Tax Law Insights

On March 11, 2021, President Biden signed into law the American Rescue Plan Act (“ARPA”).  The ARPA mandated several important changes for both employers and employees.  One of these is potentially significant for both: full subsidies for employer-paid COBRA premiums.  The ARPA requires employers to provide temporary, fully subsidized COBRA continuation coverage premiums for certain individuals for up to six months.  Employers will be able to recover the subsidized premiums by claiming a tax credit.

The benefits provided to employers and employees are available to COBRA ...

On March 11, 2021, President Biden signed into the law the American Rescue Plan Act (“ARPA”) containing $1.9 trillion in financial stimulus.  Though not highly publicized, the ARPA provides important relief related to plan funding for both single employer and multiemployer pension plans.  This article will focus solely on the single employer pension plan provisions of the ARPA.

Pension plans are required to maintain certain funding levels.  Funding levels are determined by a series of complex calculations usually performed by actuaries hired by plan sponsors.  These ...

The Consolidated Omnibus Budget Reconciliation Act (“COBRA”) became law on April 7, 1986.  For most of its nearly 35-year history, litigation involving COBRA has been relatively quiet.  Most COBRA claims are tag-alongs, added as an afterthought to various sorts of discrimination claims, and a few cases involving the definition of “gross misconduct” (essentially the one narrow exception where an offer of COBRA coverage is not required).

In the wake of the pandemic, this is changing.  Recently, there have been a number of cases filed (most filed as class actions) involving ...

The CARES Act, enacted on March 27, 2020, includes several provisions that change the rules for employee benefit plans, ranging from providing greater access to retirement benefits and HSA funds to offering funding relief to single-employer pension plans.

The CARES Act adds a new tax-favored withdrawal option that applies to the following types of retirement plans:  IRAs, qualified plans (e.g., profit sharing and 401(k) plans), 403(a) and (b) plans, and 457(b) governmental plans.  The withdrawal is permitted only if it is a Coronavirus-related distribution, which is defined as a ...

Most blog entries focus on new developments or recent legislation.  This one’s a bit different.  Its subject matter, fiduciary responsibility, is as old as ERISA itself.  In today’s environment of increased litigation risks for plans, it’s critically important to dust off these rules and review these fundamental obligations applicable to all ERISA plan fiduciaries.

ERISA imposes a few specific duties on fiduciaries:

• Loyalty (also called the “exclusive benefit” rule) – the duty to act solely for plan participants and beneficiaries
• Prudence – the obligation to act ...

On June 13, the Departments of Labor, Treasury and Health and Human Services jointly released final regulations dealing with health reimbursement accounts (“HRAs”).  These regulations fulfill the Trump administration’s directive to “increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.”

Background.

HRAs are employer-funded account-based plans from which employees may be reimbursed for qualifying medical expenses.  HRAs, like other account-based plans ...

Employers face a constant struggle to attract and retain quality employees.  This is especially true in a strong economy where jobs are plentiful and the demand for well-qualified workers is high.  Historically, employer contributions to 401(k) plans have been viewed as an effective and efficient recruitment and retention tool.  Unfortunately, many employers are finding this inadequate in today’s market because some employees, especially younger employees, prioritize other financial needs ahead of saving for retirement.  For many young employees, student loan debt is a ...