The February 24, 2023, issuance by the IRS of proposed regulations on the use of forfeitures in qualified retirement plans provides some welcome clarity, regulatory house cleaning, and relief for plan sponsors. With a proposed effective date of January 1, 2024, these regulations should prompt plan sponsors to review their plan language and procedures for
Raymond P. Turner
Dealing With Undocumented Workers In ERISA Plans
Whether because of the tight U.S. labor market or flawed onboarding processes, many undocumented workers are becoming participants and accruing benefits in ERISA-governed employee benefit plans. Dealing with such plan participation adds yet another layer of administrative difficulty and legal exposure for employers who hire employees not authorized to work in the U.S.
ERISA does…
Fifth Circuit ERISA Decision Denies Widow Paid-For Life Insurance Benefits
On October 19, 2021, the Fifth Circuit Court of Appeals denied a widow supplemental group life insurance benefits of $300,000 upon her husband’s death even though he had paid the premiums for the coverage for four years through payroll deductions by his employer, National Oilwell Varco. The case, Talasek v. National Oilwell Varco, L.P., appealed…
Remote Employees: The Geographic Tax and Benefits Challenges
As the COVID-19 vaccine has become readily available, and many employers contemplate employees returning to the office to work, both employers and employees have accelerated demands for new and permanent remote work location arrangements for a variety of jobs. Employers across the country are revisiting their business strategies, employment policies, and related legal and tax…
The IRS Released the Final Regulations for Plan Loan Offset Rollovers
The IRS released final regulations on the provisions of the Tax Cuts and Jobs Act (“TCJA”) that added Section 402(c)(3) of the Internal Revenue Code, effective January 1, 2018, special rollover relief for qualified plan loan offset (“QPLO”) amounts.
As per our initial blog on the TCJA change, distributing a plan loan offset occurs under…
California Imposes New Flexible Spending Account Notice Requirement On Employers
Beginning with plan years that end in 2020 California employers maintaining flexible spending accounts, or “FSAs,” will be required by a new amendment to the state’s Labor Code, enacted August 30, 2019, to notify the employee participants of any “deadline to withdraw funds before the end of the plan year.” FSAs are expense reimbursement plans…
EIGHTH CIRCUIT RULES AGAINST THIRD PARTY ADMINISTRATOR IN CROSS-PLAN OFFSETTING IN GROUP HEALTH PLANS
On January 15, 2019, the federal Eighth Circuit Court of Appeals issued its decision in Peterson v. UnitedHealth Group, Inc., 913 F.3d, 769 (8th Cir. 2019), in which the Court upheld the federal district court’s holding that UnitedHealth Group, Inc. (“United”) was not authorized to reduce (or “offset”) payments to medical providers under ERISA…
DEDUCTIONS AND W-4S: EARLY 2018 RESPONSES TO TAX REFORM
The Tax Cuts and Jobs Act signed into law on December 22, 2017 is prompting some prudent early tax 2018 actions by both employers and employees related to employee benefits. Many employers are electing to make additional employer qualified plan contributions for the 2017 tax year when the employer’s tax rate may be higher and…
2018 Tax Reform Series: A Change to Participant Loan Rollovers
One welcome qualified plan change under the Tax Cuts and Jobs Act is the extension of the period within which a participant may pay the amount of an “offset” of an outstanding plan loan to another qualifying plan or IRA to accomplish a tax-free rollover of the loan offset amount. The change became effective January…
FORFEITURE FREEDOM
Some of our employer client sponsors of pre-approved 401(k) plans have contacted us regarding plan amendment notices received recently from their prototype or volume submitter plan document sponsors relating to the expanded use of forfeitures in their plans. An employer is informed either that an amendment has already been made for all employers that have…