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.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-09-26 11:22:492019-09-26 11:22:51Start spreading the news…student loan 401(k) match revenue ruling in the works
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.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-09-23 14:45:522019-09-23 15:12:23It’s been a hard day’s night: final hardship distribution rules issued
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.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-09-05 09:22:122019-09-05 09:22:14She works hard for the money, so you’d better … help her afford to buy company stock
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.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-08-16 09:16:162019-08-16 10:05:44Somebody get me a (juris) doctor . . . increased IRS activity on healthcare reform
The IRS issued a ruling earlier this summer that serves as
a reminder of how important it is to maintain the distinction between an
election for health plan coverage and an election on how to pay for such
coverage.
In practice, virtually all employees (and frankly, many
employers) forget there is a distinction between electing coverage and electing
how to pay for it. It is usually automatically assumed that when an employee
elects medical coverage, they will pay for that coverage pre-tax under a
Section 125 cafeteria plan. Indeed, IRS guidance and proposed regulations
permit the employer to default an employee into paying for medical coverage
pre-tax under a cafeteria plan. But if an employee makes this election (either
affirmatively or by default), they may come to regret it, as demonstrated in
the IRS Chief Counsel letter issued May 8, 2019.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-08-13 09:48:032019-08-16 10:06:09Ch-ch-ch-changes . . . cafeteria plan change in status rules are sometimes surprisingly restrictive
In late July, the Department of Labor released a rule
allowing small businesses to more easily band together in a joint retirement
plan. The idea is that a larger plan will have more leverage to obtain better
pricing and better service from vendors. Equally important is the ability of
employers to offload some or all of the responsibility for maintaining
retirement plans.
The final rule alters the definition of “employer” in
ERISA for purposes of who may establish and maintain an individual account
defined contribution retirement plan. Under the new rule, a group or
association, or a PEO (professional employer organization) can sponsor what
the DOL refers to as a “MEP” – a “multiple employer plan.” The regulation is
limited to “bona fide” groups, associations and PEOs – which means they must
have a business purpose or other common connection, and not merely have the
purpose of providing the retirement plan. In this way, the new rule mirrors
the DOL’s regulations intended to expand the availability of association
health plans (“AHPs”), which is currently stalled due to litigation.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-08-08 09:15:072019-08-16 10:06:18Come together, right now . . . and join a MEP?
Welcome to the Benefits Dial, a new blog authored by members of Holland & Hart’s Benefits Law Group. We will share our insights on current trends, pending legislation, regulatory developments, and practical tips about common situations that arise in employee benefits and executive compensation. Tune in to the Benefits Dial for the best in benefits law news. Come for the catchy tunes, stay for the legal insights.
Start spreading the news…student loan 401(k) match revenue ruling in the works
/in 401(k) Plans, IRS, Retirement Plansby 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.
Read moreIt’s been a hard day’s night: final hardship distribution rules issued
/in 401(k) Plans, 403(b) plans, 457(b) plans, ERISA, IRS, Retirement Plansby 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.
Read moreShe works hard for the money, so you’d better … help her afford to buy company stock
/in Employee Stock Purchase Plans (ESPPs), Equity Compensation, Executive Compensation, Fringe Benefits, IRSby 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 moreSomebody get me a (juris) doctor . . . increased IRS activity on healthcare reform
/in Health & Welfare Plans, IRSby 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.
Ch-ch-ch-changes . . . cafeteria plan change in status rules are sometimes surprisingly restrictive
/in Cafeteria Plans, ERISA, Health & Welfare Plans, IRSby Beth Nedrow
The IRS issued a ruling earlier this summer that serves as a reminder of how important it is to maintain the distinction between an election for health plan coverage and an election on how to pay for such coverage.
In practice, virtually all employees (and frankly, many employers) forget there is a distinction between electing coverage and electing how to pay for it. It is usually automatically assumed that when an employee elects medical coverage, they will pay for that coverage pre-tax under a Section 125 cafeteria plan. Indeed, IRS guidance and proposed regulations permit the employer to default an employee into paying for medical coverage pre-tax under a cafeteria plan. But if an employee makes this election (either affirmatively or by default), they may come to regret it, as demonstrated in the IRS Chief Counsel letter issued May 8, 2019.
Read moreCome together, right now . . . and join a MEP?
/in 401(k) Plans, Benefits Plan Creation, DOL, ERISA, IRS, Legislation, Retirement Plansby Beth Nedrow
In late July, the Department of Labor released a rule allowing small businesses to more easily band together in a joint retirement plan. The idea is that a larger plan will have more leverage to obtain better pricing and better service from vendors. Equally important is the ability of employers to offload some or all of the responsibility for maintaining retirement plans.
The final rule alters the definition of “employer” in ERISA for purposes of who may establish and maintain an individual account defined contribution retirement plan. Under the new rule, a group or association, or a PEO (professional employer organization) can sponsor what the DOL refers to as a “MEP” – a “multiple employer plan.” The regulation is limited to “bona fide” groups, associations and PEOs – which means they must have a business purpose or other common connection, and not merely have the purpose of providing the retirement plan. In this way, the new rule mirrors the DOL’s regulations intended to expand the availability of association health plans (“AHPs”), which is currently stalled due to litigation.
Read moreThere’s something happenin’ here . . . introducing the Benefits Dial
/in UncategorizedWelcome to the Benefits Dial, a new blog authored by members of Holland & Hart’s Benefits Law Group. We will share our insights on current trends, pending legislation, regulatory developments, and practical tips about common situations that arise in employee benefits and executive compensation. Tune in to the Benefits Dial for the best in benefits law news. Come for the catchy tunes, stay for the legal insights.