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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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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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ISS Expands List of Egregious Equity Plan Factors
As reported in prior blogs, Institutional Shareholder Services Inc. (“ISS”), a leading proxy advisory firm, uses a proprietary “Equity Plan Scorecard” approach to evaluate public company equity compensation plans and will recommend a “for” or “against” vote depending on a combination of plan features, plan cost, company grant practices, etc. Last week ISS issued its Proxy Voting Guideline Updates for 2020, which are generally effective for meetings on or after February 1, 2020 (“2020 Update”). The 2020 Update, among other things, makes changes to the current Equity Plan Scorecard.
Regardless of how a plan scores under the current Equity Plan Scorecard, ISS will generally recommend a vote against a plan proposal if any of the following egregious factors apply: (i) accelerated vesting pursuant to a liberal change in control definition; (ii) provisions that permit the repricing and/or cash out of underwater options or stock appreciation rights without shareholder approval, (iii) provisions that make a plan a vehicle for problematic pay practices or create a pay for performance disconnect, (iv) the plan is excessively dilutive to shareholder holdings, or (v) the plan contains other features that have a significant negative impact on shareholder interests. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 2020, Glass Lewis, guideline update, ISS, problematic pay practices, Proxy voting
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California Cares . . . About Employees Losing Flexible Spending Account (“FSA”) Funds
California recently approved Assembly Bill 1554, adding a flexible spending account notice requirement to § 2810.7 of the California Labor Code. The new law, which takes effect January 1, 2020, states:
(a) An employer shall notify an employee who participates in a flexible spending account, including, but not limited to, a dependent care flexible spending account, a health flexible spending account, or adoption assistance flexible spending account, of any deadline to withdraw funds before the end of the plan year. Notice shall be by two different forms, one of which may be electronic.
(b) Notices made pursuant to subdivision (a) may include, but are not limited to the following: (1) Electronic mail communication. Read More ›
Posted in Employee Benefits, Health & Welfare Plans, Health Care Reform
| Tagged compliance, flexible spending, FSA, Notice
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Retirement Plan Dreams May Go Up in Smoke for Marijuana Companies
Companies in the medical and recreational marijuana industry continue to face an uphill battle for access to financial services. Although a number of states have legalized the medicinal and/or recreational use of marijuana, marijuana remains classified as a Schedule I drug subject to the federal Controlled Substances Act. As such, financial services companies that wish to serve the marijuana industry could find themselves subject to the Bank Secrecy Act and the criminal money laundering provisions. Those challenges are well documented. However, do the same types of challenges exist if a marijuana company wants to sponsor a qualified retirement plan for its employees? Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 401(k), controlled substances act, financial services, IRS, marijuana, money laundering, qualified plan, regulation, weed
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Must Drug Manufacturer Coupons Count Toward Annual Maximum Out-Of-Pocket Limits? Stay Tuned …
What is the Annual Maximum Out-Of-Pocket Limit (“MOOP”)?
MOOP is the most a participant must pay for covered services under a group health plan in a plan year. After a participant spends this amount on deductibles, copayments, and coinsurance, the health plan must pay 100% of the costs of covered benefits.
What are Drug Manufacturers’ Coupons (“Coupons”)?
Many drug manufacturers offer coupons to patients to reduce out-of-pocket costs. Drug manufacturers may offer these coupons for various reasons including: (1) to compete with another brand name drug in the same therapeutic class; (2) to compete with a generic equivalent when released; or (3) to assist consumers whose drug costs would otherwise be extremely high due to a rare or costly condition. Read More ›
Posted in Employee Benefits, Health & Welfare Plans, Health Care Reform
| Tagged coupons, HHS, MOOP, NBPP, Notice, out-of-pocket maximum
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Form 5500 Penalty Relief Deadline Approaching for MEPs
On July 24, 2019, the Department of Labor (the “DOL”) issued Field Assistance Bulletin 2019-01 (the “Bulletin”), which provides transition relief to multiple employer plans (“MEPs”) that failed to comply with certain annual reporting requirements.
The Bulletin focuses on a Form 5500 reporting requirement added by the Cooperative and Small Employer Charity Pension Flexibility Act, which requires MEPs to report on the Form 5500 all participating employers and an estimate of the percentage of contributions made by participating employers during the plan year. This disclosure requirement first became effective for plan years beginning after December 31, 2013.
The DOL has identified widespread and ongoing failure by MEPs to comply with the above reporting requirement. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged compliance, Form 5500, MEP, multiple employer plan, participating employer, transition relief
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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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