The Bipartisan Budget Act helped avoid another government shutdown, but did it cause problems for your benefit plans? Sarah L. Engle and D. Finn Pressly will discuss everything you need to know about the new legislation, including changes to hardship distributions and new wildfire relief. The panel will also bring you up to speed on other key developments in the employee benefits sphere over the last month.
Partners Judith Wethall and Finn Pressly discuss the impact of tax reform on popular fringe benefit programs including relocation costs and pre-tax transportation programs.
Access our Tax Reform Resource Center for more of our Tax Takes video series, along with other strategies and tools that will continue to help you lead your organization through the opportunities and risks brought about by the new legislation.
The Department of Labor announced increased penalties for employee benefit plans under ERISA. The increases generally apply to penalties that involve employee benefit reporting and disclosure failings if the penalty is assessed after January 2, 2018, and if the violation occurred after November 2, 2015. We’ve compiled a resource outlining the ERISA penalty amounts assessed for violations on or before January 2, 2018, and those amounts assessed after January 2.
Beginning April 1, 2018, new disability claim regulations may apply to some executive compensation arrangements. Given this pending regulatory deadline, employers need to analyze which of their executive compensation arrangements may be subject to the enhanced requirements for disability claims review.
Throughout 2017, the health care and life sciences industries experienced a widespread proliferation of digital health innovation that presents challenges to traditional notions of health care delivery and payment as well as product research, development and commercialization for both long-standing and new stakeholders. At the same time, lawmakers and regulators made meaningful progress toward modernizing the existing legal framework in a way that will both adequately protect patients and consumers and support and encourage continued innovation, but their efforts have not kept pace with what has become the light speed of innovation. As a result, some obstacles, misalignment and ambiguity remain.
We are pleased to bring you this review of key developments that shaped digital health in 2017, along with planning considerations and predictions for the digital health frontier in the year ahead.
Last month, the Internal Revenue Service (IRS) published Revenue Procedure 2018-4, which modified the user fee schedule for submissions under the IRS’s Voluntary Correction Program (VCP).
Under the new fee schedule, all VCP compliance fees are now based on the total net plan assets reported on a plan’s annual Form 5500-series return. This means that for VCP submissions filed on or after January 2, 2018, compliance fees will be:
- $1,500 for plans with assets of $500,000 or less;
- $3,000 for plans with assets of over $500,000 to $10,000,000; and
- $3,500 for plans with assets of over $10,000,000.
Prior to January 2, 2018, compliance fees were generally based on the total number of plan participants reported on a plan’s Form 5500, and ranged from $500 (for plans with 20 or fewer participants) to as much as $15,000 (for plans with 10,000 or more participants). In addition, special reduced compliance fees applied to VCPs involving some of the most common plan failures (e.g. certain plan loan and required minimum distribution failures). However, under the new fee schedule, most reduced fees have been eliminated. Only the reduced user fee for group submissions and the special fee waiver for terminating orphan plans remains unchanged.
Ultimately, for many large plan sponsors, the new asset-based fee schedule could significantly reduce the VCP compliance fee for correcting certain plan errors. However, for small plans covering fewer than 100 participants, the cost of correcting plan errors will increase to at least $1,500 (and perhaps even more, depending on the total net assets held by the plan). In addition, for all plan sponsors, the cost of correcting many of the most common plan errors will actually increase significantly.
After some speculation about a delay in implementation of the final rules on claims adjudication of disability claims under welfare and retirement plans (the Final Rule), the US Department of Labor (DOL) confirmed that the Final Rule will be applicable beginning April 1, 2018. McDermott’s article detailing the new requirements in the Final Rule can be found here. A disability welfare or retirement benefit claim, as well as claims under certain executive compensation arrangements, severance plans and other payment plans subject to ERISA’s claims procedures, will be subject to the Final Rule if the benefit is conditioned upon a claimant’s disability, and the claims adjudicator must make a determination of disability in order to decide the claim. However, if a plan links the finding of disability to a determination made by a party other than the plan (e.g., a finding made under the employer’s long-term disability plan or a determination of disability made by the Social Security Administration), then the special rules for disability claims are not applicable to a claim for benefits under such plan.
Plan sponsors and administrators should review retirement, welfare, executive compensation and severance plans to determine whether such benefits are subject to the Final Rule’s additional requirements. Any language detailing claim procedures in plan documents and summary plan descriptions should be updated, and disability claim and appeal administrative practices and procedures, as well as disability claim and appeal notices should be revised to comply with the Final Rule.
The Tax Cuts and Jobs Act of 2017 was signed into law last year. From biking benefits to leave tax credits, we’ll discuss the employee benefit provisions and strategies for compliance, as well as opportunities your company won’t want to miss! Join the McDermott team on Friday, February 2 for a discussion of how the new law impacts fringe benefit plans, executive compensation and retirement plans.
Friday, February 2, 2018
10:00 – 10:45 am PST
11:00 – 11:45 am MST
12:00 – 12:45 pm CST
1:00 – 1:45 pm EST
The end of a year and beginning of the next generally starts the countdown to the public company proxy season. But before moving into 2018, registrants would be well served by first looking back to the guidance that came out of the SEC at the end of 2017.
During the last quarter, the SEC staff had their hands full preparing for new standards impacting registrants’ filings this year, keeping pace with tax reform, tweaking the shareholder proposal process and corralling a burgeoning cryptocurrency market.
On January 22, 2018, Congress passed an interim funding bill to end the three-day government shutdown that also pushed back the effective date of the Affordable Care Act’s controversial “Cadillac Tax.” The Cadillac Tax imposes an excise tax on group health plans that provide benefits in excess of certain thresholds. The new legislation pushes the effective date back an additional two years to January 1, 2022.