Plans, Perks & Pay | Employee Benefits & Executive Compensation Blog

The Internal Revenue Service has updated the Employee Plans Compliance Resolution System (EPCRS) to allow for the self-correction of more failures. EPCRS is a program that allows plan sponsors to correct errors involving qualified plans (such as 401(k) plans, profit sharing plans, defined benefit pension plans, etc.) and certain other types of plans that, if left uncorrected, could jeopardize the tax-favored status of the plan. Revenue Procedure 2019-19 expands the self-correction program to include correction of certain loan failures and more corrections via retroactive amendment.

Recently, the IRS has been issuing 226J letters for the 2016 tax year. IRS Letter 226J is the penalty letter sent to employers who did not comply with the employer mandate under the Patient Protection and Affordable Care Act (ACA) in their offers of health coverage to employees. Frequently these penalties can be in the hundreds of thousands to millions of dollars. However, with the advice of counsel, you may be able to reduce, if not eliminate, the penalties, and changes can be made to avoid penalties in future years. It is important to note that while the individual mandate has been eliminated effective Jan. 1, 2019, by the current administration, the employer mandate still applies.

The battle over health benefits rages on. In the latest salvo, a group of states scored a major court victory against the Trump administration’s new “Association Health Plan” Final Rule, which was finalized in 2018. While this decision will have major ramifications, it is important to remember that association health plans may still be established under old rules that existed long before the final rule.

The case is styled New York v. United States Dep’t of Labor, No. CV 18-1747 (JDB), 2019 WL 1410370 (D.D.C. Mar. 28, 2019).