Time keeps on slippin’, slippin’, slippin’… into the future with an extended deadline for Form 1095-C and Form 1095-B reporting

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by Becky Achten and Bret Busacker

The Internal Revenue Service has extended the due date for providing the 2019 Form 1095-C (applicable to large employers as explained below) and the Form 1095-B (generally applicable to insurance carriers) to participants from January 31, 2020 to March 2, 2020.  The deadlines for filing the 2019 Forms 1094-B, 1095-B, 1094-C and 1095-C with the IRS remain at February 28, 2020, for paper submissions, or March 31, 2020, if filing electronically.

In addition, the IRS has issued relief for insurance carriers generally required to provide the Form 1095-B.  Because there is no individual penalty for not having minimum essential coverage in 2019, individuals don’t need the 1095-B in order to calculate a tax penalty or file an income tax return.  Therefore, the IRS will not assess a penalty to entities that do not provide a Form 1095-B if they meet the following conditions:

  • The reporting entity must post a prominent notice on its website stating that individuals may receive a copy of their 2019 Form 1095-B upon request, along with contact information to make such a request; and
  • The reporting entity must furnish the 2019 Form 1095-B within 30 days of a request.
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Walk this way…to avoid the pitfalls of ERISA

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by John Ludlum

Companies implement bonus plans to meet a variety of business objectives:  retention, specific company business goals, change of control, and others.  In designing bonus plans, there are a variety of legal fields that must be understood for exemption or compliance including securities, tax, ERISA, and employment.  Many times, bonus plans that pay only in cash for achieving specific corporate objectives and which require services through the date of payment are exempt from onerous compliance mandates; however, if a bonus plan is found to provide retirement income or “results in a deferral of income by employees for periods extending to the termination of covered employment or beyond,” then that arrangement may be found to be a “pension plan” under ERISA Section 3(2) (29 U.S.C. § 1002(2)(A)).  Once a bonus plan is subject to ERISA, it must comply with ERISA’s annual reporting, participant communications, funding, participation, vesting, and fiduciary duty requirements. 

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Friends in Low Places . . . IRS focusing on late contributions too

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by Kevin Selzer

“I was the last one you’d thought you’d see there…”

We tend to think of untimely remittances to retirement plans as primarily an ERISA issue, and certainly, the cause of many DOL audits. Lately, however, it seems the IRS also sees late contributions as an invitation to examine the plan. 

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Take it to the limit one more time…IRS announces cost-of-living adjustments for 2020!

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by Becky Achten & Lyn Domenick

The Internal Revenue Code imposes dollar limitations on various compensation, benefit and contribution levels under qualified retirement plans. Today, the Internal Revenue Service announced the 2020 cost-of-living adjustments affecting dollar limitations for qualified retirement plans. Check out our chart for easy reference!

Start spreading the news…student loan 401(k) match revenue ruling in the works

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by Ben Gibbons

As you may recall, Private Letter Ruling 201833012 (the “PLR”), concerning the IRS’ approval of Abbott Laboratories’ plan to implement 401(k) matching contributions on student loan repayments, was released to much fanfare in the summer of 2018.  We’ve learned that at last week’s annual NASPP conference in New Orleans, Stephen Tackney, Deputy Associate Chief Counsel of the IRS Office of Chief Counsel (and author of the Section 409A deferred compensation regulations) announced that the IRS is working on converting the PLR into a revenue ruling that can be relied upon by all employers.

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It’s been a hard day’s night: final hardship distribution rules issued

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by Brenda Berg

If you are one of those plan sponsors who was waiting for the final hardship regulations to be issued before making any changes to hardship distributions in your plans – your time has come. The Treasury Department and IRS issued the final regulations on September 19, 2019 for publication today, September 23, 2019.

These regulations finalize the proposed regulations issued on November 14, 2018, and they are essentially the same with some clarifications. Plans that made changes in compliance with the proposed regulations will be deemed to have complied with the final regulations. Overall the rules – which generally apply to 401(k) plans, 403(b) plans, and 457(b) plans – ease some of the restrictions on taking hardship distributions.

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Wake me up when September ends

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by Lyn Domenick

Final rules released by the Departments of Labor, Health and Human Services and Treasury on June 13, 2019 have the potential to transform how employers pay for health care coverage for employees.  The rules permit the use of a new type of health plan called an individual coverage health reimbursement arrangement (“ICHRA”).   Under an ICHRA, the employer provides an amount that can be used by the workers to pay for all or some of health coverage obtained in the individual market.  These plans will presumably be utilized by employers that want to offer a health benefit to employees without maintaining a full (major medical) group health plan.  However, an important notice deadline is approaching.   Employers that want to adopt an ICHRA for 2020 (effective January 1, 2020) must provide a notice to employees by no later than October 3, 2019.  The new ICHRA guidance is complex and includes rules related to enrollment, classes of employees, opting out, substantiation of expenses and the annual notice requirement described above.   Given the short time frame to analyze whether to proceed under the new rules, work out the details and issue the required notice, many employers may take a wait and see approach and defer this decision to the 2021 plan year or beyond.  Early adopters, however, need to act soon if this is on their agenda for 2020. 

If you have questions about the new ICHRA health plans, reach out to a member of the Benefits Law Group and we will be glad to assist. 

I can’t drive 55 – or classify my workers

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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. 

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

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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.

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Somebody get me a (juris) doctor . . . increased IRS activity on healthcare reform

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by Kevin Selzer

You may be hearing from the IRS soon on penalties related to the Affordable Care Act (“ACA”). 

We have seen increased ACA-related enforcement activity from the IRS, particularly with respect to taxes owed under the employer mandate (which requires large employers to provide group health coverage meeting certain requirements to full-time employees). In our experience, the employer mandate assessments often contain errors in calculating the penalty and/or originate from inadvertent mistakes made by the taxpayer on the Form 1094-C or Form 1095-C and can often be eliminated or reduced.

The IRS is also assessing penalties on large employers that fail to file ACA-related tax forms.  We recently helped a large employer obtain full abatement of a proposed penalty exceeding $200,000 for failure to file and transmit Forms 1094-C and 1095-C. In this case, we were able to show that the failure was due to reasonable cause and persuade the IRS to abate the entire penalty. If you receive proposed ACA-related taxes or penalties, please reach out to a member of the Holland & Hart Benefits Law Group.