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 […]
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 […]
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 […]
The recently adopted American Rescue Plan Act of 2021 (ARPA) includes in its $1.9 trillion of relief spending reimbursement of the premium cost of COBRA continuation coverage for employees and their covered family members who lose their group coverage as a result of an involuntary termination of their employment or a reduced number of employment hours. These […]
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 […]
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) […]
IRS and Department of Labor joint rules effective May 4, 2020 created a new COBRA universe by extending both group health plan deadlines for providing COBRA election notices and employee deadlines for electing COBRA continuation coverage — and paying for it. These deadlines are extended for the entire “Outbreak Period,” which started March 1, 2020 […]
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 […]
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, […]
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 […]
CARES ACT PROVIDES COVID-19 IMPACTED EMPLOYERS TAX RELIEF An alternative provision under the CARES Act provides tax relief for employers that have been financially impacted by the COVID-19 pandemic. A tax credit, the Employee Retention Credit (ERC), of 50 percent of up to $10,000 per employee in wages paid and related health plan expenses is […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
5/10/18 There are judicial decisions holding that a business owner can be personally responsible when the owner has control over company finances and exercises such authority by paying company creditors instead of making required payments to a welfare benefit plan. But a recent decision of the U.S. Court of Appeals for the Ninth Circuit holds that an […]
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 […]
2/7/18 Nick Saban is the highest paid college football coach in the country. In 2017, he was reportedly paid $11 million by the University of Alabama. If he is paid that amount in 2018, the recently passed Tax Cuts and Jobs Act (the “Act”) will impose an excise tax on Alabama, his employer, of over […]
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 […]
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 […]
12/18/19 What can you do if your retirement plan operations don’t square with the provisions of your plan document? For example, your plan provides for a matching contribution maximum of one percent of a participant’s compensation – but your organization has been contributing up to two percent since the last plan amendment. Recognizing that the […]
9/20/19 A former employee attains age 65 and applies for a retirement pension. That’s normally a routine situation for any plan administrator. But what if the employee stopped rendering covered service 24 years ago and the plan administrator has no records of the employee or his employment because he worked for a separate company that […]
7/22/19 What happens when you go to an in-network facility (hospital or emergency room) and are treated by a doctor who is not in your insurance company’s PPO network? You get a bill from a specialist like a radiologist or anesthesiologist that exceeds your insurer’s normal reimbursement – and you’re stuck with the balance. Surprise! […]
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 […]
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, […]
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 […]
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 […]
1/24/19 We have an award winner for 2018: Florida eye doctor Samuel Poppell. In McLain v. Poppell, it was alleged that Dr. Poppell, owner of the Emerald Coast Eye Clinic and trustee of its 401(k) plan with total investment discretion, invested plan assets primarily in VirnetX, a publicly traded company whose principal business was acting as […]
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 […]
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 […]
10/24/18 No fee mutual funds are here! Fidelity recently announced domestic and international “index” funds that would charge no management fees – and no transaction fees when purchased directly from Fidelity. The no fee structure appears to be more than a come on, and industry sources report that Fidelity intends to subsidize fund costs in […]
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 […]
8/6/18 Employers with 25 or more employees in Illinois will be subject to the Secure Choice Savings Program Act (the “Act”) if they do not already have an employer sponsored retirement arrangement like a 401(k) plan. For such employers with 500 or more Illinois employees that have been in business for at least two years, the […]
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 […]
12/7/17 Many of us have believed that every ERISA plan must have both a plan document and a summary plan description (“SPD”). An SPD is required for all ERISA plans in order to explain them in plain English. ERISA also requires subject plans to have a “written instrument” and it is the usual practice, for retirement plans […]
2/3/17 The Affordable Care Act (ACA) has tied the hands of employers who would like to reimburse employees for the cost of their individual health insurance coverage. Under the ACA, tax-free reimbursement of employee health insurance costs was not permitted through a health reimbursement arrangement (HRA) unless it was “integrated” with an employer-provided group health […]
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 […]
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 […]
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 […]
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 […]
OK, you sponsor an insured group health plan and employ at least 50 full-time employees including full-time equivalents, or “FTEs” (that’s ACA jargon for 30 hours of work each week performed by more than one employee so that, for example, two employees working 15 hours per week equals one “FTE”). You have made this determination […]
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 […]
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 […]
Welfare benefit plans are generally required to file annual reports on Form 5500, the same form that is used for pension plan annual reports. An exception applies to welfare benefit plans (that is, plans providing medical, dental, disability and life insurance coverage) that (i) have fewer than 100 participants as of the beginning of the […]
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 […]
Independent contractors who are engaged by an employer for an extended period of time may be treated as employees for tax and benefits purposes. Whether these workers are freelance creatives or employees obtained through a temporary employment agency, if they render services for a single employer at the employer’s place of business under its direct […]
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 […]
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 […]
Entrepreneurs who work hard and build a business over decades realize that, at some point, they need to think about slowing down and stepping back. Frequently, planning and specific decisions about transition are put off. Entrepreneurs worry about two things that can make delay an attractive option. Number one is a concern about their standard […]
You’re a successful business owner and you’d like to plan ahead. Professionals are urging you to prepare a “succession plan” – but you look at it as a retirement plan. Getting out of the daily grind might be nice, but giving up your life’s work and your legacy business? Maybe not so nice. No matter […]
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 […]
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 […]
COBRA requires administrators of group health plans to notify “qualified beneficiaries” (covered employee and any covered spouse or other dependents) at the time of any “qualifying event” (such as termination of employment) of their rights to continue group health coverage upon payment of the cost of such coverage. Qualified beneficiaries in the same family may […]
The U.S. Department of Labor recently issued final COBRA notice regulations. These regulations apply to all group health, dental and vision plans sponsored by employers with twenty or more employees (in Illinois, employees covered by group plans with two or more participants may also have rights to continuation coverage under state law). The regulations are […]
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 […]
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 […]
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 […]
Section 409A was added to the Code and is generally effective with respect to all subject deferrals that vest on or after January 1, 2005. All covered deferred compensation arrangements must be amended by December 31, 2006. Relevant transition rules allow covered plans to operate in the meantime so long as they are operated in […]
Most of us have received a detailed booklet, usually prepared by an insurance company, that describes our group health coverage. The booklet is a formidable document that describes our group health benefits and the applicable limitations and restrictions on coverage in great detail. But does this booklet measure up to ERISA requirements? In many cases […]
It’s a familiar story: you or your retirement plan’s third party administrator (TPA) need to make a benefit distribution to an ex-employee. But the employer’s records are out of date and the former employee cannot be located. Worse yet, the missing participant has attained age 70½ so the plan is required to make minimum distributions […]
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 […]
Benefits due diligence involves uncovering and examining all of a Seller’s benefit plans in order to determine their compliance with law and potential financial impact on the Buyer. The due diligence process begins with the Buyer’s request for information from the Seller, typically following a confidentiality agreement or a letter of intent. In the case […]
What is an ESOP? An ESOP is a type of profit sharing plan that invests primarily in the stock of the sponsoring employer and provides for benefit distributions in the form of employer stock. How does it work? The employer can contribute stock instead of cash to the ESOP as its plan contributions. The ESOP […]
The Age Discrimination in Employment Act, 29 U.S.C.§151 et seq. (“ADEA”), generally prohibits discrimination on the basis of age in employment decisions. Subject employers (those with 20 or more employees for each working day in each of 20 or more calendar weeks during the current or preceding calendar year that are engaged in an “industry […]
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. […]
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 […]
Note: The following checklist has been published by the U.S. Department of Labor (“DOL”) as a general guide to ERISA compliance for retirement plans. It is not intended to be comprehensive but does outline the areas of major compliance concern to the DOL. Compliance with the Employee Retirement Income Security Act (ERISA) begins with knowing […]
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” […]
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 […]
If you have been employed by the Company for at least twelve (12) months and you have performed at least 1,250 hours of service during that twelve (12) month period, you may be eligible to take up to twelve (12) weeks of family and medical leave during the following twelve (12) month period, for one […]
The Department of Labor recently issued final regulations that require certain retirement plan service providers to disclose fee and related information to plan fiduciaries. Those fiduciaries in turn have to evaluate the reasonableness of such fees. The good news about these regulations is that they postpone the deadline for compliance from April 1, 2012 to […]
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 […]
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 […]
The American Taxpayer Relief Act of 2012 (the Act) resolves income, estate and gift tax uncertainty with “permanent” changes effective starting in 2013. Although the Act preserves the Bush era tax rates for most taxpayers, it does not extend the two percent cut in the employee portion of Social Security payroll tax that was in […]
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. […]
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) […]
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 […]
Health Care Reform (the Patient Protection and Affordable Care Act) will not kick into high gear until 2014, but plan sponsors and HR staff need to take compliance action now. Group health plans need to prepare and distribute participant notices by the beginning of the plan year starting on or after September 23, 2010. For […]
Unless you frequent tanning salons, it is likely that the Health Care Reform legislation, PPACA (the Patient Protection and Affordable Care Act), has had no impact on you or your health insurance coverage. The tanning salon ten percent sales tax is already in place, but the first real steps towards PPACA’s implementation are effective for […]
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 […]
The US Court of Appeals for the Seventh Circuit in Chicago issued an opinion on March 12, 2014 (Central States Welfare Fund v. Lewis) which enforces a contempt order entered against defendants subject to an ERISA subrogation lien. The defendants (a Georgia lawyer and his client, who had recovered $500,000 in an auto accident settlement […]
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, […]
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 […]
Health Care Reform is here and group health plans will need to provide dependent coverage for children up to age 26. This coverage is mandatory for plans that currently provide coverage for dependent children, and is effective starting with the first plan year beginning after September 23, 2010 (that is January 1, 2011 for calendar […]
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 […]
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: […]
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 […]
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 […]
So, you’ve transferred your 401(k) retirement nest egg into an individual retirement account (IRA). This gives you more control over management and distribution of IRA assets. But, you may have concerns about creditors and their ability to attack your retirement assets, which are now conveniently consolidated from several employer plans into one convenient IRA. Will […]
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 […]
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 […]
The IRS has recently released final regulations that allow employers, for the first time, to eliminate joint and survivor annuity options from certain defined contribution plans. For the typical profit sharing plan or 401(k) plan, this means that the compliance risks associated with the spousal consent rules as well as the notice and explanation requirements […]
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 […]
Let’s say you have a concern about how your 401(k) plan is operating. Maybe participant loans aren’t getting repaid or a service provider has neglected to allocate forfeitures on an annual basis. So you consult a lawyer. The lawyer writes a memo outlining the situation and advising on corrective steps. You drop the memo in […]
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 […]
The American Recovery and Reinvestment Act of 2009 (the “Recovery Act”), signed into law by President Obama on February 17, 2009, provides a COBRA subsidy for all employees who are “involuntarily” terminated from employment at any time during the period from September 1, 2008 through December 31, 2009. This subsidy applies to group health plans, […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
On September 5, the IRS released a series of four notices and three revenue rulings comprising the “Retirement and Savings Initiatives: Helping Americans Save for the Future.”The newly released guidance provides details on automatic enrollment provisions for 401(k) and SIMPLE IRA plans, permits the contribution of payments for unused vacation and other accrued leave to […]
You have worked for a few years and now have a sizeable 401(k) account. You have moved on from your former employer and might be thinking about starting an independent business, perhaps a franchise business. That can take a hefty personal investment. How about using your 401(k) retirement funds to start the new business? You […]
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 […]
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 […]
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 […]
The IRS is authorized by statute to waive the 60-day period for rolling over retirement plan distributions into an individual retirement account (IRA) or other eligible retirement plan. The waiver allows individuals who fail to meet the 60-day rollover deadline to avoid current taxation if the failure is the result of casualty, disaster or other […]
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 […]
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 […]
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 […]
The nine year saga of a denied group health benefit claim has finally played out in Butler v. United Healthcare of Tennessee, a decision of the U.S. Court of Appeals for the Sixth Circuit. During this period, United Healthcare of Tennessee (“United”) initially denied a claim for inpatient substance abuse treatment for alcohol addiction for […]
Section 409A was added to the Internal Revenue Code to govern deferred compensation arrangements effective with respect to all subject benefits that vest on or after January 1, 2005. Because of the broad sweep of Section 409A, almost every arrangement that provides compensation to executives and other “service providers” payable in a form other than […]
The prohibition of Title VII of the Civil Rights Act of 1964 against sex discrimination does not protect transsexuals where the plain meaning of the prohibition implies that it is unlawful to discriminate against women because they are women and against men because they are men. In the context of Title VII=s prohibition against discrimination, […]
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 […]
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 […]
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 […]
Is a stolen laptop packed with medical information on thousands of patients worth paying a $1.55 Million government fine? North Memorial Health Care of Minnesota (“NMHC”) thinks so. It recently agreed to pay $1,550,000 in fines for its “potential” violation of privacy and data security rules imposed by the Health Insurance Portability and Accountability Act […]
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 […]
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 […]
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 […]
The Same Sex Marriage Compliance Challenge Same sex marriage is now recognized for Federal tax and benefit purposes regardless of the law in your state. Federal law recognizes the validity of all same sex marriages performed in states where the ceremony is legal (the “state of celebration”). Consequently, a same sex marriage performed in Iowa […]
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 […]
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 […]
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. […]
You are presented a business opportunity. Maybe it is a rental real estate investment or a franchise operation. You also have most of your spare cash sitting in a rollover IRA. Is there a good way to use those IRA funds for your business investment? That is a frequently asked question, and if you look […]
Jennifer Reavis, a nurse, was terminated from employment for “mooning” a male nurse. Her employer advised that, because of her “gross misconduct,” she did not qualify for COBRA continuation of health care coverage and the COBRA subsidy available under the American Recovery and Reinvestment Act of 2009 (ARRA). Ms. Reavis appealed the decision to the […]
If your organization sponsors a 401(k) or other retirement plan you, or someone in your organization, is a fiduciary to that plan. You may have hired a service provider to administer the plan (a third party administrator, or “TPA”), but the buck stops with your organization. This is because the fine print in your TPA’s […]
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 […]