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Employee Benefits

Department of Labor Updates COBRA FAQs and Model Notices

By Jacob Mattinson and Megan Mardy on May 7, 2020
Posted In Employee Benefits, Health and Welfare Plans

On May 1, 2020, the Department of Labor (DOL) issued updated Frequently Asked Questions and revised model notices under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA is a federal law that permits individuals to continue group health plan coverage for a limited period of time following certain events, such as a termination of employment, that are coupled with a loss of coverage. Employers are required to notify individuals of their rights under COBRA. The changes in the model notices are primarily designed to help Medicare-eligible individuals understand their options for healthcare coverage. The model notices, however, do not include language that addresses DOL relief issued earlier in the week that provides additional time for individuals to elect COBRA coverage through the end of the coronavirus pandemic. Plan sponsors should work with their COBRA vendors and legal counsel to determine whether the model notice updates or coronavirus...

CARES Act—Tax Deferral Opportunities for Employers

By David Fuller on May 5, 2020
Posted In Employee Benefits, Employment

The CARES Act created several payroll tax deferral opportunities but also left employer board members and executives asking what exactly was deferred and worrying about “responsible person” liability. In particular, Section 2302 of the CARES Act (Public Law 116-136) allows all employers to defer the deposit and payment of the employer’s portion of Social Security taxes for a minimum of 12 months and, for some deferrals, a period of more than 32 months. Despite the confusion among some advisers, unlike the employee retention tax credit available under the CARES Act, this opportunity to defer employer Social Security taxes is even available for those employers applying for Small Business Administration loans. Access the full article.

CARES Act Payroll Tax Forum: IRS Weighs in on High-Profile Employee Retention Tax Credits

By Rachel B. Cowen, David Fuller, Brian Tiemann, Andrew Liazos and Sarah L. Engle on May 4, 2020
Posted In Employee Benefits, Employment

Decisions aimed at preserving your workforce in response to the COVID-19 pandemic can have a long-term impact on your business. As you prepare to emerge from government shutdown orders, recall that your workforce is your single most valuable asset. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides employee retention tax credits to help employers defray the cost of keeping their workforces intact in the post-COVID business environment. At the same time, taking advantage of these credits requires careful, upfront planning, particularly in light of the recent FAQs issued by the IRS. During our interactive discussion, we will address the critical matters that you need to understand when planning for these credits, including: What constitutes a partial suspension of business operations, and how government shutdown orders impact those suspensions under the FAQs Which types of compensation and benefits are considered “qualified wages” under the...

SARS-COV-2 Occupational Health and Safety Standard in Germany

By Dr. Thomas Gennert on Apr 30, 2020
Posted In Employee Benefits, Employment

In response to the COVID-19 pandemic, Germany has introduced special occupational safety measures to protect the health of employees, restore economic activity and interrupt the chains of infection. On April 16, 2020, Federal Minister of Labour and Social Affairs (Bundesminister für Arbeit und Soziales) Hubertus Heil and the CEO of the German statutory accident insurance (Deutsche Gesetzliche Unfallversicherung) Dr. Stefan Hussy presented a unified occupational health and safety standard for the duration of the Coronavirus pandemic. The regulations took effect immediately. Access full article here.

UK Coronavirus Job Retention Scheme: Significant Developments

By Chris Lynn, Katie Clark and Paul McGrath on Apr 28, 2020
Posted In Employee Benefits, Employment

Her Majesty's Revenue and Customs (HMRC) has issued its sixth update to the Coronavirus Job Retention Scheme Guidance (Guidance). Separately, the UK Treasury has issued a Treasury Direction (Direction) to HMRC setting out the legal framework for the Scheme. There are few points that have been clarified in the Guidance, but there is one glaring inconsistency between the Guidance and the Direction that will be of understandable concern to employers – the requirement that there is a written record of the furlough arrangement. Access full article here.

SUB-Pay Plans: An Alternative to Severance Programs

By David Fuller on Apr 16, 2020
Posted In Employee Benefits

SUB-Pay Plans: An Alternative to Severance Programs While the coronavirus pandemic wreaks havoc on the economy and jobs, employers consider disaster-related employee benefit structures, such as easily administered qualified disaster assistance relief programs and the financially attractive severance alternative known as “supplemental unemployment benefit plans” or “SUB-pay plans.” Compared to the typical severance program, restructuring a temporary or permanent layoff program as a SUB-pay plan can yield financial and tax savings exceeding 30% of an employer's typical severance costs while also providing FICA tax savings to employees of 7.65%. Access full article.

COVID-19 — Tax Planning Opportunity for Defined Benefit Participants?

By Erin Turley, Diane Morgenthaler and Todd Solomon on Apr 14, 2020
Posted In Employee Benefits, Retirement Plans

Much has been written about the new CARES Act distribution that allows impacted COVID-19 participants to access up to $100,000 in their tax-qualified defined contribution plan penalty-free and with income taxes spread over three years. However, the CARES Act legislation applies to all “eligible retirement plans” as defined in Code Section 402. So technically the CARES Act also applies to defined benefit plans. Consider, the following examples. A cash balance plan permits lump sum distributions to terminated participants. If this cash balance plan decides to add CARES Act distributions, and if its record keeper will administer the provisions, terminated participants who meet the CARES Act conditions can access their funds penalty-free and spread the income tax consequences over three years. In addition, if a plan will offer a lump sum window during 2020, then participants who qualify under the CARES Act distribution rules could elect a lump sum and use the...

CARES Act Impacts All Benefit Plans

By Steven G. Eckhaus, Sarah L. Engle, Samuel Everett Dewey, Rick Stepanovic, Ralph E. DeJong, Lisa Loesel, Lindsay Ditlow, Judith Wethall, Jacob Mattinson, Evan A. Belosa, Erin Steele and Andrew Liazos on Mar 31, 2020
Posted In Employee Benefits, Employment, Executive Compensation, Health and Welfare Plans, Retirement Plans

In the ongoing effort to help individuals impacted by COVID-19, Congress passed the Coronavirus Aid, Relief, and Economic Securities Act (CARES Act) on March 27, 2020. The President signed the CARES Act into law the same day. The historic stimulus package provides wide-ranging relief for both employers and employees. This includes rules that impact health and welfare, retirement and executive compensation plans and programs. For more information about the impact of the CARES Act on employer-provided benefits, access our On the Subject articles on the: Impact of the CARES Act on Health and Welfare Benefits Impact of the CARES Act on Retirement Plans and Student Loan Benefits Impact of the CARES Act on Executive Compensation In addition, for information about the frequently asked questions regarding health and welfare, retirement and executive compensation issues in the COVID-19 era, access our FAQs.

COVID-19 FAQs: For Employee Benefits & Executive Compensation

By Erin Steele, Erin Turley, Evan A. Belosa, Joshua N. Lerner, Jacob Mattinson, Judith Wethall, Maureen O'Brien, Sarah L. Engle, Brian Tiemann, Allison Wilkerson, Andrew Liazos and William R. Pomierski on Mar 26, 2020
Posted In Employee Benefits, Employment, Executive Compensation, Health and Welfare Plans, Retirement Plans

Coronavirus (COVID-19) raises serious concerns for employers of all shapes and sizes, across all industries and in every business sector. As the impact of COVID-19 continues to grow, many employers are faced with new challenges that affect not only their businesses and their employees, but the health and welfare, retirement and executive compensation plans and programs on which those employees rely. These new issues are arising in addition to the myriad benefit plan challenges that employers face each day. We address a number of frequently asked questions regarding health and welfare, retirement and executive compensation issues in the COVID-19 era. This includes not only questions about issues employers are currently facing, but questions about issues employers may face going forward. Given the rapidly evolving nature of the crisis, McDermott’s Employee Benefits and Executive Compensation team will periodically update these FAQs to provide you with the most...

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