U.S. Department of Labor Finalizes Regulations Authorizing States to Establish Retirement Savings Programs

Blog post by Lawrence I. Davidson

On August 25, 2016, the U.S. Department of Labor (DOL) released its Final Rule that will facilitate state legislatures in establishing employee retirement savings programs that are ERISA compliant.  Currently, roughly one-third of all workers do not have an opportunity to save for retirement through retirement savings accounts offered by their employers.  To date, eight states, including Illinois and California, have already passed legislation which creates retirement savings account programs for employees.  While the specific rules of these employee retirement savings programs vary for each state, all of them have the purpose of encouraging residents of their State to save for retirement.  Often this is accomplished through a state “auto-IRA” law which requires employers that do not offer workplace retirement savings programs to automatically enroll their employees in payroll deduction IRAs administered by the state.  Continue reading U.S. Department of Labor Finalizes Regulations Authorizing States to Establish Retirement Savings Programs

Employers Take Note: Final HIPAA Rules Mandate New Obligations for Group Health Plans

Employers that sponsor group health plans for their employees should pay careful attention to the newly announced final omnibus rule amending the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) in accordance with the HITECH Act of 2009 (the “HITECH Act”). This final rule under the HITECH Act (the “Final Rule”) issued on January 17, 2013, impacts group health plans in two significant ways. First, the Final Rule expands the existing definition and obligations of a business associate of a group health plan under HIPAA. In addition, the Final Rule modifies the obligation of a group health plan in regard to breaches of protected health information (“PHI”) that is unsecured.

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Year-End Deadline Approaching for Code Section 409A Corrections

Employers should be aware that December 31, 2012, is the Internal Revenue Service’s (IRS) deadline for correcting certain documentary violations under Internal Revenue Code Section 409A (“Section 409A”). Specifically, December 31 is the deadline for correcting violations arising in connection with severance payments, the receipt of which is conditioned upon the action of an employee (such as the employee’s providing a general release of claims, or a noncompete or nonsolicitation agreement) prior to commencement of a severance payment. This contingent payment arrangement is often seen in employment agreements, severance agreements and severance plans.

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IRS Extends Governmental Plan Filing Deadline

The Internal Revenue Service (IRS) has released Rev. Proc. 2012-50, which will delay the IRS determination letter filing deadline for governmental plans to January 31, 2016.

As background, governmental plans are required to file for IRS determination letters in “Cycle C” of the IRS’s five-year-cycle determination letter program. The initial Cycle C ended on January 31, 2009, but the IRS effectively extended the filing deadline by allowing governmental plans to submit in “Cycle E,” which ended on January 31, 2011. The extension did not, however, change the requirement that governmental plans file in Cycle C. Therefore, even though many governmental plans filed only last year, absent an accommodation, those plans would be required to file again at the start of the next Cycle C, beginning on February 1, 2013.

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IRS Publishes Additional Guidance for Employees Impacted by Hurricane Sandy

As a follow-up to our prior entry regarding Employee-Assistance Programs Available to Employers in the Wake of Hurricane Sandy, there have been two recent developments from the Internal Revenue Service of note:

(1) Notice 2012-69 addressed the treatment of certain amounts paid to Section 170(c) organizations under employer leave-based donation programs to aid victims of Hurricane Sandy. The IRS has stated that it will not assert that cash payments an employer makes to Section 170(c) organizations in exchange for vacation, sick, or personal leave that its employees elect to forgo constitute gross income or wages of the employees if the payments are made to the Section 170(c) organizations for the relief of victims of Hurricane Sandy and are paid before January 1, 2014. Similarly, the Service will not assert that the opportunity to make such an election results in constructive receipt of gross income or wages for employees. Employers who have adopted leave-sharing plans (or are considering their adoption) should take note of this development.

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Employee-Assistance Programs Available to Employers in the Wake of Hurricane Sandy

In coping with the aftermath of Hurricane Sandy, which affected millions of individuals across the eastern United States, there are a number of potential programs that employers can implement in order to assist employees. We examine two such programs – the establishment of a major disaster leave sharing plan and tax-free qualified disaster relief payments – in our Client Alert, entitled Employee-Assistance Programs Available to Employers in the Wake of Hurricane Sandy.

Countdown to Open Enrollment

As employee benefit lawyers, we can certainly tell you that the months of October and November are among the busiest for our clients, the large majority of whom are human resources professionals. Why so busy? These are the months in which organizations with a January 1 plan year prepare for and execute the annual open enrollment period for health and welfare benefit plans.

The open enrollment preparation process is an excellent time to ensure that your health and welfare plans legally comply with the many communications and notices required under the Employee Retirement Income Security Act (“ERISA”). The following are just a few such items to keep on your radar.

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“What Are Other Funds Doing About. . .”

“What Are Other Funds Doing?”

I often hear this question at trustee board meetings. More often than not, it arises from a decision on funding or investment policy. When asked, it is expected that “the professionals” (i.e. attorney, actuary or consultant) will pull from a trove of information and divine “the answer.” The fact is, funding policy (dictated by the fund’s sponsor) and investment policy (as determined by the fund’s board) can be as varied as fingerprints.

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The Private Equity Conundrum

A recent article in the Wall Street Journal notes the apparent conflict of public pension fund investments in private equity. The article points to the fact that certain labor unions, including the Service Employees International Union (SEIU), have criticized private equity funds while their members sit on boards which authorize investments in such funds. A specific example citied is the Ohio Public Employees Retirement System, which includes a representative of SEIU among its Board members, having increased its targeted private equity holdings. The article goes on to point out TV spots funded by the American Federation of State, County and Municipal Employees (AFSCME) which criticize Republican presidential candidate Mitt Romney regarding his tenure at Bain Consulting.

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