Beginning as early as January 15, 2023, certain employers will need to ensure they are complying with the District of Columbia’s Transportation Benefits Equity Amendment Act of 2020, also known as the “Parking Cash Out Law.”

Parking Cash Out Options

By January 15, 2023, or the end of their parking lease, whichever is later, “Covered Employers” with at least 20 D.C. employees that offer free or subsidized leased parking benefits must comply with the law by adopting one of the following “Parking Cash Out Options”: More…

For those with an eye on ERISA and its fiduciary rules, the past few years have caused whiplash when it comes to environmental, social, and corporate governance (“ESG”) investments in retirement plans.  With a new rule from the Department of Labor imminent, let’s review where we are, how we got here, and what’s next.

ERISA generally requires those making investment decisions for retirement plans to do so solely in the best interests of plan participants, taking into account pecuniary factors like fees, and risks and returns.  Guidance issued during the Obama administration indicated an openness to non-pecuniary factors, such as ESG, as a “tie-breaker”.  The tide turned during the Trump administration, with additional guidance and a final rule eventually issued, which required plan fiduciaries to “select investment and investment courses of action based solely on financial considerations relevant to the risk-adjusted economic value of a particular investment or investment course of action.”

In an unsurprising twist, the Biden administration soon reversed course, blocking the Trump administration’s final rule and issuing its own proposed rule to “remove barriers to plan fiduciaries’ ability to consider climate change and other environmental, social and governance factors when they select investments and exercise shareholder rights.”  A DOL fact sheet seeks to address concerns that the rule fundamentally changes a fiduciary’s duties, by highlighting the fact that the proposed rule “retains the core principle that the duties of prudence and loyalty require ERISA plan fiduciaries to focus on material risk-return factors and not subordinate the interests of participants and beneficiaries (such as by sacrificing investment returns or taking on additional investment risk) to objectives unrelated to the provision of benefits under the plan.”

The final rule is now under review with the White House and is expected to be released soon.  We will provide an update when that occurs.

Meanwhile, four House Republicans recently introduced the Safeguarding Investment Options for Retirement Act, with the stated purpose of protecting “investors from having politically motivated ‘woke’ environmental, social, and governance (ESG) issues put ahead of hardworking Americans’ investment return.”

What is a plan sponsor or committee to do?  Whatever happens in the upcoming midterms, we expect the rules regarding ESG funds in retirement plans to remain a contentious subject, potentially changing with each presidential administration.  It is imperative for plan fiduciaries to work closely with the plan’s financial advisors and legal counsel to ensure that all relevant factors—including the latest guidance on ESG—are being considered when making plan investment decisions. 

Members of the Jackson Lewis Employee Benefits practice group and the newly launched Environmental, Social, and Governance (ESG) service group are available to assist.  Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

A New York federal court recently held that a service provider for employer-sponsored retirement plans was not liable as a fiduciary under the Employee Retirement Income Security Act (“ERISA”) when it used participant information to encourage certain plan participants to roll over assets into its more expensive managed account program.  Carfora v. Teachers Ins. Annuity Ass’n of Am., No. 21 Civ. 8384, 2022 U.S. Dist. LEXIS 175613 (S.D.N.Y. Sept. 27, 2022). More…

The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations on benefits and contributions for retirement plans generally effective for Tax Year 2023 (see IRS Notice 2022-55). Most notably, the limitation on annual salary deferrals into a 401(k) or 403(b) plan will increase from $20,500 to $22,500 and the dollar threshold for highly compensated employees will increase to $150,000. The more significant dollar limits for 2023 are as follows:




401(k)/403(b) Elective Deferral Limit (IRC § 402(g)) The annual limit on an employee’s elective deferrals to a 401(k) or 403(b) plan made through salary reduction.



Government/Tax Exempt Deferral Limit (IRC § 457(e)(15)) The annual limit on an employee’s elective deferrals concerning Section 457deferred compensation plans of state and local governments and tax-exempt organizations.



401(k)/403(b)/457 Catch-up Limit (IRC § 414(v)(2)(B)(i)) In addition to the regular limit on elective deferrals described
above, employees over the age of 50 generally can make an additional “catch-up” contribution not to exceed this limit.



Defined Contribution Plan Limit (IRC § 415(c)) The limitation for annual contributions to a defined contribution
plan (such as a 401(k) plan or profit sharing plan).



Defined Benefit Plan Limit (IRC § 415(b)) The limitation on the annual benefits from a defined benefit plan.



Annual Compensation Limit (IRC § 401(a)(17)) The maximum amount of compensation that may be taken into account for benefit calculations and nondiscrimination testing.

$305,000 ($450,000 for certain gov’t plans)

$330,000 ($490,000 for certain gov’t plans)

Highly Compensated Employee Threshold (IRC § 414(q)) The definition of an HCE includes a compensation threshold for
the prior year. A retirement plan’s discrimination testing is based
on coverage and benefits for HCEs.

$135,000 (for 2023 HCE determination)

$150,000 (for 2024 HCE determination)

Key Employee Compensation Threshold (IRC § 416) The definition of a key employee includes a compensation threshold. Key employees must be determined for purposes of applying the top-heavy rules. Generally, a plan is top-heavy if the plan benefits of key employees exceed 60% of the aggregate plan benefits of all employees.



SEP Minimum Compensation Limit (IRC § 408(k)(2)(C)) The mandatory participation requirements for a simplified
employee pension (SEP) includes this minimum compensation threshold.



SIMPLE Employee Contribution (IRC § 408(p)(2)(E)) The limitation on deferrals to a SIMPLE retirement account.



SIMPLE Catch-up Limit (IRC § 414(v)(2)(B)(ii))) The maximum amount of catch-up contributions that individuals
age 50 or over may make to a SIMPLE retirement account or SIMPLE 401(k) plan.



Social Security Taxable Wage Base See the 2023 SS Changes Fact Sheet. This threshold is the maximum amount of earned income on which Social Security taxes may be imposed (6.20% paid by the employee and 6.20% paid by the employer).



Please contact a team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

Withdrawal liability is a statutory obligation under the Employee Retirement Income Security Act (ERISA) that any unionized employer may have to confront. Exemptions from liability include one applicable to construction industry employers. More…

As we enter the fourth quarter of 2022, sponsors and administrators of employee benefit plans have a lot to juggle.  From open enrollment and required notices to plan document deadlines, it is a busy time of year.  Yet, there always seems to be something new to add to the mix.   This year is no different.  Following are some 4th quarter topics for consideration: 

RxDC Reporting Is Due December 27, 2022.   The Prescription Drug Data Collection (RxDC) reporting requirement was added as part of the Consolidated Appropriations Act, 2021.  It requires plans to annually submit to the Department of Health and Human Services, Department of Labor, and Department of Treasury a report detailing the plan’s prescription drug usage, including the most frequently dispensed, the most expensive, and those with the greatest increase in cost, among others.  The Centers for Medicare & Medicaid Services (CMS) is collecting this information on behalf of the Departments and has issued detailed reporting instructions.

Although plans can contract with their third-party administrators, pharmacy benefit managers or other plan providers to meet these requirements, not all providers are willing to report all of the data elements.  This means that employers may need to register for a Health Insurance Oversight System (HIOS) account to submit some of the required information. 

With the first RxDC reporting deadline of December 27, 2022, fast approaching, plan administrators should discuss RxDC reporting with their providers now to develop a compliance plan.  As the CMS warns, HIOS accounts can take up to two weeks to create.  So, waiting until December to start working on this is not recommended.  

HDHP Amendments to Cover Insulin.  Making a splash across the headlines was the Inflation Reduction Act of 2022 (IRA), which President Biden signed on August 16, 2022.  The 273 pages of text make sweeping changes.  However, few will affect employer-sponsored benefit plans, and most of those will have only indirect effects. 

One change that does directly affect a High Deductible Health Plan (HDHP) is the exception added to Section 223 of the Internal Revenue Code effective for plan years beginning after December 31, 2022, to enable HDHPs to cover the cost of insulin without first meeting the deductible.  This first dollar coverage for insulin will protect Health Savings Account (HSA) eligibility for those who require an insulin regimen.  Employers should determine if their plan requires an amendment to implement this change. 

Contraceptive Coverage Requirements, Reimbursements.  On July 28, 2022, the Departments of Labor, Treasury, and Health and Human Services (collectively, the Departments), jointly issued Frequently Asked Questions About Affordable Care Act Implementation Part 54 (the FAQs).  The FAQs address required coverage of contraceptives by non-grandfathered group health plans and insurers, including guidance designed to:

  • Confirm the contraceptive coverage mandate;
  • Clarify the rules regarding medical management techniques for contraceptive coverage;
  • Address federal preemption of state law; and
  • Discuss enforcement actions for noncompliance. 

The FAQs also confirm that health reimbursement arrangements, health savings accounts, and health flexible spending accounts can reimburse the costs of over-the-counter contraception that is not otherwise paid or reimbursed by a health plan or issuer.  Employers should review their plans to determine if any amendments are needed to conform to the FAQs. 

Sponsors of retirement plans will get some welcome relief, however:

The CARES Act and Relief Act Amendment Deadline for Retirement Plans generally is delayed until December 31, 2025.  In August, the IRS issued IRS Notice 2022-33 extending the deadline for sponsors to amend their retirement plans to reflect certain changes under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), Section 104 of the Bipartisan American Miners Act (Miners Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). That guidance failed to delay the deadline to adopt other amendments due by the end of 2022, including amendments to implement certain optional pandemic-related distribution and loan provisions permitted under the CARES Act and the provisions of Section 302 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act) affording favorable tax treatment to qualified individuals with respect to qualified disaster distributions.

To align the amendment deadlines for the referenced Acts, the IRS issued Notice 2022-45 on September 26, 2022.  Notices 2022-33 and 2022-45, together, postpone the deadline for sponsors of nongovernmental plans to adopt amendments to conform their retirement plans to the Acts until December 31, 2025. The deadline for governmental plans likewise is extended generally until 90 days after the close of the third regular session of the applicable legislative body that begins after December 31, 2023. 

By that time, sponsors may have additional amendments to make, owing to a number of legislative proposals (referred to colloquially as SECURE 2.0) that have been under consideration since the passage of the SECURE Act of 2019.  These proposals include the Securing a Strong Retirement Act, the RISE & SHINE Act, and now the Senate’s Enhancing American Retirement Now (EARN) Act, which was approved by the Finance Committee in June, but not formally introduced until the Act language was released in September.  Monitor our blog for more on these developing laws and contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

On August 3, 2022, retirement plan sponsors welcomed IRS Notice 2022-33 (“Notice”), which extends the deadline for adopting amendments to comply with the Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act”), Section 104 of the Bipartisan American Miners Act (“Miners Act”), and certain provisions of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).  For most plans, the amendment deadline is delayed three years to December 31, 2025, but some amendments are still required before year-end.

Deadline Extension

The most helpful delay applies to a CARES Act provision that requires changes to defined contribution plan language governing required minimum distributions.  Plan sponsors were struggling with the concept of amending the plan language governing the distribution timing rules for benefits paid upon the death of a participant, given that the governing Regulations are still in proposed form.  Employers now expect the Regulations to be finalized before the 2025 amendment deadline.

Under the Notice, the deadline for amending a plan for the 2020 required minimum distribution waiver under the CARES Act was extended to December 31, 2025.  Likewise, the SECURE Act requirement to change the age at which required minimum distributions begin has been delayed until 2025.  Other amendments for which the deadline has been delayed include the change in eligibility rules for part-time employees who work at least 500 hours during each of three consecutive years and permitting penalty-free withdrawals of qualified birth or adoption distributions of up to $5,000 per child. The extension also applies to the provision of the Miners Act, which permits in-service distributions after age 59½ in pension and governmental 457(b) plans.

Non-Governmental Qualified Plans, 403(b) Plans, and IRAs

For those required amendment items covered by the Notice, the December 31, 2025, amendment deadline applies to non-governmental qualified plans, 403(b) plans not maintained by a public school, and IRAs. For governmental qualified plans and 403(b) plans maintained by a public school, the deadline is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023.  Finally, the deadline for amending a governmental plan under Section 457(b) is the later of 90 days after the close of the third regular legislative session of the legislative body with the power to amend the plan that begins after December 31, 2023, or, if applicable, the first day of the first plan year beginning more than 180 days after the date of notification that the plan was administered so it is inconsistent with the requirements of Section 457(b).

CARES Act Deadline Not Universally Extended

Commentators are accusing the IRS of having missed an opportunity to extend meaningful relief by failing to include all provisions of the CARES Act.  There is speculation that if Congress passes the retirement plan legislation currently pending (SECURE 2.0), the deadline for these missed CARES Act provisions will also be extended.  However, if additional relief is passed, given the busy year-end schedules and winter holidays, plans may have already been amended by the time it is announced.

2022 Action Items

The deadline for the following plan amendments remains December 31, 2022:

  1. Amending the plan to allow coronavirus related distributions;
  2. Amending the plan to allow increased limits on plan loans; and
  3. Amending the plan to allow an extended loan repayment period.

Similarly, the amendment deadline for the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (included in the Consolidated Appropriations Act of 2021) which provided limited distribution and loan relief for participants in qualified disaster areas was not extended.

If you have questions or would like assistance drafting your 2022 year-end amendments, please contact your Jackson Lewis attorney.

The No Surprises Act (Act), which establishes protections for health plan participants from surprise medical billing, was passed in late 2020 as part of the 2021 Consolidated Appropriations Act. On October 7, 2021, the Departments of Labor, the Treasury, and Health and Human Services (collectively, Departments) issued Interim Final Rules implementing certain provisions of the Act. On February 23, 2022, and then again on July 26, 2022, the District Court for the Eastern District of Texas vacated several key provisions of the Interim Final Rules. Following the February 23 ruling, the Departments issued a Memorandum Regarding Continuing Surprise Billing Protections for Consumers, stating the Departments’ intent to act “promptly” to release revised guidance under the Act.

Making good on that intent, on August 19, the Departments released the Requirements Related to Surprise Billing: Final Rules (Final Rules) and simultaneously issued guidance in the form of Frequently Asked Questions (FAQs) to clarify the Final Rules.

The FAQs cover a range of topics, some of which are summarized below:

Applicability to No-Network Plans

The Act’s protections against surprise billing generally apply when a participant receives emergency or air ambulance services from an out-of-network provider or certain non-emergency services from an out-of-network provider at an in-network facility. The FAQs clarify that because all emergency and air ambulance services provided under a no-network plan are necessarily out-of-network services, the Act applies to all emergency and air ambulance services provided under a no-network plan.

The protections applicable to non-emergency services from an out-of-network provider at an in-network facility will never be triggered because a no-network plan does not have in-network facilities.

Applicability to Closed-Network Plans

The Departments clarify that the Act’s requirements apply to plans that do not cover out-of-network services. Therefore, a closed-network plan may be required to pay for out-of-network emergency or air ambulance services.

Emergency Services Furnished in a Behavioral Health Crisis Facility

The Departments recognize that individuals receiving care for a behavioral health crisis may not be best served in a traditional hospital setting. Thus, the FAQs provide that the Act’s requirements apply to coverage for emergency services provided in response to a behavioral health crisis in an out-of-network facility that is licensed by the state to provide services in response to a behavioral health crisis, whether or not the facility is licensed as an emergency department or facility or whether the facility’s license includes the term “emergency services.”

Methodology for Determination of QPA

Generally, the qualifying payment amount (QPA) is the median contracted rate for a service or item.  The QPA may determine the applicable rate for cost-sharing. In addition, the QPA will help determine the appropriate provider payment rate during the Federal IDR Process.  The FAQs clarify that plans that vary their contracted rates based on specialty must calculate the QPA separately for each specialty if there is a “material difference” between the median contracted rates for a service code between providers of different specialties. Whether there is a “material difference” is a facts and circumstances determination.

This determination methodology prevents plans from calculating contracted rates in a way that artificially lowers the values. For example, suppose a plan pays a higher contracted rate for an anesthesiologist to provide anesthesia and a lower contracted rate for all other providers to provide anesthesia (because other providers rarely provide anesthesia). In that case, the plan must only use the anesthesiologist contracted rate to determine the QPA for an out-of-network anesthesiologist providing anesthesia.

Plans have 90 days to come into compliance with this requirement.

Federal IDR Process

The Federal IDR Process establishes an arbitration process for plans and providers that cannot agree on pricing for out-of-network emergency and air ambulance services and for certain out-of-network non-emergency services rendered at in-network facilities. The Interim Final Rules used the QPA as the primary factor in the arbitrator’s decision under the Federal IDR Process. The District Court for the Eastern District of Texas struck down the presumption in favor of the QPA in the Interim Final Rules. Upon revision, the Final Rules specify that arbitrators should “select the offer that best represents the value of the item or service under dispute after considering the QPA and all permissible information submitted by the parties.”

The FAQs further expand on the Federal IDR Process, including requirements for initial payment amounts, deadlines for initial payments or denial notices, and other notification requirements.

Transparency in Coverage Machine-Readable Files

The Transparency in Coverage Rules (TiC Rules), issued before the Act, require plans to publicly post machine-readable files, including negotiated and historical out-of-network rates for specific services and procedures effective as of July 1, 2022. The Departments included TiC guidance in the FAQs.

The FAQs clarify that the TiC Rules do not require a plan without a public website to create a website to post the information required by the TiC Rules.

In addition, the TiC Rules do not require an employer to post a link to the machine-readable files on its client-facing public website. Instead, a plan may satisfy the TiC posting requirement by entering into a written agreement under which a service provider posts the machine-readable files on its public website on behalf of the plan. The plan will remain liable if the service provider does not fulfill the posting requirement.

We are available to help plan administrators understand and implement the New Rule’s requirements. Please contact a Jackson Lewis employee benefits team member or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

For the many employers that use a pre-approved 401(k) plan (or another type of defined contribution plan), the deadline to execute a restatement of the plan was July 31, 2022.  An employer that missed the deadline will need to (i) review whether a correction will be required to maintain the plan’s favorable tax status and (ii) implement any required correction.  Depending on the circumstances, some failures may require obtaining formal approval from the IRS through its Voluntary Correction Program, while others may be eligible for self‑correction.

Pre-approved Plans

The terms of all traditional retirement plans (such as 401(k) plans) must meet the requirements of Internal Revenue Code Section 401(a) and related regulations.  Retirement plans with language already pre-approved by the IRS to satisfy these requirements may be purchased from a third-party such as a service provider or financial institution.  The most common format of a pre-approved plan consists of an adoption agreement and a basic plan document.  The adoption agreement includes many design options for the employer to select from (such as eligibility, types of contributions, and vesting).  The basic plan document contains all the non-elective provisions of the plan and generally includes more technical language regarding the plan’s operation.

Generally, to keep up with changes in the tax law, the pre-approved plan providers must update their plan documents and obtain approval letters from the IRS every six years.  The adopting employers then have a set period of time (generally two years) to adopt the updated plan document.  The adoption deadline for the latest plan remedial amendment cycle (Cycle 3) was July 31, 2022.

Impact of Missed Deadline for Restatement of Pre-approved Plans

On May 23, 2022, the IRS issued an edition of Employee Plans News addressing the impact of missing the deadline to restate a pre-approved defined benefit or 403(b) plan.  This same IRS guidance may be used in analyzing the failure to restate a pre-approved defined contribution plan timely.  Based on this IRS guidance:

  • Loss of Pre-Approved Plan Status: Failure to timely restate a pre-approved plan results in the plan’s loss of status as a pre-approved plan.  This means the employer could no longer rely on the pre-approved plan’s opinion letter from the IRS approving the plan document’s compliance with the tax code.  However, it does NOT mean that the plan is automatically out of compliance with the tax code.  Being a pre-approved plan is only one method of meeting the requirement to have an updated written plan document.
  • Individually Designed Plan Status: If it’s not a pre-approved plan, the plan is an individually designed plan.  An individually designed plan can still satisfy the tax qualification requirements for a retirement plan.  However, without the favorable IRS opinion letter from the pre-approved plan to rely on, the plan must be reviewed to determine whether there are form defects, especially with any prior interim or discretionary amendments.  In determining whether the interim and discretionary amendments were timely and proper, the rules for individually designed plans would apply.

Correction for Missed Deadline

If failing to timely restate a pre-approved plan results in any interim or discretionary amendments being defective, the plan may be corrected through the IRS Employee Plans Compliance Resolution System (EPCRS).  EPCRS includes two correction programs: (i) the Voluntary Correction Program (VCP), which permits a plan sponsor to pay a fee and receive the IRS’s approval for correction, or (ii) the Self-Correction Program (SCP), which allows plan sponsors to voluntarily correct failures without formal IRS approval and without payment of fees or sanctions to the IRS.  SCP is available only to correct defects that have existed for less than the past three years (see IRS Rev. Proc.  2021-30, Part IV).  Form defects older than three years may be corrected only under VCP.


Failing to qualify as a pre-approved plan is not a qualification issue by itself.  If an employer did not timely adopt the restatement of its pre-approved plan, it could still meet the written document requirements as an individually designed plan.  Individually designed plans that fail to meet these requirements can be self-corrected under certain circumstances detailed in Rev. Proc. 2021-30, Part IV (mainly that the defective amendment or plan language lasted for less than three years).

Please contact the author or the Jackson Lewis attorney with whom you regularly work if you have questions or need assistance.

Earlier this week, Senators Manchin and Schumer reached an agreement securing the former’s support for a tax bill proposed by Senate Democrats entitled the “Inflation Reduction Act of 2022” (the “Act”).  Included in the Act are several provisions intended to increase tax revenue, among them a provision designed to raise $14 billion in tax revenue over 10 years by closing the so-called “carried interest loophole.”

The term “carried interest” generally refers to a profits interest in an investment-focused partnership or limited liability company taxed as a partnership for federal income tax purposes (each, an “Investment Pass-Through Entity”) that is held by a manager providing investment management services to such entity for a fee (the “Fund Manager”) (e.g., the general partner of the partnership or the managing member of the limited liability company).  Under current federal income tax law, the Fund Manager generally can qualify for long-term capital gains treatment on distributions to it by the Investment Pass-Through Entity if the assets giving rise to such distributions have been held for over three years before being sold.  That means taxation at a maximum rate of 23.8%, as opposed to the 37% maximum rate that ordinarily applies to compensation paid for the performance of services.  It is this differential treatment in tax rates that proponents of the Act argue creates a “loophole.”

Putting aside whether a “loophole” genuinely exists (the private equity industry certainly would disagree with such assessment and perhaps argue that other policy concerns, e.g., the cost of investment in business, have not been adequately considered by Congress), the Act seeks to expand the holding period to qualify for long-term capital gains treatment to over five years.  In addition, the holding period would be calculated in a manner potentially making it more difficult for a Fund Manager to qualify for long-term capital gains treatment.

The Act, if enacted into law, would not end carried interest, but it would make the tax benefits of carried interest more difficult for the Fund Manager to achieve.  It is unclear whether the Act will pass, as Senate Republicans appear united in their opposition to it.  Senator Kyrsten Sinema has not indicated whether she will vote for it.  Senator Sinema previously has noted her opposition to tax increases, including those related to carried interest.

Stay tuned!