Supreme Court Stipulates Actual Knowledge Required in Fiduciary Breach

A unanimous U.S. Supreme Court decision in Intel Corp. Investment Policy Committee v. Sulyma affirmed a Ninth Circuit ruling that a plaintiff must have actual knowledge of a fiduciary breach for ERISA’s three-year limitation period to apply. Under ERISA, claims for breach of fiduciary duty are required to be brought within the shorter of: 6 years after occurrence of the alleged breach; 3 years after a Read More

CMS Proposes Steep Penalties for Medicare Secondary Payer Noncompliance

New proposed regulation by the Centers for Medicare & Medicaid Services (CMS) pose significant financial risk for responsible reporting entities that fail to comply with reporting obligations under Medicare Secondary Payer (MSP) laws.  As proposed, the new rule would impose steep penalties on MSP reporting violations that occur following the new rule’s effective date. Background In general, MSP laws (1) prevent Read More

Time to Review Your Retirement Plan Beneficiary Designations! Considerations Post-SECURE Act

The SECURE Act became effective on January 1, 2020, and it has dramatically changed the landscape for retirement account estate planning by implementing new rules regarding the inheritance of retirement accounts by a deceased plan participant’s beneficiaries. One of the biggest changes is the elimination of lifetime stretch rules.  Where previously designated beneficiaries were able to calculate the required minimum Read More

IRS Confirms That Cafeteria Plan Not Required to Allow Mid-Year Election Change

In IRS Information Letter 2019-0028, the IRS reiterated that while participants in a Section 125 cafeteria plan may change their pre-tax contribution elections due to the occurrence of certain qualifying events, there is no requirement for plans to make this option available.   Cafeteria plan qualifying events If allowed for in its provisions, a cafeteria plan may permit participants to make a mid-year Read More

Tax Court Agrees with IRS that ESOP with Operational/Form Errors is Non-Qualified

The U.S. Tax Court has found that an Iowa corporation’s employee stock ownership plan (ESOP) and employee stock ownership trust (ESOT) do not qualify as retirement plans under federal tax law due to operational and form deficiencies. The case -- Ed Thielking Inc. v. Commissioner of Internal Revenue -- involved an S corporation incorporated on March 10, 2006, with Ed Thielking as sole shareholder.  Ed also served as Read More

SECURE Act/Inflation Adjustments Act Leads to Significant Increase in Benefit Plan Penalties

The SECURE (Setting Every Community Up for Retirement Enhancement) Act of 2019 provided many incentives for Americans to save for retirement, including greater flexibility in contributions, tax credits for new plans, automatic enrollment capability, and more.  However, these important benefits also come with a potential price to pay: a substantial increase in penalties for failure to file several forms in a timely Read More

SECURE Act’s Increase in RMD to Age 72 May Lead to Avoidance of Net Investment Income Tax

Prior to the enactment of the SECURE (Setting Every Community Up for Retirement Enhancement) Act, people invested in qualified retirement plans and IRAs were required to begin taking required minimum distributions (RMDs) from those plans after they turned 70 ½. Under the SECURE Act, the age for beginning RMDs is now 72 for all those who turn 70 ½ after December 31, 2019.  Calculating the amount of those RMDs will Read More

Law 360 – How Cos. Can Boost Benefits For Rank-And-File Employees

By Lawrence Eisenberg (May 13, 2020) In light of COVID-19, many people anticipate a new normal. In that spirit, employers may want to consider new ways of demonstrating appreciation of their extraordinary and valued rank-and-file employees (i.e., non-highly compensated employees, or NHCEs),[1] who have given and been through so much. One way to do this is to adopt an NHCE reward and compensation plan.  What Is an Read More

SECURE Act and the Expanded Flexibility of Lifetime Income Annuity Options: Important Considerations

Three provisions in the Setting Every Community Up for Retirement Enhancement Act (the “SECURE Act”) aim to encourage adoption of guaranteed life income products by defined-contribution plans and participants by addressing perceived shortcomings of these products by DC plan sponsors.  These provisions also aspire to increase awareness among participants of the importance of viewing retirement account balances as an Read More

SECURE Act In; Three ACA Health Taxes Out!

Three taxes created to fund the Affordable Care Act (ACA) have been repealed, thanks to the Setting Every Community Up for Retirement Enhancement Act (the “SECURE Act”) of 2019. ACA Excise Tax on High-Cost Employer Medical Plans Set to take effect in 2022, the ACA excise tax on high-cost employer medical plans -- also known as the “Cadillac Tax” -- set a cap on tax deductions taxpayers could claim based on their Read More