Employee Benefits Law Report

Archives: Retirement Plans

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Proposed regulation for long-term part-time employees: Plan sponsors act now

By Rich Helmreich and Greg Daugherty on
savings, money, annuity insurance, retirement and people concept - close up of senior woman hand putting coin into piggy bankEffective Jan. 1, 2024, employers who sponsor 401(k) plans must allow employees who work at least 500 hours a year over a period of consecutive years (“long-term part-time” or “LTPT employees”) to be eligible to make deferrals into the plan. This change requires immediate action by plan sponsors to change the way they administer their … Continue Reading

Plan sponsors now have a deadline for providing lifetime income illustrations

By Greg Daugherty and Rich Helmreich on
Employers who sponsor 401(k) plans and other defined contribution plans in which participants may direct the investments of their accounts now have a deadline to provide lifetime income illustrations in those plans’ benefit statements. The Department of Labor (DOL) recently published guidance addressing these requirements. While helpful, the guidance is still subject to change in … Continue Reading

DOL confirms cyber security is an ERISA fiduciary issue and issues guidance for retirement plan sponsors, service providers and participants

By Rich Helmreich and Greg Daugherty on
The U.S. Department of Labor (DOL) recently announced new guidance for plan sponsors, fiduciaries, record keepers and participants on best practices for maintaining cyber security. This is the first time the DOL has issued such guidance, and it comes in response to a recent General Accounting Office (GAO) report responding to increased cybersecurity risks to retirement plan … Continue Reading

Public companies may need to amend nonqualified and incentive compensation plans by Dec. 31, 2020

By Greg Daugherty and Dave Tumen on
Public company nonqualified plans and incentive plans may need to be amended to avoid a potential violation of Internal Revenue Code (IRC) Section 409A as a result of changes to IRC Section 162(m) under the Tax Cuts and Jobs Act. This amendment most likely is required for employers that mandated deferrals of amounts that exceeded … Continue Reading

Aug. 31 deadline to rollover 2020 RMDs is quickly approaching

By Rich Helmreich on
Once a taxpayer reaches age 72 (or age 70 ½ if the taxpayer reached age 70 ½ prior to 2020), the Internal Revenue Code requires owners of most retirement accounts to withdraw minimum distributions (RMDs) from those accounts. To provide relief from the increased tax burden often associated with RMDs, the Coronavirus Aid, Relief and … Continue Reading

DOL proposes a more practical rule for electronic ERISA disclosures

By Victoria Hanohano-Hong and Deb Boiarsky on
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 … Continue Reading

Final IRS hardship regulations – Less of a hardship to take and administer

By Greg Daugherty, Deb Boiarsky and Victoria Hanohano-Hong on
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 … Continue Reading

IRS provides guidance to 403(b) plan sponsors who can’t locate participants required to receive distributions (but be mindful of DOL rules too)

By Greg Daugherty on
The IRS’s Tax Exempt and Government Entities Division recently issued a memorandum (the memo) to its auditors that directed them not to challenge a 403(b) plan as failing to satisfy the required minimum distribution (RMD) standards under circumstances set out in the memo. This guidance is helpful to 403(b) plan sponsors and consistent with missing … Continue Reading

Proposed tax bill would make big changes to (and create new opportunities for) executive compensation

By Greg Daugherty and Dave Tumen on
Three games into the 2014 National Football League season, the Green Bay Packers had a 1-2 record. Fans were panicking. Many were questioning whether the Packers and its quarterback, Aaron Rodgers, were doomed to have a bad season. Rodgers responded with a simple message for fans: “R-E-L-A-X”. The Packers redoubled their efforts and made the … Continue Reading

IRS previews qualified plan determination letter changes in new guidance

By Greg Daugherty on
The Internal Revenue Service (IRS) issued guidance on Jan. 4, 2016, that clarifies certain implications of its previously announced changes to the employee plans determination letter program. These clarifications, announced in Notice 2016-03 (Notice) are necessary to cover open issues raised from prior guidance that in effect shuts down the determination letter program for most … Continue Reading

Like old soldiers, Employee Plans Determination Letter Program fades away

By Porter Wright on
The Internal Revenue Service (the “IRS”) issued Announcement 2015-19 on July 21, 2015, in which the agency announced that its long-standing and widely used retirement plan determination program for individually designed plans was being significantly curtailed. The IRS indicated that this curtailment, which has been rumored for months and now becomes official, is attributable to … Continue Reading

Public companies should review stock option plans to ensure they qualify for exception to $1 million deduction limit

By Greg Daugherty on
The IRS and Treasury Department recently issued final regulations under Code Section 162(m) that, as the IRS describes it, “clarifies” stock and equity-based compensation plan drafting issues. Of course, whether something represents a clarification or a substantive change lies in the eye of the beholder (particularly if that beholder is a politician or regulator in … Continue Reading

Ninth Circuit decision illustrates importance of clearly designating beneficiaries under a nonqualified plan

By Greg Daugherty on
In a recent blog, we discussed the importance of clearly defining who is a “participant” in a nonqualified plan and who is a former participant or retiree. A more recent Ninth Circuit decision in E & J Gallo Winery v. Rogers highlights a related issue that faces tax-qualified and nonqualified plans alike—who is the beneficiary? While cases like … Continue Reading

Obama administration budget proposals could affect employee benefit programs

By Porter Wright on
The Obama administration recently released its budget proposals for Fiscal Year 2015 and as in past years those proposals contained a number of provisions that would affect employee benefit plans. A helpful explanation of the administration’s proposals can be found in the Administration’s Fiscal Year 2016 Revenue Proposals (sometimes referred to as the “Green Book”), which … Continue Reading

ERISA plan service provider avoids fiduciary status—what it means for service providers and plan sponsors

By Greg Daugherty on
A recent Third Circuit decision (Santomenno v. John Hancock, et. al.) has been described as a win for service providers to ERISA plans. It certainly is important because this decision, along with other fairly recent decisions, helps to illustrate when service provider actions become significant enough to make them fiduciaries. A somewhat less discussed point, … Continue Reading

Windsor decision on DOMA–does your plan have a year-end plan amendment deadline?

By Porter Wright on
In April, 2014, the Internal Revenue Service (“IRS”) issued Notice 2014-19, which provided additional guidance addressing the impact on tax-qualified retirement plans of the Supreme Court’s decision in United States v. Windsor, 133 S. Ct. 2675 (2013). In the Windsor decision, the Supreme Court struck down as unconstitutional Section 3 of the Defense of Marriage … Continue Reading

Employee Benefit Plan Limits – Reference Chart for 2015 and Prior Cost-of-Living Adjustments

By Porter Wright on
The Internal Revenue Code sets forth various dollar limitations on benefits, contributions, compensation under employee benefit plans. The IRS has announced limits for 2015 tax years. For your reference, the IRS Cost-of-Living Adjustments summarizes these dollar limitations, as modified by the IRS for cost-of-living adjustments (COLAs), for 2015 and prior years.… Continue Reading

Could’ve, would’ve. What should a fiduciary do? Fourth Circuit decision could spell more uncertainty for retirement plan fiduciaries.

By Deb Boiarsky on
Coming on the heels of the U.S. Supreme Court’s Dudenhoeffer decision, which eliminated a pro-fiduciary presumption with respect to company stock holdings in qualified retirement plans, the 4th Circuit issued a decision last week that could cause even more unrest for plan fiduciaries. The case, Tatum v. RJR Pension Investment Committee, et al., represents a potential elevation of … Continue Reading

Bankruptcy trumps protection for inherited IRA

By Porter Wright on
The United State Supreme Court issued an opinion on June 12, 2014 in Clark v. Rameker dealing with a relatively simple issue at the intersection of bankruptcy law and retirement policy. The case dealt with the ability to exempt “retirement funds” as a category of assets from a bankruptcy estate when an individual files for bankruptcy. The … Continue Reading
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