The Cadillac Tax is one of the least popular parts of the Affordable Care Act. In a nutshell, the law creates a 40 percent tax on the cost of health insurance premiums to the extent they exceed certain threshold amounts — currently $850 a month ($10,200/year) for individual coverage and $2,325 a month ($27,500/year) for all other coverage. Employer contributions to employees’ Health Savings Accounts are also subject to the tax.
A recently decided Fifth U.S. Circuit Court of Appeals case provides employee stock ownership plan (ESOP) fiduciaries and others with an example of how not to undertake an ESOP transaction.
When an employee stock ownership plan purchases the stock of a closely held corporation, the duty of a fiduciary is to act solely in the interest of the participants and their beneficiaries. The case, Perez v. Bruister, details that duty and the consequences of failing to fulfill it.