IRS Provides Guidance on Meaning of Excess Compensation for Tax-Exempt Entities

The 21% excise tax leveraged on excess compensation as outlined in the Tax Cuts and Jobs Act (TCJA) is equal to the corporate tax rate. In an effort to provide more guidance to the applicable tax-exempt organizations (ATEOs) that are subject to this tax rate, the IRS issued guidance outlining the meaning of excess compensation and how it should be calculated for tax purposes. Section 4960 was added to the Internal Read More

Are Class-Action Waivers the Future of ERISA Plans?

Thanks to a recent ruling by the Supreme Court, employers can now be confident that arbitration agreements and class action waivers are enforceable and do not violate the National Labor Relations Act. This debate started in 2011 with AT&T Mobility Servs. v. Concepcion, which held that arbitration provisions were enforceable when included in consumer contracts. It further held that these agreements barred Read More

IRS Issues Guidance on New Excise Tax for Tax-Exempt Entities

Regulatory updates continue as the IRS recently issued interim guidance on the Tax Cuts and Jobs Act (TCJA). Specifically, new regulations impose a 21% excise tax on “excess” executive compensation at applicable tax-exempt organizations (ATEOs). This guidance is designed to provide companies with a reasonable interpretation of the statute until such time as the IRS can issue final regulations. This excise tax applies Read More

ERISA Fiduciary Breach Claims Against Smaller Plans Increase in 2018

A growing number of lawsuits have targeted 401(k) and pension plans. These lawsuits are driven by a number of factors such as the 2008 financial crisis, a recent decision by the U.S. Supreme Court, some larger cases on the topic settling for significant sums, and an increased focus on lower management fees. As plaintiffs’ attorneys noticed the reductions in plan fees and the successful litigation on the part of large Read More

ESOP Fiduciaries and ERISA Compliance

The Employment Retirement Income Security Act of 1974 (ERISA) sets the minimum standards for many retirement and health plans. This includes employee stock ownership plans or ESOPs. In fact, ESOP fiduciaries must pay particular attention to rules and standards of conduct. The Role of ERISA Fiduciaries Anyone with authority or control of ESOP plan assets, or who participates in management or administration of the Read More

Fiduciary Liability Cases Soar as ERISA Retirement Assets Reach $28 Trillion

Fiduciaries manage assets on behalf of other individuals, like participants in retirement and health care plans. As such, fiduciaries have an ethical duty to act in the best interests of the beneficiaries they represent. In fact, they can be held liable for their actions. But what happens when beneficiaries lose confidence in fiduciaries? Lately, the answer seems to lie in the increasing number of fiduciary liability Read More

Best Steps to Avoid a Cyber Attack on Your 401(k) Plan

With everything from pizza deliveries to multi-million dollar deals being handled online, it should come as no surprise that hackers might target you 401(k) plan. However, security breaches don’t stop with an unknown party simply accessing your participants’ personally identifiable information (PII). Hacks also can lead to unauthorized withdrawals of funds from 401(k) plans. So, what can you do to avoid a cyberattack Read More

Tax-Exempt Entities Receive IRS Guidance on Executive Compensation Excise Tax

The Tax Cuts and Jobs Act (“TCJA”) enacted in December 2017 offered welcome tax relief to many American taxpayers. However, the TCJA also created headaches for tax-exempt entities in the form of a 21% excise tax on certain types of executive compensation programs. Organizations like churches, charities, social clubs, veterans’ organizations, certain trusts, and agricultural organization had to quickly learn how to Read More

Is Simultaneous Sponsorship of an FSA, HRA, and HSA Possible?

Employers struggling to offer the health and welfare benefits employees prefer may find that certain options do not mix well. In fact, employers may wonder if simultaneous sponsorship of an FSA, HRA, and HSA is possible or even preferable. The first and most important decision to make is whether it is possible to supplement health insurance with FSAs, HRAs, and HSAs under current laws. Publication 969, Health Savings Read More

Avoiding Fiduciary Liability in 2019: Steps 401(k) Fiduciaries Should Take Now

Plan fiduciaries, regardless of their title, are expected to perform their duties solely in the best interests of plan participants and their beneficiaries. In addition, plan fiduciaries are expected to act prudently. Failing to do so, and failing to comply with Department of Labor (DOL) fiduciary responsibilities, can lead to a fiduciary liability lawsuit. What follows are actionable suggestions on avoiding Read More