Morgan Lewis recently submitted a comprehensive list of IRS relief recommendations to the head of the IRS Office of Chief Counsel. The list identifies tax issues arising from actions taken to respond to the COVID-19 pandemic and provides possible solutions and response recommendations. Read the entire list.
The IRS issued guidance on March 11 that clears the way for employers to offer employees covered by a high-deductible health plan (HDHP) testing and treatment for the 2019 Novel Coronavirus (COVID-19) with no deductible or at a lower deductible.
Under current law, a plan cannot be an HDHP unless it has a minimum deductible of $1,400 for self-only coverage and $2,800 for family coverage (in 2020). Employees must satisfy the applicable deductible before the plan pays any benefits.
A hot topic in the world of money management, including the management of assets in retirement plans, is the consideration of environmental, social, and governance (ESG) factors when evaluating investments. For ERISA plans, one issue is how to consider ESG factors while satisfying the duties of loyalty and prudence under ERISA, including the duty to make investment decisions in the best interests of participants.
Over the last few years, the US Department of Labor (DOL) has issued several pieces of guidance providing instruction on how fiduciaries can use ESG factors in accordance with ERISA duties in the context of investment decisionmaking, proxy voting, and shareholder engagement and the limits on the use of those factors. But based on recent developments, there is reason to believe that more may be coming from the DOL on this topic.
Join Morgan Lewis this month for this program on employee benefits and executive compensation:
- What We’re Seeing: Hot Topics in Employee Benefits | March 19 | Webinar presented by Handy Hevener, Steve Johnson, Michelle McCarthy, Liz Goldberg, Bill Marx, and Lauren Sullivan
We’d also encourage you to attend the firm’s Global Public Company Academy series:
- Cybersecurity and Related Developments | March 25 | Webinar presented by Mark Krotoski and Emily Drazan Chapman
And these other timely events:
- Hot Topics Involving Mobility | March 11 | Webinar presented by Lucy Wang and Kevin Benedicto | Sponsored by Morgan Lewis Automotive Hour
- Cross-Border Issues: Compliance, Employment, and What Could Possibly Go Wrong in M&A Transactions | March 17 | Webinar presented by Todd Liao and K. Lesli Ligorner | Sponsored by Morgan Lewis M&A Academy
Visit the Morgan Lewis events page for more of our latest programs.
The Internal Revenue Service is planning to add more focus on its examination efforts for tax-exempt organizations, including by adding more personnel and using new strategies to address potential noncompliance. As tax-exempt organizations prepare their Forms 990 for last year, now would be a good time to ask whether any areas warrant further review.
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.
On February 26, the Supreme Court determined in Intel Corp. Investment Policy Committee v. Sulyma that the six-year statute may apply—even if the fiduciary disclosed its actions to participants in accordance with ERISA—if the participants failed to read or could not remember reading the disclosures. In the Court’s unanimous view, “actual knowledge” means the participant must have become aware of the relevant information.
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.
We recently published a LawFlash that addresses employment law considerations surrounding these concerns. Here we take a closer look at privacy issues facing employers that provide self-funded or self-administered health benefits to their employees and therefore must comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy rule.
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.
We will continue to update you on the effects of the SECURE Act. Our current publications include the following:
- SECURE Retirement Legislation Becomes Law: Overview of Provisions Affecting Retirement Plans
- SECURE Act Increases Access to Retirement Plans with ’Pooled Employer Plans’
- The Good News and Really Bad News for IRA Owners Under the SECURE Act – Next Steps for IRA Providers
- SECURE Act Provides RMD Statement Relief for IRA Providers
Keep an eye out for upcoming LawFlashes on other key aspects of the SECURE Act and how the spending bill impacts employee benefits and tax-deferred savings.
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.”
The primary question addressed in the CCM was whether a taxpayer can argue that, based on Val Lanes Recreation Center Corp. v. Commissioner, T.C. Memo 2018-92, it meets its burden to have an executed plan document by producing an unsigned plan and evidence of a pattern and practice of signing plan documents. The IRS’s answer as outlined in the CCM is: No, at least not in the absence of extraordinary circumstances.