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Possible Year-End Deadline for Retirement Plans of Plan Sponsors Involved in a 2017 Corporate Transaction

Generally, employee benefit plans of members of the same controlled group must satisfy certain requirements of the Internal Revenue Code on an aggregated basis (e.g., retirement plan nondiscrimination and coverage testing). Following a corporate transaction, such as a merger or a stock or an asset sale, the benefit plans of the buyer and seller may differ significantly. In order for plan sponsors to have a period of time post-closing to determine how best to structure their benefit plans going forward, Code Section 410(b)(6)(C) provides transition relief by permitting the plans to choose to be operated and tested separately, if certain requirements are met, such as coverage under the plan not being materially modified during a transition period. The transition period begins on the transaction’s closing date and, generally, ends on the last day of the first plan year beginning after the year in which the transaction occurred or, if earlier,… Continue Reading

Extension of Due Date to Furnish Form 1095 to Individuals and Good Faith Transition Relief

In Notice 2018-94, the IRS extended the due date, from January 31, 2019 to March 4, 2019, for furnishing to individuals their 2018 Form 1095-B and Form 1095-C. The Notice does not extend the due date to file Forms 1094-B, 1095-B, 1094-C, and 1095-C with the IRS, which are due by February 28, 2019 (paper filing) or April 1, 2019 (filing electronically), although extensions may be available. The Notice also extends the IRS’s good-faith transition relief from penalties that could apply for incorrect or incomplete information reported on such forms furnished to individuals or filed with the IRS. This relief does not apply if the applicable forms were not filed or furnished by their respective due dates. View Notice 2018-94.

IRS Transition Relief for State Contraception Laws Creating HSA Eligibility Issues

Recently, several states expanded their contraceptive coverage mandates under the applicable state’s insurance laws to require medical insurance policies to cover certain male contraceptive services (e.g., vasectomies) on a first dollar basis before an insured has met the policy’s annual deductible. This is problematic for an insured medical plan that is intended to qualify as a high deductible health plan (“HDHP”). An HDHP enables participants to make or receive contributions to a health savings account (“HSA”). Unless an exception applies (such as coverage for preventive services, disease management, or wellness services), a medical plan that provides benefits before an individual has met the annual deductible cannot qualify as an HDHP. The IRS recently released Notice 2018-12, which provides that male contraceptive coverage will not qualify for an exception from this rule as a preventive service or under another exception. The IRS has granted temporary transition relief for the HSA eligibility… Continue Reading

DOL Proposes to Extend Transition Period for Fiduciary Rule Exemptions

The DOL recently published a notice (the “Notice“) proposing to extend the “transition period” currently in effect for the Best Interest Contract Exemption and the Principal Transactions Exemption (the “Exemptions“), which were issued in connection with the DOL’s new plan fiduciary definition. During the transition period, fiduciaries may rely on the Exemptions by adhering to the “Impartial Conduct Standards” (i.e., an advisor must give prudent advice that is in retirement investors’ best interest, charge no more than reasonable compensation, and avoid misleading statements). The other conditions applicable to the Exemptions will not become effective until the transition period ends. The Notice proposes to extend the transition period, which is currently scheduled to end on January 1, 2018, through July 1, 2019. The Notice also proposes a delay in the effective date of certain amendments to Prohibited Transaction Exemption 84-24 until July 1, 2019. The Notice is available here.

October 2019
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