...
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...
IRS Guidance Regarding the Section 4960 Excise Tax Is (Somewhat) Helpful
IRS Notice 2019-09 provides guidance intended to help "applicable tax-exempt employers" determine whether compensation paid to their most highly compensated employees will be subject to the 21 percent excise tax imposed under Code Section 4960. Notice 2019-09 is indeed helpful to those of us who have to interpret the...
December 2018 Client Advisory
This Client Advisory, originally distributed in December 2018, 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 2019. The following...
IRS issues updated 402(f) rollover distribution notices
The IRS has issued new model notices for recipients of rollover distributions from qualified retirement plans. The updated notices reflect changes from the 2017 tax reform act, as well as regulatory changes enacted since previous versions of the notices were published. The model notices provide a safe harbor for...
New Disability Claims Procedures Affect Retirement Plans and Deferred Compensation Plans Too
Much has been written about the Department of Labor's final rule regarding disability benefit claims procedures (the "Final Rule"), which took effect on April 2, 2018. And by now, most employers – and all disability insurance carriers – have taken steps to implement changes in disability plan administrative procedures...
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...
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...
Budget Agreement Contains Changes to 401(k) Plan Hardship Distribution Rules
The budget agreement approved by Congress and signed into law on February 9, 2018 includes several changes to the rules governing hardship distributions from 401(k) plans. These changes — which were included in the House version of the tax reform bill, but removed during the reconciliation process — may...
How can a tax-exempt employer manage the new excise tax on executive compensation?
The executive compensation provisions of the Tax Cut and Jobs Act have been widely reported, and public companies and tax-exempt employers are now thinking about how to adjust to the new statutory changes. Tax-exempt employers face the startling new reality of a 21% excise tax on "remuneration" exceeding $1,000,000...
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...
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...
House Tax Bill Targets Deferred Compensation Earned After January 1, 2018 (Really)
It's early days yet for the Tax Cuts and Jobs Act released last week by the House Ways and Means Committee, but one thing is clear: Congressional tax writers are scouring the landscape to find a combination of more revenue and accelerated revenue from various sources in order to...
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