Search the News Archive

Preparing for the 2014 Proxy Season

"This is a good time to start gathering the information you need to prepare your 2014 proxy statement. You should also review your equity and short- and long-term incentive plans to determine ... whether shareholders need to approve: [1] An increase in the share limit; [2] An extension of the term; or [3] Performance goals so that awards qualify as 'performance-based compensation' under Section 162(m).... When drafting your CD&A and other disclosures, you should focus on the quality of the disclosure, rather than the quantity."

Penalties and Reporting for Violations of ACA Requirements

"Given the magnitude of the potential excise taxes that could become due under Code Section 4980D, and the possibility of a complete waiver if errors are quickly addressed, you should: quickly determine whether you have any issues with the portability, access and renewability requirements imposed by the ACA on your single employer group health plan(s), especially any medical reimbursement programs or health reimbursement accounts (HRAs), and periodically review your compliance with these requirements to make sure that problems are promptly identified, corrected and reported (if required)."

Potential Pitfalls for Private Equity under the ACA

"Private equity firms should take note that the 'controlled group' rules used in determining the employer for ACA purposes could potentially combine their fund and their portfolio companies, or combine multiple portfolio companies, as one single employer group. To protect against the risk of ACA employer mandate liabilities, private equity firms (and buyers in general) should review their current structures and update their acquisition diligence and procedures."

Welcome Relief from Penalties for Medical Premium Reimbursement Arrangements

"The transition relief exempts employer payment plans from ... excise taxes [1] for 2014 for employers that are not 'applicable large employers' (ALEs) for 2014, and [2] for January 1 through June 30, 2015 for employers that are not ALEs for 2015. After June 30, 2015, all employers may be liable for excise taxes if they continue these 'employer payment plans' in effect.... The IRS transition relief exempts from the above excise taxes an arrangement that reimburses or pays for the premiums for individual medical insurance policies of 2% or more shareholders, until the later of the date further guidance is issued or December 31, 2015.... This transition relief does not apply to reimbursements or payments for the premiums for individual health insurance policies for employees of an S corporation who are not 2% or more shareholders."

MEWA Reminder: Annual Form M-1 Filings Due March 1

"The Form M-1 requirement applies regardless of whether your plan is insured [or] self-insured, and even applies to sponsors who qualify as a 'bona-fide group or association of employers' for purposes of ERISA. The same March 1 deadline applies, regardless of the actual MEWA plan year.... Since March 1, 2015 is a Sunday, the 2014 Form M-1 must be filed by the next business day, Monday, March 2, 2015....The Form M-1 must be filed electronically using the Form M-1 Online Filing System[.]"

Amendment to San Francisco's Health Care Law Impacts Use of HRAs

"Employers using health reimbursement accounts (HRAs) to satisfy San Francisco's health care mandate may not be able to do so for much longer. The San Francisco Health Care Security Ordinance (HCSO) recently amended its rules to phase out the use of HRAs by 2017. The HCSO requires certain employers to spend a minimum amount of money each quarter on healthcare expenditures on behalf of their covered employees. Employers who use HRAs as a vehicle to meet such requirements must now take action to ensure compliance with the new changes[.]"

401(k) Plan Revenue Sharing Accounts for Plan Sponsors: Don't Choke on Your Piece of the Pie!

"It may sound like your service provider is offering 'free money' when it offers to share part of its revenue sharing payments. But do not jump on the offer without taking the time to satisfy your fiduciary duties, which requires a careful consideration of how the arrangement works, the service provider's role, and the reasonableness of the service provider's compensation.... How [are] revenue sharing amounts credited?... Does plan document language prohibit/prevent revenue sharing accounts? ... Can the plan sponsor receive revenue sharing payments instead of the plan? ... Is service provider compensation reasonable and trackable?"

IRS Begins 409A Audits

"The audits will focus on three issues: [1] Initial elections to defer compensation, including elections as to time and form of payment; [2] Subsequent deferral elections to re-defer compensation; and [3] Payments under 409A, including the six-month delay imposed on specified employees of public companies."

2015 ACA Pay-or-Play Checklist (PDF)

"This checklist is intended to provide a list of common steps that plan sponsors should consider in preparing for compliance with health care reform for 2015. This list is not intended to be all-inclusive and assumes all required compliance steps were taken to-date."

Timeline for Retirement Plan Compliance with Windsor Ruling

"Regardless of whether your plan needs to be amended, you should clarify administrative procedures according to a timeline that shows how your plan handled same-sex spouses before and after the Windsor ruling. The timeline should specifically address the period between June 26, 2013 (the date of the Windsor ruling) and September 16, 2013 (the effective date for the IRS recognition)."