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Recent Blog Posts

  • New IRS guidance reminds employers about new long-term part-time employee eligibility rules for 401(k) plans By Greg Daugherty and Rich Helmreich    Much of the employee benefits news this year has related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, particularly with respect to the greater flexibility it provided 401(k) plan participants with respect to requesting in-service distributions and loans. That is not a surprise during this year of economic upheaval. Updating plan administrative procedures to reflect these CARES Act terms has kept employers busy, but it is important that employers remember that they will... More
  • Process matters: IRS issues guidance on recognition of income and FICA taxes for stock-settled awards By Greg Daugherty and Dave Tumen    On May 22, 2020, the IRS released an Office of Chief Counsel Memorandum that addresses (i) the date that fair market value is determined and when gross income and federal income tax withholding liability arises for stock-settled awards and (ii) the timing for remitting FICA taxes for such awards. This question comes up frequently and has not always had a clear answer, and so the memo provides important guidance for employers who sponsor equity award... More
  • CARES Act provides temporary fringe benefit for employer repayments of employee student loans By Greg Daugherty and Victoria Hanohano-Hong    The Coronavirus Aid, Relief and Economic Security (CARES) Act has provided a wide range of programs that affect employee benefit plans, employers and employees. One benefit that has flown under the radar is a new, temporary tax-qualified student loan repayment plan. Section 2206 of the CARES Act allows employers to claim a tax deduction for repayments of employee student loans, and allows employees to exclude these payments from taxable income, in amounts up to $5,250... More
  • Stop and review COVID-19 distribution and loan forms carefully By Greg Daugherty, Deb Boiarsky, Victoria Hanohano-Hong and Rich Helmreich    The Coronavirus Aid, Relief and Economic Security (CARES) Act, authorizes employers to make changes to their qualified retirement plans to increase loan limits, delay loan repayments, and make distributions to plan participants experiencing certain COVID-19 related circumstances. Due to a lack of guidance from the IRS, there’s confusion among third-party administrators (TPAs) about how to administer these changes, resulting in potential issues with forms used by TPAs to approve these CARES... More
  • How ESOP sponsors can survive the disruption from COVID-19 By Greg Daugherty and Deb Boiarsky    The spread of COVID-19 and the resulting disruption to the economy has led many employers to think creatively about how to manage cash, provide for the sustainability of their businesses and preserve the culture they have created with their employees and customers. These issues are especially critical for employee stock ownership plan (ESOP) companies, many of whom are in the process of their annual appraisal. These appraisals are important because they directly affect the size... More
  • IRC Section 409A v. COVID-19: The nonqualified and executive compensation clash, and how employers can navigate it By Greg Daugherty, Dave Tumen and Rich Helmreich    Unintended consequences are a fact of life. As one of many examples, after the Titanic sank, the United States enacted a law that required any American ship carrying over 100 tons of weight to have enough lifeboats for every passenger. It was a noble thought – no more rationing of lifeboats in the event of a future ship wreck. Unfortunately, the SS Eastland was a poorly designed ship. The additional lifeboats required by... 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
  • 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