In the wee hours of December 2019, Congress revived the
PCORI fee and filing obligations of employer sponsors of self-insured group
health plans.
In accordance with the requirements of the Affordable Care
Act, employer sponsors of self-insured group health plans were required to file
an IRS Form 720 and pay the Patient-Centered Outcomes Research Institute fee
(PCORI) by July 31st of the year following last day of the plan year end (e.g.,
December 31, 2018 Plan Year End; employers should have filed the Form 720 by
July 31, 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.pngadmin2020-03-04 11:21:162020-03-04 11:21:20You’ve Got Another PCORI Fee Coming!: Congress revives the PCORI fee and filing obligations
Owners and employees of smaller organizations often find
themselves stretched in many directions.
With all of the demands on one’s time associated with operating a
business, it is not uncommon to see attention to the organization’s medical and
other benefit plans pushed to the back burner.
As a result, smaller organizations tend to rely heavily on their
benefits broker for their employee benefit plan documentation. While brokers can be an excellent resource,
plan sponsors need to be aware that the services provided by a broker can vary
widely from one broker to the next.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-02-12 10:08:122020-02-12 10:08:15I Want to Know, Have You Ever Seen…your plan documents?
A plan’s definition of “compensation” tends to be one of the
trickier aspects of 401(k) administration.
Having been asked multiple times in the past 12-months whether deferrals
to a nonqualified deferred compensation plan need to be deducted before
determining eligible compensation for 401(k) deferrals (spoiler: they do), it
seems a blog post on the subject is in order.
The vast majority of 401(k) plan documents define
compensation by starting with one of the following base definitions: W-2 (Box
1) compensation; Section 3401(a) compensation; or Section 415 compensation (the
specifics of these base definitions are beyond the scope of this post). Each definition has its nuances with respect
to whether certain types of compensation should be either included or excluded
from the base definition (e.g., fringe benefits or amounts realized from the
exercise of stock options).
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-01-22 14:43:382020-01-22 14:43:40The Long and Winding Road… of 401(k) plan compensation definitions
We interrupt our usual Benefits Dial programming – to take a closer look at developments affecting multiple employer plans (MEPs) as part of our series of posts on the recently enacted benefit plan legislation, including the SECURE Act (background here). The reform to MEPs is seen by many as the biggest disruptor to the retirement plan industry. Why? It facilitates the banding together of retirement plan assets from unrelated employers, helping employers punch above their weight. By combining together to form a larger plan, smaller employers can leverage assets with regard to plan services, and maybe most importantly, investment fees paid by participants.
MEPs have long been permitted but many employers have been
unwilling to participate in those plans.
The biggest deterrent has been the “one bad apple rule.” That rule provides that a defect in any
participating employer’s portion of the MEP can impact the tax qualification
of the entire MEP for other participating employers. In other words, if one participating
employer in the MEP is unwilling (or maybe unable) to correct an error, the
whole plan can be disqualified by the IRS.
The SECURE Act helps solve this issue with a special kind of MEP called
a pooled employer plan (PEP). PEPs have
a specific procedure for dealing with tax qualification defects. In short, a participating employer in a PEP
who refuses to correct the error, can be discharged (spun off) from the PEP to
isolate the disqualification impact. The SECURE Act grants relief under ERISA
to boot. Historically, MEPs were
treated as a collection of separate plans unless the underlying employers met
a commonality standard. A PEP (called a
“Group of Plans” under ERISA) is also treated as a single plan for ERISA
purposes under the SECURE Act. This
means, for example, that such plans would be allowed to file a single Form
5500.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2020-01-09 11:11:262020-03-10 14:20:49We Interrupt This Program – Is a Multiple Employer Plan In Your Future?
After being on the verge of enactment last spring but failing to pass, the SECURE Act will become law after all. Congress included the Setting Every Community Up for Retirement Enhancement Act of 2019 (H.R. 1994) (the SECURE Act) in the year-end spending legislation needed to keep the government running. The House passed the Further Consolidated Appropriations Act, 2020 (H.R. 1865) – which included the SECURE Act provisions – on December 17, 2019. The Senate followed on December 19, 2019, and President Trump signed it on the last day possible for the spending bill – December 20, 2019.
For a summary of the major SECURE Act provisions that impact retirement plans, see our previous article. In addition to including the SECURE Act provisions, the year-end legislation adds a few other provisions impacting retirement plans and other benefits. Defined benefit plans such as cash balance plans can now allow in-service withdrawals once a participant reaches age 59-1/2, instead of age 62. The minimum age for in-service withdrawals from 457(b) plans is also lowered to 59-1/2.
For
welfare benefits, the year-end legislation repeals the “Cadillac Tax” which
would have otherwise taken effect in 2022. The Cadillac Tax was part of the
Affordable Care Act (ACA) and would have imposed a 40% excise tax on the insurer
or employer for any “high cost” employer-provided health plan coverage.
Many
of the benefits provisions are effective in 2020, although some are optional.
The legislation generally provides time to amend retirement plans until the
last day of the plan year that begins in 2022, and some governmental plans and
collectively bargained plans have later deadlines until as late as 2024.
We will be covering many of the specific changes in more detail in upcoming blog posts. Sign up to regularly receive our blog posts (which come more often and on more varied topics than our Alerts).
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-12-23 09:27:192020-03-10 14:23:10A Little Less Conversation, a Little More Action: Major retirement plan legislation is finally signed into law
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.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-12-03 10:05:362019-12-03 11:15:07Time keeps on slippin’, slippin’, slippin’… into the future with an extended deadline for Form 1095-C and Form 1095-B reporting
“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.
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00adminhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngadmin2019-11-11 13:22:182019-11-11 13:22:20Friends in Low Places . . . IRS focusing on late contributions too
You’ve Got Another PCORI Fee Coming!: Congress revives the PCORI fee and filing obligations
/in Health & Welfare Plansby Bret Busacker
In the wee hours of December 2019, Congress revived the PCORI fee and filing obligations of employer sponsors of self-insured group health plans.
In accordance with the requirements of the Affordable Care Act, employer sponsors of self-insured group health plans were required to file an IRS Form 720 and pay the Patient-Centered Outcomes Research Institute fee (PCORI) by July 31st of the year following last day of the plan year end (e.g., December 31, 2018 Plan Year End; employers should have filed the Form 720 by July 31, 2019).
Read moreI Want to Know, Have You Ever Seen…your plan documents?
/in Cafeteria Plans, ERISA, Health & Welfare Plansby Ben Gibbons
Owners and employees of smaller organizations often find themselves stretched in many directions. With all of the demands on one’s time associated with operating a business, it is not uncommon to see attention to the organization’s medical and other benefit plans pushed to the back burner. As a result, smaller organizations tend to rely heavily on their benefits broker for their employee benefit plan documentation. While brokers can be an excellent resource, plan sponsors need to be aware that the services provided by a broker can vary widely from one broker to the next.
Read moreThe Long and Winding Road… of 401(k) plan compensation definitions
/in 401(k) Plans, Executive Compensation, Retirement Plansby Ben Gibbons
A plan’s definition of “compensation” tends to be one of the trickier aspects of 401(k) administration. Having been asked multiple times in the past 12-months whether deferrals to a nonqualified deferred compensation plan need to be deducted before determining eligible compensation for 401(k) deferrals (spoiler: they do), it seems a blog post on the subject is in order.
The vast majority of 401(k) plan documents define compensation by starting with one of the following base definitions: W-2 (Box 1) compensation; Section 3401(a) compensation; or Section 415 compensation (the specifics of these base definitions are beyond the scope of this post). Each definition has its nuances with respect to whether certain types of compensation should be either included or excluded from the base definition (e.g., fringe benefits or amounts realized from the exercise of stock options).
Read moreWe Interrupt This Program – Is a Multiple Employer Plan In Your Future?
/in 401(k) Plans, Benefits Plan Creation, DOL, ERISA, Fees, Fiduciary Duties, Investments, IRS, Legislation, Retirement Plans, SECURE Actby Kevin Selzer
We interrupt our usual Benefits Dial programming – to take a closer look at developments affecting multiple employer plans (MEPs) as part of our series of posts on the recently enacted benefit plan legislation, including the SECURE Act (background here). The reform to MEPs is seen by many as the biggest disruptor to the retirement plan industry. Why? It facilitates the banding together of retirement plan assets from unrelated employers, helping employers punch above their weight. By combining together to form a larger plan, smaller employers can leverage assets with regard to plan services, and maybe most importantly, investment fees paid by participants.
MEPs have long been permitted but many employers have been unwilling to participate in those plans. The biggest deterrent has been the “one bad apple rule.” That rule provides that a defect in any participating employer’s portion of the MEP can impact the tax qualification of the entire MEP for other participating employers. In other words, if one participating employer in the MEP is unwilling (or maybe unable) to correct an error, the whole plan can be disqualified by the IRS. The SECURE Act helps solve this issue with a special kind of MEP called a pooled employer plan (PEP). PEPs have a specific procedure for dealing with tax qualification defects. In short, a participating employer in a PEP who refuses to correct the error, can be discharged (spun off) from the PEP to isolate the disqualification impact. The SECURE Act grants relief under ERISA to boot. Historically, MEPs were treated as a collection of separate plans unless the underlying employers met a commonality standard. A PEP (called a “Group of Plans” under ERISA) is also treated as a single plan for ERISA purposes under the SECURE Act. This means, for example, that such plans would be allowed to file a single Form 5500.
Read moreA Little Less Conversation, a Little More Action: Major retirement plan legislation is finally signed into law
/in 401(k) Plans, 403(b) plans, 457(b) plans, Benefits Plan Creation, Defined Benefit Plans, ERISA, Governmental Plans, Health & Welfare Plans, Legislation, Retirement Plans, SECURE Actby Brenda Berg
After being on the verge of enactment last spring but failing to pass, the SECURE Act will become law after all. Congress included the Setting Every Community Up for Retirement Enhancement Act of 2019 (H.R. 1994) (the SECURE Act) in the year-end spending legislation needed to keep the government running. The House passed the Further Consolidated Appropriations Act, 2020 (H.R. 1865) – which included the SECURE Act provisions – on December 17, 2019. The Senate followed on December 19, 2019, and President Trump signed it on the last day possible for the spending bill – December 20, 2019.
For a summary of the major SECURE Act provisions that impact retirement plans, see our previous article. In addition to including the SECURE Act provisions, the year-end legislation adds a few other provisions impacting retirement plans and other benefits. Defined benefit plans such as cash balance plans can now allow in-service withdrawals once a participant reaches age 59-1/2, instead of age 62. The minimum age for in-service withdrawals from 457(b) plans is also lowered to 59-1/2.
For welfare benefits, the year-end legislation repeals the “Cadillac Tax” which would have otherwise taken effect in 2022. The Cadillac Tax was part of the Affordable Care Act (ACA) and would have imposed a 40% excise tax on the insurer or employer for any “high cost” employer-provided health plan coverage.
Many of the benefits provisions are effective in 2020, although some are optional. The legislation generally provides time to amend retirement plans until the last day of the plan year that begins in 2022, and some governmental plans and collectively bargained plans have later deadlines until as late as 2024.
We will be covering many of the specific changes in more detail in upcoming blog posts. Sign up to regularly receive our blog posts (which come more often and on more varied topics than our Alerts).
Time keeps on slippin’, slippin’, slippin’… into the future with an extended deadline for Form 1095-C and Form 1095-B reporting
/in Health & Welfare Plans, IRSby 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 furnish the 2019 Form 1095-B within 30 days of a
request.
Read moreFriends in Low Places . . . IRS focusing on late contributions too
/in 401(k) Plans, 403(b) plans, 457(b) plans, DOL, ERISA, Fiduciary Duties, Governmental Plans, IRS, Retirement Plansby 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.
Read more