2021 Year End Employee Benefit Plan Amendments

December 6, 2021 Alerts and Newsletters

Health and Welfare Plans

Employers that made available COVID-19 relief and benefit enhancements in 2020 – such as the increased carry over limit and extended grace period for health flexible spending accounts – need to amend their plan documents to incorporate those changes by the end of the 2021 plan year. For calendar year plans (i.e., most health and welfare plans) this means amendments incorporating the optional COVID-19 relief and benefit enhancements must be adopted by no later than December 31, 2021. Employers should work with employee benefits legal counsel and their third-party administrators or other document vendors to ensure that plan documents are timely amended to include any optional relief.

Click here to access a table that provides an overview of the COVID-19 relief available for health and welfare benefit plans. If an employer implemented any of the optional provisions described in the table, a plan amendment is required.

401(k) and 403(b) Plans

401(k) plans and 403(b) plans that offer hardship distributions must be amended to comply with the IRS’s 2019 final regulations on hardship distributions by the end of the 2021 plan year. For calendar year plans, this means that plan documents must be amended by December 31, 2021.

The final regulations include several changes to the rules governing hardship distributions, including prohibiting the suspension of elective deferrals or employee contributions following receipt of a hardship distribution, creating a single standard for determining whether a distribution is necessary to satisfy an immediate and heavy financial need, and providing opportunities to expand the availability of hardship distributions. Plans that previously required a 6-month suspension of elective deferrals or employee contributions should have eliminated that requirement in practice as of January 1, 2020, and an amendment to reflect that change must be adopted by no later than December 31, 2021. If an employer chose to implement any of the optional changes, the plan document must be amended to reflect these changes as well.

For detailed information about the final regulations, see our blog post here.

Firm Highlights

Blog

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...

Matter

Advised Fortune 500 Company on Group Health and Welfare Benefit Plans

We were engaged by a Fortune 500 manufacturing company to provide legal and compliance services regarding its group health and welfare benefit plans. During the course of our representation, we have advised the company...

News

31 Verrill Attorneys, Across Four Offices, Recognized in 2022 Chambers & Partners Guide

Matter

Comprehensive Benefit Plans Representation of Seller in Strategic Acquisition

We represented the largest physician network in Massachusetts in the employee benefits and executive compensation aspects of its acquisition by one of the largest health care companies in the United States. After several rounds...

Publication/Podcast

Courts Expand on Rules Regarding the Protection of Retirement Plan Assets

Blog

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...

News

77 Verrill Attorneys Recognized by Best Lawyers® 2023, Including Six Named Lawyers of the Year

News

39 Verrill Attorneys Named 2022 Super Lawyers and Rising Stars

Publication/Podcast

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...

Blog

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...

Contact Verrill at (855) 307 0700