Most employers are familiar with the requirement to prepare and distribute a summary plan description (“SPD”). Many employers, however, assume that Department of Labor (“DOL”) disclosure requirements are consistent with the practices and needs of the 21st century. Unfortunately, this is generally not the case. Those disclosure regulations have not been updated in more than …
Debunking SPD Myths, Part 1: The SPD Basics, and (Almost) Every Plan Sponsor Needs One
Most employers that sponsor retirement, health, or other welfare plans are familiar with the requirement to provide a summary plan description (“SPD”) to their employees. With that being said, we frequently run into a number of common misconceptions or gaps in understanding with respect to various SPD requirements. The All Things HR Blog is beginning …
A Written Fee Policy Can Help Employers Answer the Question: Who Pays for Your 401(k) or 403(b) Plan’s Administrative Costs and How Do You Know?
Most employers are familiar by now of the many lawsuits (more than 100) filed against 401(k) and 403(b) plan sponsors and their employee fiduciaries responsible for selecting the plans’ record keepers and investment line-ups, alleging that they breached their fiduciary duty by allowing participants to pay excessive record keeping fees and invest in underperforming and …
Sixth Circuit Court of Appeals Rules that Retiree Health Benefits May be Terminated Based on Ordinary Contract Principles
In its latest case addressing retiree health benefits, the Sixth Circuit Court of Appeals has held that a collective bargaining agreement’s general durational clause controls when retiree healthcare benefits end. Zino v. Whirlpool Corp., 2019 BL 50961, 6th Cir. (2019). This is a new data point indicating that the Sixth Circuit has moved away from …
The Top 5 Things to Know if You Are New to 401(k) Benefits Administration
As an advisor to many 401(k) plan sponsors, I have been asked occasionally what advice I would give to a person who is relatively new to retirement plan administration. While some aspects of administration may only be learned through experience, here are my top 5 things to understand about plan administration. 1. Identify the service …
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The IRS and the FICA, FUTA and Federal Income Tax Traps for Employers with Non-Resident Alien Employees
With all of the payroll complexities that employers face, it is no surprise that a special set of rules that applies to only a small category of employees is frequently overlooked. Often, to the surprise of payroll and human resources staff, special Federal Insurance Contributions Act (“FICA,” composed of Social Security and Medicare taxes), Federal …
Determining Eligibility for the Employer Credit for Paid Family and Medical Leave
Section 45S of the Internal Revenue Code (“Code”), added to the Code by the Tax Cuts and Jobs Act of 2017, establishes a general business credit for an employer who provides paid family and medical leave to qualifying employees. The credit would partially offset the cost of the paid leave, however, it is available only …
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The IRS Announces Updated Limitations Related to Employer Plans; 401(k) Contribution Limit Increases to $19,000 for 2019
The IRS announced cost of living adjustments affecting dollar limitations for employer plans for tax year 2019. The IRS issued technical guidance detailing these items in Notice 2018-83, in addition to previous guidance in Rev. Proc. 2018-30. Many, but not all, of the limitations will change because the increase in the cost-of-living index met the …
Buyers Beware: Sixth Circuit Holds That Asset Purchaser Can Be Sued for Predecessor’s Unpaid Pension Liability
In a typical asset sale transaction, the purchaser takes great care to disclaim any responsibility for the seller’s business debts. When the seller is a sponsor of a defined benefit pension plan, this typically includes a disclaimer for any pension liability (e.g., unpaid plan contributions, PBGC premiums, and liability upon plan termination). The purchaser will …
IRS Releases Draft W-4 to Comply with Tax Law Changes: Four Things Employers Need to Know Now
The Tax Cuts and Jobs Act (“TCJA”) has created many changes for individuals and employers, including the way that employers calculate wage withholding for their employees. Employers need to be aware of the new methodologies for calculating individual income tax withholding, and need to prepare for the use of new forms. To that end, the …