Spotlight on Benefits

Health Plan Transparency Final Rule Requires New Health Plan Disclosures

On October 29, 2020, the Department of Health and Human Services (HHS), Department of the Treasury (Treasury) and Department of Labor (DOL) issued the final rule on transparency in health plan coverage. The final rule imposes significant new requirements on group health plans, including all issuers of non-grandfathered individual and group health insurance coverage and self-insured plans (that are not account based plans), to disclose information on pricing and cost-sharing under their plans. Grandfathered health plans and excepted benefit health plans are not subject to the transparency rules.

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Plan Sponsor and Plan Administrator Escape 401(k) Plan Cybertheft Suit, But Recordkeeper Remains

An Illinois district court issued a split decision in a case involving the cybertheft of retirement plan assets, allowing the plan administrator and plan sponsor to be dismissed, but requiring the recordkeeper to defend allegations that it breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA). Bartnett v. Abbott Laboratories, et. al. (N.D. Illinois, Case No. 1:20-cv-02127) is one of several recent lawsuits filed against plan sponsors and recordkeepers for allowing cyber-thieves to pilfer large distributions from participants’ retirement plan accounts.

Heide Bartnett, a former employee of Abbott Laboratories (Abbott) and participant in Abbott’s 401(k) plan, alleges that a hacker accessed her 401(k) account online, changed the password, added a new bank account and requested a $245,000 distribution from the 401(k) plan’s recordkeeper, Alight Solutions LLC (Alight) to be deposited into the newly added account. The imposter also called Alight several times to ask questions about the distribution.

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IRS Extends Deadline for Certain ACA Reporting Requirements

In Notice 2020-76 (Notice), the IRS extended the deadline from January 31, 2021, to March 2, 2021, for furnishing Forms 1095-B and 1095-C to individuals for reporting year 2020. Note that the Notice does not extend the deadline to file Forms 1094-B, 1095-B, 1094-C or 1095-C with the IRS. Those forms must be filed with the IRS by March 1, 2021 or if filed electronically, by March 31, 2021.

The Notice also extends “good-faith” reporting relief for employers that report incomplete or incorrect information on their returns (such as missing taxpayer identification numbers or dates of birth). This relief is available only when the employer can show it made a good-faith effort to comply with the filing requirements, such as gathering and transmitting the necessary data to an agent to prepare the data for submission, or testing its ability to transmit information to the IRS. The IRS has provided this good-faith relief in the past, but the Notice states that the 2020 reporting year will be the final year this type of relief is available.

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DOL Issues Guidance on Private Equity Investments in 401(k) Plans

The Department of Labor (DOL) recently issued guidance in the form of an Information Letter describing the process that plan fiduciaries should undertake in determining whether an investment fund having a private equity component satisfies ERISA fiduciary standards. Specifically, the DOL emphasized that there are factors unique to such investment funds that should be considered as part of a prudent process.

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Audiocast: Year-End Checklist for Your Retirement Plan: 2020

Each year, retirement plans’ fiduciaries have a lot of responsibilities as they prepare for year-end. This year, fiduciaries and plan sponsors have a few extra “to do’s” on their list, with the passage of the CARES and SECURE Acts within the past year. Join Summer Conley, partner at Faegre Drinker, and Bonnie Treichel, co-founder and COO of ZUNA, on Thursday, October 22, 2020, at 1:00 p.m. ET for an actionable audiocast that will cover the tasks that are most critical to preparing for a successful year-end and start to 2021.

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Talking Through the DOL’s Proposed Prohibited Transaction Exemption, Episode 4: Litigation Risks

On June 29, the Department of Labor (DOL) issued a proposed prohibited transaction exemption (PTE), filling the void left when the Fifth Circuit vacated the Obama-era 2016 DOL regulation in 2018. While the proposed rule is ostensibly an administrative rulemaking on which the DOL seeks public comment, it also does a lot more. In this podcast episode, Faegre Drinker’s Jim Jorden and Brad Campbell analyze the litigation issues related to this new interpretation — particularly as it pertains to the sale of annuities and other insurance products.

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Employment Agreements: When to Call an Executive Compensation Attorney

Being asked to draft (or review) an executive employment agreement is a common occurrence for attorneys specializing in many practice areas (e.g., corporate, employment, healthcare, etc.). This presentation identifies compensation features in an executive employment agreement that should be reviewed by an Executive Compensation attorney. Failure to consider IRS rules when drafting employment agreements with these compensation features can lead to headaches down the road. The COVID-19 pandemic has given us all enough headaches. Do not let an employment agreement create another one – call your friendly Executive Compensation attorney when drafting or reviewing executive employment agreements.

Rehiring Employees by End of 2020 Could Prevent Partial Plan Terminations

In our May 2020 client alert, we addressed the possibility that COVID-19 layoffs could inadvertently cause a partial termination of a company’s qualified retirement plan. Recently issued IRS guidance provides that if participating employees whose employment was terminated due to COVID-19 are rehired by the end of 2020, the IRS generally will not deem a partial plan termination to have occurred. However, rehiring employees by the end of 2020 will not guarantee that employers will avoid a partial plan termination.

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The Clock Is Ticking: DOL Issued Interim Final Rule on Lifetime Income Disclosures for Defined Contribution Plans

The Setting Every Community Up for Retirement Enhancement (SECURE) Act included several provisions related to lifetime income strategies under retirement plans, including a requirement that pension benefit statements for defined contribution plans disclose the “lifetime income stream equivalent” of each participant’s current account balance – both as a single life annuity (SLA) and as a qualified joint and survivor annuity (QJSA). On August 18, 2020, the Department of Labor (Department) issued an interim final rule implementing this requirement that includes a model disclosure and assumptions for converting benefits (the Rule), and a fact sheet.

As background, under ERISA, administrators of defined contribution plans (such as 401(k) and 403(b) plans) are required to provide pension benefit statements quarterly if the plan allows participant-directed investment, otherwise annually. Among other requirements, the benefit statements must include the participant’s current account balance.

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Federal Courts Continue to Dismiss ERISA Stock-Drop Claims Post-Jander

Ever since the Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409 (2014), plaintiffs’ attorneys have been trying to crack the code for pleading an ERISA duty-of-prudence claim against fiduciaries of employee stock ownership plans (ESOPs) following a drop in the company’s stock price. Those attempts have been largely unsuccessful, with the notable exception of Jander v. Retirement Plans Committee of IBM, 910 F.3d 620 (2d Cir. 2018), vacated and remanded, 140 S. Ct. 592, reinstated, 962 F.3d 85 (2d Cir. 2020). When the Supreme Court granted certiorari in Jander, many ERISA lawyers expected the Court to clarify how a plaintiff could satisfy the Dudenhoeffer standard while still preventing meritless stock-drop claims. But as it often does, the Supreme Court ducked the issue and remanded the case without addressing the merits.

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