In Revenue Procedure 2019-20, the Internal Revenue Service (IRS) provides for a limited expansion of the determination letter program for certain limited categories of individually designed retirement plans – certain “statutory hybrid plans” and “merged plans” as described in more detail below.

As background, the IRS in 2016 formally limited the availability of the determination letter program for individually designed retirement plans to the plan’s initial qualification and then upon its termination. The IRS’s decision was a blow to sponsors of individually designed plans that had come to rely on the determination letter program for purposes of confirming periodically that a plan’s written form satisfied the applicable tax-qualification requirements of the Internal Revenue Code. The decision was particularly difficult for sponsors of older and larger defined benefit pension plans (many of which included complicated benefit formulae and/or legacy provisions from previously merged plans); such plans are ill-suited for being maintained on a third-party provider’s prototype or volume submitter document.

Now that spring has arrived, thoughts turn to the design, communication, and eventual implementation of next year’s health and welfare benefits. Reviewing and drafting open enrollment communication materials can help address the following issues, as well as inform plan design decisions for next year’s benefits:

  • Compliance with the myriad Code, ERISA, and ACA provisions applicable to health and welfare benefits
  • The interplay between high-deductible health plans and existing onsite clinics or rapidly growing telemedicine initiatives
  • Wellness rules and requirements
  • Interactions between open enrollment materials, plan documents, and SPDs
  • Impact of upcoming changes on prior benefits
  • Health flexible spending account interactions with health savings accounts
  • Electronic communication rules and best practices
  • Legally mandated annual communication requirements

Please reach out to the authors or your Morgan Lewis contact if you have any questions about your upcoming open enrollment materials, or any related aspects of next year’s health and welfare benefits.

On April 5, the IRS issued Private Letter Ruling 201911002 where it addressed whether an employer’s stock purchase plan that permits a participant to purchase employer shares via a loan from the employer or a third party qualifies as an employee stock purchase plan under Section 423(b) of the Internal Revenue Code (Code). The plan permits the exercise price to be paid through a salary reduction and/or the proceeds of a loan unless the loan is prohibited by the Sarbanes-Oxley Act of 2002.

Judge John Bates of the US District Court for the District of Columbia recently struck down two parts of the US Department of Labor’s (DOL’s) final regulations on Association Health Plans (AHPs). On March 28, Judge Bates ruled in favor of the plaintiffs, 11 states and the District of Columbia, which claimed that the DOL’s final AHP regulations misinterpreted the definition of “employer” under ERISA and also violated the Patient Protection and Affordable Care Act (ACA).

The Employee Benefits Security Administration (EBSA) at the US Department of Labor (DOL) compiles statistics every year to measure its activities as the agency responsible for investigating and enforcing the fiduciary duties under ERISA. Statistics for the agency’s 2018 fiscal year enforcement activities affirm that EBSA’s enforcement program remains extremely active, with a particular focus on terminated vested participant investigations.

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

  • Retirement Plans: Key Fiduciary Issues in 2019 seminar series presented by Morgan Lewis, Grant Thornton, and Fiduciary Investment Advisors (FIA): 
  • Enrolled Actuaries Meeting | April 7-10 | Washington, DC | Seminar presented by Jonathan Zimmerman on Effect of Tax Reform on Nonqualified Plans

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.

In June 2018, the US Court of Appeals for the Fifth Circuit officially ordered the US Department of Labor (DOL) to vacate the so-called DOL Fiduciary Rule—the name generally used to refer to the 2016 amendment to the definition of fiduciary “investment advice” under ERISA and Internal Revenue Code Section 4975—and its related exemptions. As a result of this order and the DOL’s decision not to appeal, the DOL Fiduciary Rule is regarded as effectively repealed, leaving just the formality of removing it from the Code of Federal Regulations. But the rule continues to influence developments not only in the retirement area, but also beyond.

On behalf of all of us at ML BeneBits, we’d like to wish a very happy National Employee Benefits Day to the trustees, administrators, consultants, and advisors we serve. Your ongoing dedication improves the lives of your colleagues and co-workers and their families!

Morgan Lewis and its partnership with Women Against Abuse have been recognized by the Philadelphia Business Journal as part of its 2019 Faces of Philanthropy awards, which celebrate the Philadelphia region's most impactful philanthropic initiatives between for-profit companies and nonprofits. The vice president of advancement for Women Against Abuse nominated the firm in recognition of the support from and contributions by employee benefits partners Amy Pocino Kelly and Bob Lichtenstein. Amy serves as chair of the Women Against Abuse board of directors, and Bob is a member of the board. All honorees will be recognized at an April 11 event.