KMK Law Management Rights Blog

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides broad-spectrum relief for participants and plan sponsors of qualified plans and expanded benefits for participants in group health plans including the following:

• For defined contribution plans including 401(k) plans, the changes include expanded in-service distribution provisions up to $100,000, relief from early withdrawal penalty taxes, a temporary increase in 401(k) plan loan limits to $100,000, and relief from minimum required distributions for the remainder of 2020. The adoption of any optional provisions may require plan amendment. It appears amendments would not have to be adopted until at least December 31, 2022.
• There are also special rules related to funding defined benefit plans.
• There are several provisions that impact group health plan coverage requirements. 

The post below provides a summary of certain changes of particular interest to plan sponsors.

We previously reported on Retirement Plans Committee of IBM et al. v. Larry W. Jander, in our June 2019 newsletter which was an employer stock-drop case from the Second Circuit.

There’s good news and bad news under President Trump’s new spending package, which includes the Further Consolidated Appropriations Act (“FCAA”). 

As reported in our June 2019 newsletter, the Ninth Circuit in Intel Corp. Investment Policy Committee et al. v. Sulyma addressed when a participant has actual knowledge of a potential fiduciary breach.

Plans and issuers will be required to use the new 2021 Summary of Benefits and Coverage (SBC) template in connection with coverage and plan years beginning on or after January 1, 2021. Updated instructions and other materials are also available on the agencies' websites. Specifically,

• The new form revises the minimum essential coverage statement to reference the impact on premium tax credit eligibility, and removes the reference to the individual mandate (given the mandate has been effectively eliminated),
• Likewise, the Uniform Glossary has removed references to the ...

The Seventh Circuit recently issued a stern warning about the importance of strict compliance with ERISA claim review timeframes in holding that the “substantial compliance” standard “does not apply to blown deadlines.” In this case, Fessenden v. Reliance Standard Life Ins. Co. (7^th Cir. 2019), the disability plan administrator issued a decision on review about eight days after the time prescribed by ERISA. In the short time period after the ERISA deadline expired and before the decision on review was rendered, the claimant filed suit as he was deemed to have ...

This year, we have seen a string of COBRA class actions seeking monetary penalties on account of defective COBRA notices. Most recently, in Hicks v. Lockheed Martin, the spouse of a former employee alleged various technical defects in Lockheed’s COBRA notice. Although on its face it appeared to include a good deal of required information, the Lockheed notice allegedly failed to state the COBRA coverage termination date, failed to provide an address to which payment should be sent, and failed to sufficiently identify the plan administrator. And, without this information, the ...

In our August Monthly Minute, we touched on the precarious future of drug accumulator programs in light of recently released guidance that appeared to significantly limit their application and usefulness from a cost-management perspective.  Some of those fears have just been put to rest – for the time being. On August 26, 2019, new guidance was released that acknowledged certain ambiguities about the treatment of drug manufacturer’s coupons in circumstances other than in which there is a medically appropriate generic equivalent available. Although the new ...

On September 19, 2019, the final regulations were published making 401(k) hardships easier for participants. Although there are no major departures from last year’s proposed regulations, plan administrators will want to be aware of several key updates, including –

• The list of safe harbor expenses that are considered to satisfy the “immediate and heavy financial need” threshold has been expanded: the home casualty hardship reason is not limited by IRC 165(h)(5) and need not be in a federally declared disaster area, and expenses incurred as a result of certain federally ...

What tax treatment applies when a participant fails to cash a distribution check?  In Rev. Rul. 2019-19, the IRS recently confirmed that the distribution is taxable in the year distributed, whether or not the check is cashed.  Thus, when a distribution is made to an individual and the individual could cash the check, the amount is included in income (provided that no exception to income inclusion applies), subject to withholding, and the distribution must be reported on a 1099-R for the year of distribution.  What’s more, the result is the same whether the individual keeps the ...