Retirement plan administrators have for years sung the sad lament of what to do with missing participants. Ol’ Hank Williams himself could have written a hit song about the problem. Recent guidance from the IRS may have the retirement community singing a slightly different tune, however.
The hassle of keeping plan accounts open for lost or deceased former employees can be a real problem, especially for terminating plans. When participants go missing, retirement plan administrators have few alternatives. One alternative that has been discussed is the use of state unclaimed property funds (sometimes called by their old-fashioned name, “escheat” law). Plans previously were reluctant to escheat unclaimed retirement accounts to state funds due to concerns over how to report tax and withholding. But recent guidance from the IRS (Revenue Ruling 2020-24) makes clear that if a plan escheats funds to the state, it is appropriate for the plan to treat the payment as being includible in gross income and subject to federal income tax withholding, reportable on a Form 1099-R.
Today the IRS announced the 2021 cost-of-living adjustments to qualified plan limits. Please refer to our chart for easy reference.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-10-26 16:01:322020-10-27 14:07:42In the Year 2021…IRS Limits Announced Today
As with many of the issues at stake in the upcoming Presidential election, the future of how Americans will obtain healthcare is a core issue this November. The Trump administration previously outlined its view that healthcare could be provided through Association Health Plans that consist of loosely related employer groups, including self-employed individuals. This Association Health Plan rule was then struck down by the Second Circuit Court of Appeals, which concluded the Rule was too aggressive; and exceeded the scope of the Employee Retirement Income Security Act (ERISA).
A recent US District Court case in Texas throws new fuel on the debate fire of whether healthcare coverage may be offered through ever-more expansive and creative employer sponsored arrangements; or whether ERISA should be interpreted to limit employer coverage to more traditional employer-employee structures.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-10-23 13:43:592020-10-23 14:56:00US District Court Pushes Back on DOL’s ERISA Plan Ruling Finding It Arbitrary and Capricious
Early in the pandemic, the IRS and DOL issued a temporary rule (published May 4, 2020) extending certain deadlines applicable to retirement plans and health and welfare plans. (See Deadlines and Commitments: DOL and IRS Temporary Rule for COVID for more information about that extension.) Under that temporary rule, the deadlines were generally extended until 60 days after the announced end of the National Emergency due to COVID-19, which was referred to as the “Outbreak Period.” The deadlines are essentially “tolled” during the Outbreak Period. The National Emergency began on March 1, 2020, as declared by President Trump’s Proclamation.
The examples in the temporary rule assumed an end date of April 30, 2020 for the National Emergency, which would have extended the Outbreak Period through June 29, 2020. As we all now know, this National Emergency did not end on April 30, and in fact it is still in place. So we are still waiting for the National Emergency period to end and trigger the normal deadlines.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-10-16 13:18:332020-10-16 13:18:35I’m Just Waiting on an… End to the Extended ERISA Deadline Periods
October brings with it the approach of year-end notices and open enrollment for 2021 health & welfare benefits. While open enrollment for your organization may be a month or so away, October 15 is the deadline for distribution of the Medicare Part D Notice which certifies whether a group health plan’s prescription drug coverage pays out at least as much as the standard coverage under a Medicare prescription drug plan. Most employer sponsored group health plans that provide prescription drug benefits are subject to the notice requirement mandated by the Centers for Medicare and Medicaid Services (CMS). Rather than trying to identify the Medicare Part D eligible individuals who must receive the required notice, many employers choose to simply distribute the Medicare Part D Notice to all of its employees who are enrolled in or eligible for the employer’s prescription drug coverage. CMS has model notices on its website which have not changed substantially since inception of the notice requirement.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-10-08 12:37:522020-10-08 12:37:55Well The Leaves Have Come to Turning… And It’s Notice Time Again
This week we’re changing the station on the Benefits Dial to remind private companies who are granting securities to their employees of the importance of complying with Rule 701. Rule 701 of the Securities Act of 1933 provides a federal securities registration exemption for privately-held companies who are granting securities (including stock options) through written compensatory benefit plans (such as omnibus equity incentive plans) to their employees and contractors (natural persons only). Absent Rule 701, such securities would generally need to be registered with the Securities and Exchange Commission (SEC).
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-10-01 10:04:312020-10-01 10:04:33Trouble Ahead, Trouble Behind, and You Know Rule 701 Just Crossed My Mind
The Internal Revenue Code requires plan administrators of qualified retirement plans (e.g., 401(k) plans, defined benefit plans and ESOPs), 403(b) plans, and eligible 457(b) plans maintained by a governmental employer to provide a written explanation to any recipient of an eligible rollover distribution. This notice is typically referred to as the Special Tax Notice.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-09-16 13:19:182020-09-16 16:29:43Don’t You . . . Forget About Special Tax Notices
Your [es]Cheating Heart … Might Be Useful to Retirement Plans Dealing With Missing Participants
/in 401(k) Plans, ERISA, IRS, Retirement Plans, State Benefits Lawsby Beth Nedrow
Retirement plan administrators have for years sung the sad lament of what to do with missing participants. Ol’ Hank Williams himself could have written a hit song about the problem. Recent guidance from the IRS may have the retirement community singing a slightly different tune, however.
The hassle of keeping plan accounts open for lost or deceased former employees can be a real problem, especially for terminating plans. When participants go missing, retirement plan administrators have few alternatives. One alternative that has been discussed is the use of state unclaimed property funds (sometimes called by their old-fashioned name, “escheat” law). Plans previously were reluctant to escheat unclaimed retirement accounts to state funds due to concerns over how to report tax and withholding. But recent guidance from the IRS (Revenue Ruling 2020-24) makes clear that if a plan escheats funds to the state, it is appropriate for the plan to treat the payment as being includible in gross income and subject to federal income tax withholding, reportable on a Form 1099-R.
Read moreIn the Year 2021…IRS Limits Announced Today
/in 401(k) Plans, 403(b) plans, Defined Benefit Plans, ESOPs, IRSby Lyn Domenick
Today the IRS announced the 2021 cost-of-living adjustments to qualified plan limits. Please refer to our chart for easy reference.
US District Court Pushes Back on DOL’s ERISA Plan Ruling Finding It Arbitrary and Capricious
/in Benefits Plan Creation, ERISA, Health & Welfare Plans, Legislation, Litigation, State Benefits Lawsby Bret Busacker
As with many of the issues at stake in the upcoming Presidential election, the future of how Americans will obtain healthcare is a core issue this November. The Trump administration previously outlined its view that healthcare could be provided through Association Health Plans that consist of loosely related employer groups, including self-employed individuals. This Association Health Plan rule was then struck down by the Second Circuit Court of Appeals, which concluded the Rule was too aggressive; and exceeded the scope of the Employee Retirement Income Security Act (ERISA).
A recent US District Court case in Texas throws new fuel on the debate fire of whether healthcare coverage may be offered through ever-more expansive and creative employer sponsored arrangements; or whether ERISA should be interpreted to limit employer coverage to more traditional employer-employee structures.
Read moreI’m Just Waiting on an… End to the Extended ERISA Deadline Periods
/in 401(k) Plans, 403(b) plans, 457(b) plans, 457(f) plans, Cafeteria Plans, Defined Benefit Plans, DOL, ERISA, Health & Welfare Plans, IRS, Retirement Plansby Brenda Berg
Early in the pandemic, the IRS and DOL issued a temporary rule (published May 4, 2020) extending certain deadlines applicable to retirement plans and health and welfare plans. (See Deadlines and Commitments: DOL and IRS Temporary Rule for COVID for more information about that extension.) Under that temporary rule, the deadlines were generally extended until 60 days after the announced end of the National Emergency due to COVID-19, which was referred to as the “Outbreak Period.” The deadlines are essentially “tolled” during the Outbreak Period. The National Emergency began on March 1, 2020, as declared by President Trump’s Proclamation.
The examples in the temporary rule assumed an end date of April 30, 2020 for the National Emergency, which would have extended the Outbreak Period through June 29, 2020. As we all now know, this National Emergency did not end on April 30, and in fact it is still in place. So we are still waiting for the National Emergency period to end and trigger the normal deadlines.
Read moreWell The Leaves Have Come to Turning… And It’s Notice Time Again
/in Health & Welfare Plansby Lyn Domenick
October brings with it the approach of year-end notices and open enrollment for 2021 health & welfare benefits. While open enrollment for your organization may be a month or so away, October 15 is the deadline for distribution of the Medicare Part D Notice which certifies whether a group health plan’s prescription drug coverage pays out at least as much as the standard coverage under a Medicare prescription drug plan. Most employer sponsored group health plans that provide prescription drug benefits are subject to the notice requirement mandated by the Centers for Medicare and Medicaid Services (CMS). Rather than trying to identify the Medicare Part D eligible individuals who must receive the required notice, many employers choose to simply distribute the Medicare Part D Notice to all of its employees who are enrolled in or eligible for the employer’s prescription drug coverage. CMS has model notices on its website which have not changed substantially since inception of the notice requirement.
Read moreTrouble Ahead, Trouble Behind, and You Know Rule 701 Just Crossed My Mind
/in Equity Compensation, Executive CompensationBy Benjamin Gibbons
This week we’re changing the station on the Benefits Dial to remind private companies who are granting securities to their employees of the importance of complying with Rule 701. Rule 701 of the Securities Act of 1933 provides a federal securities registration exemption for privately-held companies who are granting securities (including stock options) through written compensatory benefit plans (such as omnibus equity incentive plans) to their employees and contractors (natural persons only). Absent Rule 701, such securities would generally need to be registered with the Securities and Exchange Commission (SEC).
Read moreDon’t You . . . Forget About Special Tax Notices
/in 401(k) Plans, 403(b) plans, 457(b) plans, Defined Benefit Plans, ESOPs, Governmental Plans, IRS, Retirement Plansby Leslie Thomson
The Internal Revenue Code requires plan administrators of qualified retirement plans (e.g., 401(k) plans, defined benefit plans and ESOPs), 403(b) plans, and eligible 457(b) plans maintained by a governmental employer to provide a written explanation to any recipient of an eligible rollover distribution. This notice is typically referred to as the Special Tax Notice.
Read more