Are you responsible for the actions of the prior members of the retirement plan committee? Fiduciaries have a duty to remedy the continuing effect of their predecessors’ breach if they know of the breach. But what type of knowledge is required for liability to attach? In Fuller v. SunTrust Banks, Inc., a federal court evaluated whether actual or constructive knowledge is sufficient. The court found that successor fiduciaries must have actual knowledge of their predecessors’ breach to be held liable. In so finding, the court rejected plaintiffs’ reliance on ...
Effective July 17, 2019, the IRS expanded the list of preventive care benefits permitted to be provided by an HDHP without a deductible, as described in IRS Notice 2019-45. The expanded list is in response to President Trump’s Executive Order 13877 which called for guidance to expand the ability of patients to select HDHPs used alongside HSAs that cover low-cost preventive care to help maintain health status for individuals with chronic conditions. The new guidance signifies a departure from prior guidance which generally did not treat benefits intended to treat existing ...
The United States Supreme Court recently agreed to hear two ERISA class-action cases next term that were decided by the lower courts in favor of plan participants. First, the Supreme Court agreed to review Retirement Plans Committee of IBM et al. v. Larry W. Jander, an employer stock-drop case from the Second Circuit. IBM workers claimed that IBM’s Retirement Plans Committee breached its fiduciary duty by allowing workers’ retirement funds to be invested in artificially-inflated IBM stock. The Second Circuit applied the “more harm than good” standard that was set forth ...
The IRS recently announced in Rev. Proc. 2019-25, the following inflation-adjusted amounts for Health Savings Accounts for 2020:
Heath reimbursement accounts (“HRAs”) have long been subject to various restrictions under the ACA. However, as of 2020, HRAs may be used to reimburse individual health coverage premiums. This signals a departure from the previous prohibition on integrating HRAs with individual coverage. Employers of all sizes will now be able to offer individual coverage HRAs, although specific notice and procedural requirements apply. The new rules also allow employers to offer “excepted benefit HRAs” to finance other types of medical expenses (for example, copays, deductibles and ...
On May 23, 2019, the House approved the “Setting Every Community Up for Retirement Enhancement (“SECURE Act”) by a vote of 417-3. The SECURE Act generally provides for an increase in retirement savings and improves portability of lifetime income options between plans (Summary). More specifically, the SECURE Act includes provisions that:
- Require 401(k) plans to offer participation to part-time employees who work at least 500 hours in three consecutive years;
- Simplify the 401(k) safe harbor rules relating to the notice requirement and limits on plan amendments;
- Increase ...
In another recent Revenue Procedure (Rev. Proc. 2019-19), the Employee Plans Compliance Resolution System (“EPCRS”) program was expanded to permit the correction of certain additional failures through the Self-Correction Program (“SCP”). Before this new ruling, the ability to use SCP was more limited The expanded EPCRS provides the following:
- Plan sponsors can now self-correct certain loan defaults without having to report the failure as a deemed taxable distribution to the participant. A correction may be made by either reamortizing the outstanding loan balance or ...
In a recent Revenue Procedure (Rev. Proc. 2019-20), the IRS announced the limited expansion of the determination letter program for individually designed plans. The program is limited to (1) certain cash balance plans and (2) retirement plans that merge as the result of a corporate transaction. The window for determination letter submissions for eligible cash balance plans will run from September 1, 2019 to August 31, 2020. Submissions for merged plans will begin on September 1, 2019 and will be ongoing.
This opportunity is especially important for cash balance plans since the IRS ...
On April 9, 2019, Kentucky Governor Matt Bevin (R) signed the Pregnant Workers Act, SB 18, which requires employers who have at least 15 employees in Kentucky to provide reasonable accommodations to employees for pregnancy, childbirth, and related medical conditions. The law becomes effective on June 27, 2019.
The U.S. Department of Labor Employee Benefits Security Administration (“EBSA”) discovered that William H. Minor, a former board member of Rehabilitation Center for Children & Adults Inc. who also volunteered to manage its pension plan, embezzled approximately $2 million from the pension plan. Minor operated Multi Financial Insurance Corp. an entity that provided investment advice and administrative services to pension plans.
EBSA discovered that Minor moved the plan’s assets to a life insurance company with which Minor was a registered agent. Minor then falsely ...
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