ML BeneBits

In buyout or take private transactions, the management team of the target business is a key constituency that frequently—yet often unknowingly—requires legal counsel to advocate for its interests. The management team’s interests may be implicated in such transactions in various ways, which differ from those of institutional equity sellers, given that members of management are service providers and, in many cases, equity holders of the target business, who are expected to rollover proceeds to align their interests with the purchaser.

The Internal Revenue Service (IRS) released a notice providing guidance on distributions for emergency personal expense and domestic abuse victims under the SECURE 2.0 Act of 2022 (SECURE 2.0). Both distributions are optional, allow self certification as to eligibility, and may be repaid within three years.

In 2017, several private universities were hit with ERISA class actions alleging various breaches of fiduciary duty and prohibited transactions—including claims that these universities’ defined contribution plans charged unreasonable recordkeeping costs. One such university was Cornell in the case of Cunningham v. Cornell University.

After a recent slower period of activity in the initial public offering (IPO) markets, there has been speculation in accounting and finance markets that there might be an increase in activity over the course of the 2025 calendar year. Private companies considering a near- or mid-term IPO need to take a number of steps in their preparation for that undertaking, including review and development of an executive compensation program, which will help ensure that their IPO is successful and that their management team remains engaged prior to, in connection with, and after an IPO.

Companies required to use “box 11” of Form W-2 in 2023 to report either payments of nonqualified deferred compensation (deferred compensation) or FICA taxation of unpaid deferred compensation may soon be challenged by employees angry about potential double taxation of deferred compensation. This double tax is created because the Form 1040 filing instructions for 2023 require deferred compensation payments reported in box 11 of Form W-2 to be reported on an employee’s Form 1040 as “wage” income subject to income tax and again as “additional income,” also subject to income tax.

Recently, we have become aware of what appears to be a new approach in the US Department of Labor’s (DOL’s) Form 5500 Annual Report (Form 5500) penalty program, including increased penalties and faster enforcement actions. This development could impact the sponsors and administrators of any Employee Retirement Income Security Act (ERISA) plan that is required to make a Form 5500 filing, particularly when a filing is late or deficient, or has the potential to be late or deficient.

The Inflation Reduction Act (IRA) made several changes to Medicare Part D that may impact whether employer-sponsored coverage will be creditable for the 2025 plan year. With open enrollment season about to begin, plan sponsors that provide prescription drug coverage to Medicare-eligible individuals should double check their plan’s creditable coverage status for 2025.

The US Department of Labor (DOL) issued a press release on September 6, 2024 reminding ERISA plan fiduciaries that it considers cybersecurity to be an area of “great concern” and emphasizing that it continues to investigate potential cybersecurity-related ERISA violations. The press release accompanied guidance updating the DOL’s 2021 cybersecurity subregulatory guidance and, most significantly, clarifying that the 2024 updates apply to all types of ERISA plans, including health and welfare plans. In our view, this clarification now aligns the DOL’s cybersecurity guidance with the position it has taken in investigations and public statements.

The amendments to the QPAM Exemption include a September 15, 2024 notification deadline that will apply to many asset managers. This blog post includes a brief summary of the US Department of Labor’s (DOL’s) recent technical amendments to the exemption.

In Loper Bright Enterprises v. Raimondo and Relentless Inc. v Department of Commerce, the Supreme Court held that both the United States’ constitutional structure and the Administrative Procedure Act preclude a court from deferring to administrative agencies when they interpret ambiguous statutory text. Instead, the court must assess the “best meaning” of the statute using traditional tools of statutory construction.