There are both single-employer pension plans and multiple employer plans (MEPs). In a single-employer plan, only employees within the same “controlled group” of businesses are allowed to participate. Put very simply (because the rules are complicated), the controlled group consists of different entities that share enough common ownership that they are treated as a single employer for employee benefits purposes. And all of those employers’ employees are able to participate in one plan.
Even though it is rare for participants and service providers in a 401(k) plan to become involved in litigation, it does happen. Always be prepared for the worst situation, and you will be ahead of the game. In the April 2020 edition of 401(k) Advisor, Jeffrey Herman identifies the basic standards that apply to 401(k) plan litigation. Click here to read the full article in the publication.
A poorly drafted contract with a service provider can spell doom for a retirement plan in a worst-case scenario. All provider contracts should be carefully reviewed and negotiated to ensure the maximum possible protection for your retirement plan. In the September 2019 edition of 401(k) Advisor, attorney Jeff Herman addresses some of the specific concerns and provisions to watch out for in your contracts. Click here to read the full article in the publication.
Retirement accounts are a seemingly simple and effective way to protect assets from future creditors, but the subtle nuances of what is protected under Missouri law and what is protected in bankruptcy can be complex. In the July/August 2019 edition of the Journal of the Missouri Bar, attorneys Keith Herman and Jeffrey Herman analyze how you can use retirement accounts for asset protection and the potential loopholes to avoid.
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).
Construction companies with union employees often must make contributions to a defined benefit pension plan sponsored by the union. These plans are called “multiemployer” pension plans.
As a general rule, multiemployer plans are not well-funded. In 2015, for example, a federal study showed that 98.3 percent of multiemployer plans were underfunded. Collectively, that underfunding surpassed $560 billion. And nearly 40 percent of multiemployer plans are in the construction industry.
I previously examined the proposed rule by the U.S. Department of Labor (DOL) to expand so-called Association Health Plans, or AHPs, under the Employee Retirement Income Security Act of 1974 (ERISA). In a nutshell, the proposed rule was designed to make it easier for employers to form a group in order to provide health benefits to their employees through an AHP. These new AHPs would have more freedom to restrict benefits in order to provide more affordable coverage.
The Tax Cuts and Jobs Act (TCJA) eliminated a host of miscellaneous itemized deductions through 2025, including a deduction for job-related education expenses pursuant to Code Section 162. Simple enough.
Except that many employer-provided education benefits are directly tied to the employee’s right to claim a deduction under Section 162. These include tax-free employer payments and reimbursements for college courses and continuing education, as well as an employer’s in-kind provision of such education. If no individual deduction is available for such expenses under Section 162, can the employer still provide, pay for, or reimburse employees for education without it being taxable to the employee?
The Bipartisan Budget Act of 2018 (H.R. 1892) was signed into law on Feb. 9, 2018. The Budget Act makes several changes to retirement plan rules, both now and in the near future.
Current rule changes
Section 20102: California Wildfire Disaster Victims: Distributions of up to $100,000 from an eligible retirement plan (e.g., a qualified plan, 403(b) plan or 457(b) plan) are allowed on or after Oct. 8, 2017, and before Jan. 1, 2019, without being subject to a 10 percent early withdrawal penalty. This rule applies to individuals who sustained losses to a home in a California wildfire disaster area (see below). The home must have been a person’s “principal place of abode” at some time between Oct. 8, 2017, and Dec. 31, 2017. These distributions may be repaid to the eligible retirement plan at any time within three years and essentially treated as rollover contributions.
As previously noted, the individual mandate under the Patient Protection and Affordable Care Act (also known as the ACA, or more informally as Obamacare) still applies in 2018. Finding affordable coverage to avoid the penalty is essential.
One option available to individuals and families is joining a “health care sharing ministry” (HCSM) under Section 5000A of the Tax Code. If an individual is covered by an HCSM in any given month in 2018, then the individual will not be subject to the tax penalty for that month.