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Employee Benefits Legal Resource Site
Employee Benefits Legal Resource Site
Pre-approved 403(b) Plans
(Posted on September 19, 2017 by Carol V. Calhoun)
In 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 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:
- What Is a 403(b) Plan?
- What Is a Preapproved 403(b) Plan?
- What Are the Advantages of a Preapproved 403(b) Plan?
- What Are the Legal Pitfalls of a Preapproved 403(b) Plan?
- What Operational Issues Can Arise for a Preapproved Plan?
- What Practical Issues Can Arise for a Preapproved Plan?
- When Should an Employer Adopt a Preapproved 403(b) Plan?
- Can the Employer Cure Past Plan Issues by Adopting a Preapproved 403(b) Plan?
- What Should an Employer Do If It Did Not Comply with the Written Plan Document Requirement in the Past?
IRS Issues Self-Assessment Forms for Federal, State, and Local Government Employers
(Posted on July 10, 2017 by Carol V. Calhoun)
The IRS has now issued a series of forms to enable federal, state, and local governments to assess their compliance with federal tax statutes, and has set forth some common errors found in examining such employers. Several of the forms relate to employee benefits issues, and may be of assistance to governments trying to ensure that they comply with all legal requirements.
The forms are as follows:
For use by Federal, State and Local Government Entities
- Form 14581-A Fringe Benefits Compliance Self-Assessment
- Form 14581-B International Issues Compliance Self-Assessment
- Form 14581-D Other Tax Issues Compliance Self-Assessment
- Form 14581-G Worker Status Compliance Self-Assessment
For use by State and Local Government Entities Only
Two New Articles: 403(b) Plans and Substantial Risk of Forfeiture
(Posted on April 21, 2017 by Carol V. Calhoun)
Two articles recently published in the Lexis Practice Advisor are now available on this site:
- Section 403(b) Plan Design and Operation 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).
- Substantial Risk of Forfeiture discusses the concept of substantial risk of forfeiture (SRF) under sections 83, 409A, 457(f), 457A, and
3121(v)(2) of the Internal Revenue Code and the different consequences of the failure to achieve a SRF under each such section. It is accompanied by a Substantial Risk of Forfeiture Comparison Chart, which summarizes the rules.
Employers Need to Adopt Pre-Approved 403(b) Plans by March 31, 2020
(Posted on January 30, 2017 by Carol V. Calhoun)
With the IRS no longer issuing rulings or determination letters on individually designed qualified plans or
Reflecting this, Revenue Procedure 2013-22 established a program for issuing opinion and advisory letters for
The IRS has now announced in Rev. Proc. 2017-18, 2017-5 I.R.B. 743, that the last day of the remedial amendment period for employers to adopt pre-approved
Obtaining an IRS advisory or opinion letter is not legally required, so long as a plan (in form and operation) complies with
What’s Happening with the Affordable Care Act?
(Posted on January 25, 2017 by Carol V. Calhoun)
The recent flurry of activity around the Affordable Care Act (ACA) has many people confused about where it stands, and what the employer’s obligations are. The following summarizes the activity so far:
Legislative Repeal Activity
A popular meme suggests that the Senate voted to eliminate virtually all of the provisions of the ACA, including the ability to obtain insurance in spite of pre-existing conditions, the requirement to cover adult children up to the age of 26, etc. This is not the case.
Department of Labor Regulations Permit State and Local Governments to Set Up Retirement Plans for Private Employers
(Posted on December 20, 2016 by Carol V. Calhoun)
In recent years, several states have adopted laws requiring private (nongovernmental) employers to set up payroll deduction individual retirement accounts, individual retirement annuities, or Roth IRAs (collectively, IRAs) for their employees. Certain localities have also indicated an interest in setting up such programs. ERISA by its terms generally preempts any and all state laws relating to any employee benefit plan regulated by ERISA, other than state laws that regulate insurance, banking, or securities. ERISA
- Are the state or local laws setting up such programs preempted by ERISA?
- Aare the plans themselves subject to ERISA?
The Department of Labor issued final regulations on August 30, 2016 providing a safe harbor for statewide plans covering private employers. On December 20, 2016, it expanded on those regulations with further regulations providing a safe harbor for plans for private employers operated by local governments. This bulletin discusses how those programs work, and what employers can expect from them.
Webinar – Phased Retirement Programs: Exploring the Issues
(Posted on December 5, 2016 by Carol V. Calhoun)
Phased retirement has become increasingly popular among two groups of employees: those who would like to begin easing away from work at a younger age, and those who need to continue working at older ages but require a less demanding schedule. We recently conducted a webinar to help employers identify the situations in which phased retirement may be beneficial, and structure phased retirement arrangements in such a way as to avoid the practical and legal pitfalls.
The PowerPoint presentation for the webinar is now available at this link. Or you can purchase the on-demand webinar, audio & reference manual, or MP3 download at this link.
A Trump Presidency: What Does It Mean for Employee Benefits?
(Posted on November 29, 2016 by Carol V. Calhoun)
Based on both campaign promises and Donald Trump’s plans for his first 100 days, a Trump presidency is likely to make major changes in employee benefits law. The most significant ones are likely to be:
- Major changes in the Affordable Care Act (although the timing and extent of such changes are unclear), combined with expansion of health savings accounts.
- Postponement or elimination of the recently issued Department of Labor fiduciary regulations.
- Loosening of executive compensation rules.
- Further cutbacks in IRS guidance and audit activity.
- Increased hostility to consideration of noneconomic factors in selecting retirement plan investments.
- Diminished enforcement of protections for LGBT employees.
- Increased activity at the state level, including establishment of state-sponsored retirement plans for private employers.
These issues, and others of less general concern, are discussed below. Read more.
2017 IRS Benefits & Contributions Limits Announced
(Posted on November 14, 2016 by Carol V. Calhoun)
On November 14, 2016 the IRS issued IRS Notice 2016-62, 2016-46 I.R.B. 725, announcing the changes in pensions and benefits limits for 2017. The maximum limits on employee pretax contributions to 401(k), 403(b), and 457(b) plans (without catch-ups) remained unchanged at $18,000. However, the maximum limit on annual additions (primarily to defined contribution plans) rose from $53,000 to $54,000, and the maximum limit on benefits (when expressed as an annual benefit) under a defined benefit plan rose from $210,000 to $215,000. Limits on annual compensation taken into account and the compensation used in the definition of a key employee also rose.
A chart showing details, and limits from 1996 to 2017, can be found at this link.
Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs Updated
(Posted on October 27, 2016 by Carol V. Calhoun)
The Comparison of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs chart has now been updated to reflect recent developments, including:
- 2017 limits on contributions and benefits
- Changes in the Employee Plans Compliance Resolution System (EPCRS)
- The IRS announcement that it is discontinuing most determination letters regarding individually designed plans