Employee Benefits Legal Resource Site


Carol V. Calhoun

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403(b) and 457(b) Plan Compliance Challenges PowerPoint Now Available
(Posted on August 27, 2019 by )


Strafford webinarSections 403(b) and 457(b) plan compliance presents significant challenges for employee benefits counsel and plan administrators. Sponsors of 403(b) and 457(b) plans must consider the impact of recent regulatory and litigation developments to ensure strict compliance to avoid potential claims.

As part of a Strafford webinar on “403(b) and 457(b) Plan Compliance Challenges,” Carol V. Calhoun gave a presentation on ways in which new developments create challenges for tax-exempt and governmental organizations which sponsor such plans. A copy of the PowerPoint for her speech can be found at this link.

IRS Permits New Benefits in High Deductible Health Plans
(Posted on July 18, 2019 by )


Internal Revenue ServiceThe IRS has recently issued Notice 2019-45, which increases the scope of preventive care that can be covered by a high deductible health plan (“HDHP”) without eliminating the covered person’s ability to maintain a health savings account (“HSA”).

As background, since 2003, eligible individuals whose sole health coverage is a HDHP have been able to contribute to HSAs. The contribution to the HSA is not taxed either when it goes into the HSA or when it is used to pay health benefits. It can for example be used to pay deductibles or copays under the HDHP. But it can also be used as a kind of supplemental retirement plan to pay Medicare premiums or other health expenses in retirement, in which case it is more tax-favored than even a regular retirement plan.

As the name suggests, a HDHP must have a deductible that exceeds certain minimums ($1,350 for self-only HDHP coverage and $2,700 for family HDHP coverage for 2019, subject to cost of living changes in future years). However, certain preventive care (for example, annual physicals and many vaccinations) is covered without having to meet the deductible. In general, “preventive care” has been defined as care designed to identify or prevent illness, injury, or a medical condition, as opposed to care designed to treat an existing illness, injury, or condition.

Notice 2019-45 expands the existing definition of preventive care to cover medical expenses which, although they may treat a particular existing chronic condition, will prevent a future secondary condition. For example, untreated diabetes can cause heart disease, blindness, or a need for amputation, among other complications. Under the new guidance, a HDHP will cover insulin, treating it as a preventative for those other conditions as opposed to a treatment for diabetes. Read more.

2019 Supplement to the 457 Answer Book, Seventh Edition, Published
(Posted on June 20, 2019 by )


The most recent update to the Seventh Edition of the 457 Answer Book was published on June 20, 2019. Carol V. Calhoun is the author of Chapter 1, History of 457 Plans, and Chapter 14, Miscellaneous Issues.

The 457 Answer Book is an in-depth resource that provides answers to the questions that tax-exempt organizations, state and local governments, their accountants, tax and legal advisors, 457 administrators, product providers, and investment counselors need to know.

Guiding readers through all aspects of 457 plan administration — from installation through the audit process — the 457 Answer Book describes: the duties and responsibilities of those performing the functions; the required legal, accounting, and administrative tasks; checklists that facilitate control of each administrative process; and suggested forms.

Read more.

2019 Supplement to the Governmental Plans Answer Book Published
(Posted on June 7, 2019 by )


The 2019 supplement to the Fourth Edition of the Governmental Plans Answer Book has now been published.

The 2019 Supplement to Governmental Plans Answer Book gives subscribers the most relevant, current, and practice-oriented answers to the issues faced daily by plan administrators, attorneys, actuaries, consultants, accountants, and other pension professionals as they navigate the requirements and procedures involved in administering their plans. The 2019 Supplement to Governmental Plans Answer Book examines the following significant changes and case law in this area and includes:

  • Recent state-level legislative developments affecting design, eligibility, and related issues (see Q 2:126) and investment, including divestiture (see Q 7:98) and fiduciary education requirements (see Q 7:32).
  • Law sources and practical points to consider in discerning whether a participant is allowed to make a beneficiary designation by electronic means (see Q 12:5.1).
  • Court decision that recognizes, even on interpleader, deference to a claims administrator’s discretionary authority (see Q 12:25).
  • Updated explanations about community-property laws (see Chapter 12).
  • How a provision in the Constitution of the United States and in many states’ constitutions might preclude applying a revocation-on-divorce statute to a beneficiary designation or contract made before the statute was enacted or took effect (see Q 12:54).
  • Citations for the laws of three states that do not end a person’s minor status at age 18 (see Q 12:57).
  • Recent court decision that an order that conditions a payment on whether the payee remains unmarried is not a qualified domestic relations order (see Q 13:10.1).
  • Information about state laws that restrict a plan-approved domestic relations order to provisions more restrictive than those allowed for a non-governmental plan’s qualified domestic relations order (see Chapter 13).
  • A 2018 ethics interpretation about a lawyer’s duties concerning the lawyer’s errors (see Chapter 13).
  • Updated explanations about same-sex marriage and domestic partnerships (see Chapters 12 and 13).
  • The Securities and Exchange Commission’s Regulation Best Interest applicable to broker-dealers that advise employee benefit plans (see Q 7:2).
  • Expanded coverage of cases in text cross-referenced to Appendix E, Recent Court Decisions of Interest Involving Governmental Plans (see Appendix E).

For more information on this book, written by Carol V. Calhoun, Cynthia L. Moore, and Keith Brainard, you can use the following links:

Description | Table of Contents | Purchase

IRS Revenue Procedure Eases Correction Procedures
(Posted on April 22, 2019 by )


Internal Revenue ServiceThe IRS has just issued a new revenue procedure, Rev. Proc. 2019-19, which limits the number of plans that have to make IRS filings under the Voluntary Correction Program (“VCP”) in order to correct past errors.

The guidance adds provisions allowing plans to be corrected under the Self-Correction Program (“SCP”), which does not require an IRS filing, in the case of two sorts of errors:

  • Plan document failures
  • Correction by retroactive plan amendment

The revenue procedure also loosens certain requirements for dealing with plan loan failures.
Read more.

New PowerPoint: Avoiding Fringe Benefit Pitfalls: Tax Traps, De Minimis Rules, Correction Procedures, Fiduciary Risks
(Posted on April 4, 2019 by )


Strafford webinarA recent CLE webinar guided benefits counsel and advisers on recent rules and regulations in providing fringe benefits to employees and avoiding dangerous and costly issues that arise regarding such benefits including personal liability under ERISA. The panel discussed key considerations in structuring fringe benefits, tax traps, de minimis rules, effective correction procedures and methods to minimize fiduciary risks. The PowerPoint presentation for the portion of the webinar dealing with tax aspects is now available at this link.

New article: Section 403(b) Plan Design and Compliance
(Posted on December 5, 2018 by )


Lexis Practice Advisor articleA new article, Section 403(b) Plan Design and Compliance, discusses the rules that apply when eligible tax-exempt organizations establish tax-sheltered annuities, custodial accounts, or retirement income accounts, as described in Section 403(b) of the Internal Revenue Code (403(b) plans).

This article addresses the following topics:

Read more.

New Article: Pre-Approved 403(b) Plans
(Posted on November 29, 2018 by )


Internal Revenue ServiceIn March 2017, the Internal Revenue Service (IRS) began issuing advisory and opinion letters to the first preapproved retirement programs described in Internal Revenue Code (I.R.C.) § 403(b) (403(b) plans). A new article, Pre-Approved 403(b) Plans, discusses preapproved 403(b) plans, including their advantages, legal pitfalls, and other issues that an eligible employer may consider when determining whether to convert its existing 403(b) plan into a preapproved plan.

The major topics are:

Read more.

2018 IRS Benefits & Contributions Limits Announced
(Posted on November 1, 2018 by )


irsOn November 1, 2018, the IRS issued IRS Notice 2018-83, announcing the changes in pensions and benefits limits for 2019. The maximum limits on employee pretax contributions to 401(k), 403(b), and 457(b) plans (without catch-ups) increased from $18,500 to $19,000, the maximum limit on annual additions (primarily to defined contribution plans) rose from $55,000 to $56,000, and the maximum limit on benefits (when expressed as an annual benefit) under a defined benefit plan rose from $220,000 to $225,000. A variety of other limits, including the limits on annual compensation taken into account and the compensation used in the definition of a key employee, also increased.

A chart showing details, and limits from 1996 to 2019, can be found at this link.

New Article: Nonqualified Deferred Compensation Rules for Tax-Indifferent Entities (Section 457A)
(Posted on October 26, 2018 by )