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
Noting that there has been an increase in computer crime in connection with the economic disruption caused by COVID-19, companies should remember that retirement plan accounts are attractive targets for cyber thieves because of the often larger account balances relative to ordinary financial accounts, the infrequency of checking on accounts by many of their owners, and the potential for some account owners to rely on the plan sponsor and record-keeper to provide security.
ERISA fiduciaries generally are subject to the prudent expert standard of care, and they owe a duty of loyalty to the plan participants. A prudent expert acts with the care, skill, and diligence that the circumstances call for a person of like character and like aims to use.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-09-22 13:04:372020-09-22 13:04:40Staring at the Stars Above, Wonder What [Fiduciary Duties] Are We Made Of – Cybersecurity for Retirement Plans
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
What’s in a number? Retirement plan participants may soon better understand how account balances translate to retirement readiness. The SECURE Act enacted last December requires defined contribution plans to show participants the value of their account balances if converted into a monthly lifetime stream of income. The disclosures are aimed at reminding participants that retirement plan balances are meant to last for life – and busting the “wealth illusion” that single sum account balances present.
The details on the disclosures are starting to take form following an interim final rule recently released by the Department of Labor (“DOL”). Under the interim final rule, plans must provide participants with two lifetime income illustrations: the value of the benefit converted to (1) a single life annuity, and (2) a qualified joint and 100% survivor annuity (assuming the participant is married with a spouse of equal age). The DOL clarified in the final rule that the projections will be based on the participant’s current account balance (rather than a future projected value) and will show what that balance would buy purchasing an annuity at age 67 (or the participant’s actual age, if older).
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-09-11 11:49:252020-09-11 11:49:27That’s Life . . . New Defined Contribution Plan Disclosures
Just as the Kentucky Derby will finally be run this Saturday, the race for plan restatements has also begun….although this race will last longer than “the most exciting two minutes in sports.”
Pre-approved plans – plan documents the have already been submitted for review to and been issued an opinion letter from the IRS – are required to be updated and restated every six years. The IRS announced that the current restatement period (referred to as Cycle 3) would begin on August 1, 2020 and end on July 31, 2022. During that period, all pre-approved defined contribution plans, including 401(k), profit sharing and money purchase plans, must be restated in order to maintain their qualified status. And, for the first time, ESOP and KSOP pre-approved plan documents will be available from many document providers. Once the IRS has issued the opinion letters, document providers will be reaching out to plan sponsors to start the restatement process.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-09-03 09:26:052020-09-03 09:26:08Call to the Post…Cycle 3 Restatement Considerations
I’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 moreStaring at the Stars Above, Wonder What [Fiduciary Duties] Are We Made Of – Cybersecurity for Retirement Plans
/in 401(k) Plans, 403(b) plans, 457(b) plans, 457(f) plans, Defined Benefit Plans, DOL, ERISA, Fiduciary Duties, Governmental Plans, Investments, IRS, PBGC, Retirement Plansby John Ludlum
Noting that there has been an increase in computer crime in connection with the economic disruption caused by COVID-19, companies should remember that retirement plan accounts are attractive targets for cyber thieves because of the often larger account balances relative to ordinary financial accounts, the infrequency of checking on accounts by many of their owners, and the potential for some account owners to rely on the plan sponsor and record-keeper to provide security.
ERISA fiduciaries generally are subject to the prudent expert standard of care, and they owe a duty of loyalty to the plan participants. A prudent expert acts with the care, skill, and diligence that the circumstances call for a person of like character and like aims to use.
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 moreThat’s Life . . . New Defined Contribution Plan Disclosures
/in 401(k) Plans, DOL, ERISA, Fiduciary Duties, Retirement PlansBy Kevin Selzer
What’s in a number? Retirement plan participants may soon better understand how account balances translate to retirement readiness. The SECURE Act enacted last December requires defined contribution plans to show participants the value of their account balances if converted into a monthly lifetime stream of income. The disclosures are aimed at reminding participants that retirement plan balances are meant to last for life – and busting the “wealth illusion” that single sum account balances present.
The details on the disclosures are starting to take form following an interim final rule recently released by the Department of Labor (“DOL”). Under the interim final rule, plans must provide participants with two lifetime income illustrations: the value of the benefit converted to (1) a single life annuity, and (2) a qualified joint and 100% survivor annuity (assuming the participant is married with a spouse of equal age). The DOL clarified in the final rule that the projections will be based on the participant’s current account balance (rather than a future projected value) and will show what that balance would buy purchasing an annuity at age 67 (or the participant’s actual age, if older).
Read moreCall to the Post…Cycle 3 Restatement Considerations
/in ESOPs, IRSby Becky Achten
Just as the Kentucky Derby will finally be run this Saturday, the race for plan restatements has also begun….although this race will last longer than “the most exciting two minutes in sports.”
Pre-approved plans – plan documents the have already been submitted for review to and been issued an opinion letter from the IRS – are required to be updated and restated every six years. The IRS announced that the current restatement period (referred to as Cycle 3) would begin on August 1, 2020 and end on July 31, 2022. During that period, all pre-approved defined contribution plans, including 401(k), profit sharing and money purchase plans, must be restated in order to maintain their qualified status. And, for the first time, ESOP and KSOP pre-approved plan documents will be available from many document providers. Once the IRS has issued the opinion letters, document providers will be reaching out to plan sponsors to start the restatement process.
Read more