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Welcome to the Snell & Wilmer Benefits Blog. We will be posting about current employee benefits and executive compensation topics and issues. We invite you to contact the authors with your thoughts or questions.Blog Contributors
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With a New Administration, Will the Department of Labor’s Fiduciary Rule Once Again be Revised?
The Department of Labor’s (the “DOL”) attempts to regulate the conduct of fiduciaries under ERISA and the Code has been mired in controversy. In 2010, the Obama administration’s DOL proposed a fiduciary regulation that was met with so much criticism that it was subsequently withdrawn in 2011. In 2015, the DOL re-proposed a fiduciary regulation that imposed a fiduciary standard on financial advisors giving clients advice about their retirement plan investments. The DOL issued final regulations and the final rule was being implemented when it was struck down by a federal appeals court in June 2018.
In June 2020, the DOL proposed a new fiduciary rule which significantly revises the Obama administration fiduciary rule. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged DOL, ERISA, fiduciary duty, financial institutions, iras, plan investments
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IRS Publishes 2019 Required Amendments List
In our 2019 End of Year Plan Sponsor “To Do” List (Part 3) Qualified Plans, we suggested that sponsors of all qualified retirement plans should be on the lookout for the Internal Revenue Service’s (“IRS”) 2019 Required Amendments List (“2019 RA List”). The IRS recently published Notice 2019-64, which contains the 2019 RA List, https://www.irs.gov/pub/irs-drop/n-19-64.pdf.
Part A of the 2019 RA List addresses changes in qualification requirements that require amendments to most plans (or to the types impacted by the change). The 2019 RA List contains two changes in Part A: those required by final regulations regarding hardship distributions and those required by final regulations regarding collectively bargained cash balance/hybrid defined benefit plans. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 2019, cash balance, hardship, hybrid defined benefit, Part A, Part B, RAL List, Required Amendments 2019, Required Amendments List
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IRS Changes Course on Lump Sums to Retirees
In Notice 2019-18, the Internal Revenue Service (the “IRS”) changed its position and now will permit employers to offer lump sum payments to retirees who are currently receiving annuity payments from a defined benefit plan. This is a reversal from its position in Notice 2015-49, in which the Treasury Department and the IRS stated that they intended to propose amendments to the required minimum distribution regulations to address the payment of lump sums to replace ongoing annuity payments under a defined benefit plan. Prior to the issuance of Notice 2015-49, a number of defined benefit plans started offering retirees who were receiving annuities an opportunity to elect to convert their annuities into lump sum benefits during a limited period of time in what became known as “de-risking” transactions. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged annuities, annuity, IRS, lump sum, notice 2015-49, notice 2019-18, retirees
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IRS Issues Updated Tax Notice for Qualified Retirement Plan Distributions
The Internal Revenue Service (“IRS”) recently released guidance that contains two updated safe harbor notices that retirement plans may use to satisfy the requirements of the Internal Revenue Code (the “Code”) to provide an advance notice to a participant prior to the date on which the participant receives a distribution that meets the requirements for an eligible rollover distribution. This notice is commonly referred to as the “402(f) Notice” after the relevant section of the Code that requires the notice to be provided.
The IRS guidance contains two model notices, one that may be used when distributions are not from a Roth account and a second model notice that may be used for distributions that are from a Roth account. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 402(f), Internal Revenue Code, IRS, model notice, Notice, safe harbor
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Much Ado about $50… IRS Announces Relief for Reduction of Maximum HSA Contributions
On April 3, we blogged about a reduction in the HSA contribution limit for family coverage in 2018 from $6,900 to $6,850. This was a technical change resulting from the Tax Cuts and Jobs Act that adjusted the method for calculating inflation. On April 26, in Revenue Procedure 2018-27, the IRS came through with a fix for this $50 technical issue. For 2018, taxpayers with family coverage under a high deductible health plan (HDHP) may treat $6,900 as the maximum deductible HSA contribution.
Posted in Employee Benefits, Health & Welfare Plans
| Tagged Contribution limit, HSA, revenue procedure 2018-27
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Review of Qualified Plan Compensation Definition May be Needed Due To Tax Reform
Tax reform made few changes that directly impact qualified retirement plans; however, it made some changes that may indirectly impact qualified retirement plans. We previously blogged on the indirect changes that tax reform had on hardship distributions.
Tax reform also made changes to the taxation of certain fringe benefits that may impact the definition of “compensation” used in some qualified plans. Some qualified plans define compensation for plan purposes based on the taxability of a fringe benefit. For example, a qualified plan may exclude from its definition of compensation “moving expenses, to the extent excluded from gross income.” After tax reform, employers may no longer pay or reimburse moving expenses on a tax-free basis. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged compensation, definition, fringe benefits, moving expenses, qualified plan, tax reform
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IRS Publishes 2017 Required Amendments List
In our 2017 End of Year Plan Sponsor “To Do” List (Part 4) Qualified Plans, we suggested that sponsors of all qualified retirement plans should be on the lookout for the Internal Revenue Service’s (“IRS”) 2017 Required Amendments List (“RA List”). The IRS recently published Notice 2017-72, which contains the 2017 RA List, https://www.irs.gov/pub/irs-drop/n-17-72.pdf.
Part A of the RA List addresses changes in qualification requirements that require amendments to most plans (or to the types impacted by the change). The 2017 RA List contains two changes in Part A: those required by final regulations regarding cash balance/hybrid plans and those that address benefit restrictions for certain defined benefit plans that are eligible cooperative plans or eligible charity plans described in Section 204 of the Pension Protection Act of 2006, as amended. Read More ›
Posted in Employee Benefits, Health & Welfare Plans, Qualified Retirement Plans
| Tagged IRS, Notice 2017-72, RA List, required amendments
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IRS Issues Hurricane Harvey Relief
In Announcement 2017-11, the IRS relaxed standards for hardship distributions and loans from qualified retirement plans for those affected by Hurricane Harvey. This relief applies to employees or former employees and their family members who live or work in the disaster areas designated for individual assistance by the Federal Emergency Management Agency (“FEMA”).
The Announcement provides for the following relief:
- Relaxes the administrative rules that apply to hardship distributions by permitting plan administrators to rely on a participant’s representations regarding the need for, and the amount of, the hardship distribution unless the plan administrator has actual knowledge to the contrary.
- Permits hardship distributions for Hurricane Harvey-related needs for family members, including parents, children and spouses.
Posted in Employee Benefits
| Tagged contributions, distributions, hardship, harvey, Hurricane Harvey, IRS, loan, relief, six-month delay
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Missing Participants – Out of Sight Out of Mind?
Imagine it’s March 31 and you are a retirement plan administrator. You have a participant who terminated employment 15 years ago. He turned 70½ last year and now you owe him his first required minimum distribution from the Plan on April 1. You have not thought about this participant or attempted to locate him in the past 15 years. It doesn’t seem like a big deal until you realize if the participant does not receive his required minimum distribution, he will owe a 50% excise tax on the required minimum distribution.
This scenario is common to plan administrators. In trying to keep up with the day to day requirements of administering retirement plans, it is easy to lose touch with former employees or beneficiaries. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged administrators, missing, missing participants, participants, plan administrators, required minimum distribution, rmd, search
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Potential $2.4 Billion and Countless Trees Saved – Department of Labor’s Proposed Rule on Electronic Disclosure for Retirement Plans
The Department of Labor recently issued a proposed rule that allows certain retirement plan disclosures to be posted online, rather than requiring such disclosures to be printed and mailed. The Department of Labor anticipates this rule, if finalized, would save plan sponsors $2.4 billion over the next ten years. The rule is currently in proposed form and will not become effective until 60 days after the final rule is published. As such, plan sponsors may not rely on this proposed rule now.
Current Electronic Disclosure Requirements
In 2002, the Department of Labor issued a safe harbor for the use of electronic media. Read More ›
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