In Case You Missed It: Spotlight on Benefits – Winter 2024

Written by members of Faegre Drinker’s benefits and executive compensation team, this blog features analysis and information on matters related to retirement plans, health and welfare plans, ESOPs, ERISA litigation, fiduciary governance, and other benefits issues.

This quarterly digest provides links to our most popular posts during the past few months so that you can catch up on what you missed or re-read them.


IRS Announces 2024 Retirement Plan Limits

By Sarah Bassler Millar, Mark Rosenfeld, Dawn Sellstrom and Inés Sosa
The IRS recently announced the 2024 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS modestly increased the applicable limits for 2024.

Introducing ERISA Moments: Bite-Size Vodcasts on the Latest ERISA Developments

By Fred Reish and Bradford Campbell
Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments.

When One Door Closes, Another Opens…Maybe Fourth Circuit Holds that Surcharge Is Not Equitable Relief Available Under ERISA but Paves the way for Unjust Enrichment Claims

By Rick Pearl
In an ERISA case for wrongful denial of health insurance benefits, the U.S. Court of Appeals for the Fourth Circuit addressed when a plaintiff may recover monetary relief under §§ 502(a)(1)(B) and (a)(3). The Fourth Circuit unsurprisingly held that ERISA § 502(a)(1)(B) limits recovery to benefits due under the terms of a plan, and a plaintiff cannot recover the cost of a denied surgery because the cost is not a “benefit” due; coverage for the cost, and payment to the provider, is the benefit. Unless a plaintiff pays the bill first, the plaintiff cannot recover the cost from an insurer.

De Minimis Financial Incentives to Participate in a 401(k) or 403(b) Plan

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.)

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IRS Announces 2024 Retirement Plan Limits

The IRS recently announced the 2024 cost-of-living adjustments to various benefit and contribution limits applicable to retirement plans. The IRS modestly increased the applicable limits for 2024. The following limits apply to retirement plans in 2024:

  • The limit on elective deferrals under 401(k), 403(b), and eligible 457(b) plans increased to $23,000.
  • The limit on additional catch-up contributions by participants aged 50 or older remains at $7,500. This means that the maximum amount of elective deferral contributions for those participants in 2024 is $30,500.
  • The Internal Revenue Code (“Code”) Section 415 annual addition limit is increased to $69,000 for 401(k) and other defined contribution plans, and the annual benefit limit is increased to $275,000 for defined benefit plans.
  • The limit on the annual compensation that can be taken into account by qualified plans under Code Section 417 is increased to $345,000.
  • The dollar level threshold for becoming a highly compensated employee under Code Section 414(q) increased to $155,000 (which, under the look-back rule, applies to HCE determinations in 2025 based on compensation paid in 2024).
  • The dollar level threshold for becoming a “key employee” in a top-heavy plan under Code Section 416(i)(1) is increased to $220,000.

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Reminder: Gag Clause Attestations Due by Year-End

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.

Prohibition on Gag Clauses

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”

In Case You Missed It: Spotlight on Benefits – Fall 2023

Written by members of Faegre Drinker’s benefits and executive compensation team, this blog features analysis and information on matters related to retirement plans, health and welfare plans, ESOPs, ERISA litigation, fiduciary governance, and other benefits issues.

This quarterly digest provides links to our most popular posts during the past few months so that you can catch up on what you missed or re-read them.


DOL Issues Long Awaited Mental Health Parity Guidance

By Sarah Bassler Millar, Yael Kalman and Dawn Sellstrom
Plan sponsors, insurers, and third-party administrators should pay close attention to the new guidance to facilitate health plan compliance with complex nonquantitative treatment limitation comparative analyses requirements.

Another 401(k) Plan Fiduciary Defeats Breach of Fiduciary Duty Claims at Trial

By Kimberly Jones and James E. Crossen

401(k) plan fiduciaries recently defeated a lawsuit alleging the fiduciaries imprudently managed and paid excessive record keeping an investment fees. The victory for the fiduciaries follows a jury trial win of Yale University’s 403(b) plan. The court opinions in both of these cases serve as a good reminder that offense is the best defense, and ERISA plan fiduciaries best protect themselves against ERISA breach of duty of prudence claims by proactively implementing strong fiduciary governance practices, such as keeping thorough committee meeting minutes.

IRS Issues 2-Year Delay for Roth Catch-Up Contribution Requirements

By Mona Ghude and Mark Rosenfeld

On August 25, 2023, the IRS announced a two-year delay for the Roth catch-up contribution requirement for employees making $145,000 or more in the prior calendar year that would have applied in 2024. The Roth catch-up contribution requirement will now be effective for taxable years beginning after December 31, 2025.

IRS Issues 2-Year Delay for Roth Catch-Up Contribution Requirements

On August 25, 2023, the IRS announced a two-year delay for the Roth catch-up contribution requirement for employees making $145,000 or more in the prior calendar year that would have applied in 2024. The Roth catch-up contribution requirement will now be effective for taxable years beginning after December 31, 2025. (For an overview of SECURE 2.0 for defined contribution plan sponsors, click here.)

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You Can’t Have Your Cake and Eat it, Too

On July 7, 2023, the U.S. District Court for the Northern District of Alabama issued a ruling in Perfection Bakeries Inc. v. Retail Wholesale & Dep’t Store Int’l Union & Indus. Pension Fund, ordering Perfection Bakery, Inc. (Perfection Bakery) to pay the Retail Wholesale and Department Store International Union and Industry Pension Fund (the Fund) withdrawal liability in the amount of $15.6 million.

The court affirmed the previously issued arbitrator’s decision regarding the amount of withdrawal liability Perfection Bakery owed the Fund for its 2018 complete withdrawal. Perfection Bakery argued that the partial withdrawal liability it had paid as a result of its 2016 partial withdrawal should count towards the 2018 total withdrawal liability to reduce the total liability overhead cost. Perfection Bakery argued that the Fund, by not doing so, had misinterpreted the applicable law governing withdrawal liability.

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Plan Fiduciaries Continue to Defeat BlackRock Target Date Fund Class Actions

A series of cases against fiduciaries of 401(k) plans that offer BlackRock Target Date Funds (TDFs) have been dismissed by district courts in recent months. In three recent cases, the district courts held that plaintiffs failed to allege any facts about the plan fiduciaries’ process for selecting and monitoring the BlackRock TDFs and that plaintiffs’ reliance on the BlackRock TDFs’ alleged underperformance alone was insufficient to state a claim for breach of fiduciary duty.

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Congressional Leaders Address SECURE 2.0 Act Glitches

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:”

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IRS Issues Interim Guidance on SECURE 2.0 Self-Correction Expansion

The IRS recently issued Notice 2023-43 (Notice) to provide interim guidance on Section 305 of SECURE 2.0 Act of 2022 (SECURE 2.0), which significantly expanded self-correction under the Employee Plans Compliance Resolution System (EPCRS). The Treasury Department was directed under SECURE 2.0 Section 305 to issue an updated version of EPCRS (most recently set forth in Rev. Proc. 2021-30) by December 29, 2024. The Notice is intended to provide some answers to plan sponsors in advance of the update to Rev. Proc. 2021-30.

In general, Section 305 of SECURE 2.0 broadened the scope of self-correction by permitting any eligible inadvertent failures (EIFs) to be self-corrected within a reasonable period after the failure is identified. SECURE 2.0 defines the self-correction period as indefinite, with no last day, so long as the IRS does not identify the failure before the plan sponsor takes action demonstrating a specific commitment to implement a self-correction to the failure.

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