The DOL has now officially delayed until April 1, 2018 its regulations that amend the claims review and appeal procedures applicable to ERISA-covered employee benefit plans providing disability benefits. Such regulations were originally scheduled to apply to disability benefit claims filed on or after January 1, 2018. We previously commented on the DOL’s proposal to delay these regulations here. The delay gives the DOL time to consider additional comments and data, reassess the impact of the new claims procedures, and revise the regulations as deemed appropriate. Employers should thus expect to receive additional guidance from the DOL before the April 1 effective date. View the final regulations that provide for the delay.
The following non-exhaustive list describes year-end action items and the annual notices for retirement plans, which generally must be distributed within a reasonable time prior to the start of the plan year. For calendar year plans, providing the notices outlined below by December 1, 2017 will meet this requirement in most cases. Safe Harbor 401(k) Notice: For 401(k) plans that are designed to comply with the safe harbor requirements of the Internal Revenue Code Automatic Enrollment Notice: For any plan that includes automatic enrollment provisions Qualified Automatic Contribution Arrangement Notice: For plans that are designed to comply with the Internal Revenue Code’s qualified automatic contribution provisions Eligible Automatic Contribution Arrangement Notice: For plans that are designed to comply with the Internal Revenue Code’s eligible automatic contribution provisions Qualified Default Investment Alternative (“QDIA”) Notice: For plans with participant-directed investments that include a QDIA in which a participant’s account will be invested… Continue Reading
There are a number of health and welfare plan action items to address at the end of 2017 and early 2018. We have addressed these action items on our HB Health and Welfare blog. These items include: Affordable Care Act (“ACA”) reporting for 2017 (i.e., Forms 1094/1095) and related issues Issues that may impact plan design and/or written materials such as the ACA, plan design limits, wellness regulations, and federal agency enforcement activity Certain other reporting and communication requirements
The IRS recently released a memo instructing its Employee Plans examiners not to challenge a qualified retirement plan’s compliance with the required minimum distribution (“RMD”) rules under Code Section 401(a)(9), in situations where the plan is unable to make an RMD to a missing participant after completing the following steps: (i) searching plan, sponsor, and publicly-available records for alternative contact information; (ii) using a commercial locator service, credit reporting agency, or proprietary Internet search tool; and (iii) attempting contact via certified mail to the last known mailing address and through “appropriate means” for any other addresses or contact information (e.g., email addresses or telephone numbers). If a plan has not taken all of the foregoing steps, an examiner may challenge the qualified status of that plan if it fails to make timely RMDs to lost participants. Plan administrators are thus advised to complete those steps and document the results for… Continue Reading
IRS Provides Retirement Plan Loan and Hardship Distribution Relief for Victims of Hurricane Maria and the California Wildfires
The IRS released Announcement 2017-15 providing relief from some of the loan and hardship distribution requirements for qualified retirement plans (including Code Section 401(a) and 403(b) plans). The relief applies to employees or former employees either (i) whose principal residence was on the island of Puerto Rico or the U.S. Virgin Islands, or in one of the California counties identified by FEMA for individual assistance because of wildfires; or (ii) whose place of employment was in one of those locations. A list of the areas covered by this relief can be found on FEMA’s website. Qualified plans that do not have loan or hardship distribution provisions can still make loans or hardship distributions, so long as the plan is amended to provide for them no later than the end of the first plan year beginning after December 31, 2017. View Announcement 2017-15.
The IRS recently updated its Questions and Answers on Employer Shared Responsibility Provisions under the Affordable Care Act (the “FAQs”) to include a description of the employer shared responsibility payments process in the form of revised FAQs #55 – 58. FAQ #58 indicates the IRS will send assessments for the 2016 reporting year in late 2017. A brief overview of this process is described below: The IRS will send Letter 226J to the employer. This letter will include: (i) the assessment amount the IRS believes is owed by the employer for each month of the prior reporting year; (ii) a list of the full time employees resulting in the assessment (the list will include the Form 1095-C Part II indicator codes provided to the IRS, if any, by the employer); (iii) the steps the employer should take if it agrees or disagrees with the assessment; and (iv) the steps the… Continue Reading
The IRS recently issued Notice 2017-67 (the “Notice”) containing 79 questions and answers that provide helpful guidance regarding the requirements for “qualified small employer health reimbursement arrangements” (“QSEHRAs”). As discussed in our prior blog posts (linked below), starting January 1, 2017, eligible small employers are permitted to offer employees a QSEHRA to reimburse substantiated medical care expenses, including premiums, of up to a specified maximum per year, provided that certain requirements are met. Among other items, the Notice addresses the QSEHRA requirements regarding employer and employee eligibility, the written employee notice, the substantiation of reimbursable expenses, and Form W-2 reporting of QSEHRA coverage. The Notice also discusses the impact of QSEHRA coverage on health savings account eligibility. View IRS Notice 2017-67. Our prior blog posts regarding QSEHRAs are available here: Small Employers Can Reimburse Premiums and Medical Expenses IRS Provides Transition Relief Regarding QSEHRA Notice Deadline Executive Order Directs Agencies… Continue Reading
In this case, the summary plan description (“SPD”) described a participant’s ability to submit a second level appeal for a denied benefits claim under an employer-sponsored group health plan subject to ERISA and stated that failure to submit such an appeal would constitute a waiver of the participant’s right to review the decision. In addition, the denial letter received by the participant stated that she had a right to request a second level appeal. However, the court found neither the plan document, SPD, or denial letter obligated the participant to file a second level appeal before filing a lawsuit, thus resulting in the court’s denial of the defendant’s motion for summary judgment for failure to exhaust the plan’s administrative remedies. This case highlights the importance of reviewing plan and related documents to ensure they expressly state that submitting a second level appeal is required before a lawsuit over a denied… Continue Reading
In a case of first impression for a federal appellate court, the U.S. Court of Appeals for the Eleventh Circuit held that a fiduciary may affirmatively waive any defenses based on the six-year statute of repose in Section 413 of ERISA. In this case, the U.S. Secretary of Labor brought an action against the company and its owner/CEO who was also the trustee of the company’s employee stock ownership plan (“ESOP”), claiming that the owner engaged in prohibited self-dealing by causing the plan to purchase company stock at inflated prices. While attempting to negotiate a settlement, the Secretary of Labor agreed to delay filing suit in exchange for the defendants executing a series of tolling agreements, in which they agreed they would “not assert in any manner the defense of statute of limitations, the doctrine of waiver, laches, or estoppel, or any other matter constituting an avoidance of the Secretary’s claims… Continue Reading
The IRS recently announced cost-of-living adjustments for 2018. Below is a list of some of the key annual limits that will apply to qualified retirement plans in 2018: Compensation limit used in calculating a participant’s benefit accruals: increased to $275,000. Elective deferrals to 401(k) and 403(b) plans: increased to $18,500. Annual additions to a defined contribution plan: increased to $55,000. Catch-up contributions for employees aged 50 and over to 401(k) and 403(b) plans: remains unchanged at $6,000. Annual benefit limit for a defined benefit plan: increased to $220,000. Compensation dollar limit for defining a “key employee” in a top heavy plan: remains unchanged at $175,000. Compensation dollar limit for defining a “highly compensated employee”: remains unchanged at $120,000. The full list of 2018 plan limits can be found in IRS Notice 2017-64.