In a presentation for the National Center for Employee Ownership (NCEO) Conference, Emily Rickard presented on ESOP plan design, operation and administration. She, along with the other presenters, identified ERISA compliance watchdogs including the plaintiff’s bar, Department of Treasury and Department of Labor, and what attracts their attention when it comes to audits. Emily also identified common mistakes employers make during the entire ESOP lifecycle (e.g. lack of employee communication, distribution strategy and planning) and provided guidance on how to correct those mistakes.
The Internal Revenue Service (IRS) recently extended the temporary nondiscrimination relief for closed defined benefit plans. This extended relief is intended to enable closed pension plans (defined as pension plans that have been closed to new participants but continue to provide ongoing benefit accruals for certain participants) to more easily satisfy certain nondiscrimination testing requirements. In most cases where the relief applies, the closed defined benefit plan is aggregated with a defined contribution plan to satisfy the nondiscrimination testing requirements, and the relief assists the aggregated plan in passing nondiscrimination requirements that apply to accrued benefits and to certain rights and features relating to those benefits.
The original nondiscrimination testing relief for closed pension plans was provided several years ago in an earlier IRS Notice. This relief was already extended on two prior occasions, and the recent IRS Notice further extends the relief until the end of plan years that begin before 2019, as long as the conditions of the original IRS Notice continue to be satisfied. In 2018, the IRS also intends to issue final regulations under Section 401(a)(4) of the tax code that address the nondiscrimination requirements for closed pension plans. Until then, the IRS indicated that plan sponsors can still rely on the proposed 2016 IRS regulations under Section 401(a)(4) for plan years that begin before 2019.
Near the end of 2016, the Department of Treasury (Treasury) and the Internal Revenue Service (IRS) published two significant sets of proposed regulations on issues pertaining to defined benefit pension plans, including mortality table updates that likely would increase pension funding liabilities for many plan sponsors.
On Monday March 6, 2017, the House Republican leadership in the Energy and Commerce and Ways and Means Committees unveiled their signature bill to “repeal and replace” the Affordable Care Act (ACA). The “American Health Care Act” (AHCA) is an effort to make good on President Trump’s promise to dismantle the ACA. Democrats are united in their opposition to the AHCA and other stakeholders have also come out against the bill – while the proposed legislation is subject to modification as it is marked up in committee and debated in Congress, certain provisions of the AHCA, if enacted, will be of particular importance to employers and provide the framework for a strategic road map as employers plan and design future health care benefits for their employees.
On April 6, 2016, the US Department of Labor posted final versions of the updated summary of benefits and coverage (SBC) template and instructions, updated uniform glossary and other associated materials. In previous guidance, the US Departments of Treasury, Labor, and Health and Human Services provided that health plans and issuers who maintain an open enrollment period will be required to start using the new template and associated documents on the first day of the open enrollment period beginning on or after April 1, 2017, with respect to coverage for the plan year or policy year that begins on or after April 1, 2017. Health plans and issuers who do not use an open enrollment period should begin using these documents on the first day of the first plan year or policy year that begins on or after April 1, 2017.
Employers should begin preparations to ensure that the finalized documents are ready for distribution by the required implementation date. Health plans and issuers with calendar year plans and open enrollment periods must be ready to use the new documents during the 2017 open enrollment period for coverage that begins on January 1, 2018. Health plans and issuers with calendar year plans and no open enrollment period should be prepared to use the documents by January 1, 2018.
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