KMK Law Management Rights Blog

The United States Supreme Court recently agreed to hear two ERISA class-action cases next term that were decided by the lower courts in favor of plan participants. First, the Supreme Court agreed to review Retirement Plans Committee of IBM et al. v. Larry W. Jander, an employer stock-drop case from the Second Circuit.  IBM workers claimed that IBM’s Retirement Plans Committee breached its fiduciary duty by allowing workers’ retirement funds to be invested in artificially-inflated IBM stock. The Second Circuit applied the “more harm than good” standard that was set forth ...

The IRS recently announced in Rev. Proc. 2019-25, the following inflation-adjusted amounts for Health Savings Accounts for 2020:

Heath reimbursement accounts (“HRAs”) have long been subject to various restrictions under the ACA.  However, as of 2020, HRAs may be used to reimburse individual health coverage premiums. This signals a departure from the previous prohibition on integrating HRAs with individual coverage. Employers of all sizes will now be able to offer individual coverage HRAs, although specific notice and procedural requirements apply. The new rules also allow employers to offer “excepted benefit HRAs” to finance other types of medical expenses (for example, copays, deductibles and ...

On May 23, 2019, the House approved the “Setting Every Community Up for Retirement Enhancement (“SECURE Act”) by a vote of 417-3.  The SECURE Act generally provides for an increase in retirement savings and improves portability of lifetime income options between plans (Summary). More specifically, the SECURE Act includes provisions that:

• Require 401(k) plans to offer participation to part-time employees who work at least 500 hours in three consecutive years;
• Simplify the 401(k) safe harbor rules relating to the notice requirement and limits on plan amendments;
• Increase ...

In another recent Revenue Procedure (Rev. Proc. 2019-19), the Employee Plans Compliance Resolution System (“EPCRS”) program was expanded to permit the correction of certain additional failures through the Self-Correction Program (“SCP”). Before this new ruling, the ability to use SCP was more limited The expanded EPCRS provides the following:

• Plan sponsors can now self-correct certain loan defaults without having to report the failure as a deemed taxable distribution to the participant. A correction may be made by either reamortizing the outstanding loan balance or ...

In a recent Revenue Procedure (Rev. Proc. 2019-20), the IRS announced the limited expansion of the determination letter program for individually designed plans.  The program is limited to (1) certain cash balance plans and (2) retirement plans that merge as the result of a corporate transaction.  The window for determination letter submissions for eligible cash balance plans will run from September 1, 2019 to August 31, 2020.  Submissions for merged plans will begin on September 1, 2019 and will be ongoing.

This opportunity is especially important for cash balance plans since the IRS ...

On April 9, 2019, Kentucky Governor Matt Bevin (R) signed the Pregnant Workers Act, SB 18, which requires employers who have at least 15 employees in Kentucky to provide reasonable accommodations to employees for pregnancy, childbirth, and related medical conditions. The law becomes effective on June 27, 2019.

The U.S. Department of Labor Employee Benefits Security Administration (“EBSA”) discovered that William H. Minor, a former board member of Rehabilitation Center for Children & Adults Inc. who also volunteered to manage its pension plan, embezzled approximately $2 million from the pension plan.  Minor operated Multi Financial Insurance Corp. an entity that provided investment advice and administrative services to pension plans. 

EBSA discovered that Minor moved the plan’s assets to a life insurance company with which Minor was a registered agent.  Minor then falsely ...

The Justice Department filed a letter in the Fifth Circuit Court of Appeals on March 25, 2019 (Letter) supporting the decision of a Texas District Court ruling that the Affordable Care Act (“ACA”) is unconstitutional.  In its ruling (Ruling), the District Court held the individual mandate under the ACA is unconstitutional given the passage of the Tax Cuts and Jobs Act of 2017.  The court further held that the remaining provisions of the ACA are also unconstitutional because those provisions cannot be severed from the individual mandate.  The Justice Department intends to file a ...

The IRS reversed its previous position that prohibited defined benefit plan sponsors from offering lump payments to terminated participants currently receiving annuity payments.  The IRS announced in Notice 2019-18 that until further guidance is issued it will not assert that a plan amendment providing for a retiree lump sum window program violates Section 401(a)(9) of the Internal Revenue Code.  The Notice also provides that the IRS will evaluate the plan amendment to ensure it satisfies the relevant provisions of the Code. 

Based on this latest development, it appears plan ...