Photo of Pamela D. Kaplan

On June 3, the Internal Revenue Service (“IRS”) issued Notice 2020-24 providing temporary relief from the physical presence requirement for participant elections that are required to be witnessed by a plan representative or a notary public, including spousal consents.  The relief covers the period from January 1, 2020 through December 31, 2020 (the “Relief Period”).  While specifically intended to facilitate the payment of coronavirus-related distributions and plan loans under the CARES Act, as described in our Advisory of April 3, 2020, Notice 2020-24 applies to any participant election that requires the signature of an individual to be witnessed in the physical presence of a plan representative or notary.

Continue Reading IRS Issues Temporary Relief from Physical Presence Requirement for Spousal Consents Under Retirement Plans

On May 27, 2020, the Department of Labor published final regulations establishing a new electronic disclosure safe harbor for ERISA-covered retirement plan (but not health and welfare plan) documents. This new safe harbor does not replace the DOL electronic disclosure safe harbor issued in 2002 (the “2002 safe harbor”), but instead offers employers additional methods for electronic disclosure of plan documentation. Compared to the 2002 safe harbor, the new safe harbor is broader in scope with respect to how electronic disclosures may be made and to whom, but is subject to several administrative requirements and limitations.

We have summarized the new safe harbor rules below to help employers decide which electronic disclosure safe harbor may work best for them.

Continue Reading DOL Establishes New Electronic Disclosure Safe Harbor for ERISA-Covered Retirement Plans

The Internal Revenue Service (“IRS”) recently issued guidance relaxing several cafeteria plan rules to help employees deal with unanticipated COVID-19 expenses. Employers that sponsor cafeteria plans will need to decide whether to amend their plans to adopt these optional rule changes. We have summarized the rule changes below, including some important employer considerations.

Note that the IRS also issued recent guidance clarifying the retroactive application of CARES Act relief for high deductible health plans and extending the period in which premium expenses may be reimbursed. These changes will be addressed in a separate post.

Continue Reading IRS Issues Cafeteria Plan Relief, Providing Employers Significant Discretion

The uncertainties surrounding the COVID-19 pandemic have made it difficult for employers to predict the long-term impact of the pandemic on their businesses. In response, many employers are looking for ways to preserve cash reserves by reducing or deferring benefit and compensation costs, without taking the more drastic step of permanently reducing their workforces. We have summarized below some of the near term cash preservation measures that employers might consider with respect to their benefit and compensation arrangements.

Continue Reading COVID-19: Employee Benefit Measures for Preserving Cash and Saving Jobs

In response to the COVID-19 outbreak, the Department of Labor (the “DOL”) recently issued guidance providing relief to employee benefit plan participants and administrators facing challenges in complying with various administrative requirements and deadlines. We have summarized below how this latest DOL guidance seeks to addresses those challenges.

First, in a notice jointly issued with the Internal Revenue Service (the “IRS”), the DOL extended the timeframes for participants to exercise certain rights, file claims and appeal denied claims. Second, in a separately issued notice, the DOL extended the time for administrators to furnish certain notices and disclosures, as well as relaxed the enforcement of other administrative requirements. Both notices apply with respect to a relief period starting March 1, 2020 and ending 60 days after the end of the federally declared national emergency for the COVID-19 outbreak, subject to a 1 year limit (the “Outbreak Period”).

Continue Reading COVID-19: DOL Issues Administrative Changes for Employee Benefit Plans

In response to the COVID-19 emergency, the IRS has automatically extended the deadline for retirement and welfare plans to file Form 5500 and Form 8955-SSA until July 15, 2020.  As explained below, however, this automatic extension will only be useful to certain benefit plans with a non-calendar plan year.

Both Form 5500 and Form 8955-SSA must be filed by the last day of the 7th month following the end of a plan year.  A plan may extend this original filing deadline by applying for a 2 1/2 month extension using Form 5558.  The IRS has, however, granted an automatic extension until July 15, 2020 for plans with original or extended filing deadlines that fall on or after April 1, 2020 through July 14, 2020.

Continue Reading Limited Filing Relief for Form 5500 and Form 8955-SSA

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the third phase of emergency relief passed by Congress in response to the coronavirus pandemic. The CARES Act includes relief measures for workers and employers that impact employee benefit and compensation arrangements, and which may require employers to take certain administrative actions. Below is an overview of the CARES Act provisions affecting various types of employee benefit and compensation arrangements.

Note that this Advisory does not address the CARES Act provisions specific to air carriers and charitable employers.

Continue Reading CARES Act Impact on Employee Benefits and Compensation

On December 20, 2019, Congress enacted the SECURE Act as part of the Further Consolidated Appropriations Act of 2020 (together, the “Act”). The Act includes both required and discretionary changes for employer-sponsored qualified retirement plans, some of which are effective for the 2020 plan year. Below is an overview of these changes with a reference to each date on or prior to the plan year for which the changes become effective.

Note that this Advisory does not address changes from the Act that do not affect employer-sponsored qualified retirement plans.

Changes Regarding Contributions and Withdrawals

December 20, 2019

  • Credit Card Plan Loans.  Qualified retirement plans are prohibited from making plan loans through credit cards or similar arrangements.

December 31, 2019

  • Default Automatic Contribution Rate. The maximum safe harbor default automatic contribution rate is increased from 10% to 15% (but can’t be more than 10% for the first year of participation).
  • Safe Harbor 401(k) Plan – Election. A 401(k) plan may become a nonelective contribution safe harbor 401(k) plan after the beginning of the plan year if either (i) it is amended by the 30th day before the end of the plan year, or (ii) it provides a nonelective contribution of at least 4% for the plan year and is amended before the last day for distributing excess contributions for the plan year.


Continue Reading SECURE Act Considerations for Retirement Plan Sponsors

Several jurisdictions have recently adopted laws requiring individuals to purchase health coverage or pay a state tax penalty. Employers employing residents in a covered jurisdiction now need to facilitate compliance by reporting health coverage information to local governmental authorities. The following is a brief summary of the new health coverage reporting requirements.

State Individual Mandates

Under the Affordable Care Act’s (the “ACA”) individual mandate, beginning in 2014, individuals were required to either purchase minimum essential coverage (“MEC”) or pay a federal tax penalty for failing to maintain such coverage. MEC generally includes employer-sponsored group health plan coverage. The Tax Cuts and Jobs Act of 2017 effectively eliminated the individual mandate by reducing the penalty to zero starting in 2019. In response, however, California, the District of ColumbiaNew JerseyRhode Island and Vermont (“Adopting Jurisdictions”) have each adopted their own versions of the ACA’s individual mandate.

Note that Massachusetts had already adopted an individual mandate requirement in 2006, well before the ACA became law. This Advisory does not address coverage reporting requirements under Massachusetts law.

Continue Reading Summary of State Mandated ACA Reporting

March 31, 2020 is the deadline for retroactively correcting most 403(b) plan document defects that occurred on or after January 1, 2010.  These defects can be corrected by amending an individually-designed 403(b) plan or by adopting a pre-approved prototype or volume submitter 403(b) plan.

Employers who adopt a pre-approved 403(b) plan by March 31, 2020