News Items

"The IRS has three safe harbor compensation definitions, in addition to IRC 415(c)-2(b) compensation (statutory compensation), as they relate to a qualified retirement plan that will satisfy both IRC 415(c) and IRC 414(s). The three compensation definitions following the statutory definition of compensation are safe harbor definitions of compensation that are adjustments to the statutory definition. There are also safe harbor adjustments to IRC 414(s) that can be made. Each of these safe harbor definitions will be defined and compared in [this article]."

12 pages. "By embracing new technologies, customization opportunities, and risk-mitigation solutions, DC plans have the potential to help workers meet their retirement income challenges. They also have the potential to help employers, both by mitigating the costs associated with older workers staying on the job because they can't afford to retire, and by giving retirees an incentive to stay in their workplace plans."

"Among low income households making $25,000 or less, 401(k) participants saved 10 times more on average than their peers without access to a plan and 20 times more than those who have access but choose not to participate.... Plan participants are more likely than eligible participants to report higher progress toward a variety of financial objectives such as reducing student loans (72% and 38%, respectively) and saving for emergencies (73% and 41%, respectively). Additionally, plan participants are twice as likely to save for retirement via traditional IRAs or other accounts."

"Key substantive changes for all retirement plans include: Documents required with determination letter requests.... New categories for determination letter requests.... Lump sum windows.... Mailing addresses.... Several updates relate to preapproved plans: Tax-exempt status of trusts/custodial accounts.... Eligibility to request determination letters.... Procedures for requesting determination letters on Form 5307."

"[S]ome of the primary factors that may help determine which type of retirement plan is best: Are there Highly Compensated employees? ... Is there a desire to offer 'exotic' investment choices? ... Is there a for-profit affiliate? ... Are there employees or other plan participants who pay New Jersey income taxes?"

11 pages. "The instructions have been updated to reflect the penalty changes under section 6652(e) for a plan failure to file a return. The penalties have been increased to $250 a day, up to a maximum penalty of $150,000 per plan year applied to returns required to be filed after December 31, 2019." [Also available: 2019 IRS Form 5500-EZ]

"Though short on substantive changes, an extensive comment-and-response section provides more guidance to the NJDOL's interpretation and enforcement of the ESLL. Significantly, it discusses the ESLL's interplay with collective bargaining agreements (CBAs), existing paid time off (PTO) policies, and employee leave laws. It also explains the permissible use and payment of ESLL."

"What’s New: ... The additional tax on early distributions doesn't apply to qualified disaster distributions."

"The [Federal Retirement Thrift Investment Board] proposes to reduce paperwork burdens on participants who are eligible to make catch-up contributions, by removing the regulation that requires them to submit two different contribution election forms."

15 pages. "All private employers with at least one employee in Massachusetts have PFML obligations, including collecting and remitting covered employees' contributions to the trust fund or maintaining an approved private plan. Employers with 25 or more employees in the state must also contribute to the PFML program, but smaller employers are exempt from making contributions."

"On January 21, 2020, the High Court decided not to hurry the decision of whether to hear a case appealing a decision from Texas that the ACA is unconstitutional.... [The] Court will not decide whether to take the case for months and, if it takes it, won't hear it until the Fall. This means the case will likely not be decided before the November Presidential election." [U.S. House of Representatives v. Texas, No. 19-481 (cert. pet. filed Jan. 3, 2020; motion to expedite consideration denied Jan. 21, 2020)]

"[1] Revisit plan goals and objectives.... [2] Understand your risks.... [3] Review your glide path.... [4] Optimize your expected return on assets (EROA).... [5] Re-evaluate your interest rate hedge.... [6] Understand future contribution requirements.... [7] Take advantage of low borrowing costs.... [8] Implement strategies to lower PBGC premiums.... [9] Review your participant data.... [10] Audit forms and procedures."

"In granting certiorari, the Supreme Court is poised to resolve a conflict over PBM regulation. The D.C. and Eighth Circuits hold that all PBM regulation is preempted, while the First Circuit holds that none is preempted.... The decision in Rutledge also, hopefully, will clarify the scope of ERISA preemption by adding to over fifteen Supreme Court decisions on what it means for a state law to 'relate to' an ERISA plan." [Pharmaceutical Care Mgmt. Assoc. v. Rutledge, Nos. 17-1609 and 17-1629 (8th Cir. June 8, 2018; cert. pet. granted Jan. 13, 2020)]

"Most plans have a set period (such as March 31 of the following year, for a calendar year plan) to submit expenses for the prior year. If any money is left over after that period, the employer has four options.... [T]he employer should make sure that its plan document permits any or all of these options ... Employers using a third-party administrator (TPA) to administer the health FSA should also make sure the option they choose can be handled by the TPA."

"[M]ost companies that have incorporated ESG into their respective executive compensation programs have done so on a mostly symbolic basis ... [T]hose companies that want to make more than just a symbolic gesture should consider taking the following fundamental steps. [1] Select a measure that is right for you ... [2] Consider how much impact ESG should have ... [3] Consider using a [plus/minus (±)] modifier so it has more impact than a symbolic carve-out ... [4] Consider using discretion ... [5] Disclosure and communication."

"When asked to identify cost management strategies, employers typically don't mention what may be the simplest and least disruptive way to reduce their benefit costs: re-negotiating their pharmacy benefit management (PBM) contract."

"The IRS ... extended the deadline for furnishing 2020 Forms 1095-C to individuals from January 31, 2020 to March 2, 2020. The deadline for filing the forms with the IRS electronically ... is March 31, 2020.... The Massachusetts 1099-HC must be provided to employees by January 31, 2020 ... [A] copy of the ACA Form 1095-C must be submitted by June 30, 2020 (District of Columbia) or by March 31, 2020 (New Jersey).... [E]mployers should ensure that they submit an Annual Reporting Form for 2019 to the San Francisco Office of Labor Standards Enforcement by April 30, 2020."

"Starting with the 2021 Plan Year, 401(k) plan sponsors will need to track hours of service performed by part-time employees ... and will be required to permit certain part-time employees to make elective deferrals in a 401(k) Plan beginning in the 2024 Plan Year.... The SECURE Act increases by ten-fold the penalties in connection with failing to file an annual report for a qualified retirement plan.... [E]mployers should analyze their leave programs and make sure they do not want to make changes to take the tax credit in 2020.... [T]ax-exempt employers no longer need to include the value of qualified transportation fringe benefits in their UBIT."

"Ease of access and ease of use need to be the highest priority if we are going to get the right people to use their benefits at the right time. It's also an often overlooked question when pursuing personalization. And it becomes even more important to consider when you're using personalization and engagement to drive health strategy."

"The Blue Cross Blue Shield Association and 18 Blue Cross Blue Shield health insurers are working with Civica Rx, a non-profit formed two years ago to try to increase competition for hospital-based generic drugs. The new subsidiary will focus on drugs that members can purchase via mail order or in retail pharmacies. It aims to launch new rivals starting in 2022 for about 7 to 10 expensive generic drugs where there is currently only one manufacturer[.]"

"[1] Expanding leave entitlement by redefining threshold eligibility.... [2] Improper identification and description of your FMLA leave year.... [3] Inaccurate or non-compliant rules about required or permissive substitution of paid time off and/or disability benefits during leave.... [4] Failing to describe employees' notice obligations (or failing to accurately capture difference between foreseeable and unforeseeable situations).... [5] Outdated information about military family leave entitlements.... [6] Explanation of what happens if employee fails to pay benefit premiums during leave.... [7] Overstating fitness for duty requirements.... [8] Failing to attach DOL's FMLA Poster or include all of its detail in the policy.... [9] No state law addendums where required  ... [10] Leaving out descriptions of employer's recertification and second/third opinion rights."

"The American College of Employee Benefits Counsel hereby invites academics, practitioners, and any other individuals interested in the employee benefits system to submit proposals to simplify employee benefits law. A $10,000 prize for the winning submission will be awarded ... [E]ach proposal should include [a detailed analysis] that: [1] Thoroughly details the simplification that will result from the proposal and the benefits of that simplification.... [2] Explains how the proposal either enhances or, at the least, has no material adverse impact on employee/participant rights; and [3] Identifies and analyzes other ancillary advantages or benefits and any policy tradeoffs.... The Simplification Award Template ... provides comprehensive guidance on the format of a submission.... Submissions for the Third Annual ACEBC Simplification Award must be received no later than Midnight, Eastern Time on May 1, 2020."

"With the passage of the SECURE Act, ... IRA Account owners must now reduce their intended [Qualified Charitable Contributions (QCDs)] by any contribution amounts made into their IRAs after age 70-1/2 (the age cap in place to make IRA contributions before passage of the SECURE Act), to the extent they have not already been used to reduce their QCD. In other words, IRA contributions made after age 70-1/2 cannot be turned around to be used as QCDs… and the rules effectively require a 'LIFO' treatment that ensures post-age 70-1/2 contributions will first and foremost be used to reduce future QCDs."

Rev. Nov. 2019. "Small businesses may choose to offer IRAs, defined contribution plans, or defined benefit plans. Many financial institutions and retirement plan practitioners make available one or more of these retirement plans that have been pre-approved by the IRS. [This publication includes] a chart outlining the advantages of each of the most popular types of IRA-based and defined contribution plans and an overview of a defined benefit plan."

"Given the challenges associated with common law marriage, here are some best practices for employers to consider: [1] Determine if you have employees in states that allow common law marriage.... [2] Consider whether qualifying events that result in a person adding or dropping a spouse should require evidence (and what evidence is required). [3] Include the evidence requirement in the applicable plan language.... [4] Apply the evidence requirement consistently with all impacted employees."