The DOL published on July 27, 2022 a proposed change to the QPAM Exemption (“Proposed QPAM Amendment”) that may require retirement plan sponsors to update their collective trust agreements in order to satisfy the new DOL requirements. Collective trusts have become an increasingly common way for qualified retirement plan committees/plan sponsors to achieve lower investment expenses for some of the investment options in their plans.
These collective trusts are managed by investment managers who often engage other financial institutions to execute trades involving the pension assets held by the collective trust. These trades involving retirement plan assets may at times be executed by a financial institution that is also providing services (such as recordkeeping services) to the same retirement plan. Absent an exemption, these sorts of related party transactions may violate the ERISA prohibited transaction rules. 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.pngadmin2022-08-22 09:30:452022-08-22 09:30:45You Spin Me QPAM Baby QPAM: DOL’s Proposed QPAM Rule May Mean Changes to Collective Trust Agreements for Plan Sponsors
The IRS has given plan sponsors more time to adopt some – but apparently not all – retirement plan amendments reflecting law changes in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Bipartisan Miners Act of 2019 (Miners Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Notice 2022-23, issued August 3, 2022, generally provides that the deadline to adopt these amendments is extended to December 31, 2025. This is the deadline for qualified plans regardless of the plan year, and this deadline also applies to 403(b) plans and collectively bargained plans. Governmental plans generally have until 90 days after the third regular legislative session of the body with the authority to amend the plan that begins after December 31, 2023. Read more
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One of the most popular incentives for small business owners to establish an ESOP (employee stock ownership plan) is the ability to defer tax on the gain they will receive in the sale through the Section 1042 deferral. If certain requirements are met (most notably that the ESOP must end up owning at least 30% of the company), the selling shareholders can defer tax on their gain by investing the proceeds in certain types of “qualified replacement property.” Read more
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The trusts maintained to hold assets of ERISA plans are separate tax entities from the employers sponsoring the plans. Therefore, each is required to have its own federal tax ID number. Knowing when and where to use whose EIN can be confusing. Here are a few tidbits of information on that topic. This information applies to single employer plans. Multi- and multiple-employer plans may have different rules. Read more
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Long term incentive plans offered by an entity that is taxed as a partnership present an additional problem compared to their corporate A-side counterparts. If an employee is given an equity interest in the partnership, the individual will generally no longer be considered an employee for tax purposes. Instead, that individual is considered a partner in a partnership, will receive a K-1 for future pay (rather than a W-2), must pay estimated taxes, becomes ineligible for certain benefits, etc. This dual status issue is generally nonexistent within corporate entities – indeed, it is commonplace for employees to also be shareholders, perhaps as a result of a traditional restricted stock or option grant. Read more
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IRS Employee Plans has just announced a pilot program for pre-examination compliance checks of qualified retirement plans, beginning this month. If your plan is targeted, you will receive a letter from the IRS notifying you that your retirement plan has been selected for an upcoming IRS examination. What’s new under the pilot program is that the IRS will give you 90 days to perform your own self-compliance check and determine if the plan is in compliance with current IRS guidance, with the enticement that this self-review may avoid an IRS examination.
During the 90 days, you would complete a compliance review of your plan and, if you do not find any errors, you would assert to the IRS that the plan meets current tax law requirements. Or, if you discover some matters that need correction, you may correct mistakes using the self-correction principles or the voluntary compliance program (VCP) under the IRS correction program, EPCRS. If the errors are eligible for self-correction under EPCRS, it appears that no penalty will apply. If the errors are eligible for VCP but not self-correction, the IRS may issue a closing agreement and assess a fee based on the VCP fee that would otherwise have been charged if the plan had filed a VCP application under EPCRS before this process had begun. If the IRS disagrees with the correction–or if you fail to respond to the IRS within the 90-day period–the IRS will likely schedule a limited or full-scope examination. Read more
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The focus of this week’s post is on an emerging hot topic, abortion care travel reimbursement. Reimbursement for travel to obtain abortion care was already something being considered by a number of companies in response to the recent Texas fetal heartbeat law and similar laws in other states. With the recently leaked Supreme Court draft opinion that stands to overturn Roe v. Wade, both the need for such a benefit and employers’ interest in offering travel reimbursements has increased significantly. If Roe is overturned, access to abortions will be largely prohibited in the 13 states with so called “trigger laws” and could be significantly restricted in at least 13 other states. 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.pngadmin2022-05-24 10:14:402022-05-24 10:14:40I’m Leaving On A Jet Plane…Is Abortion Care Travel a Covered Benefit?
You Spin Me QPAM Baby QPAM: DOL’s Proposed QPAM Rule May Mean Changes to Collective Trust Agreements for Plan Sponsors
/in 401(k) Plans, 403(b) plans, 457(b) plans, 457(f) plans, Corporate Governance in Benefits, Defined Benefit Plans, DOL, ERISA, ESOPs, Fees, Fiduciary Duties, Governmental Plans, Investments, Retirement Plansby Bret F. Busacker
The DOL published on July 27, 2022 a proposed change to the QPAM Exemption (“Proposed QPAM Amendment”) that may require retirement plan sponsors to update their collective trust agreements in order to satisfy the new DOL requirements. Collective trusts have become an increasingly common way for qualified retirement plan committees/plan sponsors to achieve lower investment expenses for some of the investment options in their plans.
These collective trusts are managed by investment managers who often engage other financial institutions to execute trades involving the pension assets held by the collective trust. These trades involving retirement plan assets may at times be executed by a financial institution that is also providing services (such as recordkeeping services) to the same retirement plan. Absent an exemption, these sorts of related party transactions may violate the ERISA prohibited transaction rules. Read more
Time Is On My Side: Some Retirement Plan Amendment Deadlines Pushed Back
/in 401(k) Plans, 403(b) plans, 457(b) plans, Cafeteria Plans, Defined Benefit Plans, Governmental Plans, Health & Welfare Plans, IRS, Legislation, Retirement Plansby Brenda Berg
The IRS has given plan sponsors more time to adopt some – but apparently not all – retirement plan amendments reflecting law changes in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the Bipartisan Miners Act of 2019 (Miners Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Notice 2022-23, issued August 3, 2022, generally provides that the deadline to adopt these amendments is extended to December 31, 2025. This is the deadline for qualified plans regardless of the plan year, and this deadline also applies to 403(b) plans and collectively bargained plans. Governmental plans generally have until 90 days after the third regular legislative session of the body with the authority to amend the plan that begins after December 31, 2023. Read more
Take A Chance On Me? Could We Finally See Legislation Expanding Section 1042 Deferral to S Corp ESOPS?
/in ESOPs, IRS, Legislation, Retirement Plansby Elizabeth Nedrow
One of the most popular incentives for small business owners to establish an ESOP (employee stock ownership plan) is the ability to defer tax on the gain they will receive in the sale through the Section 1042 deferral. If certain requirements are met (most notably that the ESOP must end up owning at least 30% of the company), the selling shareholders can defer tax on their gain by investing the proceeds in certain types of “qualified replacement property.” Read more
Old MacDonald Had a Farm…EIN Confusion?
/in 401(k) Plans, Defined Benefit Plans, ERISA, ESOPs, IRS, Retirement Plansby Becky Achten
The trusts maintained to hold assets of ERISA plans are separate tax entities from the employers sponsoring the plans. Therefore, each is required to have its own federal tax ID number. Knowing when and where to use whose EIN can be confusing. Here are a few tidbits of information on that topic. This information applies to single employer plans. Multi- and multiple-employer plans may have different rules. Read more
B-Side – Dual Status Issues with Partnership LTI
/in Executive Compensation, IRSBy Kevin Selzer
Long term incentive plans offered by an entity that is taxed as a partnership present an additional problem compared to their corporate A-side counterparts. If an employee is given an equity interest in the partnership, the individual will generally no longer be considered an employee for tax purposes. Instead, that individual is considered a partner in a partnership, will receive a K-1 for future pay (rather than a W-2), must pay estimated taxes, becomes ineligible for certain benefits, etc. This dual status issue is generally nonexistent within corporate entities – indeed, it is commonplace for employees to also be shareholders, perhaps as a result of a traditional restricted stock or option grant. Read more
We Just Need Your Compliance…IRS Announces Pilot Pre-Examination Program for Qualified Plans
/in 401(k) Plans, 403(b) plans, Defined Benefit Plans, ERISA, IRS, Retirement Plansby Lyn Domenick
IRS Employee Plans has just announced a pilot program for pre-examination compliance checks of qualified retirement plans, beginning this month. If your plan is targeted, you will receive a letter from the IRS notifying you that your retirement plan has been selected for an upcoming IRS examination. What’s new under the pilot program is that the IRS will give you 90 days to perform your own self-compliance check and determine if the plan is in compliance with current IRS guidance, with the enticement that this self-review may avoid an IRS examination.
During the 90 days, you would complete a compliance review of your plan and, if you do not find any errors, you would assert to the IRS that the plan meets current tax law requirements. Or, if you discover some matters that need correction, you may correct mistakes using the self-correction principles or the voluntary compliance program (VCP) under the IRS correction program, EPCRS. If the errors are eligible for self-correction under EPCRS, it appears that no penalty will apply. If the errors are eligible for VCP but not self-correction, the IRS may issue a closing agreement and assess a fee based on the VCP fee that would otherwise have been charged if the plan had filed a VCP application under EPCRS before this process had begun. If the IRS disagrees with the correction–or if you fail to respond to the IRS within the 90-day period–the IRS will likely schedule a limited or full-scope examination. Read more
I’m Leaving On A Jet Plane…Is Abortion Care Travel a Covered Benefit?
/in Cafeteria Plans, Fringe Benefits, Health & Welfare Plans, Legislation, State Benefits Lawsby Benjamin Gibbons
The focus of this week’s post is on an emerging hot topic, abortion care travel reimbursement. Reimbursement for travel to obtain abortion care was already something being considered by a number of companies in response to the recent Texas fetal heartbeat law and similar laws in other states. With the recently leaked Supreme Court draft opinion that stands to overturn Roe v. Wade, both the need for such a benefit and employers’ interest in offering travel reimbursements has increased significantly. If Roe is overturned, access to abortions will be largely prohibited in the 13 states with so called “trigger laws” and could be significantly restricted in at least 13 other states. Read more