The U.S. Supreme Court has ruled in three cases that pension plans established by church affiliated organizations are “church plans” that are exempt from ERISA (the Employee Retirement Income Security Act of 1974).  The cases are Advocate Health Care Network v. Stapleton, U.S., 6/5/17; Saint Peter’s Healthcare Sys. v. Kaplan, U.S., No. 16-86, 6/5/17; and Dignity Health v. Rollins, U.S., No. 16-258, 6/5/17. The Supreme Court’s decision overrules contrary decisions by three federal appellate courts. …

U.S. Internal Revenue Code §409A provides a wide range of very restrictive rules pertaining to “nonqualified” deferred compensation plans and many other types of compensation arrangements that may defer compensation. On June 22, 2016, the Internal Revenue Service issued proposed changes to the regulations under IRC §409A. This post reviews a few highlights of the proposal that may be of interest to employers and employees. Coordinated proposed regulations were issued under IRC §457, a deferred compensation…

U.S. Internal Revenue Code §457(f) addresses federal income taxation of certain types of “nonqualified” deferred compensation plans and arrangements of entities that are either state and local governments or tax-exempt organizations (under IRC §501(c)). Most of those deferred compensation arrangements also must comply with IRC §409A to avoid tax penalties. For state and local governments and tax-exempt organizations, the IRC §457(f) rules principally apply to employment agreements and other compensation arrangements for executive level employees…

Many employers provide a cash payment to an employee who waives employee medical plan coverage.  Contrary to popular belief, this practice is not “illegal” under U.S. law.  However, because of new guidance contained in IRS Notice, 2015-87 (December 16, 2015), employers may want to provide “waiver payments” to U.S. employees, only if they can show that they have other health care plan coverage.…

Recently released IRS Notice 2015-49 will prohibit U.S. pension plan sponsors from offering lump sum payments to existing pensioners.  Thus, for example, if an employer is going to do a lump sum “window”, existing pensioners could not be offered a lump sum.  Nevertheless, it does appear that lump sums can still be offered to pensioners upon a plan termination. The Notice has a July 9, 2015 effective date.  The Notice has some complicated grandfathering rules…

The U.S. Supreme Court recently held that a fiduciary of an ERISA covered retirement plan has an ongoing duty to monitor the prudence of the plan’s investments.  The decision is Tibble v. Edison International, 2015 U.S. LEXIS 3171 (May 18, 2015). In the case, Edison International had selected three “retail class” mutual funds for its 401(k) plan in 1999.  Three more retail class funds were selected in 2003.  The plaintiffs alleged a violation of fiduciary…

The U.S. Equal Employment Opportunity Commission just released proposed regulations related to wellness plans, finally lifting the veil of secrecy surrounding its actions.  The EEOC regulations apply to wellness plans that include disability related inquiries or “medical exams” The EEOC’s regulations are designed to allow employers to continue to provide financial incentives to employees, up to 30% of the plan’s total cost of employee-only coverage (i.e., both the employer and employee portions of the cost). …