Benefits Blast

As 2025 begins, we wanted to highlight several important changes that will impact employer-sponsored group health plans.

On August 25, 2023, the IRS issued Notice 2023-62, which effectively delays for two years the requirement that certain catch-up contributions in 401(k), 403(b), or governmental 457(b) plans be made as Roth contributions.

On December 15, 2022, the Internal Revenue Service (IRS) issued final regulations that permanently extend by 30 days the deadline for furnishing Form 1095-C and Form 1095-B to individuals. The forms will now be due on March 2 (March 3 in a leap year), or the next business day if the due date falls on a weekend or holiday. The proposed regulations were issued in November 2021.

In Internal Revenue Service (IRS) Notice 2022-59, the IRS released the new Affordable Care Act’s (ACA) Patient-Centered Outcomes Research Institute (PCORI) fee for policy and plan years that end on or after October 1, 2022, and before October 1, 2023.

The U.S. Department of Labor (“Department”) has published proposed changes to its Prohibited Transaction Class Exemption 84-14 (the “QPAM (qualified professional asset manager) Exemption”). The QPAM Exemption is heavily relied on by qualified investment professionals because it provides relief from numerous prohibited transactions. The qualified investment professionals who rely on the QPAM Exemption are those who manage the assets of certain employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans and accounts subject to section 4975 of the Internal Revenue Code (“Code”), and plan asset vehicles (collectively, “Benefit Plans”).

The IRS recently published its annual inflation adjustment to the percentage of household income used to determine whether an employer’s offer of health care coverage under the Affordable Care Act (ACA) is considered affordable in the 2023 plan year.

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On May 18, 2021, the Internal Revenue Service (IRS) released highly anticipated guidance on the COBRA subsidies available under the American Rescue Plan Act (ARP).

On May 10, 2021, the Internal Revenue Service (IRS) released Notice 2021-26 (the Notice), clarifying the federal income tax implications of recent temporary changes to rules governing dependent care flexible spending accounts (DCFSAs) as set forth under the Consolidated Appropriations Act, 2021 (CAA), and the American Rescue Plan Act of 2021 (ARPA).

Earlier this month, the Internal Revenue Service (IRS) issued Notice 2020-76, which has once again extended the due date for certain reporting requirements under Internal Revenue Code (Code) §§ 6055 and 6056, as added by the Affordable Care Act (ACA).

On September 2, 2020, the Internal Revenue Service (IRS) issued Notice 2020-68 (the Guidance) in the form of questions and answers interpreting several provisions of the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) and the Bipartisan Miners Act of 2019 (Miners Act) affecting qualified retirement plans, 403(b) plans, and Individual Retirement Accounts (IRAs). The Guidance provides clarification on a number of provisions of interest to employers, as detailed below:

The Internal Revenue Service (IRS) has issued new guidance intended to provide employers sponsoring safe harbor 401(k) (and 403(b)) plans with flexibility in responding to the coronavirus (COVID-19) pandemic.

On June 19, 2020, the Internal Revenue Service (IRS) issued Notice 2020-50, which makes a number of updates and clarifications for plan sponsors and participants under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). One of the most significant changes described in the Notice is an expansion of the categories of individuals eligible to take coronavirus-related distributions or larger plan loans from their retirement plans, or to suspend loan repayments in 2020 under the CARES Act.

The U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) recently issued proposed regulations under Section 213 of the Internal Revenue Code of 1986, as amended (the Code), clarifying the tax treatment of Direct Primary Care Arrangements (DPCA), and Health Care Sharing Ministry (HCSM) memberships under certain medical care arrangements.  

Under current law, certain participant elections must be witnessed in the physical presence of a plan representative or notary public. However, local shutdowns and social distancing practices in response to the Coronavirus (COVID-19) pandemic have made compliance challenging.

Section 2202 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, provides for special distribution options and rollover rules for retirement plans and IRAs, and expands permissible loans from certain retirement plans. We have previously written on the impact of the CARES Act on retirement plans.

On May 12, 2020, the Internal Revenue Service issued two new notices (Notice 2020-29 and Notice 2020-33) addressing some of the many Section 125 Cafeteria Plan questions and issues raised by plan sponsors, administrators, and participants as a result of the COVID-19 pandemic.

The novel Coronavirus, or COVID-19, was designated as a disaster under the Stafford Act on March 13, 2020. This action caused the novel Coronavirus pandemic to escalate to that category of disasters which permit tax-free reimbursements by employers as a “Qualified Disaster Payment.”Adding to the individual tax benefit, the employer’s payments remain fully deductible.

Most retirement plans calculate benefits on the basis of a participant’s pay or compensation. For example, in a profit-sharing plan, an employer typically contributes a percentage of the employee’s pay each year, or, in a defined benefit pension plan, the employee’s benefit will be based on his or her final average pay or career average pay.

On September 19, 2019, the IRS and Treasury Department issued final regulations that amend the rules regarding hardship distributions from Internal Revenue Code (“Code”) Sections 401(k) and 403(b) plans.