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Plan Administration

DOL Disability Regulations and the Impact on ERISA Plans

The Department of Labor has issued final regulations under Section 503 of ERISA that purport to enhance the disability benefit claims and appeals process for plan participants. These regulations amend the DOL’s disability claims procedure regulations issued in 2002. The new regulations generally affect the procedures for filing disability benefit claims, providing notice of adverse benefit determinations, and appealing adverse benefit determinations.

ACA-Reporting Deadline Extended by 30 Days

The Affordable Care Act (“ACA”) imposed additional reporting requirements on health coverage providers (including self-funded employer plans) and “applicable large employers” (those with 50 or more full-time employees). In Notice 2016-70, the IRS has granted coverage providers and employers 30 more days to issue the appropriate ACA-reporting forms to their insureds and full-time employees for coverage provided during 2016. Rather than January 31, 2017, these Forms 1095-B and 1095-C will now be due by March 2, 2017. In addition, the IRS has extended by one year the period of “good-faith compliance” with these reporting rules. As of now, however, the IRS has not extended the deadline for coverage providers and employers to transmit these ACA-reporting forms to the IRS.

You’ve (Still) Got to Be Kidding: Supreme Court Holds ERISA Plan Participants May Ignore Reimbursement Provisions If They Spend the Money Fast Enough

The Supreme Court has handed down its latest in a long line of decisions on enforcing the reimbursement provisions of self-funded ERISA welfare plans. As evidenced by the Court’s lopsided 8-1 decision, the result in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan will not surprise those familiar with the law in this area. But as indicated by Justice Ginsburg’s indignant dissent, plan sponsors may find the decision downright bizarre. After all, it tells participants who double-recover for medical benefits paid by their employer’s health plan that they’re off the hook – if they spend the money fast enough.

2016 Inflation Adjustments

Following recent announcements by both the IRS and the Social Security Administration, we now know most of the dollar amounts that employers will need to administer their benefit plans for 2016. The key dollar amounts for retirement plans and individual retirement accounts (“IRAs”) are shown on the front side of this card.

Same-Sex Marriage Ruling Impacts Benefit Plans (Again)

On Friday, June 26, 2015, the Supreme Court published its ruling in Obergefell v. Hodges, holding (by a 5 to 4 margin) that the Fourteenth Amendment requires a state to license marriages between two people of the same sex, and to recognize any such marriage that is lawfully licensed and performed out-of-state. As a result, all (remaining) state laws or constitutional amendments banning same-sex marriage are now invalid.

IRS to Plan Sponsors: You Must Retain Documentation for Loans and Hardship Withdrawals

Most sponsors of defined contribution plans rely on a third-party administrator (a “TPA”) to handle participant loans and hardship withdrawals—typically through the TPA’s website. However, in guidance issued last week, the IRS cautions that the sponsor—not the TPA or the participant—is responsible for maintaining documents proving that those transactions comply with the law.

Another Court Enforces DOL’s Electronic SPD Rules

At some point, as electronic communication becomes the norm – and as paper virtually disappears from the workplace – we will surely see a softening of the conditions imposed by the Department of Labor (“DOL”) on the electronic distribution of summary plan descriptions (“SPDs”). But a recent decision by a New York federal court confirms that we are not yet at that point.

Davidson v. Henkel: A Rather Taxing Decision

A recent decision by a Michigan federal trial court serves as a warning to employers that their failure to shield participants in nonqualified deferred compensation plans from adverse tax consequences may subject the employers to unanticipated liability. Although this decision (in Davidson v. Henkel Corporation) involved FICA taxation, the court’s reasoning would seem to apply equally to the 20% penalty tax and interest assessments triggered by a violation of Code Section 409A.

Employee Benefits Plans – 2015 Inflation Adjustments

Following recent announcements by both the IRS and the Social Security Administration, we now know most of the dollar amounts that employers will need to administer their benefit plans for 2015.

When Does 9.5% Equal 9.56%?

Although 9.5% has been a key threshold in determining the “affordability” of employer health coverage, the IRS has just announced (in Revenue Procedure 2014-37) that this threshold will be adjusted to 9.56% for 2015. This adjustment reflects the fact that health insurance premiums have risen more rapidly than incomes. Similar adjustments have also been announced for related percentage thresholds.

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