ML BeneBits

The Internal Revenue Service (IRS) issued an important reminder of the unique application of the limit under Internal Revenue Code (IRC) Section 415(c) to 403(b) plans on August 20, 2021. The IRS’s “Issue Snapshot” highlighted a rule that has applied for decades, but with which 403(b) plan sponsors and administrators are often not familiar.

The American Rescue Plan Act of 2021 (ARPA) provides for a 100% COBRA premium subsidy for up to six months, from April 1, 2021 through September 30, 2021, for Assistance Eligible Individuals (AEIs) as defined under the guidance. Our prior blog posts, DOL Issues ARPA COBRA Subsidy Model Notices and FAQs and IRS Provides Second Round of FAQs on COBRA Subsidies, provide more information about the ARPA COBRA subsidy and the associated notice requirements.

For sponsors of individually designed qualified retirement plans, now is a good time to begin thinking about year-end requirements and preparing for changes in the new year. Read our recent LawFlash to learn more about items for consideration as plan sponsors head toward the end of 2021 and the start of 2022.

The focus of the US Department of Labor (DOL) on missing participants and uncashed checks (discussed in our LawFlash DOL Guidance on Missing Participants Is No Longer Missing) recently began expanding into the area of uncashed checks (and the related assets) held by former recordkeepers. Taking the form of a letter-based initiative, the DOL is now urging retirement plan fiduciaries to recoup amounts held by former recordkeepers or paying agents that might have been overlooked during the transition of the service provider relationship to a new vendor.

Equity-based awards are often a significant element of a company’s compensation program. However, unlike more broad-based employee benefit programs, which are generally only subject to federal laws, equity-based compensation arrangements are, in most cases, subject to both federal (for example, the Securities Exchange Act of 1934, as amended (Exchange Act)) and state laws. Individual state laws generally govern the formation and operation of both private and public corporations and other business entities that are organized in their state. The corporate governance provisions of such state laws typically govern certain aspects of executive compensation arrangements including who has the authority to grant equity awards.

As we get closer to the September 30 expiration date of the COBRA premium subsidy provided under the American Rescue Plan Act (ARPA), the IRS has issued a second set of FAQs in Notice 2021-46 (Notice) to supplement its prior guidance and provide some specific answers to questions that remained unanswered. The first set of IRS FAQs were provided under Notice 2021-31, which we summarized in our previous LawFlash.

We have recently seen a rise in the number of retirement plans exiting mutual funds in favor of collective investment trusts (CITs). Often the transition is simply a change in structure—that is, moving from the same investment manager’s mutual fund to its CIT counterpart. This post explores some potential reasons for this trend by comparing some key differences in the two investment fund structures.

As we described in our August 31, 2020 LawFlash, the US Department of Labor (DOL) issued an Interim Final Rule (Rule) on August 18, 2020 outlining the requirement of the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) for employers to provide “lifetime income illustrations” to defined contribution plan (e.g. 401(k), 403(b), etc.) participants. The purpose of the Rule is to provide participants with disclosures that will help them understand how their defined contribution plan accounts may translate into an income stream in retirement.

On July 19, the US Departments of Labor, Health and Human Services, and Treasury (the Departments) issued Part 47 of their frequently asked questions (FAQs) about Affordable Care Act (ACA) implementation. There are three new FAQs, all of which pertain to coverage of pre-exposure prophylaxis (PrEP) under Section 2713 of the Public Health Service Act (PHS Act). PrEP is an antiretroviral medication for individuals at high risk of contracting human immunodeficiency virus (HIV).

The US Department of Labor (DOL) issued Information Letter 06-14-2021 last month to the attorney of a plan participant who requested a copy of an audio recording and transcript of a phone conversation he or she had with the plan’s insurer. The participant was requesting this information in relation to the participant’s denied claim under the plan.