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Dealing with Changes to an Employee’s Measurement Period

Recently the IRS issued Notice 2014-49, offering guidance for situations in which the measurement period or method applicable to an employee changes.

Background

Under the Affordable Care Act, as amended (“ACA”) an applicable large employer risks the imposition of a penalty tax under Code section 4980H in connection with a failure to offer full-time employees (and their dependents) minimum essential coverage under an eligible employer-sponsored plan that is both affordable and provides minimum value.  This is sometimes called the “play or pay” penalty.

There are two methods an employer may use to identify full-time employees for purposes of Code section 4980H – the monthly method and the look-back method.  Under the look-back  method, employers average an employee’s hours of service during a predetermined period (i.e., the measurement period) to determine whether to treat the employee as a full-time employee for the period that follows

Bill Gross Announces his Departure from PIMCO – Here’s What it Means for your 401(k) Plan

If you keep an eye on the investment world at all, you’ve certainly heard the news – Bill Gross, co-founder and chief investment officer of Pacific Investment Management (PIMCO), is leaving the very company he started more than 40 years ago.  In technical terms, Gross is what you call a “big deal” in the investment world.  He has been at the helm of PIMCO for more than four decades leading the company to a whopping $2 trillion in assets under management.  Gross has received countless awards and accolades in the industry for his thought leadership and successes, and is also a well-known writer on investment matters.

Until Friday, Gross managed the PIMCO Total Return fund (PTTCX).  This bond fund ranks as one of the largest mutual funds with a reported $221.6 billion in total fund assets.  And, perhaps more importantly for our readership, this bond fund is a pillar in

Florida Stamp Tax

Florida Stamp Tax

September 26, 2014

Authored by: Richard Arenburg

FloridaIf your 401(k) plan maintains a participant loan program, you may discover that you have compliance concerns thanks to a relatively obscure Florida tax statue. 

Under its revenue laws, Florida imposes a document tax on loan transactions that are made, signed, executed, issued, or otherwise transacted in the State.  The Florida Department of Revenue has specifically ruled that 401(k) plan loans are subject to the tax.  The law further provides that no state court may enforce the provisions of a promissory note if the document tax is not paid. 

We believe it would be a challenge to sustain a position that the Florida statute is preempted by ERISA.  A failure to pay the tax, therefore, could mean that a 401(k) plan is extending loans that are not adequately

IRS Expands Permissible Mid-Year Election Changes for Health Coverage Under Cafeteria Plans

Last Thursday, the IRS issued Notice 2014-55 (“Notice”), which expands the scope of permissible mid-year election changes under the cafeteria plan rules to allow an employee to revoke an election of employer-sponsored health coverage in the event of the employee’s reduction in hours of service (even if there is no loss of eligibility for coverage) or to avoid duplicative coverage (or a gap in coverage) under a non-calendar year group health plan due to the purchase of coverage through a Marketplace.

The guidance under the Notice is effective as of September 18, 2014 and may be relied on immediately even though the IRS has yet to amend the cafeteria plan regulations to reflect the new guidance.

Background

153773052Elections under a cafeteria plan have generally been irrevocable during a period

Signature Authority Can Trigger ERISA Fiduciary Responsibility

Signature Authority Can Trigger ERISA Fiduciary Responsibility

September 8, 2014

Authored by: benefitsbclp

When is a signature more than just a signature?

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In Perez v. Geopharma, decided on July 25, 2014, Geopharma’s CEO, Mihir Taneja, brought a motion to dismiss an ERISA breach of fiduciary duty claim under the company’s health and welfare plan brought against him by the DOL. In its suit, the DOL alleged that because Taneja had signature authority on Geopharma’s bank accounts – which included the plan’s participant contributions – he was a plan fiduciary. The claim arose from findings that the company: (1) withheld employee premium contributions over a two-month and ten-month period in 2009 and 2010 respectively; (2) failed to segregate the contributions from company assets as soon reasonably possible; and (3) failed to use the funds to pay claims. The DOL alleged that the company also

83(b) Elections

83(b) Elections

September 5, 2014

Authored by: Chris Rylands

Our sister blog, Start-Up Bryan Cave, recently posted about when and why to use the an 83(b) election.  The post has a good discussion of the advantages and disadvantages.

One item it does not mention is the company’s deduction, which is taken if and when the 83(b) election is made.  In the absence of an election, the deduction occurs when the property vests.

Of course, for the company to take the deduction, it has to know that the election has been made.  Even though the IRS rules require the recipient to give a copy to the company, another valuable planning point is to make sure that the agreement itself also requires the recipient to provide a copy of the election to the company.

Thanks, ERISA, and Happy 40th!

September 3, 2014

Categories

Thanks, ERISA, and Happy 40th!

September 3, 2014

Authored by: benefitsbclp

Forty years ago yesterday, September 2, 1974, Congress passed the Employees Retirement Income Security Act of 1974.  Most, maybe all, of the people reading this blog owe their careers to a single piece of legislation that has spawned growth industries and cottage industries.  The acronym “ERISA” has special meaning to all who work in the employee benefits industry.

ERISA exists in no small measure due to three factors:  (1) the ineptitude and greed of those running the automobile manufacturer, Studebaker–Packard Corporation back in the early 1960s; (2) the mismanagement and abuse (likely theft with no federal recourse to protect participants) of the world’s then largest pension fund by the executives of the Teamsters Union; and (3) the legislative tenacity of Senators Jacob Javits and Harrison Williams.  These factors forged together over a decade to get ERISA passed.  The legislative debate was one of the most significant management versus

40 Years of ERISA

September 2, 2014

Categories

40 Years of ERISA

September 2, 2014

Authored by: Chris Rylands

ERISA has been modified by many pieces of legislation since it was signed into law on this day in 1974. In honor of ERISA’s “Big 4-0” we invite you to (1) find all of the abbreviations below for different acts that have amended ERISA and (2) come up with the full name for each abbreviated act. We will share the solution along with each act’s full name on Thursday. Good luck! *Note: letters are shared and acronyms go every direction. 

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