In Surprise Reversal, Ninth Circuit Rules Fiduciary Breach Claim is Subject to Arbitration

A recent decision by the U.S. Court of Appeals for the Ninth Circuit found that arbitration is allowable to handle fiduciary breach claims when they are brought by an individual. In the case at hand, Charles Schwab was sued by a plan participant who claimed that Schwab breached their fiduciary duties and that certain transactions, specifically the holding of proprietary funds in a 401(k) plan, were prohibited by Read More

Beware! Layoffs and RIFs May Constitute Partial Plan Termination

Partial termination of a retirement plan can happen for reasons ranging from merging with another company to voluntary termination. Laying off a large enough portion of one’s workforce, due to a reduction in force or other reason, can result in a partial plan termination, something the business may want to avoid. What Creates a Partial Plan Termination? When layoffs impact more than 20% of total plan participants Read More

Can Business Associates Be Subject to HIPAA Civil Monetary Penalties?

HIPAA-covered business associates handle tasks ranging from health plan payments and health care operations to data storage and processing. For these businesses, being a business associate means HIPAA rules and their related civil monetary penalties apply when HIPAA data privacy, security, and even breach notification rules are violated. The Department for Health and Human Services (“HHS”) Office for Civil Rights Read More

Cash Your Retirement Plan Distribution Check! IRS Rules Participant’s Uncashed Check Includable in Gross Income

A recent revenue ruling issued by the IRS addressed whether an uncashed check, in this particular instance a retirement plan distribution check, was still included in an individual’s gross income. The IRS confirmed that an individual’s withholding and reporting obligations were the same regardless of whether the check was cashed or held. As a general rule, amounts distributed to plan participants as part of a 401(a) Read More

Can an Executive Recover 409A Excise Taxes from an Employer?

Employees, particularly executives, look closely at the full benefits package they are offered upon employment. Benefits, both health and retirement plans, are often major factors in choosing between different job offers for top tier candidates. Employers are expected to operate these plans in a reasonable fashion, and when they don’t they often find themselves subject to lawsuits alleging breach of fiduciary Read More

Fiduciary Lawsuits Highlight Importance of Service Provider Agreement Legal Reviews

When entering into a Service Provider Agreement for your 401(k) plan, legal review of the document itself is important to ensure that vendor fees are reasonable. Investment advisors, recordkeepers, and other service providers who help with your benefit plans are under increasing scrutiny due to a string of lawsuits and the Department of Labor’s fee disclosure rules. With increased transparency of fees came increased Read More

Plan Sponsors Take Note! IRS Stipulates that ACA Employer Penalties Cannot be Waived or Reduced

A recent Information Letter issued by the IRS discusses the employer mandate, also known as the employer shared responsibility payment (ESRP) and questions regarding waiver and hardship payments. In short, the IRS letter clearly stipulates that the Affordable Care Act (ACA) employer mandate penalties will not be waived or reduced. Applicable Large Employers (ALE) IRS Code Section 4980H lists penalties for ALEs that Read More

Medicare Secondary Payer Reporting Required for Prescription Drug Coverage Beginning in 2020

Beginning next year, group health plans (GHPs), including Medicare Secondary Payers, are required to follow the Substance Use – Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT Act) rules on reporting on prescription drugs and coverage. Current group health plan (GHP) reporting requirements are focused on exchanging drug coverage information in order to coordinate Read More

Time to Review Your Plan’s Hardship Distributions: Understanding 2020 Hardship Changes

The Bipartisan Budget Act of 2018 (“BBA”) included several changes to retirement plans, specifically changes to 401(k) and 403(b) plan hardship distributions. In response to the BBA, the IRS released proposed new regulations giving benefit plan administrators guidance on how they are likely to view hardship distributions in light of the new law. Regulatory Changes for Hardship Distributions as of January 1, Read More

Employer’s Failure to Respond to Claims Appeal Within ERISA-Prescribed Time Period Proves Costly

ERISA regulations include timelines for many of the different procedures performed under the rules, including the issuance of long-term disability decisions. Plans have 45 days to issue decisions on long-term disabilities and 60 days for other types of decisions. There are also certain circumstances where the plan administrator has the flexibility to extend the timeframe for benefit decisions. However, failure to Read More