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Plan Sponsors Beware When Classifying Independent Contractors for Benefit Plan Purposes

Employers generally understand that “employee benefit plans” should only be provided to “employees” and that “independent contractors” should be excluded from benefit plan participation. While this concept is simple in principle, it is not as simple in application, since the determination of whether an individual is an independent contractor or an employee is not based on a bright-line test; rather, it is based on a facts and circumstances analysis. With the increase in the “gig” economy, the continued use of temporary or leased employees, and the periodic need to have an employee provide transition services on a limited basis following a termination of employment, minds can easily differ on an individual’s proper classification. To further complicate the matter, there are two different sets of rules that govern the determination of whether an individual is an independent contractor or an employee.  As we noted in our Labor and Employment Group’s alert… Continue Reading

IRS Announces New 2023 Health and Welfare Plan Limits

The IRS recently announced the following inflation-adjusted limits for 2023 for certain health and welfare plans: Health flexible spending account limit: increased to $3,050. Qualified transportation fringe benefit monthly limits for parking and transit: each increased to $300. Adoption assistance program limit: increased to $15,950. Qualified Small Employer Health Reimbursement Arrangement limit: increased to $5,850 for individual coverage and $11,800 for family coverage. The above and other 2023 plan limits are available in Rev. Proc. 2022-38 here.

IRS Provides for a New Mid-Year Election Change Event under Cafeteria Plans

In its recent Notice 2022-41 (the “Notice”), the IRS has provided for a new, optional election change event, which may be adopted by Code Section 125 cafeteria plans that operate on a non-calendar year plan year. The Notice was issued in conjunction with final regulations recently promulgated by the Treasury Department under Code Section 36B (“Final Regulations”).  Final Regulations  Pursuant to Code Section 36B, which was originally enacted under the Affordable Care Act, applicable taxpayers who enroll in a qualified health plan through a Health Insurance Exchange (“Exchange Plan”) and are not otherwise eligible for coverage under an employer-sponsored group health plan (“ER Plan”) that provides “minimum value” and is “affordable” are generally entitled to a premium tax credit (“PTC”). Under the prior regulations regarding the PTC, the “affordability” of coverage under the ER Plan for an employee, as well as for each of the employee’s family members, was based… Continue Reading

Tax Relief for Hurricane Fiona Victims in Puerto Rico

The IRS released Announcement 2022-161 on September 20, 2022 (available here), providing relief to victims of Hurricane Fiona in any area designated by FEMA. Those individuals and businesses that reside in the Commonwealth of Puerto Rico qualify for tax relief, postponing various tax filing and payment deadlines that occurred starting on September 17, 2022. Those individuals and businesses will now have until February 15, 2023 to file various federal individual and business tax returns and make tax payments that were originally due during that period. The February 15, 2023 extended deadline also applies to quarterly estimated income tax payments otherwise due on January 17, 2023 and the quarterly payroll and excise tax returns normally due on October 31, 2022 and January 31, 2023. Additionally, the Puerto Rico Treasury Department issued Internal Revenue Circular No. 22-13 (available here) allowing for special disaster distributions from Puerto Rico qualified plans and Puerto Rico… Continue Reading

IRS Extends Deadline for Amending Eligible Retirement Plans Under the CARES Act and Taxpayer Certainty and Disaster Relief Act

As we previously reported here, in August 2022, the IRS issued Notice 2022-33 (available here), which provided for an extension to the deadline for amendments for certain provisions of the CARES Act; however, that extension did not apply to coronavirus-related distributions and loan relief. The IRS recently issued Notice 2022-45 (available here) providing for an extension to the deadline to amend an eligible retirement plan to reflect the coronavirus-related distributions and loan relief provisions of Section 2202 of the CARES Act and Section 302 of Title III of the Taxpayer Certainty and Disaster Relief Act of 2020 (the “Relief Act”). Pursuant to Notice 2022-45, non-governmental qualified retirement plans and Section 403(b) plans will now have until December 31, 2025 to be amended to reflect the provisions of Section 2202 of the CARES Act and Section 302 of Title III of the Relief Act. Despite the fact that the amendment deadline… Continue Reading

October 2022