Many traditional defined benefit plans, such as final average pay plans, offer a lump sum distribution as an optional form of benefit. The amount of the lump sum distribution is sensitive to the applicable interest rate (calculated under Internal Revenue Code Section 417(e)) and varies inversely with the rate level. Higher interest rates result in smaller lump sums, and lower rates result in larger lump sums. Plans must update the applicable interest rate on a monthly, quarterly, or annual basis. With interest rates increasing rapidly, upcoming changes to the applicable interest rate may cause lump sum payments to decrease. In some cases, the decrease may be significant.
ML BeneBits
EXAMINING A RANGE OF EMPLOYEE BENEFITS
AND EXECUTIVE COMPENSATION ISSUES
AND EXECUTIVE COMPENSATION ISSUES
The US Securities and Exchange Commission (SEC) recently approved a proposed environmental, social, and governance (ESG) rulemaking for investment advisers and funds. This proposed rule and form amendments will impact SEC-regulated asset managers, but may also be of interest to investors, including ERISA plans, that consider ESG factors and/or invest in ESG funds.
This blog post is Part 2 in the “Ready for a Sale?” series, which is aimed at getting the human resources, benefits, and executive compensation functions of your organization ready for a potential sale or similar corporate transaction. Part 1 provided general guidelines and suggestions on how to get organized and start the process. This second part will address key considerations in the process that often arise early: (1) identifying, assembling, and analyzing documents that will be automatically triggered or impacted by the potential sale, and (2) determining the expected impact of the transaction on any outstanding equity compensation.
In light of the active M&A market, we think this spring could be an ideal time for companies to evaluate the order of their executive compensation arrangements and employee benefit plans, particularly companies that are considering (or hoping for) a sale within the short-term future.
Late on May 2, various media outlets published a draft US Supreme Court opinion overturning Roe v. Wade. The Supreme Court confirmed the authenticity of the document on May 3 but cautioned that the opinion was still in process and subject to revision. Twenty-three states have laws that criminalize abortion or say that abortion will automatically become criminalized if Roe is overturned. When navigating these issues and potential responses, particularly changes to plans that permit reimbursement for abortions outside of particular states, employers should consider several factors.
The Internal Revenue Service (IRS) issued Notice 2022-24 on April 29 to provide the inflation-adjusted amounts for health savings accounts (HSAs) in calendar year 2023.
In Pizzella v. Vinoskey, 2019 U.S. Dist. LEXIS 129579, the US Department of Labor (DOL) brought a case against an independent transactional ESOP trustee (the trustee), but also named the seller of stock to an employee stock ownership plan (ESOP) as a defendant (the seller). The court found that the ESOP overpaid for Sentry Equipment Erectors, Inc. (the company) stock, in violation of ERISA, and that the trustee breached its duties of prudence and loyalty and engaged in a prohibited transaction by paying more than adequate consideration for shares in the ESOP transaction.
The Consolidated Appropriations Act of 2022, which was signed March 15, again permits first-dollar coverage for telehealth services without jeopardizing health savings account (HSA) eligibility, effective April 1, 2022, through December 31, 2022.
Cryptocurrency investing has experienced a tidal wave of popularity since the fabled genesis of Bitcoin in 2009. This growth has been fueled by “extreme” investment returns (despite “extreme” volatility) and innovative means of investing in cryptocurrency. As the wave of interest in cryptocurrency investing reaches the shores of 401(k) plans, including interest in cryptocurrency as a plan investment option or through plan brokerage windows, the US Department of Labor (DOL) warns 401(k) plan fiduciaries to exercise “extreme care” before providing plan participants with the opportunity to expose their retirement savings to cryptocurrency.
The Internal Revenue Service (IRS) is temporarily suspending the IRS Prototype Opinion Letter Program for individual retirement accounts and individual retirement annuities (IRAs) effective March 14, 2022. As noted in Announcement 2022-6, the IRS will not be accepting applications for opinion letters on prototype traditional, Roth, and SIMPLE IRAs or SEP (including SARSEP) and SIMPLE IRA plans until further notice.