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Recent Blog Posts

  • DOL proposes a more practical rule for electronic ERISA disclosures By Victoria Hanohano-Hong and Deb Boiarsky    On Oct. 23, 2019, the Department of Labor (DOL) released a proposed rule for electronic delivery of ERISA disclosures. Although the DOL already allows for electronic delivery under the 2002 Electronic Safe Harbor, its availability is limited and technology quickly outpaced its usefulness. The proposed rule creates a new, additional safe harbor the DOL calls the “Notice and Access” safe harbor that will allow for electronic delivery as a default method of delivery for certain... More
  • Final IRS hardship regulations – Less of a hardship to take and administer By Greg Daugherty, Deb Boiarsky and Victoria Hanohano-Hong    Special thanks to Victoria Hanohano-Hong, Porter Wright law clerk, for her assistance on this article. The IRS recently published final regulations, which amend the hardship withdrawal rules for 401(k) and 403(b) plans. The regulations reflect statutory changes to 401(k) and 403(b) plans, including changes made by the Bipartisan Budget Act of 2018. Most of the changes are optional and do not require employer adoption; some are not optional. The following changes are mandatory for plans... More
  • Sellers beware: Recent court case shows sellers – as well as ESOP fiduciaries – should be engaged in ESOP due diligence and valuation process By Greg Daugherty and Deb Boiarsky    As we have explained in prior ESOP blogs, the Department of Labor (DOL) remains acutely concerned with private company employee stock ownership plan (ESOP) valuations in the formation of ESOPs. In particular, trustees who approve an ESOP trust’s purchase of shares from a seller must demonstrate that they have satisfied ERISA’s fiduciary duties with respect to the share purchase price. Specifically, trustees (whether independent or internal) need to demonstrate the due diligence and valuation procedures... More
  • Sixth Circuit nonqualified deferred compensation plan decision highlights importance of Code Section 409A compliance and ERISA claims procedures By Greg Daugherty and Dave Tumen    We often receive questions about whether different types of bonus plans and nonqualified deferred compensation plans (NQDC plans) are subject to ERISA. We explain that being subject to ERISA may be a good thing for an NQDC plan, particularly with respect to resolving disputes and claims for benefits. Even if it is questionable whether an NQDC plan is subject to ERISA (i.e., because it arguably does not provide retirement benefits or covers only one person),... More
  • Individual coverage HRAs: A potential alternative to traditional group health plan coverage? By Employee Benefits Law Report    In a reversal of previous Obama Administration guidance, the Trump Administration recently finalized regulations that provide for a new type of health reimbursement arrangement—the individual coverage HRA. In a previous blog, we briefly discussed the potential for the individual coverage HRA to provide large employers who are subject to the Affordable Care Act (ACA) employer coverage mandate with a cost-effective alternative for meeting those requirements. To recap, under the ACA, large employers (those with 50 or... More
  • New health reimbursement account rules provide alternative path to Affordable Care Act compliance By Greg Daugherty and Employee Benefits Law Report    Seemingly unfazed by the recent setbacks with the Association Health Plan regulations, the Departments of Treasury, Labor and Health and Human Services have released new health reimbursement (HRA) regulations that could reshape the group health plan landscape by providing employers with potentially cheaper options than traditional group health plan coverage for satisfying Affordable Care Act (ACA) requirements. While we are still digesting the regulations (they come in at a whopping 497 pages), the guidance... More
  • IRS issues guidance on excise tax on executive compensation of tax-exempt entities By Greg Daugherty    The IRS recently issued Notice 2019-09 (Notice), which provides guidance with respect to the 21 percent excise tax on remuneration in excess of $1 million and excess parachute payments by “applicable tax exempt organizations” (ATEOs) applies under Code Section 4960. In general Code Section 4960 and the Notice apply concepts from Code Sections 162(m) (which denies a deduction to publicly traded corporations with respect to payments of compensation in excess of $1 million to certain covered employees) and... More
  • IRS publishes transition relief regarding part-time employees and 403(b) plans By Employee Benefits Law Report and Greg Daugherty    The IRS recently issued Notice 2018-95 (the Notice), which clarifies the circumstances under which part-time employees must be given the opportunity to make deferral elections under their employers’ 403(b) plans. In particular, the Notice provides transition relief from the once-in-always-in (OIAI) condition for excluding part-time employees. Tax-exempt and governmental employers who sponsor 403(b) plans will want to confirm that they are including and excluding part-time employees correctly under this latest guidance. Background—the universal availability... More
  • IRS letter ruling generates interest in employer student loan benefit plans, but be aware of testing and other issues By Greg Daugherty and Seth Hanft    The Internal Revenue Service (IRS) recently issued a private letter ruling, PLR 201833012 (PLR) that has generated interest among employers about student loan benefit programs. An IRS official at a recent conference, however, cautioned practitioners to read the PLR because the scope of the PLR is more narrow than what some headlines may have led people to believe. In particular, the PLR did not allow employers to authorize distributions from 401(k) plans to allow employees... More
  • Recent IRS guidance affects corporate tax deductibility of public company executive compensation arrangements and related proxy statement disclosures By Greg Daugherty and Dave Tumen    We previously blogged about how the Tax Cuts and Jobs Act (the Act) amended Internal Revenue Code Section 162(m). In general, the amended Code Section 162(m) restricts the ability of publicly traded companies to recognize a tax deduction for amounts paid to “covered employees” in excess of $1 million. It does this primarily by expanding the groups of individuals who are classified as covered employees and restricting the scope of the arrangements that are exempt... More