Blog Posts: Benefits Law Update
Visit the Full BlogNamed a Top 10 Blog in Compensation and Benefits, Verrill's attorneys use the Benefits Law Update blog to provide timely updates and commentary on developments in law affecting employee benefit plans and executive compensation arrangements.
Reporting Deferred Compensation on Form 990
Tax-exempt organizations often provide deferred compensation to their officers, key employees, and most highly compensated employees. Like current compensation payable to such employees, deferred compensation must be reported annually on Form 990, Schedule J. For the most part, Schedule J is straightforward. However, it is not always obvious how...
DOL Guidance on Missing Pension Plan Participants
The Department of Labor (“DOL”) has undertaken a nationwide compliance initiative to ensure that retirement plan participants receive the benefits that they were promised when they reach their retirement age. To that end, the DOL recently issued three pieces of guidance – (i) Missing Participants - Best Practices for...
Consolidated Appropriations Act of 2021 Includes Flexible Spending Account Relief
The Consolidated Appropriations Act of 2021 (the “Act”) was signed into law on December 27, 2020. Buried within its 5,593 pages is some welcome flexibility relating to 2020 and 2021 health care and dependent care Flexible Spending Accounts (FSAs). Specifically: Expanded Carry-Over or Grace Period Under the Act, health...
Employee Benefits & Executive Compensation 2020 Year-End Client Advisory
Click here to view as a PDF . This Client Advisory highlights important developments in the law governing employee benefit plans over the past year. It offers insight into what these developments mean for employers and plan sponsors and previews developments we expect to see in 2021. The following...
Target Date Funds: Are You Asking the Right Questions?
Eight years ago, the U.S. Department of Labor (“DOL”) issued “tips” for retirement plan fiduciaries to consider when selecting and monitoring target date retirement funds (“TDFs”). At the time, the DOL noted that TDFs were becoming “increasingly popular.” Who could have predicted how popular? Earlier this year, Barron’s magazine...
Supreme Court Declines to Address Pleading Standards in Stock-Drop Litigation - Retirement Plans Committee of IBM v. Jander
On November 9, 2020, the Supreme Court declined to consider an appeal from the Second Circuit Court of Appeals in Retirement Plans Committee of IBM v. Jander , leaving unresolved for now questions about the specificity required by the “more harm than good” pleading standard in stock drop litigation...
December 31 Sunset of Safe Harbor Correction Method for Certain Elective Deferral Failures
UPDATE (added February 10, 2023): With the passage of the SECURE 2.0 Act of 2022, Congress made the safe harbor correction method for employee elective deferral failures in 401(k) and 403(b) plans with automatic contribution features permanent. More information about the SECURE 2.0 Act provisions related to this safe...
New IRS Guidance Will Help Facilitate 403(b) Plan Terminations
With the publication of Revenue Ruling 2020-23 , the IRS completed a cycle of helpful guidance regarding the termination of 403(b) plans that began with the publication of regulations under Code Section 403(b) in 2007. Revenue Ruling 2020-23, issued pursuant to a direction given to the Secretary of the...
COVID-19 Extension Guidance Makes the Interplay Between COBRA and Medicare (a Bit) Trickier
The rules concerning the interplay between COBRA and Medicare are a frequent source of confusion for employers. The spike in retirements, layoffs, and furloughs attributable to the coronavirus pandemic has produced an environment where employers may be confronted with these rules more frequently. In addition, guidance extending certain COBRA...
IRS announces 2021 plan limits
The IRS has announced adjusted benefit plan limits for 2021. These adjustments reflect inflation, and are important for administrators of employee retirement and health plans. The limit on 401(k) and 403(b) plan elective deferrals remains the same, at $19,500 for 2021, as does the limit on catch-up contributions, at...
401(k) Plan Sponsors – Time to Focus on Compliance with the SECURE Act’s Eligibility and Vesting Rules for Long-Term, Part-Time Employees
As noted in our January 7, 2020 Client Advisory , the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) requires 401(k) plans to allow certain long-term, part-time employees to make elective deferrals. The SECURE Act also mandates special vesting rules for such employees with...
ERISA and COBRA Implications for EAPs and Wellness Programs
There is a growing trend for employers to provide employee assistance programs (“EAPs”) and wellness programs for the benefit of their employees. Typically, the employer pays for benefits under these programs out of its general assets. These programs are designed to reduce health care costs, reduce absences from work...
Allocation of Medical Loss Ratio Rebates and Premium Refunds
One consequence of the current COVID-19 crisis for group health plans has been the significant reduction in employee preventive care and elective medical procedures as people shelter in place and socially distance. When group health plan premiums were established last year, the underwriters could not have foreseen 2020’s underutilization...
DOL Proposed Regulation Highlights the Risks of ESG Investing for ERISA Fiduciaries
On June 23, 2020, the U.S. Department of Labor (“DOL”) issued a proposed regulation outlining the duties of an ERISA fiduciary when considering an investment that incorporates environmental, social, and corporate governance (“ESG”) factors. [1] Some believe that the DOL will likely move quickly to finalize the regulation before...
A Chronology of COVID-19 Relief for ERISA Plans
This chronology traces the major ongoing relief provided by legislation, regulatory action, and other agency guidance to assist ERISA plan participants, fiduciaries, and sponsors during the ongoing COVID-19 pandemic through August 10, 2020. Superseded agency guidance is not included in the chronology. Terms/acronyms used: COVID-19 – Includes statutory and...
Proposed Regulations Clarify Application of Excise Tax under Code Section 4960
Proposed Regulations published by the Treasury Department last month provide helpful clarifications regarding the application of the excise tax under Section 4960 of the Internal Revenue Code of 1986, as amended (the “Code”). The content of the Proposed Regulations is generally consistent with the guidance provided early last year...
IRS Allows Tax-Advantaged Leave Donation to COVID-19 Relief Organizations
UPDATE (added July 22, 2021): The IRS has extended the deadline for employer contributions to charitable organizations for the relief of victims of COVID-19 as part of a leave donation program. In Notice 2021-42 , the IRS announced that employees will receive favorable tax treatment for donated leave if...
IRS Issues New Guidance on CARES Act Retirement Plan Distributions and Loans
The IRS recently issued Notice 2020-50 , which expands relief provided for retirement plan distributions and loans under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Distributions Under the CARES Act, a retirement plan may allow participants affected by COVID-19 to elect cash distributions in an amount...
Supreme Court Holds Pension Plan Participants Lack Standing to Sue Fiduciaries for Breach of Duties
In Thole v. U.S. Bank , a 5-4 Supreme Court decision issued on June 1, the Court held that retired participants in a defined benefit pension plan lack constitutional standing to sue the plan fiduciaries for alleged breach of their ERISA fiduciary duties. What was key for the Court’s...
DOL E-Disclosure Rule Recognizes Our New (Digital) Reality
The COVID-19 pandemic has forced us to find new ways to work through digital technology. Now, more than ever, an enormous percentage of our communications occur over the phone and online. The Department of Labor’s recent publication of final rules permitting electronic disclosure by retirement plans as a default...
IRS Relaxes Rules for Cafeteria Plans and Clarifies Relief for High Deductible Health Plans
In response to the 2019 novel coronavirus outbreak (COVID-19), earlier this week the IRS issued two notices allowing certain changes to cafeteria plans. Notice 2020-33 increases the limit on unused amounts remaining at the end of the plan year in a health flexible spending arrangement (FSA) that may be...
IRS and DOL Extend Certain Health & Welfare Benefit Plan-Related Deadlines
This post summarizes the health and welfare benefit plan-related deadline extensions described in IRS Notice 2020-23 issued April 9, 2020 and the DOL and Treasury Joint Notice issued April 28, 2020 (the “Joint Notice”). IRS Notice 2020-23 expands upon previously issued guidance extending certain tax filing and payment deadlines...
Employee Layoffs May Vest Retirement Plan Benefits
Increasing numbers of employers are being forced to shutter places of business and lay off workers as the coronavirus pandemic continues. When laid off workers are participants in their employer’s qualified retirement plan, one consequence of the aggregate layoffs may be a partial termination of the plan under ERISA...
CARES Act Imposes Limits on Executive Pay over $425,000 for Businesses Seeking Financial Assistance
On Friday, March 27, 2020, the $2 trillion assistance package known as the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides a variety of relief programs to companies and, similar to the Troubled Asset Relief Program (“TARP”) implemented during...
With CARES Act, Congress provides retirement plan relief and group health plan changes
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, includes a number of provisions that affect retirement plan sponsors and participants. These provisions are designed to provide relief to participants and employers facing financial difficulty as a result of the coronavirus pandemic...
Paying Health Insurance Premiums for Furloughed or Laid Off Employees
Employers of all sizes in nearly every industry have had to lay off or furlough employees in an attempt to deal with the massive business disruptions caused by the spread of COVID-19. Facing this reality, many employers have asked whether they can pay monthly health insurance premiums on behalf...
Congress Passes Emergency Paid Leave Laws in Response to Coronavirus Pandemic
On March 18, Congress passed and the President signed into law the Families First Coronavirus Response Act , a temporary measure designed to increase the availability of paid leave during a time when many employees are being directed to stay at home. The following is a brief summary of...
Leave Sharing Programs: A Critical Bridge for Employees Affected by COVID-19
The federal government may soon be providing paid leave assistance to employees affected by COVID-19. In the meantime, however, employers that maintain leave sharing programs can leverage those programs to help soften the financial impact on employees forced to miss work because of COVID-19. Leave sharing programs allow employees...
High-deductible health plans can cover coronavirus costs
Recognizing the need to eliminate potential administrative and financial barriers to testing for and treatment of the 2019 Novel Coronavirus (COVID-19), in Notice 2020-15 , posted today on IRS.gov, the IRS advised that high-deductible health plans (HDHPs) can pay for COVID-19-related testing and treatment, without jeopardizing their status. This...
Supreme Court: written disclosures not enough to show actual knowledge in ERISA suits
The United States Supreme Court unanimously decided last week that a plan participant who received written disclosures about the plan’s investments, but does not remember reading them, does not necessarily have “actual knowledge” of the content of the disclosures. This is important because ERISA imposes a shorter statute of...
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