Employee Benefits Blog

IRS Approves Additional Leave-Based Donation Programs for COVID-19 Relief

Posted on: July 20, 2020 By: Russell Johnson

We previously posted about two leave-sharing programs available to employers during the COVID-19 pandemic: major disaster leave-sharing programs and medical emergency leave-sharing programs. These leave-sharing programs may allow employees to donate paid leave to co-workers affected by COVID-19. When properly structured under Internal Revenue Service (“IRS”) guidance, the donated leave is excluded from the gross income of the donor employee.

On June 11, 2020, the IRS published Notice 2020-46, which permits employers to establish an additional type of leave-sharing program: a leave-based donation program under which employees can donate vacation, sick, or personal leave in exchange for cash payments that the employer makes to a charitable organization described in Internal Revenue Code (the “Code”) Section 170(c) (a “Section 170(c) Organization”). Read More ›

Posted in Employee Benefits, Health & Welfare Plans | Tagged 2020-46, IRS, leave, leave donation, leave sharing, sick leave, tax

Department of Labor Issues Final Electronic Disclosure Rule

Posted on: July 15, 2020 By: Russell Johnson

On May 21, 2020, the Department of Labor (the “DOL”) announced a final rule establishing a new electronic disclosure safe harbor. The new safe harbor permits retirement plan administrators to deliver certain plan documents by one of two methods: (1) a “Notice and Access” method; or (2) a direct email method. The new safe harbor is unavailable to health and welfare plans. The regulatory electronic delivery safe harbor established by the DOL in 2002 is not superseded by the new safe harbor and is still available as an option for plan sponsors. A brief summary of the new safe harbor follows. Read More ›

Posted in Employee Benefits, Qualified Retirement Plans | Tagged DOL, electronic disclosure, internet availability, NOIA, paper notice, plan administrator, safe harbor

COVID-19-Related Cancellations of NQDC Elections

Posted on: July 7, 2020 By: Greg Gautam and Russell Johnson

As a general matter, deferral elections under non-qualified deferred compensation plans (“NQDCs”) cannot be cancelled unless a NQDC plan participant incurs an “unforeseeable emergency” or “disability” as each such term is defined in Section 409A of the Internal Revenue Code. Internal Revenue Service Notice 2020-50 (the “Notice”) adds a third reason to permit the cancellation of NQDC elections, the receipt of a coronavirus-related distribution (“CRD”) from a qualified retirement plan.

The Internal Revenue Service issued the Notice on June 19^th to, among other things, help plan sponsors allow plan participants to take advantage of the provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) by giving participants greater access to their retirement plan savings. Read More ›

Posted in Executive Compensation | Tagged CARES Act, covid-19, elections, furlough, lay off, nonqualified deferred compensation, nqdc, reduction in hours

In Case You Missed It … Recent Posts From the SW Benefits Update

Posted on: May 22, 2020 By: Greg Gautam

We periodically consolidate our prior blog posts and push them out as a single package to help individuals catch up on what they might have missed with respect to important health and welfare, qualified retirement plan, and executive compensation issues. The posts highlighted here largely focus on the CARES Act and the impact the COVID-19 pandemic is having on employee benefit and executive compensation plans. As always, please feel free to reach out to any member of our employee benefits and executive compensation group with questions. Please enjoy (and have a safe) Memorial Day weekend!

CARES Act Enables Employers to Assist with Student Loan Repayments

Posted on: May 11, 2020 By: Russell Johnson

The Coronavirus Aid Relief and Economic Security Act (the “CARES Act”), signed into law on March 27, 2020, provides employers with a new mechanism to assist their employees with repayment of student loans. Section 2206 of the CARES Act amends Section 127 of the Internal Revenue Code (the “Code”) to allow employers to pay up to $5,250 toward qualified education loans as part of an educational assistance program as long as the payments are made before January 1, 2021. Employers can make payments either directly to the employee or to a lender.

Section 127 provides that amounts paid or expenses incurred by employers under an educational assistance program for the educational assistance of employees are not included in the employee’s gross income, provided that the program satisfies the following requirements:

The program must be a separate written plan of the employer for the exclusive benefit of its employees to provide such employees with educational assistance.

IRS Continues to Extend Key Filing Deadlines in Response to COVID-19

Posted on: April 22, 2020 By: Greg Gautam and Russell Johnson

On April 9. 2020, the Internal Revenue Service (the “IRS”) issued Notice 2020-23, which extends a number of key filing deadlines in the wake of the COVID-19 pandemic. The guidance provides welcome relief to individuals and plan sponsors who must perform certain “time-sensitive actions” on or after April 1, 2020 and before July 15, 2020. For Notice 2020-23 purposes, “time-sensitive actions” are described, in part, in Revenue Procedure 2018-58, and include key filings such as Forms 5500, 990, and Section 83(b) elections. Because the relief is provided only for filings due during the period from April 1, 2020 to July 15, 2020, certain individuals and plan sponsors will remain subject to normal filing deadlines. Read More ›

Posted in Employee Benefits, Executive Compensation, Qualified Retirement Plans | Tagged 5500 deadline, form 990, notice 2020-23, Section 83(b) election

Salary Deferrals in the Time of COVID-19

Posted on: March 31, 2020 By: Marvin "Bucky" Swift

As the saying goes, “drastic times call for drastic measures” and, from an economic standpoint, these are drastic times. To fight the battle to stay in business many employers are considering a wide range of alternatives, including employee furloughs, layoffs and terminations. While some employers may also consider sweeping salary reductions, other employers may consider reducing current salaries with the promise to pay those salaries in the future. Employers taking this latter approach must understand that deferring salaries from 2020 to 2021 (or to some other future year) can create compliance issues under Section 409A of the Internal Revenue Code (“409A”). Read More ›

Posted in Employee Benefits, Executive Compensation, Qualified Retirement Plans | Tagged 409A, coronavirus, covid-19, deferred compensation, pandemic, salary deferral

U.S. Supreme Court to Decide Standing Question on ERISA Pension Lawsuits

Posted on: March 9, 2020 By: Russell Johnson

The U.S. Supreme Court is mulling over whether retirement plan participants must demonstrate individual or imminent risk of financial loss before seeking a breach of fiduciary duty action under the Employee Retirement Income Security Act of 1974 (“ERISA”). On January 13, 2020, the U.S. Supreme Court heard oral arguments in the matter of Thole v. U.S. Bank, N.A. (No. 17-1712), and the Court’s coming decision could have wide-reaching implications for participant standing in ERISA causes of action.

The plaintiffs in Thole, who are participants in a U.S. Bank defined benefit pension plan (the “Plan”), allege that the defendants breached their fiduciary duties by mismanaging and failing to diversify the Plan’s assets. Read More ›

Posted in Employee Benefits, Qualified Retirement Plans | Tagged diversify, fiduciary duty, overfunding, pension plan, standing, Supreme Court, thole, us bank

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