Benefits Law Advisor

Insights on benefits counseling and litigation issues impacting employers nationwide

In the spirit of the holidays, the Internal Revenue Service gave a gift to sponsors of 403(b) tax-deferred annuity plans on December 4, 2018, by issuing IRS Notice 2018-95.  For plan sponsors that exclude part-time employees from their 403(b) plans, this gift provides a 10-year nod on their historical plan administration, despite noncompliance with the once-in-always-in part-time exclusion condition. The Notice contains many conditions to qualify for the relief.  It also does not provide…
On December 14, 2018, a federal district judge sitting in Texas ruled that, without the so-called “individual mandate” which requires individual taxpayers to maintain minimum essential coverage, the rest of the Patient Protection and Affordable Care Act as amended (widely known as the “ACA”) is “INVALID”. What was the case about? Texas v United States was brought in Judge Reed O’Connor’s court by numerous states and two individual plaintiffs seeking the court’s declaration that the…
In IRS Notice 2018-94, the IRS announced an extension for furnishing 2018 IRS Forms 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage), from January 31, 2019, to March 4, 2019.  The IRS issued this extension in response to requests by employers, insurers, and other providers of health insurance coverage that additional time be provided to gather and analyze the information required to complete the Forms and is largely identical to the…
Earlier this year we reported on legislative changes that modified the requirements related to hardship distributions from 401(k) plans.  Recently, the IRS issued proposed regulations that if finalized will implement those changes. Background The Internal Revenue Code (the “Code”) and associated regulations generally place restrictions on participants’ ability to withdraw their elective deferrals from 401(k) plans.  Similar restrictions exist for Section 403(b) plans. However, there are exceptions to those rules.  One such exception occurs if…
            This is another blog on our monitoring the status of defined benefit multi-employer pension funds.  Since this author last wrote to you, it has been revealed that the Central States Pension Fund is scheduled to become insolvent sometime in 2025.  Worse yet, it has been announced that the multi-employer fund of the Pension Benefit Guaranty Corporation (“PBGC”) which was structured to assist insolvent multi-employer pension funds is also projected to run out of money…
The Puerto Rico Department of the Treasury has announced changes to tax reporting for certain severance payments. As a result of the Labor Transformation and Flexibility Act (Act 4-2017), adopted in 2017, certain limited payments made by an employer to an employee due to separation of employment are classified as “exempt income” under the Puerto Rico Internal Revenue Code. These are not taxable for purposes of Puerto Rico income tax, but the employer must report…
The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2019 (see IRS Notice 2018-63). Most notably, the limitation on annual salary deferrals into a 401(k) plan will increase from $18,500 to $19,000. The dollar limits are as follows:   LIMIT 2018 2019 401(k)/403(b) Elective Deferral Limit (IRC § 402(g))The annual limit on an employee’s elective deferrals to a Section…
Whether a one-time voluntary separation program should be treated as an ERISA-covered severance plan depends on whether the program requires an “ongoing administrative scheme” – a requirement first established by the Supreme Court in Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987). In Fort Halifax, the Supreme Court held that ERISA does not apply to a one-time severance payment —such as one dictated by a state plant-closing law ― that is triggered by…
On October 3, 2018, the IRS issued transitional guidance in Notice 2018-76 concerning the business expense deductions for meals and entertainment following the changes made by the Tax Cuts and Jobs Act (“TCJA”) — which generally disallowed a deduction for expenses related to entertainment, amusement or recreation, but did not specifically address the deductibility of business meal expense. The Notice explained that, under Code Section 274(k), no deduction is allowed for food and beverage expense…
Clients often are surprised to learn they are liable for ERISA statutory penalties associated with participant document requests even though they have retained an independent third party to administer their ERISA welfare benefits plans (such as disability, life, and health plans). It is fairly well established in most of the federal circuits that only the plan administrator, as defined by ERISA, can be penalized for failure to respond to document requests. In virtually all circumstances,…