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Sarah Friedman helps clients navigate the complex regulatory requirements of ERISA, the Internal Revenue Code, and other applicable federal and state or local laws. Her practice covers all aspects of tax-qualified retirement plans, health and welfare plans, and executive compensation.

As we discussed in our previous blog post, Temporary Relief Allows Flexible Spending Arrangements to be More Flexible, Section 214 of the Consolidated Appropriations Act, 2021, Pub. L. 116-260 (the “Act”), allows employers to offer an extended use-it-or-lose-it and/or extended spend-down periods during which participants in a health flexible spending arrangement (“ health FSA”) may have access to unused health FSA amounts until the end of the subsequent plan year and/or after they terminate participation in the health FSA mid-year, respectively. In certain cases, access to unused health FSA amounts can make an individual ineligible to contribute to a health savings account (an “HSA”).

Continue Reading Preserving HSA Eligibility With An Extended Health FSA Use-It-Or-Lose-It Period

Section 214 of the Consolidated Appropriations Act, 2021, Pub. L. 116-260 (the “Act”), allows sponsors of health and dependent care flexible spending arrangements (“FSAs”) to delay forfeitures of unused account balances for 2020 and 2021 plan years and grant participants, including former participants, more time to spend down account balances. Section 214 and implementing guidance also give employers another opportunity to allow participants to change their elections with respect to FSAs and health plans. On February 18, 2021, the Internal Revenue Service (“IRS”) issued IRS Notice 2021-15 to help explain and expand the parameters of this relief.

Continue Reading Temporary Relief Allows Flexible Spending Arrangements to be More Flexible

On May 12, 2020, the Internal Revenue Service (“IRS”) published Notices 2020-29 and 2020-33. Notice 2020-29 is the latest installment in COVID-19 relief guidance targeted at health and welfare benefits. The Notice enables employers to provide flexibility to employees to modify their health coverage and flexible spending account (“FSA”) elections and gives employees until the end of 2020 (but not 2021) to use certain FSA amounts that may otherwise be forfeited. Unlike certain COVID-19 relief related to retirement plans, employers may make the relief under Notice 2020-29 available to all participants, regardless of whether they have suffered a COVID-19-related loss.

Notice 2020-33 allows employers to adopt an indexed maximum carryover amount for health FSAs, beginning with amounts that may be carried over from the 2020 plan year to the 2021 plan year.


Continue Reading IRS Empowers Employers to Increase Health Coverage, FSA Election Flexibility During Pandemic; Clarifies HDHP COVID-19 Relief

On April 11, 2020, the Departments of Labor, Treasury, and Health and Human Services issued joint guidance on certain provisions of the Families First Coronavirus Response Act (“FFCRA”) and the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act relating to health and welfare benefits.  This post analyzes some of the key provisions in the guidance.

Continue Reading Tri-Agency Guidance Clarifies Some FFCRA and CARES Act Health & Welfare Provisions

On March 27, 2020, President Trump signed the largest economic stimulus bill in U.S. history: the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).  In this blog article, we take a closer look at the provisions affecting health and welfare plans.

Continue Reading CARES Act Expands COVID-19 Testing and Other Health and Welfare Benefits

On March 13, 2020, the President declared the COVID-19 pandemic to be an emergency under Section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Stafford Act”).  The decision to declare an emergency is addressed in a letter from the President to Administration officials in which he explained that his decision to issue an emergency declaration was “based on the fact that our entire country is now facing a significant public health emergency.”

Employers may be wondering whether this declaration provides an opportunity to offer “qualified disaster relief payments” under Internal Revenue Code § 139 to employees as a means of mitigating the pandemic’s effects.  It is not entirely clear.  Because the President declared an emergency—not a major disaster—it is not clear, until we get further guidance from the IRS that employers that they may rely on Code § 139 as a means of providing tax-free benefits to their employees.  Section 139 refers specifically to a declared disaster as do the regulations under section 165(i), which are cross-referenced in the section 139 rules.  Less formal IRS guidance in the form of revenue procedures have conflated the two types of declarations in the past, however, and the IRS has indicated that for purposes of section 165(i), “a disaster includes an event declared a major disaster or an emergency.”  However, in the interim, employers may still adopt other policies, such as leave-sharing, that will ease the pandemic’s toll on affected employees.


Continue Reading COVID-19 Emergency Declaration: Code § 139 Uncertain; Leave-Sharing Policies Permitted

We recently wrote about Rev. Proc. 2019-39, which provides for remedial amendment periods for 403(b) plans and establishes deadlines for 403(b) plans to adopt discretionary amendments and amendments that correct form defects.  Rev. Proc. 2019-39 also announced the IRS’s intent to include changes to § 403(b) requirements on its annual Required Amendments List (the “List”).  The List is issued annually and includes statutory and regulatory changes that become effective during the year in which it is published, or which became effective after publication of the previous year’s List.

The Service has kept its promise, issuing IRS Notice 2019-64 on December 4, 2019.  Notice 2019-64 contains the 2019 Required Amendments List, which applies to 403(b) plans as well as qualified plans, and is the first Required Amendments List to include changes to § 403(b) requirements.  Only one change affecting 403(b) plans (as well as qualified defined contribution plans) is included on the 2019 List: sponsors must amend 403(b) plan documents to comply with two of the provisions of the final hardship distribution regulations.  (The List also covers certain amendments to cash balance and other hybrid defined benefit plans.)


Continue Reading 2019 Required Amendments List Includes Change Affecting 403(b) Plans

In October, the U.S. Department of Labor released a proposed rule that would increase plan administrators’ ability to make certain required ERISA pension disclosures through electronic, rather than paper, delivery.  Below is a summary of the proposed rule with some highlights on aspects of the proposal that have been questioned by interested parties and might be changed.

Continue Reading DOL Proposal for Electronic Disclosure of ERISA Pension Documents

On September 30, 2019, the Internal Revenue Service issued Revenue Procedure 2019-39, which finalizes important changes to how sponsors and employers can ensure 403(b) plan compliance.  The guidance is a welcome update from the Service, which initiated a regular system of remedial amendment periods for 403(b) plans in 2013, with the first period ending on March 31, 2020.  Most significantly, Revenue Procedure 2019-39:

  • Makes permanent the system of remedial amendment periods, during which an employer may retroactively amend its 403(b) plan or adopt a pre-approved 403(b) plan to correct a “form defect” (e., a defect in the terms of the plan that causes the plan to fail a § 403(b) requirement);
  • Clarifies that a retroactive amendment to correct a form defect is only permitted where the plan has been operated in compliance with the § 403(b) requirement;
  • Establishes deadlines to adopt amendments that correct form defects as well as deadlines to adopt discretionary amendments (e., amendments that do not remedy a form defect);
  • Confirms that the Service will not review individually designed 403(b) plans through a determination letter process;
  • Sets out a cyclical system in which pre-approved 403(b) plan sponsors may seek Service approval of plans; and
  • Announces the Service’s intent to provide additional guidance related to 403(b) plans, including its intent to include changes to the § 403(b) requirements on its annual Required Amendments List and the Operational Compliance List.

The Service intends to issue additional guidance in the next several years to address the procedures announced in Revenue Procedure 2019-39.


Continue Reading IRS Announces Remedial Amendment Periods and Deadlines for Correction of 403(b) Plan Form Defects