ML BeneBits

The US Supreme Court recently decided a closely watched ERISA case against employers and fiduciaries. Under Section 413 of ERISA, the statute of limitations for a fiduciary breach claim is shortened from six years to three years if the plaintiff has “actual knowledge” of the breach.

Since the 2019 Novel Coronavirus (COVID-19) was first detected in December, the death toll has continued to rise as the virus quickly spreads. Centers for Disease Control (CDC) officials have stated that while the immediate risk of the virus to the American public is believed to be low at this time, US employers should more closely consider employee safety and ways to address disease prevention in the workplace.

Ever since defined contribution plans have come to dominate the retirement plan landscape, both plan sponsors and policymakers have grappled with how to help employees take a lifetime’s worth of savings and convert it into a sustainable source of retirement income. One way to help participants meet retirement income needs is to integrate guaranteed income products into defined contribution plan lineups. Fiduciaries have expressed concern, however, about potential liability they may face for the selection of annuity providers. The SECURE Act, signed into law by President Donald Trump on December 20, 2019, may help allay those concerns.

The SECURE Act—potentially the most impactful benefits legislation since the Pension Protection Act of 2006—was included in the bipartisan spending bill signed into law on December 20, 2019. The SECURE Act includes provisions that affect tax-qualified retirement plans and individual retirement accounts. Other provisions of the spending bill affect executive compensation and healthcare benefits.

Tax laws have long required that qualified retirement plans timely adopt written plan documents and amendments. But what evidence must a plan sponsor provide to an IRS auditor to prove that they have timely adopted a written plan document and required amendments? The IRS recently addressed this question in Chief Counsel Memorandum 2019 002 (the CCM), which advises that absent extraordinary circumstances, “. . . it is appropriate for IRS exam agents and others to pursue plan disqualification if a signed plan document cannot be produced by the taxpayer.”

On December 20, 2019, President Donald Trump signed into law the Further Consolidated Appropriations Act, 2020 (Act).

Sponsors of single employer defined benefit (DB) pension plans could be subject to higher-than-usual minimum funding contribution requirements over the next several years, for at least two reasons.

In the much anticipated decision State of Texas v. United States of America, et al., the US Court of Appeals for the Fifth Circuit upheld a district court ruling that the individual mandate under the Affordable Care Act (ACA) is unconstitutional. Because the Tax Cuts and Jobs Act of 2017 zeroed out the federal tax penalty under the individual mandate, effective January 1, 2019, the Fifth Circuit concluded that since there is no longer a penalty or tax resulting from the individual mandate, the mandate can no longer be sustained constitutionally under Congress’s taxing power.