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New 2022 Health and Welfare Benefits Limits: In Time for Open Enrollment?

The IRS published increased limits for 2022 for various health and welfare benefits, including: Health flexible spending account limit increased to $2,850 (from $2,750); Qualified transportation fringe benefit limit for parking and transit each increased to $280 (from $270); Adoption assistance program limit increased to $14,890 (from $14,400); and Qualified Small Employer Health Reimbursement Arrangement limit increased to $5,450 for individual coverage and $11,050 for family coverage (from $5,300 and $10,700, respectively). An employer that wants to incorporate these increased limits into its plans should determine whether the plans are drafted to automatically reflect the increased limits or whether amendments would be required. If a plan (including a health flexible spending account) is drafted to automatically incorporate any increased limits, the plan sponsor should communicate the increased limits to participants to permit changes during open enrollment for the upcoming plan year. The list of 2022 plan limits can be found in… Continue Reading

Before Cleaning Out Files, Brush Up on Record Retention Requirements

Our world is filled with paper and electronic records, and the HR departments at most companies are no exception. Enrollment forms, notices, plan documents, summary plan descriptions, benefit statements, and service records are just a few of the records that fill the HR department?ÇÖs file cabinets and computer storage. While it might be tempting to clean out files, plan sponsors should exercise care before disposing of any files relating to benefits under a plan. A clean desk today could create headaches tomorrow. Generally, ERISA requires an employer to retain plan records to support plan filings, including the annual Form 5500, for at least six years from the filing date (ERISA ?º107) and to maintain records for each employee sufficient to determine the benefits due or that may become due to such employee (ERISA ?º209), with no time limit on such requirement. In addition, HIPAA requires retention of the policies and… Continue Reading

IRS Issues Guidance on Certain Changes Made Under the Secure Act and the Miners Act

The IRS recently issued Notice 2020-68 (the ?Ç£Notice?Ç¥), which contains several sets of questions and answers that provide helpful guidance regarding various provisions in the Setting Every Community Up for Retirement Enhancement Act of 2019 (the ?Ç£SECURE Act?Ç¥) and Section 104 of the Bipartisan American Miners Act of 2019 (the ?Ç£Miners Act?Ç¥). Specifically, the Notice addresses certain issues concerning the following provisions of the SECURE Act: The small employer automatic enrollment credit; The repeal of the maximum age for traditional IRA contributions; Participation of long-term, part-time employees in 401(k) plans; Qualified birth or adoption distributions; and Permitting excluded ?Ç£difficulty of care payments?Ç¥ to be taken into account as compensation for purposes of determining certain retirement contribution limits. The Notice also provides guidance with respect to the reduction in minimum age for in-service distributions as provided in the Miners Act. In addition, the Notice sets forth the deadlines to amend retirement… Continue Reading

CARES Act Relief Checklist: Considerations in Deciding What Relief is Right for Your Business

The Coronavirus Aid, Relief, and Economic Security Act (the ?Ç£CARES Act?Ç¥) offers relief to businesses affected by COVID-19 through various programs, including forgivable loans and federal income tax credits. However, the CARES Act prevents businesses from claiming certain benefits that are considered duplicative.?á The following checklist outlines key considerations for businesses when selecting among the Paycheck Protection Program (the ?Ç£PPP?Ç¥), the Employee Retention Tax Credit, the Employer Social Security Tax Deferral, and Work Opportunity Tax Credit. Certain industries, such as aviation, have specialized relief, which is beyond the scope of this checklist. In deciding what relief is appropriate, businesses should consider, as discussed in detail below, employer size, what may be best for the business?ÇÖs employees, and the business?ÇÖs long-term prospects. While this checklist is designed as a tool to assist businesses in choosing the proper relief, the best way to determine which option is optimal for a particular business… Continue Reading

COVID-19 EMPLOYEE BENEFIT AND EXECUTIVE COMPENSATION QUESTIONS AND ANSWERS

In light of the recent economic developments stemming from the COVID-19 pandemic, many employers are evaluating their employee benefit plans and how employee and employer costs will be impacted. The following summary provides a list of questions we have been receiving from clients over the past week, along with action items to help employers address these issues. Health and Welfare Plans and Fringe Benefits Should benefits coverage continue while an employee is on an unpaid furlough? If so, how would the employee pay the employee?ÇÖs portion of the premium? Could the employee elect to drop coverage due to the reduction in hours of active service? Could the employer pay for coverage for some or all of its furloughed employees? Continued eligibility for benefits will depend on whether the employer treats the furlough as a termination of employment or as an unpaid leave of absence. The terms of the plan, including… Continue Reading

IRS Issues Helpful Guidance Regarding Qualified Small Employer Health Reimbursement Arrangements

The IRS recently issued Notice 2017-67 (the ?Ç£Notice?Ç¥) containing 79 questions and answers that provide helpful guidance regarding the requirements for ?Ç£qualified small employer health reimbursement arrangements?Ç¥ (?Ç£QSEHRAs?Ç¥). 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

Small Employers Can Reimburse Premiums and Medical Expenses

The 21st Century Cures Act, which recently passed in Congress and President Obama has stated he will sign, creates a new ?Ç£qualified small employer health reimbursement arrangement?Ç¥ (?Ç£QSEHRA?Ç¥) effective January 1, 2017. The QSEHRA is a new form of health reimbursement arrangement (?Ç£HRA?Ç¥) that can reimburse substantiated medical care expenses, including premiums, of up to $4,950 per year (as adjusted for inflation) or up to $10,000 per year (as adjusted for inflation) if the QSEHRA reimburses family member expenses. The QSEHRA is available to an employer that (i) is not an ?Ç£applicable large employer?Ç¥ under the Affordable Care Act (?Ç£ACA?Ç¥) (which generally means having at least 50 full-time or full-time equivalent employees, determined on a controlled group basis) and (ii) does not offer a group health plan to any of its employees in the controlled group. Unlike ?Ç£regular?Ç¥ HRAs, the QSEHRA generally is not considered a group health plan for… Continue Reading

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