Recently in Employee Benefits Category

September 23, 2014

Employee Benefits-IRS Reminds Us That Errors by IRA Trustees, Issuers and Custodians On Form 5498 May CauseTax Trouble

In Employee Plans News, Issue 2014-15, September 22, 2014, the IRS says that incorrect information on Form 5498, IRA Contribution Information, may cause taxpayers to make IRA reporting errors on their tax returns. Common examples of incorrect information include:

• Reporting the IRA contribution for the wrong year;

•Failing to report the contribution as a conversion from a traditional IRA to a Roth IRA; and

• Issuing duplicate Forms 5498.

IRA trustees, issuers and custodians can avoid making these common errors by
checking the information on Form 5498 before submitting it to the IRS and providing a copy to the client.

September 4, 2014

Employee Benefits-IRS Changes Group Trust Rules

The Internal Revenue Service (the "IRS") has made some changes to the 81-100 group trust rules. These changes are discussed in Employee Plans News, Issue 2014-13, September 2, 2014. Here is what the IRS says:

New Revenue Ruling

Revenue Ruling 2014-24 modifies the rules regarding 81-100 group trusts by:

• stating that certain retirement plans qualified under the Puerto Rico Code may
invest in 81-100 group trusts even if such a plan is not also qualified under the
Internal Revenue Code.

• clarifying that assets held by insurance company separate accounts may be
invested in 81-100 group trusts under some circumstances.

• giving transition relief for certain dual-qualified plans (plans with U.S. trusts qualified
under both the U.S. and Puerto Rico Codes) to allow sponsors of those plans an
additional year to spin off the assets and liabilities of their Puerto Rico employees
into Puerto Rico-only qualified plans satisfying ERISA Section 1022(i)(1).

• providing other miscellaneous guidance.

Group trust investment requirements

Rev. Rul. 81-100 provides that qualified retirement plans and individual retirement accounts (IRAs) may pool their assets for investment purposes in a group trust if certain requirements are met. Subsequent revenue rulings added Internal Revenue Code Section 403(b), 457(b) and 401(a)(24) plans to the list of plans that may invest in 81-100 group trusts and added some additional requirements (Rev. Ruls. 2011-1 and 2004-67).

Puerto Rico plans and transition relief

With respect to Puerto Rico plans, Rev. Rul. 2014-24:

• states that a plan described in ERISA Section 1022(i)(1) is eligible to participate in
an 81-100 group trust if the requirements of Rev. Rul. 2011-1, as modified by Rev.
Rul. 2014-24, are satisfied; and

• extends certain transition relief provided in Rev. Rul. 2008-40 to transfers to ERISA
Section 1022(i)(1) plans from qualified retirement plans that participated in 81-100
group trusts on January 10, 2011, if the transfers occur before January 1, 2016.
The transition relief under Rev. Rul. 2008-40 is not extended for any other plans.

Separate account investment requirements

Rev. Rul. 2014-24 provides that assets held in an insurance company's separate
account may be invested in an 81-100 group trust if the:

• assets of the separate account consist solely of assets from group trust retiree
benefit plans;

• insurance company timely enters into an agreement with the trustee of the group
trust that meets the requirements of Rev. Rul. 2014-24; and

• assets of the separate account are insulated from the claims of insurance
company's creditors.

Written agreement timing requirements

If plan assets are invested through an insurance company's separate account in a 81-
100 group trust as of December 8, 2014, the trustee of the group trust and the
insurance company must enter into a written arrangement meeting the requirements of
Rev. Rul. 2014-24 before January 1, 2016. Otherwise, the group trust trustee and the
insurance company must enter into a written arrangement no later than the time of the

Other provisions clarified

Rev. Rul. 2014-24 also:

• clarifies that, in the case of a governmental plan, the governing document includes
any statute that sets forth the terms applicable to the plan as well as any
regulations, ordinances, and other state or local rules or policies binding on the plan
under state or local law; and

• modifies condition 6 under Rev. Rul. 2011-1 to make clear that the group trust
instrument must expressly provide for separate accounting (not separate accounts)
to reflect the interest that each adopting group trust retiree benefit plan has in the
group trust.

August 25, 2014

Employee Benefits-Eighth Circuit Rules That The Taxpayer Made A Rollover Contribution To An IRA, Thereby Offsetting Income From An Earlier IRA Withdrawal

In Haury v. Commissioner of Internal Revenue, No. 13-1780 (8th Cir. 2014), the issue arose as to whether the taxpayer ("Haury") had made a $120,000 rollover contribution an IRA, which would offset the income attributable to earlier IRA withdrawals.

In this case, Haury had made certain loans to two companies, which he funded with withdrawals from his IRA account, taken from February 15, 2007 through October 25, 2007 totalling about $425,000, including a withdrawal of $168,000 on April 9, 2007. Haury was less than 59 ½ years old, so his IRA withdrawals were taxable as ordinary income subject to a 10% additional tax. Haury also made a $120,000 contribution to his IRA account on April 30, 2007. The issue is whether that contribution was a qualifying "rollover" that reduced Haury's 2007 taxable IRA-distribution income by $120,000.

The Eighth Circuit Court of Appeals (the "Court") noted that, under Code section 408(d)(3)(A)(i), an individual may exclude an IRA withdrawal from taxable income if it is "rolled over" into an IRA account, by not later than the 60th day after the day on which he receives the withdrawal. An amount less than the entire withdrawal is likewise excluded if it is paid into an IRA, under Code section 408(d)(3)(D). The rollover contribution exclusion does not apply if the distributee used it to exclude another withdrawal from tax in the year prior to the date of the withdrawal in question, under Code section 408(d)(3)(B).

The Court concluded that Haury's April 30, 2007 IRA contribution of $120,000 was made well within 60 days of the April 9 withdrawal of $168,000. There was no previous rollover contribution during the year preceding April 30, 2007. Therefore, the April 30 contribution was a qualifying partial rollover contribution under § 408(d)(3)(D), and Haury is entitled to reduce his taxable 2007 IRA withdrawals by $120,000.

August 18, 2014

Employee Benefits-A Reminder: Revised Business Associate Agreements Must Be Executed By September 22

Introduction. Generally, under HIPAA, a health plan-including a multiemployer health plan-may disclose protected health information ("PHI") to a business associate only if the plan and the business associate meet several requirements, including the entering of a "business associate agreement" between them. This agreement must reflect the requirements of the HIPAA regulations.

The U.S. Health and Human Services Department (the "HHS") issued, on January 25, 2013, final regulations modifying a number of requirements under HIPAA. These modifications changed some of the requirements for the business associate agreement, so that the plan and business associate are required modify their agreement.

Changes to the Business Associate Agreements. The changes to the requirements for business associate agreements in the final regulations cause the agreements to reflect the following:

1) If the health plan delegates any of its obligations under the HIPAA Privacy Rule to the business associate, then the business associate must comply with the Privacy Rule when carrying out the obligations.

2) The business associate must comply with the HIPAA Security Standards for electronic PHI.

3) The business associate is required to report to the plan any breaches of unsecured PHI, in addition to any security incidents.

4) The business associate is required to enter into an agreement with each of its subcontractors that create or receive PHI for or from the business associate, and this agreement must be substantially similar to the business associate agreement with the plan (a "subcontractor agreement").

Due Date for Revised Business Associate and Subcontractor Agreements. The plan and the business associate were generally required to revise their business associate agreement to reflect the above changes by September 23, 2013. However, a transitional deadline has been available if the plan and business associate had a business associate agreement which:

-- was in place prior to January 25, 2013,

--complied-prior to January 25, 2013- with the HIPAA regulations in effect as of such date, and

--is not renewed or modified from March 26, 2013, until September 23, 2013.

If the transitional deadline applied to a business associate agreement, then such agreement need not be revised to reflect the changes in the regulations until the earlier of: (1) the date on which such agreement is renewed or modified on or after September 23, 2013 or (2) September 22, 2014.

The same regular and transitional deadline apply to subcontractor agreements.
Bottom Line: The revisions to all business associate agreements must be completed and executed by this coming September 22.

August 6, 2014

Employee Benefits-IRS Provides Guidance On Retirement Plan Terminations

In Employee Plans News, Issue 2014-11, August 4, 2014, the Internal Revenue Service ("IRS") provides guidance on retirement plan terminations, including partial terminations. If you are contemplating a plan termination, or think you may be facing a partial termination, you may want to take a look at what the IRS says in this guidance, which may be found here.

July 8, 2014

Employee Benefits-IRS Issues Final Regulations On Use Of Qualified Longevity Annuity Contracts

The Internal Revenue Service (the "IRS") has issued final regulations which will allow participants in a qualified defined contribution plan (e.g., profit sharing or 401(k))to purchase and hold qualified longevity annuity contracts ("QLACs") in their accounts. A QLAC will pay lifetime benefits starting as late as age 85. It will thus will help the participant to defer funds and begin to receive a stream of income at a late age, and hopefully to not outlive his or her retirement income. The final regulations also provide rules for holding QLACs in traditional IRAs, 403(b) plans, and eligible government 457(b), although those rules are beyond the scope of today's blog. The rules for QLACs do NOT apply to defined benefit plans. For a qualified defined contribution plan, the rules are as follows:

In General. A QLAC is an annuity contract which is purchased from an insurance company for a participant, and which meets the requirements set forth below:

Limitation On Premiums. The amount of the premiums paid for the QLAC under the plan on a given date cannot exceed the lesser of $125,000 or 25% of the employee's account balance on the payment date.

Required Commencement Date. Distributions must begin by not later than the first day of the month next following the participant's 85th birthday.

After Distributions Begin. After distributions begin, they must satisfy the requirements of Internal Revenue Code section 401(a)(9)(other than the requirement that annuity payments commence on or before the participant's required beginning date) which apply to annuity contracts, such as the limitation on increasing payments.

No Cash-Out. The QLAC does not make available any commutation benefit, cash surrender right, or other similar feature, except it may allow a premium refund to a beneficiary.

Limited Death Benefits. No benefits are provided by the QLAC after the participant's death, except benefits specifically permitted under the regulations, such as a life annuity payable to a beneficiary.

Statement Of QLAC Status. When the QLAC is issued, the QLAC contract (or a rider or endorsement) states that the contract is intended to be a QLAC.

Prohibited Features. The QLAC is not a variable contract under section 817 of the Internal Revenue Code, an indexed contract, or a similar contract, except as permitted by the IRS.

RMD Calculation. While not technically a requirement for being a QLAC, in determining the amount of a minimum required distribution from the plan, the participant's account balance does not include the value of any LAC purchased on or after July 2, 2014 (the effective date of the regulations).

June 11, 2014

Employee Benefits - IRS Provides Guidance On Verifying Rollover Contributions

In Employee Plans News, Issue 2014-8, May 16, 2014, the Internal Revenue Service (the "IRS") provides guidance on verifying rollover contributions. Here is what the IRS said:

A retirement plan isn't required to accept rollover contributions from other plans or IRAs, but if it does, the incoming funds must:

• be permissible rollovers allowed by the plan document,
• come from a qualified plan or IRA,
• be the type of funds eligible to be rolled over, and
• be paid into the new plan no later than 60 days after the employee receives the funds from the old plan or IRA.

The plan administrator should take reasonable steps to evaluate whether these conditions are met. If the funds are coming directly from the old plan or IRA - for example, via a check made out to the new plan - then there is no 60-day requirement.

Safe harbor procedures. Revenue Ruling 2014-9 describes simplified due diligence procedures for a plan administrator to confirm the sending plan or IRA's tax-qualified status and conclude that a rollover contribution is valid. These procedures are generally sufficient:

• employee certification of the source of the funds
• verification of the payment source (on the incoming rollover check or wire transfer) as the participant's IRA or former plan
• if the funds are from a plan, looking up that plan's Form 5500 filing, if any, in the Department of Labor's EFAST2 database for assurance that the plan is intended to be a qualified plan.

It's not necessary to obtain a letter from the distributing plan when its qualified status can be checked using the online Department of Labor filing search.

Example (1): Alice makes a direct rollover contribution to Plan A with a check from Plan B payable to the trustee of Plan A, for the benefit of Alice. Plan A accepts all rollover contributions except after-tax or designated Roth contributions. Plan A's administrator may reasonably conclude that Alice's rollover contribution is valid based on these factors:

1. Alice, aged 50, certifies that her Plan B distribution doesn't include after-tax contributions or amounts attributable to designated Roth contributions.
2. Plan A's administrator verifies that the rollover check was issued by Plan B payable to the trustee of Plan A. The plan administrator may reasonably conclude that the trustee of the distributing plan treated the amount as an eligible rollover distribution.
3. Plan A's administrator checks the EFAST2 database for Plan B's most recent Form 5500 filing and sees that the entry on line 8a (identifying plan characteristics) indicates the plan is intended to be a qualified plan.

Example (2): Brian, aged 60, gives Plan A's administrator a check from the trustee of his traditional IRA, payable to Plan A for the benefit of Brian. The check stub identifies the source of the funds as "IRA of Brian." Brian also certifies that the distribution includes no after-tax amounts. Based on the information on the checkstub and Brian's certification, the plan administrator may conclude that Brian's rollover contribution is valid.

Will an invalid rollover contribution jeopardize my plan's qualification? In general, a plan can accept a direct rollover contribution without jeopardizing its qualified status if the plan administrator:

1. reasonably concludes that the rollover contribution is valid, and
2. distributes any ineligible rollover contribution, with earnings, within a reasonable time of discovering the error (Treasury Regulation Section 1.401(a)(31)-1, Q&A 14).
Form 5500 filings database.

A plan administrator can access the EFAST2 database maintained by the Department of Labor, and:
• Search for the most recently filed Form 5500 or 5500-SF for the plan making the rollover distribution.
• On the latest Form 5500 or 5500-SF for the plan, check the entry on the line for plan characteristics (line 8a on Form 5500 and line 9a for Form 5500-SF).
• Code 3C entered on this line indicates that the plan is not intended to be a qualified plan. If any other code is entered on this line, the plan administrator may reasonably conclude that the plan is qualified.

Not all plans are required to file a Form 5500 or Form 5500-SF, so sometimes this information will not be available.

It's not necessary for the distributing plan to have a determination letter from the IRS on its qualified status for a plan administrator to conclude that a rollover contribution is valid.

Eligible rollover distributions. IRAs: You can roll over all or part of any distribution from your IRA except:

• A required minimum distribution or
• A distribution of excess contributions and related earnings.

Retirement plans: You can roll over all or part of any distribution of your retirement plan account except:

• Required minimum distributions,
• Loans treated as a distribution,
• Hardship distributions,
• Distributions of excess contributions and related earnings,
• A distribution that is one of a series of substantially equal payments,
• Withdrawals electing out of automatic contribution arrangements,
• Distributions to pay for accident, health or life insurance,
• Dividends on employer securities, or
• S corporation allocations treated as deemed distributions.

Distributions that can be rolled over are called "eligible rollover distributions." Of course, to get a distribution from a retirement plan, you have to meet the plan's conditions for a distribution, such as termination of employment.

June 3, 2014

Employee Benefits-IRS Provides Guidance On Retirement Plan Payments for Accident, Health and Disability

In Employee Plans News, Issue 2014-8, May 16, 2014, the Internal Revenue Service (the "IRS") provides guidance on retirement plan payments for accident, health and disability. Here is what the IRS said:

Final regulations. Final regulations (T.D. 9665) state that payments from a qualified defined contribution plan to pay a participant's:

• accident and health insurance premiums are taxable distributions to the participant unless a statutory exception applies (Internal Revenue Code Sections 72 and 402(a)), and

• disability insurance premiums aren't taxable distributions if they meet certain conditions.

The regulations finalize the 2007 proposed regulations and add the exception for disability insurance coverage; they are effective January 1, 2015, but may be applied earlier.

Accident and health insurance. The 2007 proposed regulations stated the general rule that payments from a qualified plan to pay a participant's accident or health insurance premiums are taxable distributions unless they're paid:

• from a qualified retiree health account (IRC Section 401(h)), or

• for qualified public safety officers (IRC Section 402(l)).

Disability insurance. The final regulations include an exception for disability insurance premiums being taxed to participants if the following conditions are met:

1. Premiums for the disability insurance contract are paid directly from the plan.

2. The plan receives the benefit payments as required by the disability insurance contract.

3. Benefit payments under the contract are paid because of an employee's inability to continue employment with the employer because of disability.

4. The benefit payments to a participant's account aren't more than a reasonable expectation of what the participant would've received as an annual contribution during the disability period, reduced by any other contributions.

If these conditions are satisfied, the disability insurance is considered a plan investment, and the plan's premium payments and the insurance's benefit payments to the plan aren't taxable to the participant.

If the disability insurance premiums aren't paid by the plan, the insurance benefits paid to the plan aren't a return on a plan investment. Instead, these payments are contributions to the plan governed by qualified plan contribution rules (generally, IRC Section 415(c), which limits employer contributions to a defined contribution plan).

If an employer self-insures this disability coverage (or doesn't finance it through third party insurance), the amount paid to the plan because of the employee's disability is also considered a contribution to the plan governed by the general qualified plan contribution rules.

May 29, 2014

Employee Benefits-IRS Updates Its FAQs On Individual Shared Responsibility Requirements

According to the IRS, under the Affordable Care Act, the Federal government, State governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. The IRS has just updated its FAQs on the health insurance requirements imposed on individuals. The revised FAQs are here.

May 28, 2014

Employee Benefits-IRS Provides Guidance On Mid-Year Plan Amendments Related to Same-Sex Marriages

In Employee Plans News, Issue 2014-8, May 16, 2014, the Internal Revenue Service (the "IRS") provides guidance on mid-year plan amendments related to same-sex marriages. Here is what the IRS said:

Couples. Safe harbor 401(k) or 401(m) plans may be amended mid-year to comply with the Supreme Court's decision in United States v. Windsor and related IRS guidance in Revenue Ruling 2013-17 and Notice 2014-19 (Notice 2014-37). The Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act (DOMA), which barred married same-sex couples from being treated as married under federal law.

When plan amendments are required. A plan with terms that are inconsistent with Windsor or Revenue Ruling 2013-17 must be amended to comply (Notice 2014-19). For example, a plan must be amended if it defines "spouse" by reference to section 3 of DOMA, or only as a person of the opposite sex. Similarly, a plan must also be amended if a plan sponsor chooses to reflect the outcome of Windsor for periods prior to the date Windsor was decided. Required amendments must generally be adopted by the later of December 31, 2014, or the applicable date under the IRS' general amendment guidance for qualified retirement plans, Revenue Procedure 2007-44 (Q&A-8 of Notice 2014-19).

Safe harbor plan rules. A safe harbor 401(k) or 401(m) plan must generally be adopted at the beginning of a plan year and maintained throughout the full 12-month year. Plan amendments to reflect Windsor and related IRS guidance are exceptions to this general rule.

April 11, 2014

Employee Benefits-Multiemployer Pension Plans May Have to Be Amended To Comply With IRS Guidance On The Treatment of Same- Sex Marriage By Retirement Plans THE IRS GUIDANCE

In Notice 2014-19 (the "Notice") and accompanying Frequently Asked Questions posted on its website (the FAQs), the Internal Revenue Service (the "IRS") provides guidance on the application of the Supreme Court's decision in United States v. Windsor ("Windsor") and the holdings of Rev. Rul. 2013-17 to the treatment of same-sex marriages by a multiemployer pension plan (and any other tax-qualified retirement plan).


Prior to Windsor , section 3 of the Defense of Marriage Act ("DOMA") prohibited the recognition of same-sex spouses for purposes of Federal tax law. Windsor ruled that section 3 is unconstitutional. Based on this decision, Rev. Rul. 2013-17 held the following:

(1) For Federal tax purposes, the terms "spouse," "husband and wife," "husband," "wife" : (a) include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term "marriage" includes such a marriage between individuals of the same sex and (b) do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term "marriage" does not include such formal relationships.

(2) For Federal tax purposes, the IRS adopts a general rule recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex, even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages.

These holdings apply to a multiemployer pension plan, prospectively as of September 16, 2013.


Very briefly, the Windsor outcome will affect any plan provision that considers a participant's marital status, such as those pertaining to qualified joint and survivor annuities ("QJSAs"), qualified preretirement survivor annuities ("QPSAs"), beneficiary designations, loans, section 415 limits, incidental death benefit requirements, minimum required distributions, rollovers, safe harbor hardship withdrawals, qualified domestic relations orders ("QDROs") and stock ownership attribution rules.


The Notice establishes the following rules for a multiemployer pension plan:

Uniform Treatment. Any retirement plan qualification rule, under section 401(a) of the Internal Revenue Code (the "Code"), that applies because a participant is married must be applied with respect to a participant who is married to an individual of the same sex. For example, a participant in a plan subject to the rules of section 401(a)(11) of the Code who is married to a same-sex spouse cannot waive a QJSA without obtaining spousal consent pursuant to section 417 of the Code.

Mandatory Effective Date. Plan operations must reflect the outcome of Windsor as of June 26, 2013. A plan will not be treated as failing to meet the requirements of section 401(a) of the Code merely because it did not recognize the same-sex spouse of a participant as a spouse before June 26, 2013.

Amendment Prior To Mandatory Effective Date. A plan will not lose its qualified status due to an amendment to reflect the outcome of Windsor for some or all purposes of the plan and the Code as of a date prior to June 26, 2013, if the amendment complies with applicable qualification requirements (such as those in section 401(a)(4)). For example, for the period before June 26, 2013, a plan sponsor may choose to amend its plan to reflect the outcome of Windsor solely with respect to the QJSA and QPSA requirements of section 401(a)(11) and, for those purposes, solely with respect to participants with annuity starting dates or dates of death on or after a specified date.

Transition Rule. A plan will not be treated as failing to meet the requirements of section 401(a) merely because the plan, prior to September 16, 2013, recognized the same-sex spouse of a participant only if the participant was domiciled in a state that recognized same-sex marriages.


The FAQs provide guidance on specific applications of the Windsor decision, Rev. Rul. 2013-17 and the Notice (together, the "Notice Requirements") to a multiemployer pension plan:

Particular Rule For Beneficiary Designations. In a profit-sharing or stock bonus plan, to the extent the section 401(a) qualification rules require a married participant's spouse to be the participant's beneficiary with respect to all or part of the participant's benefits (unless the spouse consents to the participant's designation of another beneficiary), the plan must treat a participant who is lawfully married on the date of death to an individual of the same sex as married for purposes of applying those qualification rules with respect to a participant who dies on or after June 26, 2013. This applies regardless of any conflicting plan terms and regardless of any prior beneficiary or other designation to which the participant's spouse has not consented that specifies an individual other than the participant's spouse to receive those benefits (except as provided in a QDRO).

State Law Not Applicable. If a plan's terms designate a particular state's laws as applying to the plan, and that state does not recognize same-sex marriage for purposes of applying state law, it is not permissible , on and after June 26, 2013, for the plan to be operated in a manner that does not recognize a participant's same-sex spouse with respect to the section 401(a) qualification requirements which apply to married participants. Thus, if-on or after June 26, 2013- a plan administrator does not recognize the participant's same-sex spouse for purposes of the plan provisions that are required under section 401(a) because a plan administrator interprets the terms of the plan by applying a designated state's laws (such as under a plan's choice of law provision) to identify a participant's marital status, then the plan would violate the qualification requirements of section 401(a).

Retroactive Application of Amendments. A plan that is retroactively amended to be consistent with the Notice Requirements will not fail to retain its qualified status if the retroactive amendment is implemented using principles similar to those in the Employee Plans Compliance Resolution System (the "EPCRS"), as set forth in Rev. Proc. 2013-12. For example, if the plan is retroactively amended to apply the spousal consent rules under sections 401(a)(11) and 417 consistently with the Notice Requirements, the plan may obtain spousal consent to remedy a prior lack of spousal consent under the principles described in section 6.04(1) of Rev. Proc. 2013-12.

New Rights. In light of the Windsor decision, a plan sponsor may wish to amend a plan to provide new rights or benefits with respect to participants with same-sex spouses - such as an amendment that provides those participants with a new opportunity to elect a QJSA - to make up for benefits that were not previously available to those participants. Such an amendment must comply with the applicable qualification requirements (such as section 401(a)(4)).


The Notice requires that amendments be adopted by a multiemployer pension plan as follows:

(1) If the plan's terms with respect to the requirements of section 401(a) define a marital relationship by reference to section 3 of DOMA or are otherwise inconsistent with the outcome of Windsor or the guidance in Rev. Rul. 2013-17 or the Notice, then an amendment to the plan that reflects such outcome or guidance must be adopted.

(2) An amendment is required if a plan sponsor chooses to apply the rules with respect to married participants in a manner that reflects the outcome of Windsor for a period before June 26, 2013. The amendment must specify the date as of which, and the purposes for which, the rules are applied in this manner.

(3) An amendment is not required, if a plan's terms are not inconsistent with the outcome of Windsor and the guidance in Rev. Rul. 2013-17 and the Notice (for example, the term "spouse," "legally married spouse" or "spouse under Federal law" is used in the plan without any distinction between a same-sex spouse and an opposite-sex spouse).

(4) The deadline to adopt an amendment required in (1) or (2) above is the latest of: (a) the last day of the tenth month following the close of the plan year in which June 26, 2013 falls or (b) December 31, 2014.

Note: For a multiemployer pension plan, an amendment required in (1) is not subject to the requirements of section 432 of the Code (generally prohibiting an amendment which increases liabilities through changes to benefits, benefit accruals, or vesting schedules for a plan in endangered or critical status), while an amendment required in (2) is subject to those requirements.


A plan sponsor of a multiemployer pension plan (normally the Trustees) needs to review the plan to determine if an amendment is required under the Notice and FAQs. Further, since the plan must comply with the requirements of the Notice and FAQs in operation, the plan sponsor needs to review the plan procedures, summary plan descriptions, election forms and notices, and other participant communications to see if revisions to them are needed. New communications may be required in any event if any options change or new beneficiary designations must be made. Finally, the plan sponsor should review whether the plan has complied with the Windsor outcome on and after June 26, 2013 (except as otherwise allowed by the Transition Rule) (e.g., whether QJSAs and QPSAs were properly made available).

April 9, 2014

Employee Benefits-IRS Provides Guidance On Keeping Your SARSEP Compliant

Do you have a Salary Reduction Simplified Employee Pension ("SARSEP") plan? If so, you need to keep the SARSEP in compliance with technical requirements. To help, the Internal Revenue Service ("IRS") has provided a "SARSEP Checklist" and a "SARSEP Plan Fix-It Guide". Check them out.

April 7, 2014

Employee Benefits- Treasury And IRS Issue Guidance Facilitating Tax-Free Rollovers To Employer-Sponsored Retirement Plans

According to a Press Release dated 4/3/14, the U.S. Department of the Treasury and the Internal Revenue Service ("IRS") have issued guidance-in the form of a Revenue Ruling- designed to help individuals accumulate and consolidate retirement savings by facilitating the transfer of savings from one retirement plan to another. This guidance will increase pension portability by making it easier for employees changing jobs to move assets to their new employers' retirement plans.

The Press Release says that the ruling simplifies the rollover process by introducing an easy way for a receiving plan to confirm the sending plan's tax-qualified status. The plan administrator for the receiving plan can now simply check a recent annual report filing for the sending plan on a database that is readily available to the public online. This eliminates the need for the two plans to communicate (with the individual as go-between), expedites the rollover process, and reduces associated paperwork.

The Revenue Ruling is here.

April 4, 2014

Employee Benefits-Department Of Health & Human Services Provides Guidance On Health Coverage Of Same-Sex Spouse

The Department of Health & Human Services (the "DHHS") has provided guidance on coverage of same-sex spouses by employee benefit plans. The guidance is here. It says the following:

Background. On February 27, 2013, the Centers for Medicare & Medicaid Services ("CMS") of the DHHS published final regulations implementing section 2702 of the Public Health Service Act (the "PHS Act"). Section 2702 of the PHS Act requires health insurance issuers offering non-grandfathered health insurance coverage in the group or individual markets (including qualified health plans offered through Affordable Insurance Exchanges) to guarantee the availability of health coverage unless one or more exceptions applies. The preamble to the final regulations (78 FR at 13417) indicates that discriminatory marketing practices or benefit designs represent a failure by health insurance issuers to comply with the guaranteed availability requirements, and the final regulations at 45 CFR 147.104(e) establish certain marketing and nondiscrimination standards in the regulation text.

New Guidance. The following serves to clarify the meaning of the terms used in 45 CFR 147.104(e) for the purposes of describing the requirements health insurance issuers must meet to ensure guaranteed availability of coverage.

1) If a health insurance issuer in the group or individual market offers coverage of an opposite-sex spouse, the issuer may not refuse to offer coverage of a same-sex spouse. Federal regulations at 45 CFR 147.104(e) provide that a health insurance issuer offering non-grandfathered group or individual health insurance coverage cannot employ marketing practices or benefit designs that discriminate on the basis of certain specified factors. One such factor is an individual's sexual orientation. As CMS has used the terms in this regulation, an issuer violates this requirement if-

-- the issuer offers coverage of an opposite-sex spouse; and

-- the issuer chooses not to offer, on the same terms and conditions as those offered to an opposite-sex spouse, coverage of a same-sex spouse based on a marriage that was validly entered into in a jurisdiction where the laws authorize the marriage of two individuals of the same sex, regardless of the jurisdiction in which the insurance policy is offered, sold, issued, renewed, in effect, or operated, or where the policyholder resides.

2) This regulation does not require a group health plan (or group health insurance coverage provided in connection with such plan) to provide coverage that is inconsistent with the terms of eligibility for coverage under the plan, or otherwise interfere with the ability of a plan sponsor to define a dependent spouse for purposes of eligibility for coverage under the plan. Instead, this regulation prohibits an issuer from choosing to decline to offer to a plan sponsor (or individual in the individual market) the option to cover same-sex spouses under the coverage on the same terms and conditions as opposite sex-spouses.

3) CMS expects issuers to come into full compliance with the regulations as clarified in this guidance no later than for plan or policy years beginning on or after January 1, 2015. It also expect States to begin enforcing the regulations in accordance with this clarification by the same time. CMS will not consider a State to be failing to substantially enforce PHS Act section 2702 in connection with this clarification for earlier policy years.

March 31, 2014

Employee Benefits-Reminder: Tomorrow Is April 1: Don't Forget Your Required Minimum Distribution From Your Company Retirement Plan Or IRA

An Internal Revenue Service News Release reminds taxpayers who turned 70½ during 2013 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Tuesday, April 1, 2014. The Press Release offers some helpful points and may be found here.