On December 20, 2023, the IRS issued Notice 2024-2, which provides question-and-answer guidance on various aspects of the SECURE 2.0 Act. This post focuses on the “de minimis financial incentives” under SECURE 2.0 Act Section 113. (For an overview of SECURE 2.0 for defined contribution plan sponsors, click here.)
Continue reading “De Minimis Financial Incentives to Participate in a 401(k) or 403(b) Plan”
The Consolidated Appropriations Act of 2021 generally requires group health plans and health insurance issuers to submit a Gag Clause Prohibition Compliance Attestation (Attestation) each year to demonstrate compliance with the prohibition on including gag clauses in certain agreements. The Departments of Labor, Health and Human Services, and the Treasury (the Departments) issued FAQs last February requiring affected plans and issuers to submit their first Attestations no later than December 31, 2023, covering the period beginning December 27, 2020 through the attestation date, with subsequent Attestations due annually thereafter.
Group health plans and health insurance issuers offering group health insurance coverage are prohibited by ERISA and the Internal Revenue Code from entering into an agreement with a health care provider, network or association of providers, third-party administrator (TPA), or other service provider offering access to a network of providers that would directly or indirectly restrict a plan or issuer from (i) disclosing provider-specific cost or quality-of-care information to referring providers, plan sponsors, enrollees or eligible individuals; (ii) electronically accessing de-identified claims and encounter information or data for plan participants, beneficiaries, or enrollees, and (iii) sharing such information or data with business associates, consistent with applicable privacy regulations. A similar prohibition applies to health insurers offering individual health insurance coverage under the Public Health Service Act. These prohibited restrictions are referred to as “gag clauses.”
Continue reading “Reminder: Gag Clause Attestations Due by Year-End”
The SECURE 2.0 Act made sweeping changes to Internal Revenue Code (Code) and ERISA provisions governing employee benefit plans. In a recent letter to the Department of the Treasury and the Internal Revenue Service, the Chairmen and Ranking Members of the House Ways and Means Committee and the Senate Finance Committee addressed a number of ambiguities and technical errors in the SECURE 2.0 Act and signaled their intent to introduce technical correction legislation. (Exactly which errors will be fixed in such legislation remain to be seen.)
The letter pinpointed the following four provisions of the SECURE 2.0 Act and asked the IRS to implement the legislative provisions in a way that would “ensure that Congressional intent is carried out:”
Continue reading “Congressional Leaders Address SECURE 2.0 Act Glitches”
SECURE 2.0 introduced several new distribution options and tax reporting rules for defined contribution plan sponsors. Below is an overview of the new provisions and their potential implementation dates. (For an overview of SECURE 2.0 for defined contribution plan sponsors, click here.)
Here is a quick summary of the new distribution changes in SECURE 2.0.
Continue reading “SECURE 2.0 Adds New Distribution Options for Defined Contribution Plans”
The Internal Revenue Service (IRS) has announced that beginning June 1, 2023, it will accept determination letter applications for individually designed 403(b) retirement plans. As background, 403(b) plans are a distinct type of retirement plan for employees of 501(c)(3) tax-exempt organizations and public schools (including colleges and universities). Despite the formal distinction, though, in many respects modern 403(b) plans often resemble 401(k) plans.
Internal Revenue Code Section 280G (280G) (commonly referred to as the golden parachute provision) is intended to discourage the payment of excessive compensation to certain shareholders, officers and highly compensated service providers of companies undergoing a change in control. In general, when transaction-related payments or benefits to a covered individual equal or exceed three times the individual’s average compensation for the previous five years, the individual may be subject to a 20% excise tax, and the company’s deduction for such payments or benefits may be disallowed (in each case, with respect to amounts in excess of the average compensation).
280G commonly applies when a C-corporation undergoes a corporate transaction. However, in certain circumstances, 280G can also apply when the only entity being sold is an LLC. Note: Although this post focuses on the applicability of 280G to LLCs, 280G can also apply to the sale of a partnership in the circumstance described in #2 below.
On July 26, 2021, the Department of Labor (Department) issued frequently asked questions (FAQs) regarding the interim final rule (IFR) on lifetime income illustrations (LIIs) that must be included in participants’ pension benefit statements for defined contribution plans on an annual basis. The IFR on LIIs, which we previously discussed in a client alert, will become effective on September 18, 2021. The FAQs respond to comments received in response to the IFR regarding the applicability date of the rules and method for furnishing benefit statements.
On May 21, 2021, the terms of the proposed ERISA class action settlement in Cates v. The Trustees of Columbia University in the City of New York were announced. The settlement, which includes a $13 million payment and many non-monetary terms, serves as a reminder for fiduciaries/committees to review their processes for selecting and retaining investment options — and to examine the fees and services of plan providers.
On February 26, 2021, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury collectively issued new frequently asked questions (FAQs) regarding the implementation of the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and other health coverage issues related to COVID-19. Previous blogs posts reviewed the FAQs on COVID-19 group health plan coverage implementation and preventative care mandates. The FAQs expand upon prior guidance related to the requirement under the FFCRA that group health plans and health insurance issuers (health plans) cover COVID-19 diagnostic testing and vaccinations, and certain related issues.
Continue reading “New Guidance Requires Free COVID-19 Testing and Vaccines”
