This blog post addresses retirement plans that are intended to be tax-qualified under Section 401(a) of the Internal Revenue Code (Code). Specifically, this post will provide information related to: Quite often, we see employers, particularly smaller employers, design and implement tax-qualified retirement plans without a basic understanding of how these rules apply to their plans. … Continue Reading
In recent years, there have been more than 150 lawsuits alleging violations of ERISA[1] fiduciary obligations that are based on “excessive fees” being charged to participants in defined contribution retirement plans. A more recent trend also seems to be focusing on the investment performance of target date funds. This Post discusses that litigation trend, and … Continue Reading
Section 9501 of the American Rescue Plan Act of 2021 (the “ARPA”)[1] requires certain employers to offer free COBRA coverage to certain individuals between April 1, 2021 and September 30, 2021. The ARPA provides tax credits to employers to offset the cost of the COBRA coverage. The right to free COBRA coverage extends to some … Continue Reading
This is a Supplement to our post on March 24, 2021 regarding Section 9641 of the American Rescue Plan Act of 2021 (the “ARPA”). This Supplement addresses state and local governmental employers. Section 9641 of the Rescue Plan makes available tax credits to offset the costs borne by certain employers who voluntarily provide emergency paid … Continue Reading
On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021 (the “Rescue Plan”).[1] This post reviews Section 9641 of the Rescue Plan, which makes available tax credits to certain employers who voluntarily provide paid time sick leave and family and medical act leave to employees for absences occasioned by … Continue Reading
Section 9501 of the American Rescue Plan Act of 2021 (the “ARPA”)[1] requires employers to extend offers of free COBRA coverage to certain individuals for the period from April 1, 2021 through September 30, 2021. The ARPA then provides tax credits as means of offsetting the costs of the free COBRA coverage. The law also … Continue Reading
This blogpost reviews the “partial termination” rules for certain tax-qualified retirement plans and certain regulatory and statutory rules that have, to the benefit of employers, relaxed the partial termination rules in 2020 and 2021.… Continue Reading
The Equal Employment Opportunity Commission (“EEOC”) recently proposed regulations pertaining to employer wellness programs that, as will be explained below, may concern employers that have “Participatory” wellness plans. [1] Current Wellness Plan Rules under Other Laws To understand the EEOC’s proposal, one must first take note of the other pre-existing wellness plan rules. In general, … Continue Reading
Section 2206 of the CARES Act allowed an exclusion of up to $5,250 from an employee’s gross income, if an employer paid principal or interest on an employee’s “Qualified Education Loan”. Section 2206 of the CARES Act was only designed to be in effect for calendar year 2020. However, The Consolidated Appropriations Act, 2021 (the … Continue Reading
Besides the COVID-19 pandemic, 2020 has also had its share of other disasters, including hurricanes, floods and fires. The Consolidated Appropriations Act, 2021 (the “CAA”) has provisions that are designed to provide tax relief for individuals and employers who have been adversely affected by one of the numerous federally declared “Qualified Disasters”. These provisions of … Continue Reading
The Consolidated Appropriations Act, 2021 (the “CAA”) extends through June 30, 2021, the Employee Retention Credit provisions of Section 2301 of the CARES Act. It also favorably modifies the rules for claiming the Employee Retention Credits. These changes are generally effective as of January 1, 2021. These provisions of the CAA are found in Sections … Continue Reading
On August 8, 2020, President Trump issued an Executive Order titled “Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster” (the “Order”). The Order directs the Secretary of the Treasury to permit deferral of employee Old Age, Survivors and Disability Insurance (“OASDI”) taxes for payroll dates on and after September 1, … Continue Reading
On Saturday, August 8th, President Trump issued an executive order titled “Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster” (the “Order”). The Order provides for the deferral of certain payroll taxes. The Order will be effective for wages paid on or after September 1, 2020 and will have to be … Continue Reading
There is a new electronic delivery option for retirement plan sponsors who are looking for an easier and more efficient means of providing required plan information disclosures to plan participants and beneficiaries. Retirement plan administrators can now electronically notify participants and beneficiaries that certain disclosures are available on a specified website. In addition, retirement plan … Continue Reading
Providing much needed assistance to employees’ who were blindsided by COVID-19 and who were incapable of making health care coverage elections with COVID-19 in mind, the IRS on May 12, 2020, provided temporary relief that allows employers, during 2020, to expand the permissible reasons for employees to make prospective mid-year election changes to their health … Continue Reading
The recently released Republican tax reform proposal (H.R. 1 – Tax Cuts and Jobs Act) has a provision that would effectively be a death knell for many common types of nonqualified deferred compensation plans. Under the Bill, nonqualified deferred compensation will be subject to income tax when there is “no substantial risk of forfeiture”. In … Continue Reading
With U.S. tax reform on the horizon, there are some reports that lawmakers are considering limiting annual pretax contribution limits to 401(k) plans to $2,400. The current tax code allows most workers to contribute up to $18,000 on a pretax basis to 401(k) plans. At this time, it is uncertain whether there will be any … Continue Reading
The U.S. Supreme Court has ruled in three cases that pension plans established by church affiliated organizations are “church plans” that are exempt from ERISA (the Employee Retirement Income Security Act of 1974). The cases are Advocate Health Care Network v. Stapleton, U.S., 6/5/17; Saint Peter’s Healthcare Sys. v. Kaplan, U.S., No. 16-86, 6/5/17; and … Continue Reading
U.S. Internal Revenue Code §409A provides a wide range of very restrictive rules pertaining to “nonqualified” deferred compensation plans and many other types of compensation arrangements that may defer compensation. On June 22, 2016, the Internal Revenue Service issued proposed changes to the regulations under IRC §409A. This post reviews a few highlights of the proposal … Continue Reading
U.S. Internal Revenue Code §457(f) addresses federal income taxation of certain types of “nonqualified” deferred compensation plans and arrangements of entities that are either state and local governments or tax-exempt organizations (under IRC §501(c)). Most of those deferred compensation arrangements also must comply with IRC §409A to avoid tax penalties. For state and local governments … Continue Reading
Many employers provide a cash payment to an employee who waives employee medical plan coverage. Contrary to popular belief, this practice is not “illegal” under U.S. law. However, because of new guidance contained in IRS Notice, 2015-87 (December 16, 2015), employers may want to provide “waiver payments” to U.S. employees, only if they can show … Continue Reading
Recently released IRS Notice 2015-49 will prohibit U.S. pension plan sponsors from offering lump sum payments to existing pensioners. Thus, for example, if an employer is going to do a lump sum “window”, existing pensioners could not be offered a lump sum. Nevertheless, it does appear that lump sums can still be offered to pensioners upon … Continue Reading
The U.S. Supreme Court recently held that a fiduciary of an ERISA covered retirement plan has an ongoing duty to monitor the prudence of the plan’s investments. The decision is Tibble v. Edison International, 2015 U.S. LEXIS 3171 (May 18, 2015). In the case, Edison International had selected three “retail class” mutual funds for its … Continue Reading
The U.S. Equal Employment Opportunity Commission just released proposed regulations related to wellness plans, finally lifting the veil of secrecy surrounding its actions. The EEOC regulations apply to wellness plans that include disability related inquiries or “medical exams” The EEOC’s regulations are designed to allow employers to continue to provide financial incentives to employees, up to … Continue Reading
