When drafting a deferred compensation plan or agreement for a key employee (a “top hat plan”), the focus is almost always on the terms of the plan. In the process, many employers miss a crucial step—filing the top hat statement under ERISA. A top hat plan is an unfunded, employer sponsored plan that provides deferred compensation to a select group of management or highly compensated employees. Employers who sponsor these plans must file a top hat statement with the Department of Labor (“DOL”) within 120 days of the plan’s effective date. By doing so, the employer ensures that the plan is exemp ..read more

In the wake of recent developments, we are pleased to provide insights into Pension-Linked Employee Savings Accounts (PLESAs) under the Secure 2.0 Act.  PLESAs are short-term savings accounts that are established and maintained within a defined contribution plan.  The legislative intent of a PLESA is to allow low- and middle-income employees to use payroll deductions to accumulate funds that they can use in the event of an emergency.  Here are the top 5 things employers should know: What is a PLESA?  A PLESA is a retirement savings vehicle where non-highly compensated empl ..read more

By Matthew P. Chiarello and Carlene Y. Lowry The IRS continues to evaluate and process Employee Retention Credit (“ERC”) claims with a focus on inaccurate and ineligible filings. Among its efforts to police the ERC program, the IRS announced a new initiative that permits taxpayers to return ERCs to which the employer is not entitled and avoid audit and penalty. The short-duration relief, known as the Employee Retention Credit Voluntary Disclosure Program (“ERC-VDP”), will run until March 22, 2024. Under the ERC-VDP, employers that received ERCs for which they were ineligible may self-iden ..read more

As reported in Part 4 of our 2022 End of Year Plan Sponsor “To Do” List,  Section 6039 of the Internal Revenue Code (the “Code”) requires employers to provide a written information statement to each employee or former employee and file information returns with the IRS regarding: (1) the transfer of stock pursuant to the exercise of an Incentive Stock Option (“ISO”); and (2) the first transfer by the employee or former employee of stock purchased at a discount under an Employee Stock Purchase Plan (“ESPP”).  For ISO exercises and ESPP transfers occurring in 2023, the Section 6039 ..read more

I previously blogged about the New York Stock Exchange and Nasdaq listing standards that require issuers to adopt compliant clawback policies by December 1, 2023. While many issuers may have already adopted clawback policies that satisfy the minimum legal requirements to comply with the law, recent guidance from Glass Lewis may prompt these issuers to expand their policies in the future to satisfy Glass Lewis’ 2024 Benchmark Policy Guidelines. In their 2024 Policy Guidelines Glass Lewis says that in addition to satisfying legal requirements, effective clawback policies should provide for clawb ..read more

On September 27th, the Departments released FAQs about Affordable Care Act Implementation Part 61 (“FAQ 61”), announcing that the Departments are rescinding prior-issued enforcement relief for certain machine-readable file requirements under the Transparency in Coverage (the “TiC”) regulations. The final TiC regulations, published in the Federal Register on November 12, 2020, in part required group health plans to disclose on a public website three files regarding negotiated rates for covered items and services from in-network providers (the “In-Network Rate File”), historical payments to out ..read more

We have reported previously on the importance of understanding the coverage and reporting rules of the Affordable Care Act.  In particular, Code Section 4980H imposes penalties on large employers for failure to offer minimum essential coverage to 95% or more of their full-time employees (and dependents) or to provide affordable, minimum value health insurance. Whether coverage is “affordable” is determined by reference to the lowest cost, self-only option available under the employer’s health plan.  Applicable guidance provides certain safe harbors with respect to affordability, the ..read more

As noted in a prior post, both the  New York Stock Exchange (“NYSE”) and Nasdaq have adopted listing standards that requires issuers to adopt compliant clawback policies by December 1, 2023.  Adoption of such policies and/or the amendment of an existing policy to make it compliant with the NYSE and Nasdaq listing standards will require Board of Director approval.  It is almost September so time is running out to get compliant policies in front of public company boards for their review and approval. From now to the December 1, 2023 deadline issuers should consider engaging outsid ..read more

Despite many legal challenges, the Affordable Care Act remains the law of the land.  In particular, Code Section 4980H imposes penalties on large employers for failure to offer minimum essential coverage to 95% or more of their full-time employees (and dependents) or to provide affordable, minimum value health insurance. The IRS continues to enforce Code Section 4980H penalties vigorously and takes the position that there is no statute of limitations for failure to comply.  Penalties can be significant and may extend across multiple calendar years.  A recent decision from t ..read more

SECURE 2.0 brought significant changes to retirement planning and distributions, including updating the Required Minimum Distribution (RMD) requirements.  As background, RMDs are the minimum amounts that individuals who attain their “required beginning date” must withdraw from their retirement accounts each year. SECURE 2.0 introduced several changes to the rules on RMDs including the following: 1. Delaying the Age for RMDs The age for starting RMDs has been raised from 72 to 75 years. This increased age provision phases in over time, with the final adjustment taking effect in 2033.  ..read more