The U.S. Supreme Court is poised for a flurry of ERISA-related activity this year, with four cases on the docket. The first decision out of this quartet came on January 14, 2020, when the Supreme Court remanded the closely watched Retirement Plans Committee of IBM v. Jander to the Second Circuit Court to consider issues that were not fully developed at the court of appeals.
In Jander, the plaintiffs were participants in IBM’s employee stock ownership plan (ESOP), which invested in IBM stock. The plaintiffs alleged that the ESOP fiduciaries’ failure to make early corrective disclosures about an incorrect business valuation was a breach of fiduciary duty that caused the IBM stock to drop significantly.
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In IRS Notice 2019-63, the IRS extended the deadline to March 2, 2020, for employers and health insurance providers to provide individuals with 2019 Forms 1095-B and 1095-C (previous date was January 31, 2020). Nonetheless, the IRS encourages employers and other coverage providers to furnish 2019 statements as soon as possible.
Below is background on the information reporting requirements added by the Affordable Care Act (“ACA”) under Internal Revenue Code sections 6055 and 6056:
After a delay of several months, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, clearing the way for one of the most substantial pieces of retirement plan legislation in years to become law.
The House of Representatives initially passed the SECURE Act in May by an overwhelming 417−3 vote. Although the Act was set for easy bipartisan passage, it foundered in the Senate. The bill found new life at the eleventh hour of the 2019 legislative session as an attachment to the must-pass $1.4 trillion spending bill, which passed by significant margins.
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A new California law requires California employers to notify employees who participate in a flexible spending account (FSA) and work in California of any deadlines applicable to withdrawing funds from their FSA before the end of the year. This includes health care FSAs, dependent care FSAs and adoption assistance FSAs.
Continue reading “Now Hear This: California Enacts FSA Notice Requirement”
The American Arbitration Association (AAA) significantly altered its rules for multiemployer pension plan arbitrations to respond to Pension Benefit Guaranty Board (PBGC) concerns and public comments regarding recent fee increases and the selection of arbitrators. Today, the PBGC published a Notice of Approval of AAA’s application of its amended rules. Click here for our alert on the changes, which discusses the welcome relief these amended rules provide employers who wish to challenge withdrawal liability assessments and the impact on arbitrating assessments between multiemployer plans and employers.
In the final installment of our ERISA at 45 series, Heather Abrigo spoke with Sarah Bassler Millar about the evolution of retirement plans since the inception of ERISA. Topics included the increasing sophistication of plan sponsors and a shift in fiduciary compliance, how employers are looking at employees and plan design to identify roadblocks to retirement, and the increased level of transparency in fees and expenses. They also discussed issues currently facing plan sponsors, such as how to address missing plan participants and the increased sophistication of alternative investment options, and took a look at what may be the most impactful trends in the years to come, including highly-focused DOL investigations, a resurgence of IRS activity surrounding compliance and qualification issues, and the introduction of state sponsored plans.
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On October 23, 2019, the Department of Labor (DOL) published a proposed rule that would ease retirement plan administration by allowing broader use of electronic disclosure. This proposed rule was foreshadowed by an Executive Order issued in August 2018 directing the DOL to review actions that could be taken to improve the effectiveness of retirement plan disclosures under ERISA and to reduce the costs to employers.
Currently, plan sponsors can rely on a 2002 safe harbor for electronic delivery of documents and other information required under ERISA. However, the 2002 safe harbor is limited; notice can be provided electronically only to participants and beneficiaries who either (1) have work-related computer access or (2) provide affirmative consent to receive documents electronically (in addition to meeting certain other requirements). Anyone not falling within one of those categories must receive a hard copy.
Continue reading “The Future of Retirement Plan Disclosures?”
The IRS has announced the dollar limits for contributions and benefits in retirement plans and certain deferred compensation plans for 2020. We have compiled a chart summarizing the key limits below, including how they compare with those in the previous year. Plan sponsors should confirm with their recordkeepers that all systems have been updated to reflect the 2020 limits.
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In our sixth installment of ERISA at 45, Mona Ghude speaks with Sarah Bassler Millar about the major changes to executive compensation over the years – including the addition of 409A to the tax code, how employers have become more aware of the tax aspects of deferred compensation arrangements, why employers are moving to a defined contribution type of deferred compensation arrangement, and the restrictions employers face with instituting top hat plans.
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In our fifth installment of ERISA at 45, Kim Jones speaks with Sarah Bassler Millar about the considerable increase in 401(k) litigation and the increased pressure on plan performance; excessive fee lawsuits and the three ERISA cases to watch before the U.S. Supreme Court this term; and the focus employers should place on prudent decision-making to reduce plan sponsor liability, especially in light of high-dollar amounts in settlements.
Continue reading “ERISA at 45: Retirement Plan Litigation”