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Hit the Reset Button: Complying with Annual Investment Fee Disclosures

Regulations under ERISA Section 404(a) require plan administrators to disclose to plan participants and beneficiaries certain fee and investment performance information about each designated investment alternative made available under a participant-directed defined contribution plan.  For calendar year plans, this information, which includes a comparative chart of all investment alternatives,  was initially required to be provided to participants and beneficiaries no later than August 30, 2012.  In addition, the regulations require that such information also be provided “annually” ( defined to mean at least once in any 12-month period, regardless of whether the plan operates on a calendar year or fiscal year basis).

Re-set Option Offered by Department of Labor

Many plans send required notifications closer to the end of the plan year.  Acknowledging this practice and concerns raised over the cost of a separate distribution covering just this investment information, the Employee Benefits Security Administration (“EBSA”) issued

Congratulations! SCOTUS Said You’re Married! Have You Registered For a Tax Refund?

Since the Supreme Court struck down Section 3 of DOMA, employers and employees face numerous issues, including whether to file claims for tax refunds.  [Additional background information may be found here.]

Background. The Internal Revenue Code permits employers to provide nontaxable group health coverage to their employees’ spouses. However, employers who extended group health coverage to domestic partners and, prior to Windsor, same gender spouses were required to impute, and report on the employee’s W-2, income equal to the fair market value of that coverage. Also, the employer was required to withhold federal income and employment taxes and pay the employer’s share of FICA and FUTA.

Employers. Now that same gender marriages are recognized for federal purposes in certain states, employers who have extended group health coverage to same gender spouses should, on a going forward basis beginning June 26 (the date Windsor was handed down), stop imputing income and

Dealing with Overturn of DOMA – Immediate Steps

Dealing with Overturn of DOMA – Immediate Steps

July 3, 2013

Authored by: benefitsbclp

Section 3 of the Defense of Marriage Act was found to be unconstitutional by the Supreme Court last week in United States v. Windsor, No. 12-307.  This action has created more questions than answers for employers and administrators of ERISA plans.  Most of this uncertainty centers on the fact that the Supreme Court’s decision did not address Section 2 of DOMA, which provides that states do not have to give full faith and credit to the laws of another state which recognizes same-sex marriage.  However, for federal law purposes, the government will look to state law to determine whether someone is a spouse.  This creates uncertainty as to whether the state of residence of an employee or plan participant will dictate whether he or she is or has a spouse at the time a right arises or action is required.  We are

Correcting 401(k) Plan Loans Under EPCRS

Correcting 401(k) Plan Loans Under EPCRS

July 2, 2013

Authored by: Denise Erwin and Chris Rylands

Participant loans from 401(k) plans must satisfy certain rules under section 72(p) of the Internal Revenue Code (the “Code”) to prevent the loan from being treated as a taxable distribution (sometimes called a “deemed distribution”).  The amount of the loan generally cannot exceed 50% of the participant’s vested account balance up to a maximum of $50,000 (with reductions for certain previous outstanding loans), the participant must be required to make level amortized payments at least quarterly, and the loan term may not exceed five years from the date the loan is funded unless the participant uses the loan to purchase his or her primary residence (in which case a longer period from the date of funding is allowed).

It is not uncommon for plan sponsors to discover that one or more of these rules have not been followed in administering the plan.  Failures to follow the terms of

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