As we look forward to 2020, we bring you a few key takeaways on the hot topics and trends that individuals operating in the employee benefits space are watching in health and welfare, plan sponsor considerations, executive compensation, fiduciary, and fringe benefits.
Health and Welfare Preventive Care Services. Section 223 of the Internal Revenue Code permits eligible individuals who are covered under a high-deductible health plan (HDHP) to establish a health savings account (HSA) to help with out-of-pocket costs associated with the HDHP. An HDHP can offer preventive care services at no cost-sharing to participants and individuals will still maintain HSA eligibility. The IRS has provided a safe harbor definition on what preventive care services are: generally, services that don’t treat any ongoing medical conditions. The latest IRS guidance, Notice 2019-45, tries to make HDHPs more appealing by expanding the definition of preventive care services.
Protecting Against Identity Theft in Taxes. In an effort to reduce taxpayer identity theft, the IRS has released new guidance that allows an employer to voluntarily include truncated taxpayer identification numbers (TTINs) on W-2s and certain other documents. This 2019 regulation finalizes rules proposed in 2017 that extend the use of TTINs beyond certain information returns, a practice allowed since 2014. This voluntary rule applies only to employee copies and employee TINs: an employer cannot truncate the TIN on copies of W-2s or other statements that go to the IRS or the Social Security Administration, and an employer can never truncate its own TIN.
Rehabilitation for Multiemployer Pension Act. A recently proposed bill, the Butch Lewis Act, would establish the Pension Rehabilitation Administration within the US Department of the Treasury and a related trust fund. The purpose of the law is to allow Treasury to make loans to certain multiemployer defined benefit pension plans that are in critical status or insolvent through bonds without a further appropriation. While the House of Representatives passed the bill, the Senate introduced a competing bill that may negatively impact the ability of the Butch Lewis Act to get passed.
SECURE Act on Multiple Employer Plans. The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) was approved by the House of Representatives on May 23, but has yet to be approved by the Senate. It contains several significant provisions relating to tax-qualified retirement plans, including a provision that would allow for “open” multiple employer plans (MEPs) (i.e., MEPs co-sponsored by unrelated employers with no “commonality,” as otherwise required by Department of Labor advisory opinions). The SECURE Act would also provide relief from the “one bad apple” rule currently applicable to MEPs, making it so that operational failures by one participating employer would not disqualify the MEP as a whole.
Part-Timers and 401k Plans. The SECURE Act would add a provision to allow part-time workers who worked at least 500 hours (as opposed to the current 1,000 hours) in three consecutive 12-month periods to make deferrals into a 401k plan. However, employers would not be required to make any employer contributions on their behalf.
For more information on any of these topics, please see our full presentation.