On November 1, 2016, the US Department of Labor (DOL) released advance copies of the 2016 Form 5500 and Form 5500-SF annual return/report and their related schedules and instructions. Information copies of the 2016 forms, schedules and instructions are available on the DOL’s website. The advance copies were released for informational purposes only, and may not be used for filing. Official versions of Form 5500 and Form 5500-SF should be posted on the DOL’s website early next year.
On July 11, 2016, the Department of Labor (DOL) and Internal Revenue Service (IRS) announced a proposal to implement significant changes to the forms and regulations that govern annual employee benefit plan reporting on Form 5500. The proposed changes, which were published in the Federal Register on July 21, 2016, would considerably increase the annual reporting obligations for nearly all health and welfare plans. The changes would also have a considerable impact on annual retirement plan reporting obligations. For more information about the effect of the proposed changes on retirement plan sponsors, see Proposed Changes to Form 5500 Reporting Requirements May Have Significant Impact on Retirement Plan Sponsors.
The DOL is seeking written comments on the proposed changes, which must be provided by October 4, 2016. The revised reporting requirements, if adopted, generally would apply for plan years beginning on and after January 1, 2019.
Read the full article here.
On July 11, 2016, the Department of Labor (DOL), Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) announced a proposal to implement sweeping changes to the forms and regulations that govern annual employee benefit plan reporting on Form 5500. The proposed changes, which were published in the Federal Register on July 21, 2016, would significantly increase the annual reporting obligations for nearly all retirement plans. The changes also would have a considerable impact on employer-sponsored group health plans. For more information about the effect of the proposed changes on health and welfare plan sponsors, see Proposed Changes to Form 5500 Would Significantly Increase Reporting Obligations for Health and Welfare Plan Sponsors.
The DOL is seeking written comments on the proposed changes, which must be provided by October 4, 2016. The revised reporting requirements, if adopted, generally would apply for plan years beginning on and after January 1, 2019. Certain compliance questions will, however, be effective for Form 5500 series returns filed for the 2016 plan year.
Read the full article here.
Though the Supreme Court’s 2014 unanimous ruling in Fifth Third Bank v. Dudenhoeffer announced the Employee Retirement Income Security Act (ERISA) standards for stock valuation in the context of a large public employee stock ownership plan (ESOP), the vast majority of ESOPs are still grappling with valuation issues. ESOPs that hold stock of closely-held corporations—approximately 90% of all ESOPs— remain almost unaffected by Dudenhoeffer’s valuation discussions, and face continued scrutiny by the Department of Labor (DOL). Appraisal of closely-held stock is an inexact science that involves an inherent level of uncertainty in assessing a variety of potential fact patterns.
This article summarizes valuation issues in acquisitions of closely-held corporation stock by ESOPs in the context of Perez v. Bruister, a recently decided Fifth Circuit case. The case stressed the importance of ‘‘process’’ in valuation determinations being utilized for acquisitions of a corporation’s stock by an ESOP. In reviewing the case, this article provides a detail of the process that should be followed to ensure consideration of the appropriate factors by fiduciaries in reviewing valuations for ESOP transactions. The article concludes with a discussion of guidance provided by the court in Bruister that may be instructive as to best practices for ESOP fiduciaries charged with establishing the value to be used by an ESOP holding shares of stock of a private company.
Wednesday, June 1, 2016
1:00-2:30 pm EDT
Join McDermott partner Kristin E. Michaels at this CLE webinar, which will review the far-reaching impact of the Department of Labor’s (DOL) recent guidelines greatly expanding joint-employer status.
The discussion will include the agency’s analysis of horizontal and vertical joint employment and the factors that point to joint-employer liability for wage and hour violations, as well as offer practical and strategic approaches for structuring agreements with subcontractors, independent contractors and contingent workers to minimize the risk of employer or joint-employer liability for FLSA violations.
To register, please click here.
Recent guidance clarifies important issues under the Affordable Care Act, Mental Health Parity and Addiction Equity Act, and Women’s Health and Cancer Rights Act.
On April 6, 2016, the US Department of Labor posted final versions of the updated summary of benefits and coverage (SBC) template and instructions, updated uniform glossary and other associated materials. In previous guidance, the US Departments of Treasury, Labor, and Health and Human Services provided that health plans and issuers who maintain an open enrollment period will be required to start using the new template and associated documents on the first day of the open enrollment period beginning on or after April 1, 2017, with respect to coverage for the plan year or policy year that begins on or after April 1, 2017. Health plans and issuers who do not use an open enrollment period should begin using these documents on the first day of the first plan year or policy year that begins on or after April 1, 2017.
Employers should begin preparations to ensure that the finalized documents are ready for distribution by the required implementation date. Health plans and issuers with calendar year plans and open enrollment periods must be ready to use the new documents during the 2017 open enrollment period for coverage that begins on January 1, 2018. Health plans and issuers with calendar year plans and no open enrollment period should be prepared to use the documents by January 1, 2018.
Recent comments from an official with the Department of Labor (DOL) indicate that the DOL’s Employee Benefits Security Administration (EBSA) has begun investigating large defined benefit plans to review how plan administrators are keeping track of benefits owed to terminated vested participants and if they are really paying participants like they should be. According to the February 2, 2015 BNA Pension & Benefits Reporter, Elizabeth Hopkins, counsel for appellate and special litigation for the DOL’s Office of the Solicitor, Plan Benefits Security Division, stated at a pension conference that EBSA is interested in monitoring whether plan administrators are following their own procedures to locate and pay out terminated vested participants. In particular, EBSA is investigating how plan administrators locate and pay out terminated vested participants over the age of 70 ½ who are owed required minimum distributions.
Defined benefit pension plans must provide that they will distribute benefits beginning no later than the required beginning date, which for most plan participants means April 1 of the calendar year following the later of (i) the calendar year in which a participant turns 70 ½ or (2) the calendar year in which the participant retires. As we noted in our recent article on the “Top IRS and DOL Audit Issues for Retirement Plans,” plan sponsors have a fiduciary duty to try to locate missing participants, to contact terminated vested participants, and to begin distributing benefits within required timeframes. Failure to pay required minimum distributions after a participant turns 70 ½ is a plan qualification error, and participants who miss required distributions may be subject to a 50 percent excise tax. The DOL has also indicated that it may impose personal liability on plan fiduciaries for any tax consequences owed to their employees. For all of these reasons, it is crucial that plan sponsors ensure that proper procedures are in place, and that plan procedures are being followed, to locate and contact terminated vested participants.
Court cases challenging the actions of Employee Retirement Income Security Act fiduciaries have continued unabated since the scandal of Enron in 2002. Since then, a large number of cases are in the “stock drop” area, which encompasses cases relating to employer securities investments when the stock price drops severely. The litigation has focused on whether a presumption of prudence exists that protects fiduciaries holding employer securities investments on behalf of a retirement plan. In June 2014, the U.S. Supreme Court ruled in the case of Fifth Third Bancorp v. Dudenhoeffer that ERISA doesn’t provide a presumption of prudence to protect fiduciaries of plans investing in employer securities. Now that the Dudenhoeffer decision resolves the presumption issue, it is reasonable to expect that ERISA cases may return to focus on the fiduciary duties of a directed license.
by Amy M. Gordon, Susan M. Nash and Jamie A. Weyeneth
If you are an employer that sponsors a fully insured medical plan option for your employees, and you had that fully insured medical plan option in place for the 2011 calendar year, you may be eligible for a Medical Loss Ratio rebate.
To read the full article, click here.
Subscribe
