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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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In Case You Missed It … Recent Posts From the SW Benefits Update
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!
Posted in Employee Benefits, Executive Compensation, Health & Welfare Plans, Health Care Reform, Qualified Retirement Plans
| Tagged blog, CARES Act, covid-19, Executive Compensation, health and welfare, retirement plan, roundup
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CARES Act Enables Employers to Assist with Student Loan Repayments
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.
Posted in Employee Benefits, Health & Welfare Plans
| Tagged CARES Act, covid-19, educational assistance, Section 127, Section 2206, Student Loans
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IRS Continues to Extend Key Filing Deadlines in Response to COVID-19
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
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Salary Deferrals in the Time of COVID-19
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
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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 ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged diversify, fiduciary duty, overfunding, pension plan, standing, Supreme Court, thole, us bank
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Congress Giveth and They Taketh Away — Recent Health Plan Changes
In enacting the Further Consolidated Appropriations Act, 2020, (the “Act”), Congress, among other changes, enacted the following key changes affecting employer group health plans:
- Repeal of the Cadillac Tax: Most notably, and a huge relief to most employers, Congress repealed the Cadillac tax. The Affordable Care Act (“ACA”) added a requirement requiring employers to pay a 40% excise tax on the value of “rich” health plans (i.e., those that exceed $10,200 for an individual and $27,500 for a family, indexed for inflation). The excise tax was originally scheduled to take effect for taxable years beginning after 2017, but it was delayed two years by subsequent legislation.
Posted in Employee Benefits, Health & Welfare Plans, Health Care Reform, Qualified Retirement Plans
| Tagged ACA, Affordable Care Act, Cadillac tax, Congress, PCORI
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New Year, New Age: the SECURE Act Increases the Required Minimum Distribution Age to 72
On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act, 2020, a spending bill that includes the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”). The SECURE Act initially passed the House in May, as discussed in our S&W Benefits Blog “The SECURE Act – A Primer on the top Six SECURE Act Changes that could be coming to Retirement Plans Next Year”, but fizzled out in the Senate. The SECURE Act was later added to the Further Consolidated Appropriations Act, 2020, which passed Congress and was sent to the White House on December 19. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged individual retirement accounts, iras, qualified retirement plans, required minimum distributions, rmd, SECURE ACT
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Enjoy the End of the Decade with Some Employee Benefit Plan Checklists
Each year, we publish health and welfare, cost-of-living, qualified retirement plan, and executive compensation plan checklists to help individuals and employers stay apprised of updates to the law of employee benefits. We just published the last of these annual checklists. In case you missed them, the links are below.
Happy Holidays!
2019 End of Year Plan Sponsor “To Do” List (Part 1) Health & Welfare
2019 End of Year Plan Sponsor “To Do” List (Part 2) Annual Cost of Living Adjustments
2019 End of Year Plan Sponsor “To Do” List (Part 3) Qualified Retirement Plans
2019 End of Year Plan Sponsor “To Do” List (Part 4) Executive Compensation
Posted in Employee Benefits, Executive Compensation, Health & Welfare Plans, Health Care Reform, Qualified Retirement Plans
| Tagged checklists, COLA, cost-of-living, ERISA, Executive Compensation, Internal Revenue Code, qualified retirement plan, to do list
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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 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.
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged amendment, bba, Bipartisan Budget Act, distributions, hardship, natural disasters, qualified plan, withdrawals
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