In late December, Congress passed and President Donald Trump signed into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act, the most sweeping retirement legislation since the Pension Protection Act of 2006. The Act, whose enabling legislation was included as part of a large government funding bill, contains many significant changes affecting employers and participants. Several provisions are effective immediately or retroactively, and others go into effect beginning in 2021.
Under a California law that took effect on January 1, 2020, employers will have to provide extra notices to California employees enrolled in flexible spending accounts (FSAs) explaining the “use it or lose it” federal tax rules that apply to those FSAs.
The Internal Revenue Service (IRS) issued Notice 2019-63 on December 2, 2019 providing some relief from Affordable Care Act (ACA) reporting requirements.
On December 5, 2019, the Internal Revenue Service (IRS) issued the final redesigned 2020 Form W-4, Employee’s Withholding Certificate, to incorporate changes pursuant to the Tax Cuts and Jobs Act of 2017.
Employer-sponsored health plans and health insurers may be required to post online—and to provide participants upon request—a range of pricing and cost-sharing information beginning in 2021.
Employers historically have maintained executive health examination programs to provide a convenient and efficient means for executives to visit several doctors in one visit, including for vision and annual health checkups. Generally, these programs are covered under employers’ self-insured health policies. This article discusses the taxability of employer-provided executive health examination programs and the associated employment tax withholding and reporting requirements.
Employers, it is time to update your qualified retirement plan administration systems for 2020. On November 6, 2019, the Internal Revenue Service (IRS) announced the 2020 cost-of-living adjustments, also known as COLAs, affecting tax-qualified retirement plans.
Late last year, we wrote about Shore v. The Charlotte-Mecklenburg Hospital Authority, et al., in which former Atrium Health employees filed a putative class action in the U.S. District Court for the Middle District of North Carolina under the Employee Retirement Income Security Act of 1974 (ERISA).
On September 23, 2019, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) published final regulations that modify the hardship distribution rules for profit sharing, 401(k), 403(b), and eligible governmental 457(b) plans. The final hardship distribution regulations generally expand and streamline the use of hardship distributions for changes made in legislative acts spanning more than a decade: the Pension Protection Act of 2006, the Heroes Earnings Assistance and Relief Tax Act of 2008, the Tax Cuts and Jobs Act of 2017, and the Bipartisan Budget Act of 2018.
In February 2019, the Arizona Court of Appeals, Division One ruled that the Arizona State Legislature overstepped its authority in 2016, when it prohibited Arizona cities and other municipalities from enacting their own employee benefits ordinances. On August 27, 2019, the Arizona Supreme Court denied review of the Court of Appeals decision.
In Dorman v. Charles Schwab Corp., No. 18-15281 (August 20, 2019), the Ninth Circuit Court of Appeals recently held that a 401(k) plan participant was required to individually arbitrate his claims regarding the plan’s fees and investment options, pursuant to the plan’s arbitration provision.
On July 17, 2019, the Internal Revenue Service (IRS) and the Department of the Treasury in Notice 2019-45 announced the expansion of preventive care benefits under qualifying high-deductible health plans (HDHPs). This expansion allows individuals to retain their eligibility to make contributions to health savings accounts (HSA) when covered under HDHPs that provide for first-dollar coverage for certain chronic conditions.
Employer plans will still be able to exclude the value of drug manufacturer coupons from annual out-of-pocket maximums, even when no generic equivalent is available, under new guidance from the Department of Labor, Department of Health and Human Services (HHS), and Department of Treasury. These exclusions, or copay accumulators, are built into many employer plans.
On March 1, 2019, New Jersey governor Phil Murphy signed Senate Bill No. 1567 (S1567) into law, making New Jersey the first state to require certain employers to provide pretax transportation fringe benefits to employees.
With a recent uptick in mergers and transactions, we thought it would be worthwhile to provide a refresher on some coverage testing issues related to retirement plans. Although a seemingly mundane topic, coverage testing should be kept in mind in corporate transactions where the buyer is acquiring an entity that sponsors a 401(k) plan and the fate of that plan is not resolved prior to the closing of the transaction. Failure to consider coverage testing concerns in the years following an acquisition can lead to qualification failures in retirement plans, which potentially can require millions of dollars to correct.
In a technical advice memorandum (TAM 201903017) released on January 18, 2019, the Internal Revenue Service (IRS) provided guidance on whether employer-provided meals and snacks are includable in employee income and subject to employment tax. The memorandum, which cites a number of IRS rulings on this topic, serves as a forewarning to employers of the limitations of providing free meals to employees.
Starting in 2020, employers will be able to offer health reimbursement arrangements (HRAs) that work in conjunction with individual coverage or Medicare without running afoul of the Affordable Care Act’s (ACA) market reform rules.
Beginning September 1, 2019, employers that sponsor cash balance plans and certain merged plans can sleep easier. Revenue Procedure 2019-20, issued by the Internal Revenue Service (IRS) on May 1, 2019, opens the IRS’s determination letter program for individually designed “statutory hybrid plans” and certain “merged plans.” Plan sponsors will recall that beginning January 1, 2017, the IRS’s determination letter program for individually designed plans was significantly curtailed by Revenue Procedure 2016-37. Revenue Procedure 2016-37 provided that plan sponsors of individually designed plans could seek a determination letter from the IRS only for initial plan qualification, plan terminations, or other circumstances to be provided by the IRS at a later time.
In late 2018, in Sulyma v. Intel Corporation Investment Policy Committee, the Ninth Circuit Court of Appeals held that a plaintiff’s access to documents disclosing an alleged breach of fiduciary duty did not trigger the Employee Retirement Income Security Act’s (ERISA) statute of limitations. According to the court, actual knowledge is required to start the limitations period. The plaintiff testified that he was not aware of the investments at issue or the documents disclosing the investments, therefore, he did not have sufficient knowledge of the alleged breach.
On June 5, 2019, in the matter Kerry W. v. Anthem Blue Cross and Shield, No. 2:19cv67, Judge Dee Benson of the U.S. District Court for the District of Utah granted Anthem Blue Cross and Shield’s motion to dismiss the plaintiffs’ cause of action for violation of the Mental Health Parity and Addiction Equality Act (MHPAEA). The district court in Utah continues to determine that a denial of a mental health benefit claim based on medical necessity cannot be transformed into a cause of action for violation of the MHPAEA through conclusory allegations.
In Josef K. v. California Physicians’ Service, No. 18-cv-06385-YGR (U.S. District Court for the Northern District of California, June 3, 2019), Judge Yvonne Gonzalez Rogers concluded that an independent medical review (IMR) organization can be subject to a claim under the Employee Retirement Income Security Act of 1974 (ERISA) as amended, 29 U.S.C. 1132(a)(3), for breach of fiduciary duties based on the review of a medical necessity appeal under an ERISA-governed employee welfare benefit plan.
On May 28, 2019, the Internal Revenue Service (IRS) announced in Revenue Procedure 2019-25 the 2020 health savings account (HSA) annual contribution limit and the 2020 high deductible health plan (HDHP) definitional limit per Internal Revenue Code Section 223.
In Gaylor v. Mnuchin, the Seventh Circuit Court of Appeals recently held that a tax code exemption for religious housing of ministers does not violate the Establishment Clause of the First Amendment of the U.S. Constitution. The decision has a direct impact on religious employers and their ministerial employees as well as a potential impact on secular employers that provide housing allowances for their employees.
The U.S. District Court for the Central District of California, applying de novo review due to California’s discretionary clause ban, ruled that an employee of Apple, Inc. was not entitled to long-term disability benefits because he did not satisfy the burden of proving that he was disabled.
The Tax Cuts and Jobs Act of 2017 (TCJA) eliminated the deduction for entertainment purchased as a business expense but left intact the deduction for business meals. Because entertainment and meals are often closely intertwined when purchased in a business context, taxpayers may have difficulty distinguishing deductible meal expenses from nondeductible entertainment expenses.
The Tax Cuts and Jobs Act of 2017 (TCJA) generally eliminated employer deductions for expenses incurred to provide employee parking benefits but left intact deductions for expenses associated with parking provided for customers and the general public. Because nondeductible employee parking expenses are often closely intertwined with deductible general public or customer parking expenses, employers may have difficulty distinguishing between the two under the TCJA.
On March 28, 2019, the U.S. District Court for the District of Columbia struck down key parts of the U.S. Department of Labor’s (DOL) final rule expanding the availability of association health plans (AHPs).
Behavioral health claims administrators and plan sponsors alike may be looking more closely at their care guidelines—and how they are applied—after a federal court ruled in a California class action that a claims administrator had breached its fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) by applying standards of care that were more restrictive than generally accepted standards and by improperly prioritizing cost savings.