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Julie Edmond has extensive experience counseling and litigating in the employee benefits area, including traditional defined benefit, cash balance, 401(k), profit-sharing and money purchase pension plans; executive compensation and § 409A; § 403(b) plans, § 457 plans and other plans for tax-exempt organizations; ESOPs; cafeteria plans; VEBAs and self-insured medical plans and other welfare plans.  Her experience includes plan selection, formulation and drafting, regulatory compliance, audits, voluntary compliance, prohibited transactions and fiduciary duty requirements, separate line of business issues, use and handling of employee benefits and benefit plans in corporate transactions, and ERISA litigation.

Ten months ago the California Supreme Court rendered its unanimous decision in Dynamex Operations West, Inc. v. Superior Court, a case that articulated a new standard for classifying employees and independent contractors.  Given the importance of this decision, we provided analysis on this case when it was first decided.  However, once issued, this new Dynamex standard did not settle the issue of employee classification in California once and for all.  Rather, as we anticipated in our prior post, Dynamex has cast a long shadow, and the issues it raised have continued to gestate, giving rise to renewed focus on employee classification at the state (and federal) level.

Continue Reading Dynamex Alters the Employee Classification Landscape in California

As part of the Tax Cuts and Jobs Act of 2017, Congress enacted new § 4960 of the Internal Revenue Code.  Section 4960 imposes an excise tax on certain executive compensation paid by tax-exempt organizations – similar to the $1 million limit on deductions for compensation paid to highly paid executives in for-profit companies under § 162(m) of the Code and to the golden parachute rules of § 280G of the Code.  The new provision could have a significant impact on some tax-exempt organizations, but it lacks important detail and leaves many questions unanswered.  The excise tax provision is in addition to other rules applicable to reasonable compensation paid to employees of tax-exempt organizations.

The statute directs the Secretary of the Treasury to prescribe regulations under § 4960 “as may be necessary to prevent avoidance of the tax under this section, including regulations to prevent avoidance of such tax through the performance of services other than as an employee or by providing compensation through a pass-through or other entity to avoid such tax.”   No regulations or other IRS guidance have been issued under § 4960 thus far.
Continue Reading New § 4960 of the Internal Revenue Code Imposes an Excise Tax on Compensation Paid to the Top Five Employees of Tax-Exempt Organizations

During a participant’s lifetime, required minimum distributions (“RMDs”) from a defined contribution plan are relatively small in size.  Less favorable treatment may apply after the participant’s death, depending on the distribution options offered by the plan, the form of distribution elected by the participant, the age of the beneficiary and the relationship between the participant and the beneficiary.

Surviving spouses can take advantage of a special rule that permits them to create spousal rollover IRAs, which effectively allow the surviving spouse to treat the benefit as if he or she was a participant in the plan.  This treatment allows the surviving spouse to elect a longer payout and to designate a beneficiary who may also be eligible for an extended distribution period.


Continue Reading Reducing Required Minimum Distributions from a Defined Contribution Plan: The Spousal Rollover IRA

Regulatory safe harbors play a critical role in the design of employee benefit plans by:

  • Providing concrete guidance on how to comply with the complex rules that govern plans;
  • Facilitating efficient, effective and consistent plan administration; and
  • Encouraging employers to establish and continue their employee benefit plans and furthering participants’ understanding of the rules.

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The Internal Revenue Service issued Revenue Procedure 2013-22 yesterday (March 28, 2013).  The Revenue Procedure describes the Service’s new procedure for issuing opinion letters and advisory letters for prototype and volume-submitter § 403(b) plans; it revises the proposed procedure that was released four years ago in Announcement 2009-34.  As part of the proposed procedure,

A § 403(b) plan that failed to adopt a plan document by December 31, 2009 is not entitled to favorable tax treatment.  However, under new guidance, a plan may regain its favorable tax treatment if it adopts a written plan document and requests a compliance statement through the Voluntary Compliance Program (“VCP”).

The IRS recently released a Voluntary Correction Program Submission Kit to assist sponsors of § 403(b) retirement plans who failed to adopt a written plan document before January 1, 2010.  The Submission Kit includes the forms a plan sponsor must submit to request a compliance statement as well as completed sample forms.

Plan sponsors of § 403(b) plans who failed to timely adopt a written plan document should consider completing a VCP submission before the end of 2013.  Correction fees have been temporarily reduced; fees are 50 percent of the normal amount for plan sponsors who submit a VCP request before December 31, 2013 if the only failure is the failure of a § 403(b) plan to timely adopt a written plan document.  
Continue Reading IRS Releases VCP Kit to Help 403(b) Plan Sponsors Who Failed to Timely Adopt a Plan Document