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In January 2021, the IRS issued Rev. Proc. 2021-4, which includes annual updates to certain procedures including determination letter requests, private letter rulings, and employee plan tax information.  Key updates to 2020 procedures are as follows: Form 5310. Form 5310, Application for Determination for a Terminating Plan, must be filed electronically starting August 1, 2021. Form 5310 may also be followed electronically beginning April 16, 2021. Leased employees. Determination letter applicants that are also…
The Tax Cuts and Jobs Act (TCJA) enacted in December 2017 created a 21% excise tax on executive compensation in excess of $1 million paid by tax-exempt organizations to certain employees (IRC Section 4960). On January 19, 2021, the IRS published the final regulations to help applicable tax-exempt organizations (ATEOs) comply with the excise tax on excessive pay under Section 4960. The following summarizes the key takeaways from the final regulations, which take effect starting…
The U.S. Department of Labor (DOL) recently released Field Assistance Bulletin 2021-01 that authorizes, as a matter of enforcement policy, plan fiduciaries of terminating defined contribution plans to use the Pension Benefit Guaranty Corporation (PBGC) missing participant program for missing or nonresponsive participant’s account balances.  Following the termination of a defined contribution plan, current DOL regulations provide a safe harbor that allow fiduciaries to distribute remaining accounts to IRAs. This safe harbor is conditional, requiring…
It’s hard to believe people would leave retirement funds behind when they move to a new job, but it happens. In fact, many people fail to roll over retirement plans when they leave a job and move to a new employer. Plan administrators and sponsors are then faced with a dilemma – and sometimes unclear or evolving guidance from government agencies that oversee employee retirement plans. Now the Department of Labor (DOL) has taken steps…
On December 18, 2020, the Department of Labor (DOL) published in the Federal Register a final prohibited transaction exemption for investment advice fiduciaries that effectively reinstates the DOL’s “five-part test” as set forth in its 1975 regulation defining investment advice fiduciaries under the Code and ERISA. For advice to constitute “fiduciary investment advice” under the five-part test, a financial institution or investment professional that is not otherwise a fiduciary under an ERISA plan must: provide…
Section 203 of the Consolidated Appropriations Act (CAA), which became law on December 27, 2020, requires group health plans to evaluate compliance with the existing rules governing nonquantitative treatment limitations (NQTLs) under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).  The MHPAEA requires group health plans that apply NQTLs to mental health or substance use disorder (MH/SUD) benefits to ensure that the NQTLs are comparable to and applied no more stringently than…
The recent increase in litigation over retirement plans and, specifically, the fees those plans are being charged for administration and management, has many companies concerned about what they need to do to protect the plans they manage. Two recent federal district court rulings illustrate the necessity for plan sponsors to have a prudent decision-making process in place to successfully defend against excessive fee litigation. Kurtz v. The Vail Corporation On January 6, 2021, a Colorado…
On January 22, 2021, President Biden issued an Executive Order on Protecting the Federal Workforce that instructed the Director of the Office of Personnel Management (OPM) to provide him with a report “with recommendations to promote a $15/hour minimum wage for Federal employees.” In addition to raising the federal minimum wage, the Executive Order overturned three of the previous administration’s executive orders that weakened job and union protections for federal workers. An accompanying fact sheet
Under the Families First Coronavirus Response Act (FFCRA), employers with fewer than 500 employees are required to provide paid sick and family leave for certain COVID-19-related reasons. Employers are required to report leave payments as wages on each qualifying employee’s Form W-2. While IRS Notice 2020-54 provided guidance on the W-2 reporting requirement in July 2020, this guidance was not incorporated into Form W-2 instructions for 2020. Since most employers provide W-2s to their employees…
The U.S. Department of Labor (DOL) has terminated its Payroll Audit Independent Determination (PAID) program that allowed employers to self-report federal minimum wage and overtime violations under the Fair Labor Standards Act (FLSA).  The DOL made the announcement via press release on January 29, 2021. The PAID program was launched in March 2018 and quickly drew criticism. Attorneys general from 11 states sent a letter to the DOL protesting the move to allow employers to…