The Pandemic Is Not Over When It Comes To Funeral Assistance Benefits

About one year ago, in anticipation of social gatherings to celebrate the upcoming Fourth of July holiday, President Biden informally observed that the COVID emergency was over. Subsequent legislative and executive action formally ended the COVID national emergency as of May 11, 2023. Various relief provisions relating to employee benefits, like COBRA continuation coverage, wound […]

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New Rules on Retirement Plan Duty to Recover Benefit Overpayments

The Secure Act 2.0 deals with many benefit related matters including changes to the prior law which generally required retirement plan fiduciaries to take reasonable action to recover any overpayment of plan benefits – even if the overpayment resulted from mistakes made by administrators of the plan. Such action would require efforts to recover benefit […]

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GUIDELINES FOR 401(K) FIDUCIARIES ON MUTUAL FUND SELECTION

Fiduciaries who handle investments for self-directed 401(k) plans are increasingly exposed to liability for their investment decisions.  Those fiduciaries, including employers and individuals charged with investment selection, are being second guessed in  court actions for the investment funds they select.  Plan fiduciaries are being sued for a variety of allegations ranging from excessive fees, poor […]

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401(K) CYBER THEFT – WHO IS RESPONSIBLE?

Cyber theft of participant 401(k) accounts is a reality (see HERE). Courts are now sorting out who is responsible when an impostor diverts a participant’s retirement funds with fraudulent distribution requests. Can the employer, as the plan sponsor, be held responsible when an outside service provider honors a suspicious distribution request? One federal court recently dismissed such […]

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DOES YOUR 401(K) PLAN OFFER TOO MANY INVESTMENT OPTIONS?

Recent cases against university-sponsored retirement plans include allegations that these plans are complicating the investment decisions of participants because the plans offer too many investment choices. As alleged in one complaint, the plans provide so many options that participants are left with a “virtually impossible burden” of deciding where to invest their retirement funds. HOW DOES YOUR 401(K) […]

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CARES ACT 401(K) COMPLIANCE CLEAN UP

The CARES Act provides a number of optional coronavirus-related relief provisions that employers may choose to incorporate into their 401(k) and other retirement plans. Those provisions include penalty-free benefit distributions of up to $100,000, a doubled maximum participant loan amount, and a one-year suspension of loan repayments for coronavirus-affected participants (CAPs). There are other relief […]

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CYBERCRIMINALS MAY BE STALKING YOUR 401(K) PLAN

CYBERCRIMINALS MAY BE STALKING YOUR 401(K) PLAN At least two pending federal cases deal with attacks on individual 401(k) plan accounts. The fact patterns are similar: a participant submits an electronic benefit withdrawal request to the employer or the plan’s record keeper. The request is passed on to the plan’s custodian for implementation. The custodian, […]

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401(K) TRUSTEES SUED FOR PANDEMIC-RELATED INVESTMENT LOSSES

Former participants in a 401(k) profit sharing plan have filed suit in Federal court in New Jersey seeking recovery of investment losses allocated to their accounts by the employer-sponsor. The losses were incurred when the employer imposed a special valuation date of April 30, 2020 to reflect the plan’s investment losses incurred during the COVID-19 […]

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IRS NOTICE 2020-42 PROVIDES RELIEF FROM PHYSICAL PRESENCE REQUIREMENT FOR SPOUSAL CONSENT

Certain retirement plan distribution and participant loan applications require a spousal consent to be signed by the participant’s spouse. The consent serves as a protection of spousal rights in plans that otherwise provide for benefit distributions in the form of an annuity that includes a survivor annuity for the spouse (a “qualified joint and survivor […]

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COVID-19 RELIEF OPTIONS FOR § 125 CAFETERIA PLANS

Recent IRS Notice 2020-29 provides additional options to allow mid-year changes in participant cafeteria plan elections. The additional relief from prior cafeteria plan election rules is intended to help employees adapt to changes in their personal circumstances resulting from the COVID-19 pandemic. The new election options are available only during 2020 and, like many other […]

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REDUCE COST OF RETIREMENT PLAN BENEFITS COVID-19 ALERT

The relief provisions of the CARES Act generally benefit coronavirus-impacted participants with accelerated retirement plan benefit payments and participant loan extensions. But what actions can employers take to relieve financial stress by reducing the cost of retirement plan benefits? Although the CARES Act does permit employers who sponsor defined benefit pension plans to postpone contributions […]

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GROUP HEALTH PLAN CONSIDERATIONS – COVID-19 ALERT

Employers who are faced with difficult decisions on reductions in their workforce need to consider group health coverage issues. Are employees on furlough, a leave of absence, or working reduced hours eligible for continued group health coverage for themselves and their families? The terms of a particular group health plan and insurance policy will determine these […]

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RETIREMENT PLANS & CORONAVIRUS IMPACTED PARTICIPANTS COVID-19 ALERT

CORONAVIRUS IMPACTED PARTICIPANTS: WHAT EMPLOYERS NEED TO KNOW For purposes of the 401(k) and retirement plan relief provisions of the CARES Act, employers will be dealing with a new category of employee, the coronavirus impacted participant, or “CIP” for short. CIPs are generally the only employees who can benefit from the CARES Act relief provisions that employers choose to provide. For […]

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CARES ACT: RETIREMENT PLAN PROVISIONS – COVID-19 ALERT

APRIL 1, 2020 COVID-19: CARES ACT – RETIREMENT PLAN PROVISIONS On March 27, 2020, President Donald Trump signed the Coronavirus Aid Relief and Economic Security Act (“CARES Act”) into law. The law contains a number of provisions that deal directly with retirement plan benefits. These relief provisions apply only with respect to “Qualified Individuals” defined […]

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ERISA FIDUCIARY CLAIM BARRED BY EMPLOYEE RELEASE

11/5/19 Deborah Innis was terminated by her employer, Telligen, Inc., after 18 years of service. She was a participant in the Telligen Employee Stock Ownership Plan (“ESOP”), and Bankers Trust was the ESOP trustee. In connection with her discharge, Innis signed a severance agreement containing a general release (“Release”) which absolved Telligen and its stockholders […]

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DOL DECREES NEW RULES FOR ESOP FIDUCIARIES

4/9/18 All transactions involving the purchase or redemption of employer stock by an Employee Stock Ownership Plan (“ESOP”) must be conducted at fair market value. This assures that the statutory prohibited transaction exceptions available to compliant ESOPs will apply. Fair market value for private companies must be determined by an independent appraisal. This would include […]

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YOUR 401(K) PLAN – COVID-19 ALERT

MARCH 26, 2020 The financial stress of the coronavirus pandemic is impacting many businesses and their employees. In this environment, employers in particular may need to review their 401(k) plans and consider the planning opportunities that may be available to them. OPTIONS FOR EMPLOYER CONTRIBUTIONS Employers that are C corporations will be able to defer […]

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WHAT HEALTH PLAN FIDUCIARIES NEED TO WORRY ABOUT

Much has been written about excess fee claims involving 401(k) and 403(b) retirement plans. In fact, a St. Louis law firm has specialized in filing class action excess fee cases around the country. So, the personal risk to retirement plan fiduciaries has been well documented. But what about the fiduciaries (employers, the employees involved in plan […]

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COURT SETBACK FOR ASSOCIATION HEALTH PLANS

5/8/19 The Department of Labor issued guidance in mid-2018 which allowed employer associations to adopt a single multiple employer health plan to cover a greater number of employers and their employees. These Association Health Plans (or “AHPs”) were intended to allow more smaller employers and self-employed individuals to band together in order to secure simpler […]

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COURT CASE CLEARS THE WAY FOR ILLINOIS SECURE CHOICE PROGRAM

4/12/19 The Illinois Secure Choice Savings Program requires employers with at least 25 Illinois employees to set up a state-sponsored IRA based retirement program if they do not already have a retirement plan. Although the program is funded solely by payroll contributions from employees, subject employers must go through an online registration and enrollment process, […]

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SHOULD 401(K) FIDUCIARIES OFFER IN-PLAN ANNUITIES?

8/14/19 Recent legislation passed by both the House and the Senate with substantial bipartisan majorities (the SECURE Act and RESA) is aimed at promoting retirement savings in Section 401(k) plans. Legislative concerns about 401(k) participants who are financially unprepared for retirement has resulted in a number of specific provisions intended to encourage participants to save […]

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WILL A MEP PLAN SOLVE YOUR 401(K) FIDUCIARY PROBLEMS?

2/26/19 Department of Labor proposed regulations would allow certain employers (including employer groups or associations) and business owners with no employees to share a single 401(k) plan. This arrangement would transfer administrative and compliance responsibility to the sponsor of the retirement plan under a multiple employer plan, or “MEP.” Under the proposed regulations, the MEP […]

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BEYOND INVESTMENTS: THE OTHER 401(K) RESPONSIBILITIES

9/17/18 We’ve all read about the lawsuits questioning an employer’s 401(k) investment fund selections and related claims of excessive fund costs. And typically a plan’s professional investment advisor (yes – you should have one unless you have an investment professional on staff) meets with company representatives periodically to discuss a detailed report on fund investment […]

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ERISA FIDUCIARY DUTIES: HOW TO HELP YOUR CLIENTS

11/19/18 Whether you are an accountant, lawyer, banker, business consultant or investment advisor, many of your business clients will have a 401(k) or other qualified retirement plan. You may not specialize in retirement plans, but consider the following as the kinds of things you might do to assist your clients and prospects with their retirement […]

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DOES YOUR RETIREMENT PLAN NEED A 3(16) FIDUCIARY?

1/11/18 Your retirement plan may have an outside third party administrator (TPA) to assist with plan administration. However, a TPA typically is not a fiduciary to the plan and does not act as “plan administrator” (that’s usually the employer itself as provided in a typical TPA services agreement). This leaves the employer ultimately responsible for the plan’s […]

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FUND OPTIONS THAT PROTECT 401(K) FIDUCIARIES

6/29/18 Fiduciaries who handle investments for 401(k) and other self-directed retirement plans (such as 403(b) plans for not-for-profit organizations) are increasingly exposed to liability for their investment decisions. Those fiduciaries, including employers and any individuals charged with investment decision making, are being second guessed for the investment funds they select. Plan fiduciaries have been sued […]

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401(K) PLAN TRUSTEES: HOW DO YOU SELECT AND MONITOR INVESTMENTS?

Many 401(k) plan sponsors have wisely selected investment professionals to assist in selecting the plan’s investment menu, typically a listing of various mutual funds. Other plan sponsors may allocate this duty to company officers and other key employees. In either case, the resident plan fiduciaries (the company officers and key employees who act on behalf […]

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ACA PROHIBITS ENHANCED HEALTH BENEFITS FOR EXECUTIVES

The Affordable Care Act (ACA) includes a ban on discrimination in insured group health plans. This prohibition on discrimination has applied to self-insured plans for years pursuant to Section 105(h) of the Internal Revenue Code. The ACA extends that prohibition to insured group health plans which can no longer favor highly compensated employees in terms […]

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ACA WHISTLEBLOWER CLAIMS: A NEW COMPLIANCE HEADACHE

The Affordable Care Act (ACA) requires “affordable” health coverage to be offered to full-time employees, their dependents and other individuals, either through employer-sponsored group health plans or health insurance exchanges maintained by participating states or the Federal government. This requirement is effective January 1, 2014. There are penalties for non-compliance that apply to subject “large […]

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AFFORDABLE CARE ACT UPDATE

There has been a deluge of regulatory activity involving the Affordable Care Act (“Obamacare”), or the ACA. Some developments, such as the general postponement of the employer mandate until 2015 (and the recent postponement until 2016 for employers with 50-99 full time equivalent employees), have received significant press attention. Others involve details of interest primarily […]

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AGE DISCRIMINATION

The Age Discrimination in Employment Act covers private employers of 20 or more persons as well as state and local governments, employment agencies serving covered employers, and labor unions with 25 or more members.  Age Discrimination in Employment Act of 1967  §2 et seq., 29 U.S.C.A. ‘ 621 et seq.  Under ADEA, employers are forbidden […]

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AMERICANS WITH DISABILITIES ACT (“ADA”) AND JOB INTERVIEWS

The Americans With Disabilities Act of 1990 (the “ADA”) generally prohibits discrimination against any “qualified individual with a disability” in the workplace.  Covered employers include those with 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.  Covered employers are not allowed […]

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ANNUAL REPORTS/NON-FILERS

The IRS and the Department of Labor (DOL) recently announced a joint enforcement effort directed to non-filers of annual reports on Form 5500.  At the same time, non-filers are encouraged to voluntarily comply in accordance with the DOL’s Delinquent Filer Voluntary Compliance (DFVC) Program, which substantially reduces the monetary penalties that would otherwise apply (for […]

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BENEFITS COMPLIANCE CHECKLIST: 2010 YEAR END

Most of us think of 2010 as being the year of Health Care Reform, the Patient Protection and Affordable Health Care Act, or “PPACA.” While year end action is required for PPACA compliance (for calendar year plans), a number of other areas require attention as well: PPACA’s major impact on group health administration requires appropriate […]

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BENEFITS UPDATE: THE REGULATORS SPEAK

Benefit plan regulators were active in the period leading up to the June 30 fiscal year-end. Significant new rules and regulations were proposed for retirement plans, deferred compensation plans and group health plans. It’s not a walk on the wild side, but some of the dry regulatory pronouncements will impact most benefit plan sponsors and […]

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CAN YOU PUT YOUR RETIREMENT PLAN ON AUTOPILOT?

Consider a typical retirement plan sponsored by a private employer. The employer is a fiduciary to the plan along with employees who individually serve as trustees or members of the plan’s investment or retirement committee. The employer may (should!) have concerns about the liability associated with its fiduciary status. Let’s say you are the person […]

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COBRA MYTHS

MYTH NO. 1:  ONE COBRA NOTICE COVERS BOTH SPOUSES Reality: In Underwood v. Fluor Daniel, Inc. 1997 U.S. App. Lexis 1410 (4th Cir. 1997), the court awarded statutory penalties to a dependent spouse who did not receive a separately addressed COBRA notice even though the reason the spouse lost continuation coverage was her failure to […]

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COMPENSATION FOR RETIREMENT PLAN LOSSES

Trustees of retirement plans who have invested plan assets in any of the following stocks may be entitled to compensation for investment losses: Adelphia Business Solutions, Inc., Amazon, America On Line, AT&T, Barnes and Noble, Focal Communications Corp., JDS Uniphase Corp., Digital Impact, Inc., Ebay, Global Crossing, Inktoni, Excite@Home, NewPower Holdings, Inc., Quest Communications, SBC […]

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COURT APPROVED PROTECTION FOR 401(K) FIDUCIARIES

Some court decisions get headlines, and some court decisions provide helpful guidelines. We hear much about multimillion dollar recoveries against retirement plans and their fiduciaries. We don’t hear so much about court decisions that outline ways to control plan liabilities and related fiduciary exposure. Consider two cases that could help your plan fiduciaries: (1) The […]

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COURT: PLAN CAN RECOVER RETIREMENT WINDFALL

Employers, plan administrators, HR staff and third party administrators (TPAs) dealing with excess benefit payments from retirement plans may unnecessarily shy away from taking action to recover such excess payments. In many cases, this reluctance is based on administrative errors made in calculating the excess benefit payment at the outset. What administrator likes to acknowledge […]

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EEOC RULE PERMITS ELIMINATION OF RETIREE HEALTH COVERAGE UPON MEDICARE ELIGIBILITY

An Equal Employment Opportunity Commission (“EEOC”) final rule (the “Rule”) provides the following exemption from the provisions of the Age Discrimination in Employment Act (“ADEA”): Some employee benefit plans provide health benefits for retired participants that are altered, reduced or eliminated when the participant is eligible for Medicare health benefits or for health benefits under […]

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EMPLOYER SPONSORSHIP OF SECTION 403(B) ANNUITY PLANS

Tax-exempt employers such as schools and hospitals frequently become involved in tax deferred annuity programs for their employees.  These plans are generally governed by Section 403(b) of the Internal Revenue Code.  Because 403(b) plans can be funded by individual annuity contracts, there may be no employer involvement in the promotion or funding of such arrangements.  […]

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EMPLOYMENT INTERVIEW GUIDELINES

TOP TEN QUESTIONS YOU SHOULD NOT ASK IN AN EMPLOYMENT INTERVIEW 1.         Do not ask about the applicant=s date of birth unless there is a legitimate minimum age requirement for the position. 2.         Do not ask about the applicant’s place of birth (you can ask whether the applicant, if hired, can submit proof of the […]

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ESOP STOCK DROP LEAVES INSIDE TRUSTEES NO WAY OUT

Participants in an employee stock ownership plan (ESOP) sponsored by Fifth Third Bancorp filed suit after the Bank’s stock experienced a 74 percent drop in market price between 2007 and 2009 – and plan fiduciaries failed to take action to avoid losses to the plan. The allegations that the plan fiduciaries did not act “prudently” […]

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EXPANDED LIABILITY FOR PLAN FIDUCIARIES

A flurry of court decisions following in the wake of the Supreme Court decision in Cigna Corp. v. Amara, 131 S. Ct. 1866 (2011), has expanded the scope of “equitable” relief to include monetary damages. Monetary damages are now available to participants alleging misconduct by plan administrators and other plan fiduciaries. “Plan fiduciaries” include anyone […]

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FIDUCIARY UPDATE FOR 401(K) AND OTHER BENEFIT PLANS

A Selected highlights of recent court decisions point to significant liability concerns for employer and service providers to 401(k) and other ERISA plans: Personal Liability – Think Twice Before Diverting Plan Contributions In ruling on a motion to dismiss a complaint filed by the U.S. Department of Labor alleging fiduciary responsibility of an employer and […]

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FINAL 401(K) REGULATIONS

Final Internal Revenue Service regulations apply to all Section 401(k) “cash or deferred” plans and require compliance starting with the 2006 plan year (for calendar year plans, compliance is required as of the plan year which began January 1, 2006).  The final regulations require certain mandatory changes and offer planning options. The mandatory changes that […]

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FMLA TODAY

New federal regulations and legislation relating to the Family Medical Leave Act (“FMLA”) are in effect as of January 16, 2009.  These new requirements are extensive and complicated, but they do require basic action that all covered employers (including public employers and those in the private sector with at least 50 employees) must take now. […]

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GROUP HEALTH PLAN AUDIT REQUIREMENT: WHO DO YOU TRUST?

Most larger group health plans are self-funded, which means the employer, not an insurer, is primarily responsible for paying benefits. These plans also are likely to require employee contributions towards the cost of benefits, and those contributions typically are paid to the employer (not a trust) on a pre-tax basis through a cafeteria (Section 125) […]

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GROUP HEALTH PLAN BENEFITS ALERT

Year-end changes in the law will require administrative and document revisions for group health plans, including cafeteria plans and flex plans. A flurry of recent regulations clarifying several statutory requirements should be considered by employers and HR staff now in advance of year-end open enrollment periods. The applicable statutes include the Genetic Information and Non-discrimination […]

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HEALTH PLAN COST REDUCTION

The cost of group health coverage continues to escalate. Both employers and employees are confronted with choices between higher coverage costs and reduced coverage. Other approaches such as wellness programs and consumer-driven health care options (health savings accounts and health reimbursement accounts) can help. Often overlooked is a cost control mechanism already included in your […]

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HEALTH SAVINGS ACCOUNTS (HSAS)

An HSA is a tax-exempt trust or custodial account similar to an IRA.  It allows both employers and employees to make deductible cash contributions on behalf of “eligible individuals.”  Any HSA withdrawals used to pay medical expenses that are not deducted for income tax purposes are excluded from the account beneficiary’s income.  These expenses include, […]

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HEALTH CARE MANDATES FOR SMALL BUSINESS

The new health care reform law contains an income tax credit for small employers (those with 24 or fewer “full time equivalent” employees with an average compensation of less than $50,000).  This tax credit is available effective January 1, 2010. HealthReform.Gov provides a further explanation of the health care reform provisions and contains the following […]

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HIPAA, THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996

HIPAA, the Health Insurance Portability and Accountability Act of 1996, extends new rights to millions of employees and their families who have preexisting medical conditions. The protection takes the form of limitations on exclusions for preexisting conditions as well as protection from discrimination in employment on the basis of individual medical conditions. HIPAA also takes […]

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HIPAA PRIVACY RULES

April 14, 2003 is the deadline for health care providers to develop formal HIPAA privacy procedures and to begin notifying patients of their privacy rights.  All health care providers who transmit protected health information electronically for billing purposes are covered by the HIPAA privacy rules.  Required documentation includes policies and related forms/notices covering the following: […]

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HIRE ACT EMPLOYMENT INCENTIVES

April, 2010 There may be even more perks for businesses in the Obama administration’s pendingbudget bill, but for now, the Hiring Incentives to Restore Employment, or HIRE Act, is law and provides some attractive tax incentives to employers seeking to add to their workforce. Under the HIRE Act, small businesses and other private employers (including […]

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HIRING AND THE ADA BASICS

The Americans with Disabilities Act (“ADA”) prohibits discrimination against qualified individuals with disabilities as to job applications and hiring. Employers subject to the ADA include those with 15 or more employees for each working day in each of 20 or more calendar weeks in a calendar year. What does this mean for your organization and […]

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ILLINOIS EXTENSION OF GROUP HEALTH COVERAGE FOR DEPENDENTS

Effective beginning June 1, 2009, all individual and group health insurance (including HMO contracts) that provide dependent coverage must permit insured parents to cover qualifying dependents up to age 26 (age 30 for dependents who are military veterans). Enrollment in college or another higher education program is not required, but the dependent must not be […]

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IMMEDIATE ACTION REQUIRED FOR SECTION 409A COMPLIANCE

All “nonqualified deferred compensation plans” subject to Section 409A of the Internal Revenue Code must comply with new rules by December 31, 2008.  Any failure to do so will expose executives, employees and others (including directors and other independent contractors) who are the intended beneficiaries of these arrangements to accelerated income tax, interest charges and […]

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LATE DEPOSIT OF 401(K) CONTRIBUTIONS

U.S. Department of Labor Regulations Section 2510.3-102 requires all employers who maintain 401(k) plans to deposit their employees’ contributions no later than 15 business days following the month in which the contributions were either withheld from employees’ paychecks or received by the employer in any other form of payment.  Note that this date is an outside deadline, not […]

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MYTHS OF EMPLOYMENT LAW

MYTH:           YOU DO NOT HAVE TO PAY OVERTIME TO SALARIED EMPLOYEES. Reality:  Only salaried, executive, administrative or professional employees who exercise substantial independent judgment or supervise others are generally “exempt employees” under the Wage and Hour Law (commissioned employees are also exempt). MYTH:           YOU HAVE TO GIVE A TERMINATED EMPLOYEE TWO WEEKS’ NOTICE OR TWO […]

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NEW EMPLOYER RESPONSIBILITIES: SOCIAL SECURITY “NO MATCH” LETTERS

The Department of Homeland Security (“DHS”) has recently issued a final regulation imposing new responsibilities on employers with respect to “no match” letters from the Social Security Administration (“SSA”).  The final regulation is effective now. A “no match” letter is a notification to an employer from the SSA advising that an employee’s name or reported […]

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NEW OVERTIME REGULATIONS

Effective August 23, 2004, the Wage and Hour Division of the U.S. Department of Labor has issued revised regulations that update the exemptions for salaried executive, administrative, professional and other “white collar” employees who are not entitled to overtime pay for working more than forty (40) hours in a week. The highlights of the new […]

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NEW PARTICIPANT BENEFIT STATEMENTS

All individual account plans (profit sharing plans, Section 401(k) plans and Section 403(b) plans of tax-exempt entities) are now required under the Pension Protection Act of 2006 (“PPA”) to provide participants benefit statements at least annually, and such plans which permit participant investment direction must do so on a quarterly basis.  For calendar year self-directed […]

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LEGISLATIVE UPDATE: THE PENSION PROTECTION ACT OF 2006

The Act has wide-ranging impact in the retirement plan area.  There are provisions imposing funding reforms for defined benefit pension plans, promoting “cash balance” retirement plans, liberalizing the Roth IRA rules, adding IRA “rollover” options, and making “permanent” the various increases in contribution limits provided by the Economic Growth and Tax Relief Reconciliation Act of […]

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PENSION PROTECTION ACT UPDATE

Recent IRS Notice 2008-30 provides some details about provisions of the Pension Protection Act of 2006 (the PPA) that are effective now.  The currently applicable requirements that affect almost all qualified retirement plans and Section 403(b) annuity plans include: (1)        Rollover Distributions to Roth IRAs A qualified retirement plan must now permit any recipient of […]

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PPACA’S NEW BENEFITS CLAIMS REQUIREMENTS

Health Care Reform legislation (the Patient Protection and Affordable Care Act, or “PPACA”) imposes additional claims processing requirements on subject group health plans and insurers. There are new claims notices, revised procedures and, for self-funded ERISA plans, a Federal external claims review requirement. Additional guidance in the form of amended regulations and technical releases has […]

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PROPOSED SECTION 403(B) REGULATIONS

The Internal Revenue Service has proposed the “first comprehensive guidance on section 403(b) arrangements in over 40 years” in regulations that were proposed on November 16, 2004. The general effective date of the proposed regulations, which cannot be relied upon until they are issued in final form, has been postponed until taxable years beginning after […]

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PROTECTING RETIREMENT PLAN FIDUCIARIES

Whether you have responsibilities as a CFO, staff attorney or HR professional, or instead serve as an independent plan service provider (third party administrator, recordkeeper, or investment advisor), you should be concerned about the new duties of retirement plan fiduciaries. Plan fiduciaries are those responsible for operating the plan and include the sponsoring employer (which […]

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RESPONSIBILITIES OF RETIREMENT PLAN TRUSTEES – AND WHAT TO DO ABOUT IT

This article is supplemented and updated by more recent posts that consider the Department of Labor fee disclosure rules (see “Protecting Retirement Plan Fiduciaries”) and case law that expands fiduciary liability (see “Expanded Liability for Retirement Plan Fiduciaries”) The Employee Retirement Income Security Act of 1974 (“ERISA”) generally governs qualified retirement plans (pension plans, profit […]

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RETHINKING ERISA RELEASES

A recent Seventh Circuit case, Howell v. Motorola, Inc., considers the effect of a release signed by an employee in exchange for receipt of a severance payment. The release complied with the general Americans With Disabilities Act (ADA) requirements and its terms applied to, among other things, any claim for pay, benefits or damages arising […]

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RETIREMENT AND 401K PLAN TRUSTEES: EMERGING PROTECTION STRATEGIES

Recent developments from the regulators and the courts present new compliance challenges for 401(k) and other retirement plan trustees.  Traditional strategies for protecting retirement plan fiduciaries need to be supplemented with new approaches.  Consider the following developments that impose additional duties and expand the potential liability of “responsible plan fiduciaries”: The Regulatory Challenge Whether you […]

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RETIREMENT PLAN FEE DISCLOSURE: AVOIDING THE FIDUCIARY TRAP

Retirement plan fee disclosures are due from covered service providers by July 1, 2012, which is just a few days away. Third party administrators (TPAs), record keepers, investment advisors, fund custodians, actuaries, accountants, lawyers and other service providers who are paid from plan assets or participant investment accounts must formally disclose all plan services rendered […]

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RETIREMENT PLAN UPDATE: 2009 DEADLINE FOR AMENDMENTS

All qualified retirement plans and 403(b) plans must be amended by the last day of the 2009 plan year (December 31, 2009 for calendar year plans) to meet requirements of the Pension Protection Act of 2006 (later deadlines may apply to certain government plans and collectively bargained plans).The highlights of the required changes include: Vesting […]

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QUALIFIED RETIREMENT PLAN COMPLIANCE CHECKLIST

Documents Plan Document Type of plan – if ESOP, target benefit, cash balance, cross tested or age weighted plan, special compliance rules will apply GUST amendment? Determination letter/filing? Trust Agreement Updated for current trustees and funding arrangement? Summary Plan Description Readable? Current? Suitable disclaimers? Summary of Material Modifications required for plan changes? Forms Enrollment Joint […]

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ROTH 401(K) OPTION NOW PERMITS TAX-FREE DISTRIBUTIONS

Starting January 1, 2006, Section 401(k) plans can be amended to permit participant 401(k) contributions (elective deferrals) to be treated like a Roth IRA contributions.  This means that participants in a “Roth 401(k)” plan can choose to put some or all of their elective deferrals in a Roth 401(k) account – and, if the account is […]

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SAME-SEX MARRIAGE AND YOUR BENEFIT PLANS

The U.S. Supreme Court recently ruled that the Fourteenth Amendment requires all states to license marriage between two qualified individuals of the same-sex and to recognize the validity of same-sex marriages performed in other states (that’s the Obergefell v. Hodges decision). This decision not only extends the right of same-sex couples to marry in all […]

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SECTION 403(B) FINAL REGULATIONS: A COMPLIANCE OUTLINE

The final Section 403(b) regulations require compliance by all subject tax deferred annuity arrangements maintained for the benefit of employees of tax-exempt and governmental organizations.  The general compliance deadline is the first taxable year beginning on or after December 31, 2008, which will typically be January 1, 2009. While revised plan documents incorporating numerous provisions […]

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SMALL IS GOOD: MORE PERKS FOR SMALL BUSINESSES IN HEALTH CARE REFORM

Health care reform contains a new income tax credit that is available now, and available only to small businesses (those with fewer than 25 full-time equivalent employees or “FTEs”). Employers are eligible to claim the credit if they have group health insurance for employees and pay at least 50% of the cost of coverage (that’s […]

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SOCIAL SECURITY STRATEGIES

The Center for Retirement Research at Boston College has recently published an article on the following “unusual” strategies for drawing Social Security retirement benefits.  These options may allow a particular claimant to increase lifetime retirement benefits for the claimant’s household: 1.         Defer and Elect Spousal Benefit.  Because the amount of monthly Social Security retirement benefits […]

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SPECIAL TAX NOTICE REGARDING PLAN PAYMENTS

The IRS has revised the Special Tax Notice that must be given to all participants of qualified retirement plans and Section 403(b) arrangement at the time benefits are distributed. The revised Special Tax Notice follows: SAFE HARBOR EXPLANATION FOR PLANS QUALIFIED UNDER SECTION 401(a), SECTION 403(a) ANNUITY PLANS, OR SECTION 403(b) TAX SHELTERED ANNUITIES SPECIAL […]

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THE ACA: AN OPERATIONS UPDATE

Obamacare (the Affordable Care Act or “ACA”) provides another set of compliance deadlines starting on November 5, 2014. The new deadlines involve: 1. Open Enrollment A three month open enrollment period begins on November 15, 2014. This is the first ACA renewal period and the first time all the related tax requirements will be in […]

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THE COBRA SUBSIDY LIVES ON

As suggested in the March Benefits Bulletin (“Short Term Extension of COBRA Subsidy Rules ”), a further extension of the COBRA subsidy “eligibility period” from March 31, 2010 through May 31, 2010 has been signed into law as of April 14, 2010. The extension is retroactive to April 1, 2010, so that covered dependents and […]

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THE FIVE 401(K) DUTIES THAT EMPLOYERS CAN’T DELEGATE

You’ve hired a financial institution or third party administrator (TPA) for your 401(k) plan. The service provider handles “everything,” so there is nothing to worry about – right? Probably not because no TPA or other service provider does “everything” (take a look at your service agreement). It’s the plan sponsor who typically retains responsibility for […]

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THE VEBA SOLUTION

Recent studies have determined that a typical married employee will have to fund an average of $260,000 in post-retirement medical expenses over the balance of the employee’s and spouse’s lifetime. The expenditures include the costs of Medicare premiums, Medicare supplemental coverage, Medicare deductibles and co-payments and long term care expenses. These amounts are typically funded […]

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WHAT A DIFFERENCE A “P” MAKES: HAIRSPLITTING DECISION DENIES DISABILITY CLAIM

A recent decision by the U.S. Court of Appeals for the Seventh Circuit in Chicago underscores the care that needs to be exercised in preparing plan documents. In Marrs v. Motorola, Inc., 577 F.3d 783 (7th Cir. 2009), the Court reviewed a plan administrator’s decision cutting off disability benefits on the basis of a plan […]

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WHY NOT AN ESOP?

There are many reasons a business owner would not want to adopt an Employee Stock Ownership Plan, or ESOP.  ESOPs are not the favorite tool of most transaction professionals, so we hear little about them except the bad press associated with companies like United Airlines and the Tribune Company ESOP transaction engineered by Sam Zell.  […]

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2011 YEAR END COMPLIANCE CHECKLIST

Looking ahead, it is not too early for employers, benefit plan administrators, HR professionals and plan service providers to consider compliance issues that require attention by the end of 2011.  There are challenging new disclosure requirements for both group health and retirement plans as well as interim amendments to retirement plan documents that need to […]

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