If your qualified pension plan does not provide for in-service distributions and has commenced benefit distributions to a retiree who experienced a bona fide retirement, the IRS says your plan may be able to rehire that retiree and let him or her continue to receive benefit payments upon rehire. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2022-03-16 14:20:292022-03-16 14:20:29Bye Bye Bye . . . Or Not. Rehiring Retirees in Pay Status
For those who have been involved in the sale of a company, Section 280G of the Internal Revenue Code may sound familiar. Section 280G governs what the IRS considers to be “golden parachute payments” and is generally applicable when a corporation is undergoing a change in control (including both stock sales and asset sales). At a high level, Section 280G imposes on disqualified individuals a 20% excise tax on excess parachute payments paid and a corresponding loss of deduction on such payments by the corporation. Read more
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If you have participants in your retirement plan who are old enough to identify Carole King as the artist who released the song “It’s Too Late” some 50 years ago, this blog’s for you. Late payment of required minimum distributions (RMDs) is an ongoing source of plan sponsor headaches. What do you do when they occur? As background, qualified plans are subject to the minimum distribution rules that generally require participants to commence payments no later than the April 1st following the year in which the participant attains age 72 (prior to January 1, 2020, age 70-1/2) unless the participant is still actively employed and is not a 5% owner. For various reasons the RMD deadline is sometimes missed and the plan administrator is faced with how to correct the late RMD error. Proper correction of missed RMDs is essential to ensure continued plan qualification. However, plan participants are also subject to stiff penalty taxes equal to 50% of the missed RMD amounts, which is a headache of a different sort.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2022-02-18 11:07:252022-02-18 11:28:06It’s [Not] Too Late Baby, Now It’s [Not] Too Late…for Required Minimum Distributions
The Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Department of Treasury (collectively, the Departments) recently issued their joint report to Congress regarding their Mental Health Parity and Addiction Equity Act (MHPAEA) enforcement activities as required under the MHPAEA and the Consolidated Appropriations Act, 2021 (CAA). The report contained insights regarding the DOL’s enforcement of the new MHPAEA reporting and disclosure requirements related to non-quantitative treatment limitations (NQTLs) established by the CAA. For additional information about the CAA’s new MHPAEA reporting and disclosure requirements, please see our previous blog post (as well as earlier blog posts). Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2022-02-11 10:05:312022-02-11 10:05:31What Happens in a Small Town Stays in a Small Town … Until the DOL Doubles Down on Mental Health Parity Compliance
In a former life, I studied how competent professionals made what turned out to be wrong and sometimes deadly decisions. Often under the general category of “loss of situational awareness,” we had sanitized terms like “target fixation” leading to CFIT or “controlled flight into terrain” (terrain impact caused by continued visual flight into IMC) or “instrument meteorological conditions” (how the mishap is described when a non-instrument rated pilot loses control after flying into clouds). We studied these mistakes to learn from them and to improve our own decision making. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2022-02-04 09:34:422022-02-04 09:34:42Into the Distance, a Ribbon of Black, Stretched to the Point of No Turning Back? Understanding Your Biases in Making Tax Decisions
The U.S. Supreme Court’s ruling this week in Hughes v. Northwestern University will do nothing to stem the rising tide of retirement plan fee litigation. But the ruling doesn’t mean fiduciary breach claims are more likely to be successful either. Instead, the Court kept its ruling very narrow: a broad investment menu with some prudent funds will not automatically mean the fiduciaries are off the hook for offering imprudent funds.
The plaintiffs in Hughes were participants in two 403(b) retirement plans sponsored by Northwestern University. The participants brought claims for breach of fiduciary duty against the University, the retirement plan committee, and the individuals who administered the plans. The participants alleged the fiduciaries breached their duty of prudence by: (1) allowing recordkeeping fees that were too high; (2) allowing plan investments with excessive investment fees; and (3) providing participants too many investment options (over 400!) which resulted in participant confusion and poor investment decisions.Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2022-01-28 12:51:222022-01-28 12:51:22The Tide is High…Keep Holding On For More Retirement Plan Fee Litigation
Last week, the US Supreme Court blocked the OSHA standard requiring private employers with 100 employees or more to vaccinate-or-test for COVID-19 from taking effect (more info here). With the fate of that standard likely sealed, employers may soon give thought to other strategies to incentivize workers to become vaccinated and/or boosted. Employers with self-funded health plans might consider charging unvaccinated (or unboosted) workers a higher premium for that health coverage. Or perhaps, it would be more appropriate to say “reconsider” that approach. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2022-01-21 12:10:212022-01-21 14:30:26Talk About Bruno . . . Health Plan Premium Surcharges & Vaccination Status
Bye Bye Bye . . . Or Not. Rehiring Retirees in Pay Status
/in 401(k) Plans, Defined Benefit Plans, IRS, Retirement Plansby Leslie Thomson
If your qualified pension plan does not provide for in-service distributions and has commenced benefit distributions to a retiree who experienced a bona fide retirement, the IRS says your plan may be able to rehire that retiree and let him or her continue to receive benefit payments upon rehire. Read more
Free Fallin’…With a Golden Parachute
/in Equity Compensation, Executive Compensation, IRSby Benjamin Gibbons
For those who have been involved in the sale of a company, Section 280G of the Internal Revenue Code may sound familiar. Section 280G governs what the IRS considers to be “golden parachute payments” and is generally applicable when a corporation is undergoing a change in control (including both stock sales and asset sales). At a high level, Section 280G imposes on disqualified individuals a 20% excise tax on excess parachute payments paid and a corresponding loss of deduction on such payments by the corporation. Read more
It’s [Not] Too Late Baby, Now It’s [Not] Too Late…for Required Minimum Distributions
/in 401(k) Plans, 403(b) plans, 457(b) plans, Defined Benefit Plans, ERISA, Retirement Plansby Lyn Domenick
If you have participants in your retirement plan who are old enough to identify Carole King as the artist who released the song “It’s Too Late” some 50 years ago, this blog’s for you. Late payment of required minimum distributions (RMDs) is an ongoing source of plan sponsor headaches. What do you do when they occur? As background, qualified plans are subject to the minimum distribution rules that generally require participants to commence payments no later than the April 1st following the year in which the participant attains age 72 (prior to January 1, 2020, age 70-1/2) unless the participant is still actively employed and is not a 5% owner. For various reasons the RMD deadline is sometimes missed and the plan administrator is faced with how to correct the late RMD error. Proper correction of missed RMDs is essential to ensure continued plan qualification. However, plan participants are also subject to stiff penalty taxes equal to 50% of the missed RMD amounts, which is a headache of a different sort.
Read more
What Happens in a Small Town Stays in a Small Town … Until the DOL Doubles Down on Mental Health Parity Compliance
/in Benefits Plan Creation, Corporate Governance in Benefits, DOL, ERISA, Fiduciary Duties, Health & Welfare Plans, Legislation, Litigationby Alex Smith
The Department of Labor (DOL), the Department of Health and Human Services (HHS), and the Department of Treasury (collectively, the Departments) recently issued their joint report to Congress regarding their Mental Health Parity and Addiction Equity Act (MHPAEA) enforcement activities as required under the MHPAEA and the Consolidated Appropriations Act, 2021 (CAA). The report contained insights regarding the DOL’s enforcement of the new MHPAEA reporting and disclosure requirements related to non-quantitative treatment limitations (NQTLs) established by the CAA. For additional information about the CAA’s new MHPAEA reporting and disclosure requirements, please see our previous blog post (as well as earlier blog posts). Read more
Into the Distance, a Ribbon of Black, Stretched to the Point of No Turning Back? Understanding Your Biases in Making Tax Decisions
/in Equity Compensation, Executive Compensationby John Ludlum
In a former life, I studied how competent professionals made what turned out to be wrong and sometimes deadly decisions. Often under the general category of “loss of situational awareness,” we had sanitized terms like “target fixation” leading to CFIT or “controlled flight into terrain” (terrain impact caused by continued visual flight into IMC) or “instrument meteorological conditions” (how the mishap is described when a non-instrument rated pilot loses control after flying into clouds). We studied these mistakes to learn from them and to improve our own decision making. Read more
The Tide is High…Keep Holding On For More Retirement Plan Fee Litigation
/in 401(k) Plans, 403(b) plans, 457(b) plans, ERISA, Fees, Fiduciary Duties, Investments, Litigation, Retirement Plansby Brenda Berg
The U.S. Supreme Court’s ruling this week in Hughes v. Northwestern University will do nothing to stem the rising tide of retirement plan fee litigation. But the ruling doesn’t mean fiduciary breach claims are more likely to be successful either. Instead, the Court kept its ruling very narrow: a broad investment menu with some prudent funds will not automatically mean the fiduciaries are off the hook for offering imprudent funds.
The plaintiffs in Hughes were participants in two 403(b) retirement plans sponsored by Northwestern University. The participants brought claims for breach of fiduciary duty against the University, the retirement plan committee, and the individuals who administered the plans. The participants alleged the fiduciaries breached their duty of prudence by: (1) allowing recordkeeping fees that were too high; (2) allowing plan investments with excessive investment fees; and (3) providing participants too many investment options (over 400!) which resulted in participant confusion and poor investment decisions. Read more
Talk About Bruno . . . Health Plan Premium Surcharges & Vaccination Status
/in Health & Welfare PlansBy Kevin Selzer
Last week, the US Supreme Court blocked the OSHA standard requiring private employers with 100 employees or more to vaccinate-or-test for COVID-19 from taking effect (more info here). With the fate of that standard likely sealed, employers may soon give thought to other strategies to incentivize workers to become vaccinated and/or boosted. Employers with self-funded health plans might consider charging unvaccinated (or unboosted) workers a higher premium for that health coverage. Or perhaps, it would be more appropriate to say “reconsider” that approach. Read more