Employee Benefits & Executive Compensation Blog

The View from Proskauer on Developments in the World of Employee Benefits, Executive Compensation & ERISA Litigation

In late September, the Pension Benefit Guaranty Corporation (the “PBGC”) published Press Release 20-04 and issued Technical Update 20-2 providing flexibility in the calculation of variable-rate premiums for plan sponsors who take advantage of extended pension contribution deadlines for 2020—even in certain circumstances where the plan sponsor has already completed its PBGC premium filing. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) allows plan sponsors to delay until January 1, 2021 the payment of minimum required contributions to tax-qualified defined benefit pension plans that would otherwise be due in 2020.  The IRS subsequently clarified in Notice 2020-61
The DOL recently provided retirement plans with a new method to comply electronically with certain participant disclosure and notice requirements. See our blog post outlining the new DOL rule. This new method adds to the previously issued DOL safe harbor and the IRS rules.  Below is a side-by-side general comparison to help plan administrators keep track of when each method may be used, and what requirements must be met. Plan administrators should consult with counsel on the details of any electronic disclosure procedures to verify compliance with all applicable rules. A few caveats to this framework: This chart could…
On June 29, 2020, the Internal Revenue Service (the “IRS”) issued Notice 2020-52 that provides temporarily relief to plan sponsors that amend their safe harbor Section 401(k) or 401(m) plans (“Safe Harbor Plans”) mid-year to reduce or suspend employer safe harbor matching or nonelective contributions due to the COVID-19 pandemic.  To qualify for the relief, a Safe Harbor Plan would need to be amended between March 13, 2020 and August 31, 2020. Background Under current IRS regulations and related guidance, a Safe Harbor Plan may be amended mid-year to reduce or suspend the employer’s safe harbor matching or nonelective contributions…
In Notice 2020-50, the IRS expanded eligibility for CARES Act distributions and loans, and provided additional guidance.  To recap (as described here), the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) added three types of distribution and loan flexibility under eligible retirement plans for certain “qualified individuals”: (1) “coronavirus-related distributions” (“CRDs”) up to $100,000 that are eligible for favorable tax treatment and generally may be repaid to the plan or an IRA within 3 years, (2) suspension for up to one year of loan repayments otherwise due from March 27, 2020, through December 31, 2020, and…
This afternoon, the Treasury Department issued Notice 2020-42, ending the uncertainty surrounding spousal consents to retirement plan distributions and loans in the socially distanced COVID-19 world. As plan administrators know, when spousal consent is required for a plan distribution or loan, the law requires that the consent be witnessed by a notary public or plan representative. Although the applicable Treasury Regulations allow the actual notarization or acknowledgment of the witnessing to be signed electronically consistent with ESIGN, the Regulations still require that the notary or plan representative witness the spouse’s signature in the physical presence of the signer. In light…
On May 12, 2020, the IRS released Notice 2020-29, which provides significant flexibility for health insurance and flexible spending account election changes during 2020, and Notice 2020-33, which increases the amount that may be carried over from one year to the next under a health flexible spending account (FSA).  The guidance allows increased flexibility for employees to make or change their elections for calendar year 2020, as well as more time for employees to spend down health and dependent care FSA balances.  These changes are optional and would require plan amendments. Read below for more details about this relief,…
On May 4th, the IRS released a set of FAQs focused on the special coronavirus-related distribution (“CRD”) and plan loan options under the CARES Act (described here). To recap, the CARES Act allows expanded distribution options and favorable tax treatment for up to $100,000 of CRDs from eligible retirement plans (including section 401(k) and 403(b) plans, and IRAs), as well as an opportunity to repay the CRDs.  The Act also increases the limits for plan loans and allows certain loan repayments to be deferred by up to an additional year.  These opportunities are available only to individuals who…
On April 29, 2020, the U.S. Departments of Labor (Employee Benefits Security Administration, “EBSA”) and Treasury (IRS) published a final regulation, and EBSA issued a package of guidance and relief, for employee benefit plans affected by the COVID-19 outbreak.  EBSA’s package includes (i) EBSA Disaster Relief Notice 2020-1, (ii) DOL COVID-19 FAQs for Participants and Beneficiaries (answering basic participant questions), and (iii) a press release.  At a high level, the package includes important guidance and extensions of various deadlines.  The IRS/DOL regulation is particularly noteworthy because it provides an extended period for employees to elect health coverage…
On April 10, 2020, the Pension Benefit Guaranty Corporation (the “PBGC”) announced that deadlines for upcoming premium payments and certain other required filings due from April 1, 2020 through July 14, 2020 will be extended to July 15, 2020 as further described below. The PBGC’s announcement came a day after the Internal Revenue Service (the “IRS”) issued Notice 2020-23, which extended certain deadlines, including for Form 5500 returns, to July 15, 2020 as a result of COVID-19. Under the PBGC’s disaster relief policy, when the IRS announces disaster relief that includes a filing extension for Form 5500 returns, the PBGC…
As recent history has shown, ERISA claims seeking recovery of investment losses tend to proliferate during times of market volatility.  The Coronavirus (COVID-19) pandemic presents a unique opportunity for plaintiffs to search for and bring fiduciary-breach claims based on the underperformance of company stock funds and other available investment options in 401(k) and 403(b) plans.  The pandemic has had an extraordinarily disruptive impact on the economic markets since spreading globally and into the United States.  Recent swings have seen historic losses in market prices, and although all investments are feeling the hit and some slightly rebounded after Congress passed the…
COVID-19 has had significant impacts on all aspects of business.  While employers are assessing how to handle immediate employee needs related to sick leave, family leave and benefits claims, employers should also consider the impact that changes in their workforce or economic conditions will have on their compensation plans and programs. Click here to read the next post in a series addressing the impact that COVID-19 has had on executive compensation issues.  In their second post, our colleagues Andrea Rattner, Colleen Hart, Josh Miller, Seth Safra, Kate Napalkova and Katrine Magas discuss certain issues that employers…
On March 27th, Congress passed a stimulus package in response to the Coronavirus/COVID-19 pandemic.  The package, which is entitled the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” or the “Act”), contains several provisions that affect employee benefits. Retirement Plans Early “Coronavirus-Related Distributions”: The CARES Act allows plans to offer “coronavirus-related distributions” up to $100,000 (from all plans in the controlled group combined).  These distributions would be taken into income over three years (unless the participant elects otherwise) and are not subject to the 10% additional tax for withdrawal before age 59 ½.  To qualify, the distribution must…
COVID-19 has had significant impacts on all aspects of business.  While employers are assessing how to handle immediate employee needs related to sick leave, family leave and benefits claims, employers should also consider the impact that changes in their workforce or economic conditions will have on their compensation plans and programs. Click here to read the first post in a series addressing the impact that COVID-19 has had on executive compensation issues.  In their first post, our colleagues Andrea Rattner, Collen Hart, Kate Napalkova and Katrine Magas discuss whether a temporary leave of absence or furlough triggers forfeiture,…
On March 18, 2020, the Senate passed and the President signed into law the Families First Coronavirus Response Act (the “Families First Act” or the “Act”) which was first drafted and passed by the House earlier in the week.  As noted in our Law and the Workplace summary of the Act, the new Act contains many important provisions regarding expanded family and medical leave and emergency paid sick leave as they relate to COVID-19.  The Families First Act, however, does not stop there.  It also mandates coverage of testing for COVID-19 without cost-sharing, prior authorization, or other medical management…
On March 11, 2020, the IRS issued Notice 2020-15, to address an important coronavirus issue for high-deductible health plans that are coordinated with health savings accounts (“HSAs”).  The guidance paves the way for health plans to waive or reduce deductibles for any “medical care services and items purchased relating to testing for and treatment of COVID-19,” without affecting eligibility to make HSA contributions. In general, employees may make and receive contributions to HSAs only if they are enrolled in a “high deductible” health plan.  With limited exceptions, covering medical expenses before the minimum deductible is reached would make employees ineligible…