On January 7, 2021, the Equal Employment Opportunity Commission unveiled two Notices of Proposed Rulemaking regarding what employers can do to encourage workers to participate in corporate wellness programs without violating the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. The proposed rules mandate that employers “offer no more than de minimis incentives” to entice workers to take part in most wellness programs, but that employers can raise or lower workers’ insurance contributions by up to 30% (or 50% to the extent the wellness program is designed to prevent or reduce tobacco use), to encourage employees to take part in “a subset of wellness programs that are part of employer health plans.” Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2021-01-11 14:28:582021-01-11 14:28:58EEOC’s New Stand on Wellness Programs
One of the employee benefits items tucked into the recently-passed Consolidated Appropriations Act, 2021 (the “Act”) will soon require group health plan service providers to issue fee disclosures.
Service providers to retirement plans have been required to provide fee disclosures – the ERISA 408(b)(2) disclosures – to plan sponsors for the past 10 years. The disclosures are part of the “reasonable compensation” exemption that keeps the arrangement from being a prohibited transaction. Until now, the 408(b)(2) fee disclosure rules have not applied to health and welfare plans; the “No Surprises Act” portion of the Act changes that next year. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2021-01-07 14:13:562021-01-07 15:25:59Tell Me More, Tell Me More…Fee Disclosures are Coming for Group Health Plans
For those of you who have been following along at home (literally these days), you know that the SECURE Act, which was passed only at the end of last year (though it feels like forever ago), instituted a wide range of retirement plan changes, including a number of changes with respect to safe harbor 401(k) plans. On December 9, 2020, the IRS issued guidance on these safe harbor changes in the form of Notice 2020-86.
More specifically, the SECURE Act (in part): (1) increased the maximum automatic contribution percentage for qualified automatic contribution arrangement (QACA) safe harbor 401(k) plans from 10% to 15%; (2) provided plan sponsors the ability to implement a retroactive safe harbor nonelective contribution during a plan year (generally provided the plan is amended at least 30 days before the end of the plan year); and (3) eliminated the safe harbor notice requirement for most plans with safe harbor nonelective contributions. The Notice, in Q&A format, provides additional guidance on each of these SECURE Act changes. A brief summary of the key provisions of the Notice follows. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-12-16 12:58:012020-12-16 12:58:01The Maximum QACA Automatic Increase Percentage is Movin’ on Up
Are you providing the benefits your employees desire? Many employers are making changes to their benefit programs as the COVID-19 pandemic continues. The pandemic has decreased access to routine health care services, increased mental health issues, and increased employees’ stress levels as a result of financial concerns and/or juggling working from home while caring for and homeschooling children. Many employers have made changes to their benefit programs to help employees cope with these and other issues, such as:
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-12-02 12:55:402020-12-02 12:55:42We Didn’t Start the Fire . . . But We Can Make Sure Employees Are Aware of What Benefits We Offer That Might Help Dampen It
Starting in January, unaffiliated employers can band together and participate in a new type of collective retirement plan, called a “pooled employer plan” or PEP. PEPs are expected to be attractive to plan sponsors because of the ability to lower plan fees and expenses by leveraging assets, simplifying administration, and shifting fiduciary risk to the PEP provider. We first posted about PEPs back in January. Nearly 11 months and a pandemic later, many questions remain, but PEPs are slowly starting to take shape.
A variety of industry players have already announced an intention to offer PEPs. Ironically, and in true PEP spirit, many unaffiliated service providers have partnered to offer PEPs, with third-party administrators/recordkeepers often partnering with investment advisors/consultants. PEPs will come in many flavors and sizes. Expect to see both national PEPs offered by well-known providers as well as smaller regional PEPs. While the strategy of pooling assets may have been aimed at smaller plans – since those plans seem to have the most to gain from a cost cutting perspective – it appears that PEPs will be marketed to larger plans ($100M+ plans) as well.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-11-20 12:24:332020-11-20 14:49:17It’s the Final Countdown . . . PEPs
Section 401(a)(9) requires most retirement plans and individual retirement accounts to make required minimum distributions (“RMDs”) over the lifetime of the individual (or the lifetime of the individual and certain designated beneficiaries) beginning no later than such individual’s required beginning date (generally, April 1 in the year following attainment of age 72). This minimum amount is determined by dividing the individual’s account balance by the applicable distribution period found in one of the life expectancy and distribution tables (the “Tables”).
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-11-11 14:57:502020-11-11 14:57:53FAME! I’m Gonna Live Forever….and My Retirement Account Might Last That Long, Too!
Retirement plan administrators have for years sung the sad lament of what to do with missing participants. Ol’ Hank Williams himself could have written a hit song about the problem. Recent guidance from the IRS may have the retirement community singing a slightly different tune, however.
The hassle of keeping plan accounts open for lost or deceased former employees can be a real problem, especially for terminating plans. When participants go missing, retirement plan administrators have few alternatives. One alternative that has been discussed is the use of state unclaimed property funds (sometimes called by their old-fashioned name, “escheat” law). Plans previously were reluctant to escheat unclaimed retirement accounts to state funds due to concerns over how to report tax and withholding. But recent guidance from the IRS (Revenue Ruling 2020-24) makes clear that if a plan escheats funds to the state, it is appropriate for the plan to treat the payment as being includible in gross income and subject to federal income tax withholding, reportable on a Form 1099-R.
EEOC’s New Stand on Wellness Programs
/in Health & Welfare PlansThis post was originally featured on Holland & Hart’s Employer’s Lawyers Blog.
By Devra Hake
On January 7, 2021, the Equal Employment Opportunity Commission unveiled two Notices of Proposed Rulemaking regarding what employers can do to encourage workers to participate in corporate wellness programs without violating the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. The proposed rules mandate that employers “offer no more than de minimis incentives” to entice workers to take part in most wellness programs, but that employers can raise or lower workers’ insurance contributions by up to 30% (or 50% to the extent the wellness program is designed to prevent or reduce tobacco use), to encourage employees to take part in “a subset of wellness programs that are part of employer health plans.” Read more
Tell Me More, Tell Me More…Fee Disclosures are Coming for Group Health Plans
/in ERISA, Fees, Health & Welfare Plansby Brenda Berg
One of the employee benefits items tucked into the recently-passed Consolidated Appropriations Act, 2021 (the “Act”) will soon require group health plan service providers to issue fee disclosures.
Service providers to retirement plans have been required to provide fee disclosures – the ERISA 408(b)(2) disclosures – to plan sponsors for the past 10 years. The disclosures are part of the “reasonable compensation” exemption that keeps the arrangement from being a prohibited transaction. Until now, the 408(b)(2) fee disclosure rules have not applied to health and welfare plans; the “No Surprises Act” portion of the Act changes that next year. Read more
The Maximum QACA Automatic Increase Percentage is Movin’ on Up
/in 401(k) Plans, 403(b) plans, ERISA, IRS, Retirement PlansA Brief Summary of Recently Issued IRS Safe Harbor 401(k) Plan Guidance
By Benjamin Gibbons
For those of you who have been following along at home (literally these days), you know that the SECURE Act, which was passed only at the end of last year (though it feels like forever ago), instituted a wide range of retirement plan changes, including a number of changes with respect to safe harbor 401(k) plans. On December 9, 2020, the IRS issued guidance on these safe harbor changes in the form of Notice 2020-86.
More specifically, the SECURE Act (in part): (1) increased the maximum automatic contribution percentage for qualified automatic contribution arrangement (QACA) safe harbor 401(k) plans from 10% to 15%; (2) provided plan sponsors the ability to implement a retroactive safe harbor nonelective contribution during a plan year (generally provided the plan is amended at least 30 days before the end of the plan year); and (3) eliminated the safe harbor notice requirement for most plans with safe harbor nonelective contributions. The Notice, in Q&A format, provides additional guidance on each of these SECURE Act changes. A brief summary of the key provisions of the Notice follows. Read more
We Didn’t Start the Fire . . . But We Can Make Sure Employees Are Aware of What Benefits We Offer That Might Help Dampen It
/in Cafeteria Plans, Fringe Benefits, Health & Welfare Plansby Leslie Thomson
Are you providing the benefits your employees desire? Many employers are making changes to their benefit programs as the COVID-19 pandemic continues. The pandemic has decreased access to routine health care services, increased mental health issues, and increased employees’ stress levels as a result of financial concerns and/or juggling working from home while caring for and homeschooling children. Many employers have made changes to their benefit programs to help employees cope with these and other issues, such as:
Read moreIt’s the Final Countdown . . . PEPs
/in 401(k) Plans, DOL, Retirement PlansBy Kevin Selzer
Starting in January, unaffiliated employers can band together and participate in a new type of collective retirement plan, called a “pooled employer plan” or PEP. PEPs are expected to be attractive to plan sponsors because of the ability to lower plan fees and expenses by leveraging assets, simplifying administration, and shifting fiduciary risk to the PEP provider. We first posted about PEPs back in January. Nearly 11 months and a pandemic later, many questions remain, but PEPs are slowly starting to take shape.
A variety of industry players have already announced an intention to offer PEPs. Ironically, and in true PEP spirit, many unaffiliated service providers have partnered to offer PEPs, with third-party administrators/recordkeepers often partnering with investment advisors/consultants. PEPs will come in many flavors and sizes. Expect to see both national PEPs offered by well-known providers as well as smaller regional PEPs. While the strategy of pooling assets may have been aimed at smaller plans – since those plans seem to have the most to gain from a cost cutting perspective – it appears that PEPs will be marketed to larger plans ($100M+ plans) as well.
Read moreFAME! I’m Gonna Live Forever….and My Retirement Account Might Last That Long, Too!
/in 401(k) Plans, ESOPs, IRS, Retirement Plansby Becky Achten
Section 401(a)(9) requires most retirement plans and individual retirement accounts to make required minimum distributions (“RMDs”) over the lifetime of the individual (or the lifetime of the individual and certain designated beneficiaries) beginning no later than such individual’s required beginning date (generally, April 1 in the year following attainment of age 72). This minimum amount is determined by dividing the individual’s account balance by the applicable distribution period found in one of the life expectancy and distribution tables (the “Tables”).
Read moreYour [es]Cheating Heart … Might Be Useful to Retirement Plans Dealing With Missing Participants
/in 401(k) Plans, ERISA, IRS, Retirement Plans, State Benefits Lawsby Beth Nedrow
Retirement plan administrators have for years sung the sad lament of what to do with missing participants. Ol’ Hank Williams himself could have written a hit song about the problem. Recent guidance from the IRS may have the retirement community singing a slightly different tune, however.
The hassle of keeping plan accounts open for lost or deceased former employees can be a real problem, especially for terminating plans. When participants go missing, retirement plan administrators have few alternatives. One alternative that has been discussed is the use of state unclaimed property funds (sometimes called by their old-fashioned name, “escheat” law). Plans previously were reluctant to escheat unclaimed retirement accounts to state funds due to concerns over how to report tax and withholding. But recent guidance from the IRS (Revenue Ruling 2020-24) makes clear that if a plan escheats funds to the state, it is appropriate for the plan to treat the payment as being includible in gross income and subject to federal income tax withholding, reportable on a Form 1099-R.
Read more