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

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 ›

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IRS Issues Final Regulations for Hardship Distributions

We previously reported on the Bipartisan Budget Act (the “Budget Act”) hardship distribution rule changes for qualified retirement plans. On September 23, 2019, the IRS issued final regulations implementing certain statutory changes to the hardship distributions rules, including those required by the Budget Act. The final regulations closely track the proposed regulations issued in November 2018. The following are some of the more significant changes implemented by the final regulations:

  • Employers must remove the six-month suspension of a participant’s plan contributions following a hardship distribution occurring on or after January 1, 2020.
  • Participants may receive a hardship distribution without first requesting a loan from the plan. 
Read More ›
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Design Considerations for Medical Emergency Leave-Sharing Programs

Employers often allow employees to donate leave to co-workers who are experiencing medical emergencies. If properly structured, these leave transfers can be excluded from the gross income of the donor employee and included in the gross income of the co-worker recipient.  There are no statutes or regulations governing these arrangements. The only formal guidance available to employers seeking this favorable tax treatment for medical emergency leave-sharing programs is Revenue Ruling 90-29 (“Rev. Rul. 90-29”). Other leave-sharing programs, such as those for major disasters or military leave, are subject to different rules and may or may not receive similar tax treatment.

Departure from the medical emergency leave-sharing program design approved by the IRS in Rev. Read More ›

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Reassigning Section 1557: Trump Administration Proposes Reversal of Transgender Benefits Rule

In 2016, the Department of Health and Human Services (“HHS”) Office of Civil Rights issued final regulations implementing the nondiscrimination provisions of the Affordable Care Act (“Section 1557”), which prohibit the categorical refusal of health coverage to transgender participants and require that individuals be treated consistent with their self-selected gender identity. These regulations drew sustained legal challenges and prompted HHS to withdraw, revise and reissue the Section 1557 regulations (the “Proposed Regulations”).

In short, the Proposed Regulations would repeal large portions of the original nondiscrimination rules and would redefine the scope of various protections under Section 1557. Specifically, the Proposed Regulations negate the provisions of Section 1557 covering nondiscrimination based on sex and gender identity. Read More ›

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A Quick Reminder: Three Best Practices for Beneficiary Designations

Three best practices for plan administration that often fall by the wayside include: (1) regularly reminding participants to review and update their beneficiary designations; (2) checking recordkeeping practices to avoid loss of beneficiary designation information; and (3) acquiring identifying information for designated beneficiaries.  Implementing these three best practices could save plan administrators significant costs and headache.

1. Periodic Beneficiary Designation Reminder

Problems arise when plan participants fail to update their beneficiary designations after a change in circumstances (such as marriage, divorce, childbirth, or adoption).  Plan administrators should be cautious when dealing with non-plan documents arising from such events that purport to waive or establish a right to benefits under the plan.  Read More ›

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Arizona’s New Mini-COBRA Statute Has Arrived, but Is Preemption a Concern?

The Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) requires employers who have 20 or more employees and who offer a group health insurance plan to provide enrollees with a right to continue coverage after the occurrence of certain qualifying events.  Effective January 1, 2019, Section 20-2330 of the Arizona Revised Statutes (“A.R.S.”) seeks to extend a similar right to Arizona employees of “small employers” who have at least 1 but not more than 20 employees.  The new rule applies to insured health benefit plans issued or renewed after December 31, 2018.  Self-insured health benefit plans are exempt from Section 20-2330.  Read More ›

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EEOC Removes 30% Incentive Safe Harbor from Wellness Program Regulations

The Equal Employment Opportunity Commission (the “EEOC”) issued final rules, published in the Federal Register on December 20, 2018, that remove the 30% incentive provisions from the EEOC’s wellness program regulations governing the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”).  The final rules are effective January 1, 2019.  As a reminder, the ADA rules previously provided that a wellness program that asks questions about employees’ health or includes medical examinations is not voluntary if the incentive to encourage employee participation in the program exceeds 30% of the total cost of self-only coverage.  The GINA rules previously provided that an employer may not offer an incentive that exceeds 30% of the total cost of self-only coverage to an employee to encourage a spouse’s participation in a health risk assessment under a wellness program. Read More ›

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