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IRS Publishes First Operational Compliance Checklist

The IRS recently published the first Operational Compliance Checklist (the ?Ç£Checklist?Ç¥), which lists changes in qualification requirements that became effective during the 2016 and 2017 calendar years. Examples of items listed on the Checklist include, among others: mid-year changes to safe harbor 401(k) plans; proposed regulations regarding QNECs and QMACs in defined contribution plans; final regulations regarding cash balance/hybrid plans; and the extension of temporary nondiscrimination relief for closed defined benefit plans. The Checklist is only available online and will be updated periodically to reflect new legislation and IRS guidance. The Checklist does not, however, include routine, periodic changes such as cost-of-living increases, spot segment rates, and applicable mortality tables, which can instead be found on the IRS?ÇÖs Recently Published Guidance webpage. View the Checklist

IRS Releases Memo Addressing Hardship Withdrawal Substantiation

The IRS recently released a memorandum (the ?Ç£Memo?Ç¥) directed to its Employee Plan Examinations agents regarding the documentation that should be obtained from plan administrators in order to determine whether distributions from 401(k) plans were made on account of an immediate and heavy financial need. The Memo indicates that a 401(k) plan distribution should be deemed to be a hardship withdrawal if, prior to making the distribution, the employer or recordkeeper either (a) obtained source documents from the employee substantiating the hardship or (b) obtained a summary of the information contained in such source documents, provided that if a summary is used, a notice containing certain information prescribed in the Memo must be provided to the employee. Plan administrators should consult with their recordkeepers to confirm that their processes for requesting and retaining hardship withdrawal documentation complies with the guidelines in the Memo. View a copy of the Memo.

IRS Provides Transition Relief Regarding QSEHRA Notice Deadline

The IRS has provided transition relief under its Notice 2017-20 (the ?Ç£IRS Notice?Ç¥) regarding the employee notice requirement that small employers must meet if they want to provide a ?Ç£qualified small employer health reimbursement arrangement?Ç¥ (?Ç£QSEHRA?Ç¥) to their employees. As background, the 21st Century Cures Act (the ?Ç£Cures Act?Ç¥) permits certain employers who are not ?Ç£applicable large employers?Ç¥ under the Affordable Care Act (i.e., generally, employers with fewer than 50 full-time or full-time equivalent employees) (?Ç£Eligible Employers?Ç¥) to offer QSEHRAs for the reimbursement of substantiated medical care expenses incurred by employees or their family members, effective January 1, 2017. The Cures Act requires Eligible Employers to furnish a written notice to their eligible employees (?Ç£QSEHRA Notice?Ç¥) at least 90 days prior to the beginning of the year in which the QSEHRA will be provided (or in the case of an employee who is not eligible to participate in the QSEHRA… Continue Reading

Disability Plan Can Disclose Disputed Substance Abuse Problem to Employer Without Violating ERISA

A former employee alleged that Aetna, as administrator of FedEx?ÇÖs short-term disability plan, breached its fiduciary duty under ERISA when Aetna reported to FedEx that the employee filed a disability claim for substance abuse and Aetna later failed to correct this report. FedEx?ÇÖs drug policy stated that the disability vendor (Aetna) would notify FedEx when an employee sought benefits for substance abuse. The U.S. Court of Appeals for the Tenth Circuit found that compliance with FedEx?ÇÖs policy could not constitute a breach of fiduciary duty and Aetna had not provided inaccurate information to FedEx and thus the appeals court upheld the district court?ÇÖs summary judgment on the claim. Williams v. FedEx Corp. Services and Aetna Life Ins. Co., No 16-4032 (10th Cir. Feb. 24, 2017)

March 2017