Just Because I’m Missing, Doesn’t Mean I’m Lost: Should Plan Sponsors Provide Data for the DOL’s Missing Participant Database?

/in , , , , , , , , , , ,

by Brenda Berg

“Missing participants” have long been a thorn in the side of plan sponsors and administrators, as they are owed a retirement benefit, but are unable to be found or unresponsive to plan communications. As a partial solution, Congress directed the DOL in the SECURE 2.0 Act of 2022 to create a “Retirement Savings Lost and Found”—an online searchable database that would connect missing participants with their retirement benefits—by December 29, 2024. The DOL had contemplated populating the database with information from Form 8955-SSA, which plans already submit to the IRS. However,  the IRS has refused to provide the information to the DOL, citing privacy concerns regarding confidential tax information. This has caused the DOL to look to sponsors of ERISA plans to voluntarily provide participant information to populate the database. While this may be a good idea in principle, it creates many obstacles. Read more

It Doesn’t Have To Be That Way: Negotiating Good Service Provider Agreements Is More Important than Ever

/in , , , , , , , , , , , , , , , , , ,

by Bret F. Busacker

It may be an understatement to say that compliance with benefit plan laws and regulations is becoming increasingly more complicated. In my experience, the COVID era has brought about some of the widest-sweeping changes on the burden of administering benefit plans in some time.

There has been major evolution around service provider fee disclosure, DOL reporting and disclosure on mental health parity and disclosure of plan costs, new claims procedure rights, expanded expectations around Cyber Security protections, and expansion of the use of ESG and crypto currency (and on-again, off-again regulatory efforts). Read more

I Come From Down in the Valley, Where the Options Are Now Underwater: Companies Look to Modify Incentives as Declining Markets Hurt Employee Stock Options

/in , ,

by John Ludlum

This is the 3rd major economic upheaval we have had in 20 some years, and once again we have a climate of widespread business uncertainty, employment instability, and economic suffering.  Most of our clients have experienced a decline in company stock values, but we are expecting that as the uncertain business environment stabilizes, companies will start to consider changes to their equity awards to maintain incentives because many stock options are “underwater” where the exercise price is higher than the current fair market value.  There are several approaches that companies can use to either reprice or exchange underwater stock options, and each has advantages and disadvantages.

Read more

I can’t drive 55 – or classify my workers

/in , , , , , , , , , , , , , , , , , , ,

by John Ludlum

Making correct classifications between independent contractors and employees is not getting simpler with flexible, geographically-distributed workforces.  For those with long memories, a key case in the area of worker classification was issued by the Ninth Circuit in Vizcaino v. Microsoft Corporation, 97F.3d 1187 (CA-9, 1996).  Vizcaino v. Microsoft held that certain workers, originally hired as independent contractors, were actually employees who were entitled to benefits under Microsoft’s 401(k) plan and Microsoft’s Employee Stock Purchase Plan.  Determinations like this can lead to substantial corrections costs to fix tax-qualified benefit plans as well as to make the contributions required under plan terms to the improperly excluded employees. 

Read more

Sunshine … on my controlled group makes me happy

/in , , , , , , , , , , , , ,

by John Ludlum

The controlled group rules under the IRC are possibly one of the driest and most technical areas in benefits practice, but mistakes in controlled group status can be very expensive and complicated to correct.  The problem we are seeing is that in too many cases, it is not clear whether the plan sponsor or the plan’s service providers have responsibility for monitoring which entities are in the plan sponsor’s controlled group.

Read more

She works hard for the money, so you’d better … help her afford to buy company stock

/in , , , ,

by Beth Nedrow and Kevin Selzer

Employee Stock Purchase Plans (ESPPs) are a program offered by many companies (particularly those with publicly traded stock) as a way for all of their employees to buy company stock. In their most robust format, employees can buy stock at a discount. You’d think employees would jump at the chance to capitalize on this immediate value opportunity. Not so! Employee participation rates are typically fairly low (often below 50%). Employers who offer ESPPs strive for ways to engage employees to appreciate and participate in this valuable benefit. Those employers may be interested to hear that a startup company is making headlines for its product aimed at boosting ESPP participation.

Read more