Benefits & Compensation Blog

Developments in Employee Benefits and Executive Compensation Law

The Affordable Care Act contains a provision–the so-called “Cadillac tax”–providing for a 40% excise tax on high cost employer-sponsored health coverage.  The bar for “high cost” is fairly low, and the Cadillac tax is ultimately expected to apply to a significant number of employer-sponsored health plans. Since the passage of the Affordable Care Act, many employers and insurers (who would be responsible for paying the tax) have actively opposed the implementation of the Cadillac…
Each new year brings new limitations, and the Internal Revenue Service has released its annual cost-of-living adjustments applicable to employee benefit plans. A year-to-year comparison of limitations applicable to plan sponsors can be found here: 2019 Annual Limitations Chart. Reflecting a slight increase in inflation over the past year, several benefit plan limitations will increase for 2019. The IRS continued its trend from the prior year by increasing the elective deferral limitation for defined contribution…
Long-awaited guidance on Section 162(m) of the Internal Revenue Code (the “Code”), has finally arrived.  On August 21, 2018, the IRS issued Notice 2018-68, which provides guidance on certain changes made to Section 162(m) by the Tax Cuts and Jobs Act (the “Act”).  The guidance is limited to (a) the identification of covered employees and (b) the so-called “Grandfather Rule.”  The Notice does not address all of the issues raised by the Act’s changes…
In a case of first impression, a federal district court in the Southern District of Texas has ruled that a former parent company’s stock was not an “employer security” under section 407(d)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).[1] As a result, the ERISA exemption from the duty to diversify and the duty of prudence (to the extent the latter requires diversification) were not available where a plan held…
FICA’s special timing rule for account balance plans is oft-misunderstood – and misapplied – which can lead to unfavorable consequences for employers and employees alike.  Partner Debbie Hoffman and senior associate Stephanie Vasconcellos recently revisited the rule, conducting an in-depth analysis for Bloomberg BNA’s Tax Management Compensation Planning Journal.  Access the full article at www.bna.com or by clicking here. Reproduced with permission from Tax Management Compensation Planning Journal, Vol. 46, 8, p. 135, 08/03/2018.  Copyright…
On April 23, 2018, the U.S. Department of Labor (“DOL”) issued Field Assistance Bulletin No. 2018-01 (the “FAB”), which revisits two important topics relating to ERISA plan investments: (1) whether and to what extent a fiduciary can consider environmental, social and governance (“ESG”) factors when deciding between different investment options and (2) the exercise of shareholder rights. The FAB clarifies that while ESG factors can present economic risks or opportunities that can be appropriately considered…
In welcome news, the IRS reversed its course on the maximum annual health savings account contribution for a family with high deductible health coverage. As you may recall, the IRS initially set the maximum 2018 HSA contribution for family coverage at $6,900. In March 2018, the IRS lowered that maximum to $6,850. Via Rev. Proc. 2018-27, the IRS announced its decision that—notwithstanding its March guidance—it would allow taxpayers to treat $6,900 (not $6,850) as…
On March 5, 2018, the IRS announced adjustments – effective immediately – to various annual limitations already in place for 2018.  One such adjustment is to the maximum annual health savings account contribution for a family with high deductible health coverage.  Previously set at $6,900 for 2018, the IRS has lowered the limit to $6,850, based on a change to the calculation of cost-of-living adjustments under the Tax Cuts and Jobs Act.  (The maximum annual health…
Just then, Goldilocks woke up and saw the three bears.  She screamed, “Help!”  And she jumped up and ran out of the room.  Goldilocks ran down the stairs, opened the door, and ran away into the forest.  And she never returned to the home of the three bears.   In a previous post, we compared lawsuits against stable value funds for being too risky or too conservative to Goldilocks’ problem of having the porridge…
The Tax Cuts and Jobs Act (Tax Act) did not directly modify the rules governing hardship withdrawals from 401(k) plans. However, one change enacted by the Tax Act does necessitate a careful review of 401(k) plan hardship withdrawal language and could impact the administration of hardship withdrawal requests. Further, the Bipartisan Budget Act of 2018, enacted on February 9, 2018 (Spending Act), makes certain changes to the statutory rules governing hardship withdrawals and requires that the…