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Join Morgan Lewis this month for this program on employee benefits and executive compensation:

We’d also encourage you to attend the firm’s Global Public Company Academy series:

And these other timely events:

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.

Read our LawFlash for more on how these changes will impact tax-exempt organizations >>

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.

SECURE Act Makes Significant Changes to Benefits Laws

December 26, 2019 (Updated February 6, 2020)

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:

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.

Join Morgan Lewis this month for these programs on employee benefits and executive compensation:

We’d also encourage you to attend the firm’s Global Public Company Academy series:

Visit the Morgan Lewis events page for more of our latest programs.

On December 20, 2019, President Donald Trump signed into law the Further Consolidated Appropriations Act, 2020 (Act). After years of delayed effective dates, the Act finally repeals the 40% excise tax on high-cost health coverage, often referred to as the “Cadillac tax.” Furthermore, the Act extends the Patient-Centered Outcomes Research Institute (PCORI) fee scheduled to originally sunset at the end of 2019.

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. First, the interest rates that many plan sponsors use to calculate such contributions (referred to as “MAP‑21” interest rates due to the 2012 legislation that originally provided interest rate stabilization for minimum funding purposes) may decline starting in 2020. Second, an economic recession and corresponding stock market decline is increasingly possible. In anticipation of potential minimum contribution increases, DB plan sponsors should consider whether they may be able to defer their minimum funding obligations at some point in the near future by obtaining a minimum funding waiver from the Internal Revenue Service (IRS).