Benefits Insights

The IRS released its annual update for the cost-of-living adjustments for 2025. Similar to the adjustments made last year, there are widespread increases for 2025. As you can see from our chart below, almost all IRS limits were affected by this year’s cost-of-living adjustments. Although the catch-up contribution limit for individuals age ...

In a recent court ruling, the US Department of Labor (DOL) prevailed against corporate directors and shareholders for claims related to an Employee Stock Ownership Plan (ESOP) transaction. Most ESOPs are established through arm's length transactions that comply with the Employment Retirement Income Security Act’s(ERISA) fiduciary ...

The retirement plan industry has been wrestling with the changes to required minimum distribution (RMD) provisions made by the SECURE Act and SECURE 2.0. One issue in particular has caused considerable confusion. Section 401(a)(9) of the Code was amended to provide that, if a retirement plan participant dies after distributions have begun ...

SECURE 2.0 provided employees better access to liquid assets during a major life crisis. We have previously discussed the domestic abuse victim distribution exemption and the emergency personal expense distribution exemption in this space. We are revisiting these topics because the IRS, through issuance of Notice 2024-55, has provided ...

A question that almost always arises when we consult on correcting retirement plan errors is, “Can we use the DOL (Department of Labor) calculator to determine earnings?” Compared to the alternatives, the DOL calculator provides a definite, quick solution that is not administratively onerous. I wish my answer to the question could always be ...

Beginning this year, plan sponsors may increase their qualified plan’s mandatory cash-out limit from $5,000 to $7,000. The increase was enacted by SECURE 2.0, and applies to distributions made after December 31, 2023. This seemingly small change could have large financial consequences for your plan, especially if you are a small employer.

The IRS released its annual update for the cost-of-living adjustments for 2024. Similar to the adjustments made last year, there are widespread increases for 2024. As you can see from our chart below, almost all IRS limits were affected by this year’s cost-of-living adjustments, with the exception of catch-up contributions.

Now that the ...

IRS guidance issued last week delays the implementation of mandatory Roth catch-up contributions. As outlined in our blog post earlier this year, SECURE 2.0 amended the catch-up contribution provisions of the Code.  The Act provided that, beginning in 2024, individuals eligible to make catch-up contributions who made over $145,000 (indexed ...

We covered the history and statutory framework of required minimum distributions and the increase in the triggering age for RMDs in Part 1 of 3 of our SECURE 2.0 RMD blogposts. We will cover the changes to rules on annuities to promote lifetime income distribution options in a future blogpost. In this post, we discuss a potpourri of changes made to the ...

The rules behind required minimum distributions (RMDs) are changing again, and this is not that end. Section 401(a)(9) was enacted in 1984, and for 35 years remained mostly unchanged. Generally, participants were permitted to delay distributions from qualified plans, 403(b) and governmental 457(b) plans until April 1 after the year in which ...

Congress issued guidance on correction of plan errors through SECURE 2.0. The source of the guidance was unexpected, as guidance on plan administration has typically been left to the purview of the IRS. Section 301 of the Act addresses correction of plan overpayments and amends sections of both ERISA and the Code. These additions codify the ...

The IRS has released the cost-of-living adjustment for the limit on permitted annual salary reduction contributions to health FSAs. The limit of $2,850 for taxable years beginning in 2022 has been increased to $3,050 for 2023. We are still waiting on most of the 2023 COLA for retirement plans, but expect those to be released in the near future and will ...

The IRS issued Notice 2022-53 last Friday to give qualified plan beneficiaries relief from 2021 and 2022 excise tax penalties due to noncompliance with certain provisions of the required minimum distribution (“RMD”) rules. Determining when a participant or beneficiary is required to make a distribution under IRS guidance, and in ...

The IRS launched a new pilot program this month that will greatly benefit employee benefit plan sponsors if they act quickly. The new 90-day Pre-Examination Compliance Pilot Program not only gives plan sponsors an opportunity to correct plan errors prior to an IRS examination, but may reduce sanctions levied by the IRS or reduce the scope of an ...

Maintaining a retirement plan requires knowledge of the law and diligence in application by plan administrators, but even the most prudent administrator can make a mistake. Plan sponsors can often correct mistakes made by following the guidelines in Revenue Procedure 2021-30, otherwise known as the Employee Plans Compliance Resolution ...

The SECURE Act, which was passed in late 2019, provided several mandatory changes affecting defined contribution plans. While plans do not have to adopt their SECURE Act amendments until December 31, 2022, plans have already been administering many of the provisions. And while many plans have already been amended and have applied its ...

We are in the middle of yet another COVID surge.  Testing sites have lines blocks long and at-home COVID tests are flying off the shelves as soon as the shelf is replenished.   In response to the latest surge, the Department of Labor, Health and Human Services, and the Treasury jointly released guidance yesterday that requires group health plans to ...

The IRS released its annual update for the cost-of-living adjustments for 2022. In contrast to the few changes made in the cost-of-living adjustments last year, there are widespread increases for 2022. As you can see from our chart below, almost all IRS limits were affected by this year’s cost-of-living adjustments, with the exception of ...

It is again time for plan sponsors to distribute their annual notices to participants. Outside of the normal changes to plan COLAs (which we expect to be announced anytime) and investment expense ratios, plan sponsors will want to consider and incorporate any changes made to their plan in the past year into this year’s annual notice. As a ...

If you sponsor a self-insured group health plan (or a health reimbursement account), make sure you’ve set a calendar alert for July 31 to pay  the annual PCORI fee (Patient-Centered Outcomes Research Institute fee) for the 2020 plan year. The fee and the related IRS Form 720 are due no later than July 31^st (note that July 31 falls on a Saturday in ...

The IRS has recently released the latest version of its correction program for retirement plans (referred to as EPCRS or Rev. Proc. 2021-30) that will make it easier for a plan sponsor to correct certain plan errors. One common error that can arise during the administration of a 401(k) plan is the improper exclusion of an employee from making ...

The IRS released its annual inflation adjustment for Health Savings Accounts (HSAs) for 2022, the 2022 minimum deductible and maximum out-of-pocket limits associated with a high deductible health plan (“HDHP”), as well as the excepted benefit HRAs (EBHRAs) maximum for plan years beginning in 2022. For those already planning for next year ...

As discussed in our March blog post, the American Rescue Plan Act allowed employers with a qualified dependent care assistance program (“DCAP”) to increase the DCAP flexible spending limit in 2021 from $5,000 to $10,500. DCAP participants also received relief from the Consolidated Appropriations Act of 2021, to carry over unused DCAP ...

Most of the concentration in the employee benefits world over the past year or so has been dedicated to getting up to speed on newly passed legislation, much of it COVID related, and all of the subsequently issued administrative guidance. But with all of the changes that have occurred in that time, compliance issues and corrections have remained a ...

We have previously written blog posts on the COBRA subsidy added by ARPA, the follow-up FAQs that were recently issued, and the new notice requirements for the COBRA subsidy. Those posts were primarily focused on the federal COBRA laws, which generally apply to ERISA group health plans maintained by private-sector employers with twenty or more ...

Similar to the relief granted in 2020, the IRS has again announced special filing and payment relief deadlines for individuals in response to COVID-19 through Notice 2021-21. The Notice postpones the Federal income tax return and payment due dates from April 15, 2021 to May 17, 2021. The IRS guidance also affects the world of benefit plans, and ...

The American Rescue Plan Act (“ARPA”) will affect benefit plans in multiple ways. In addition to the COBRA subsidy (discussed here), employers with a qualified dependent care assistance program (“DCAP”) now have the ability to increase the DCAP flexible spending limit. Employers interested in providing this benefit to employees ...

As part of the release of the 2021 annual adjustment to the civil monetary penalties, the DOL has provided benefit plans with the ever important reminder of the severity of the penalties that can be assessed for failing to file Form 5500. Effective for penalties assessed after January 15, 2021, the DOL per day penalty for failure to properly file an ...

Guidance provided by the Consolidated Appropriations Act of 2021 (the “Act”) will temporarily help employers determine if their retirement plans have experienced a “partial termination.” We discussed partial terminations in our recent blog post, and the Act supplements all prior guidance with a bright-line rule for determining when ...

Employers want to attract and retain the best talent available. Employers today are cognizant that employees entering the workforce are burdened by mounting student loan debt, and many employers have explored the benefit options available to provide student loan debt relief for their employees. Until the CARES Act, employers were for the most ...

It is again time for plan sponsors to finalize and issue their annual notices to participants. We have experienced many legislative and economic changes since this time last year, so plan sponsors might have more to consider and update in this year’s annual notice outside of the normal changes to plan COLAs and investment expense ratios. As a ...

The IRS released its annual update for the cost-of-living adjustments for 2021. In contrast with the changes made last year, many of the limitations remained unchanged, including the elective deferral limits for 401(k), 403(b), and 457(b) plans, the defined benefit plan limit, the dollar limitation on catch-up contributions for individuals ...

This continues our series of posts regarding the IRS guidance on the SECURE Act. As discussed in our article earlier this year, the SECURE Act changed the eligibility and vesting requirements an employer can use with regards to part-time workers in its 401(k) plan. Earlier this month, the IRS issued Notice 2020-68, which has provided further ...

The IRS has again directed our attention back to the SECURE Act by issuing guidance related to qualified birth or adoption distributions. Withdrawals from a qualified retirement plan before age 59 ½ are generally subject to a 10% tax for early distribution, but as discussed in our blog post earlier this year, the SECURE Act created a new ...

Way back in December of 2019, the SECURE Act was passed into law and made significant changes to retirement benefit plans. It is easy to forget about the SECURE Act after the CARES Act and seemingly endless flow of administrative guidance that has come out since the national emergency caused by the coronavirus pandemic. But the Department of Labor ...

Plan administrators of qualified plans must provide participants that receive eligible rollover distributions with a written notice under Internal Revenue Code Section 402(f).  In prior guidance issued in 2018, the IRS provided two safe harbor 402(f) notices that plans could use to meet the requirements of Section 402(f); one safe harbor ...

In our March blog post, we discussed the relief provisions for participants in defined contribution plans granted by Congress through the CARES Act, including coronavirus-related distributions (CRDs). The IRS has recently issued Notice 2020-50, which amended the definition of qualified individual (as discussed in our prior blog post) and ...

The economic downturn created by COVID-19 has caused many employers to reduce costs across the board, including making cuts to employee compensation through benefit plans. Some employers have considered making mid-year reductions to safe harbor contributions, but are either prohibited or uncertain if those amendments are permissible under ...

In our March Blog post, we discussed the relief provisions for participants in defined contribution plans granted by the Congress through the (at the time) newly enacted CARES Act. As you are by now more than likely aware, the CARES Act permitted plan sponsors to make several discretionary amendments, giving participants greater access to ...

In a prior blog post, we discussed how COVID-19 presented a potential opportunity for employers to set up a leave-sharing program for those affected by COVID-19. At that time, we discussed IRS guidance related to major disaster leave-sharing programs.  Those programs, if a very specific set of circumstances are met,  permit employees to make a ...

Many employers have been forced to make the difficult decision to reduce their workforces due to the economic impact of the coronavirus pandemic. A significant reduction of employees can have a widespread impact on many aspects of a business, and can even impact an employer’s retirement plan if the reduction has led to a “partial termination.”

As mentioned in our blog last week, the Department of Labor has finally released updated regulations on electronic disclosure; for the first time since 2002! These regulations provide a new safe harbor method of electronic distribution. Needless to say, these regulations are very welcomed (given the vast amount of technological changes that ...

Earlier this month, the Department of Labor/Employee Benefits Security Administration and the IRS (the “Agencies”) issued a Joint Rule to extend certain time frames as a result of the COVID-19 pandemic. As discussed in previous posts, the Joint Notice requires that all benefit plans subject to ERISA extend various participant deadlines ...

As mentioned in our prior blog post, the DOL and IRS have recently issued coordinated guidance that provides relief for benefit plans by extending certain deadlines. This post examines the limited relief granted to retirement plans by extending the amount of time a plan has to distribute participant contributions and loan repayments into ...

Earlier this month, the IRS announced that it had extended deadlines for filing federal income tax returns and making tax payments due to the COVID-19 pandemic, which had a small effect on benefit plans. The IRS has since amplified this relief through Notice 2020-23 and provided additional relief that is more significant for benefit plans.

The IRS has extended the deadlines for plan sponsors to adopt certain retirement plans as a result of the Coronavirus emergency.

403(b) Plans

In 2013, The IRS initiated a 403(b) program that allows eligible employers to amend or restate their plans retroactively.  Plan sponsors could correct defects in their written plan document going back as far ...

Employers want to attract and retain the best talent available. Employers today are cognizant that employees entering the workforce are burdened by mounting student loan debt, and many employers have explored the benefit options available to provide student loan debt relief for their employees. This issue has been percolating for some time

The IRS announced special filing and payment relief in response to COVID-19 through Notice 2020-18 that postpones Federal income tax return and payment due dates from April 15, 2020 until July 15, 2020. The IRS recently provided more guidance on this issue in the form of FAQs, and the guidance addresses the following topics related to benefit plans:

The coronavirus pandemic has already caused financial strain on Americans, and many are predicting this effect to continue. We have received questions from plan sponsors and have been contemplating how they should respond to plan participants when they request a withdrawal from their retirement account. Although options do exist, they are ...

As discussed in our most recent blog post, the SECURE Act increased the IRS penalties for failure to file Form 5500 by ten times effective December 31, 2019. The IRS now has the authority to assess a penalty for late filers up to $250 a day, up to a maximum penalty of $150,000 per plan year. But even with the increase in the IRS penalties, they still pale ...

As discussed in our previous blog post, the SECURE Act changes the date that employees are required to begin making retirement distributions from qualified plans from the April 1^st after reaching age 70 ½ to the April 1^st after reaching age 72. This is not the only significant change made to the required minimum distribution rules. The SECURE Act ...

Changes have been made to the penalties that may be assessed against employers since our last article on Form 5500 filings. As a reminder, Form 5500 is the information return that must be filed by most employee benefit plans subject to ERISA (unless an exception applies), and failure to file this annual return for a plan can result in assessment of ...

Along with the impact that the SECURE Act has on retirement plans, the Act will also affect health and welfare plans. The SECURE Act modified parts of current legislation put into place by the Affordable Care Act (ACA). Welcome changes made by the Act are the repeal of the medical device tax, a 2.3% excise tax on certain devices such as pacemakers, and ...

The IRS again announced that it is extending the deadline for large employers (generally those with 50 or more full-time equivalent employees in the previous year) and self-insured group health plans to distribute their Forms 1095-C to employees and plan participants.  The normal deadline to distribute Forms 1095-C is January 31^st.  This IRS ...

Now that the cost of living adjustments have been issued for 2020, it is time for plan sponsors to finalize and issue their annual notices to participants. The 401(k) safe harbor, qualified default investment alternative (“QDIA”), and automatic enrollment notices must all be sent to plan participants between 30-90 days before the beginning ...

The IRS released its annual update for the cost-of-living adjustments for 2020. Consistent with the changes made last year, elective deferral limits for 401(k), 403(b), and 457 plans increased $500 from $19,000 to $19,500, the annual compensation limit increased $5,000 from $280,000 to $285,000, the defined contribution plan limit ...

By Alex Mattingly and Kitso Malthape

In November of 2018, we wrote a blog post about the IRS’ proposed regulations regarding changes to the hardship distribution rules. On September 19, 2019, the IRS and Treasury Department issued the final regulations for hardship distributions rules. The final regulations are substantially similar to ...

October 14^th is the last day employers who sponsor group health plans can timely provide the Medicare Part D Notice to plan participants. This Notice is provided to inform participants whether or not your plan’s prescription drug coverage is expected to cover, on average, as much as the standard Medicare Part D plan. The notice must be distributed ...

We wrote a blog post last year on the proposed FAQs addressing the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), specifically as it applies to self-funded group health plans that excluded Applied Behavior Analysis (ABA) therapy from plan benefit coverage. Last week, the Department of Labor (DOL), Health and Human Services ...

In April 2019, the Department of Health and Human Services (HHS) issued final regulations that were set to become effective January 1, 2020. HHS had expressed concern that the availability of a coupon may cause physicians and patients to choose an expensive brand name drug when a less expensive and equally effective generic or other alternative ...

Beginning in 2017, the IRS began accepting determination letter applications from an individually designed plan only for initial plan qualification and for qualification upon plan termination. Prior to 2017, these plans could submit an application once every five years to request the IRS’ blessing that its provisions were satisfactory ...

In 2013, the IRS established a program for issuing opinion letters for 403(b) pre-approved plans and began accepting applications for opinion letters. This program allows eligible employers that amend or restate their plans to retroactively correct defects in form of written 403(b) plans going back to the first day of the remedial amendment ...

Most employers that sponsor a group health plan subject to COBRA are aware that employees and any covered dependents must be offered COBRA continuation coverage when an employee or dependent loses coverage under the plan. What many employers do not expect is that employees terminated for gross misconduct do not have a right to COBRA coverage ...

The IRS has responded to President Trump’s Executive Order (discussed in our prior blog post) with a Notice issued this week. The June Executive Order directed the IRS to issue guidance to expand the care high deductible health plans (“HDHP”) can cover before participants reach their deductible, while still allowing the participant to ...

If you sponsor a self-insured group health plan, make sure you’ve set your calendar alerts for the annual PCORI fee (Patient-Centered Outcomes Research Institute fee) for the 2018 plan year. As a reminder, the PCORI fee was put into place by the ACA to help fund the Patient Outcomes Research Institute and is based on the average number of covered ...

On June 24, 2019, President Trump issued the “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First.”  The Order affects the healthcare system at large, but this post focuses on the impacts the Order has on health plans, including the future changes a plan sponsor may have to make to their ...

The following facts lead to a common situation experienced by many employers:

• Employee participates in the employer’s medical plan;
• Employee makes contributions to the plan for his share of the premium payment though payroll deductions;
• Employee later goes on unpaid FMLA leave, and during Employee’s leave the premium payments are no ...

Many self-funded health plan sponsors are aware that their plans are subject to HIPAA and that they must maintain policies and procedures to comply with the law. But compliance with HIPAA does not stop in the planning phase. As the threat and occurrence of security incidents become more and more common, plan sponsors must be ready to take action when ...

In the latest version of the IRS’s correction program for retirement plans (referred to as EPCRS), the IRS has provided guidance that will make it easier for plan sponsors to correct certain plan loan errors. Prior to this guidance, all plan loan errors had to be corrected through either the Voluntary Correction Program (VCP) or Audit CAP ...

The IRS issued a Notice on March 6^th that makes the treatment of retiree lump-sum windows clear as mud. Retiree lump-sum windows previously allowed defined benefit plans to establish a temporary window for participants already receiving an annuity to elect to receive a lump-sum distribution in lieu of future annuity payments. That is until the ...

The question raised by this blog post can be answered with one sentence:

The buyer in an asset sale will be obligated to make COBRA continuation coverage available to M&A qualified beneficiaries with respect to that asset sale if the buyer is a successor employer.

Although this is an accurate statement and succinct answer, for this sentence to have ...

HHS announced another HIPAA settlement resolution at the end of last year, this time with Pagosa Springs Medical Center, a Colorado Hospital, for a violation of HIPAA's security provisions. The settlement will cost the hospital $111,400. The complaint alleged that former hospital employees had access to electronic protected health ...

Employers that sponsor a 403(b) plan generally must allow all employees to participate in the plan due to the universal availability rule. There are limited exceptions for certain categories of employees that may be excluded, one of which is the exclusion of “part-time employees” who normally work less than 20 hours per week. Under the ...

The IRS again announced that it is extending the deadline for large employers (generally those with 50 or more full-time equivalent employees in the previous year) and self-insured group health plans to distribute their Forms 1095-C to employees and plan participants. The normal deadline to distribute Forms 1095-C is January 31^st. This IRS ...

Earlier this year, we wrote a blog post on how the Bipartisan Budget Act of 2018 (“Budget Act”) eased the restrictions on financial hardship distributions beginning January 1, 2019. The IRS has now issued proposed regulations that incorporate both the changes made by the Budget Act as well as changes made by prior law. Although the proposed ...

The time of the year has come for Plan Sponsors to send their annual notices to participants (if your retirement plan has a December 31 plan year-end). Make sure that you send the appropriate notices to your participants on time if your plan contains any of the following features:

401(k) Safe Harbor

Plans that contain a 401(k) safe harbor feature ...

The IRS has released its annual update for the cost-of-living adjustments for 2019. Consistent with last year, elective deferral limits for 401(k) and 403(b) plans increased another $500 from $18,500 to $19,000, the annual compensation limit increased $5,000 from $275,000 to $280,000, the defined contribution plan limit received ...

The deadline for providing the annual Medicare Part D Creditable Coverage Notice (the “Notice”) is quickly approaching. This Notice is provided to inform participants whether or not your plan’s prescription drug coverage is creditable. A group health plan’s prescription drug coverage is considered “creditable” if the coverage ...

Let’s revisit our previous blog post and our example of Karl one more time to show another wrinkle that you should be aware of when making a contribution for a partial year missed deferral failure. In some circumstances, an employer make up contribution will be limited due to the elective deferral limit in §402(g) of the Internal Revenue Code.

Many employers provide length of service awards for their employees, often in the form of a small gift, to reward employees for their continued service. But employers must be careful to not turn an award program into a tax liability for their employees. An employee will be treated as receiving taxable compensation equal to the fair market value of ...

Our original blog post explained that the correction procedures for an elective deferral failure included the employer making a contribution equal to 50% of the employee’s missed deferral, but noted that the percentage contributed could be reduced to 25% or 0% if one of the IRS exceptions apply. It is now time to discuss those exceptions and find ...

It is no secret that the success of a company is largely determined by its workforce. Because recent graduates are facing record amounts of student loan debt upon graduation, some employers are implementing new strategies to attract elite talent by easing this financial burden. Several companies have started student loan programs that ...

Let’s revisit our previous blog post and our example of Karl to show another wrinkle that you should be aware of when correcting a deferral failure. An employer can use a different method of correction if the elective contribution failure is either due to the failure to implement an automatic enrollment feature for an affected eligible employee ...

Because of the complexity involved in the operation of a retirement plan, mistakes are almost impossible to avoid. It is important to have measures in place to find mistakes, and to know how to make the necessary corrections when the mistakes are found. One error that can arise during the life of a 401(k) retirement plan is for an employee to be ...

We have received a reoccurring question from clients on whether a group health plan must cover Applied Behavior Analysis (ABA) Therapy. The question is a good one because the current law does not provide a clear answer and is open to interpretation. The DOL has recently issued a proposed FAQ addressing the issue under Mental Health Parity. Although ...

Funds that are comprised of investments partly based on environmental, social, and corporate governance (“ESG”) factors have grown in popularity. Where once a strategy only utilized to service a niche market of investors, using ESG factors to select securities are now seen by some financial institutions as a viable investment strategy ...

This is an update to our March blogpost, where we alerted employers that the 2018 family HSA contribution limit was lowered from $6,900 to $6,850 due to the Tax Cuts and Jobs Act making an inflation adjustment. The IRS is reversing course now for a second time, and the family HSA contribution limit will again be $6,900 for 2018. The IRS cited ...

Form 5500 is the information return that must be filed by most employee benefit plans subject to ERISA (unless an exception applies). Failure to file this annual return for a plan can result in assessment of penalties by the IRS and DOL. Because the penalties can be severe, it is important to know what steps can be taken to reduce them if you realize that ...

Most employers realize that their retirement and welfare (e.g. health) plans are subject to ERISA and must comply with a variety of Department of Labor requirements. But unknown to many employers is that severance benefits can also be an ERISA covered plan, usually as a welfare plan, but sometimes as a pension plan. Because the determination of ...

The Tax Cuts and Jobs Act has changed the tax treatment of fringe transportation benefits. The new law makes it more expensive for employers to provide the same benefits to employees as a year ago. Employers will have to choose to eat the cost, cut the benefit entirely, or find another way.

Moving forward, employers will no longer be able to take ...

What standard of review do courts use for the administrator’s interpretation of plan language and administrator’s factual determinations? The answer will depend on whether the plan document delegates discretion to the plan administrator. A court reviewing the denial of a claim of an ERISA plan that lawfully delegates discretionary ...

Buried within last month’s Budget Bill were three changes that will be important to both plan participants and employers starting in 2019. Generally, the changes will make it easier for plan participants to acquire funds through a hardship withdrawal. The Bill does not mandate employers to make any changes, but employers might want to amend ...