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DISCLAIMER: This blog is published for general information only - it is not intended to constitute legal advice and cannot be relied upon by any person as legal advice.  U.S. Treasury Regulations require us to notify you that any tax-related material in this blog (including links and attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties, and may not be referred to in any marketing or promotional materials.  While we welcome you to contact our authors, the submission of a comment or question does not create an attorney-client relationship between the Firm and you. 


EPCRS Revisions: The Second Act

For the second time in under a week the Internal Revenue Service released a series of updates to its most recent restatement of the Employee Plans Compliance Resolution System (EPCRS).  Revenue Procedure 2015-28 modifies EPCRS by outlining new safe harbor correction methods for plans with automatic contribution features and shorter term elective deferral failures.  The changes provide helpful relief to employers who maintain 401(k) and 403(b) plans by expanding the correction options for errors involving the implementation of elective deferrals or the improper exclusion of eligible employees from the plan.  Employers whose plans provide for automatic enrollment and automatic escalation of elective deferrals will find the new guidance especially advantageous.

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IRS Clarifies the Correction of Overpayments under EPCRS

The IRS has clarified the correction of certain retirement plan operational failures under its Employer Plan Compliance Resolution System (EPCRS) and expanded certain elements of the program in ways that are helpful to retirement plan sponsors. The clarifications, contained in Rev. Proc. 2015-27, address what the IRS believes is an overly narrow or strict interpretation by plan sponsors of the requirements for the correction of overpayments and modify the correction program in other ways.

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Notice 2015-17: Small-Scale Excise Tax Relief for Small Employers

On February 18, 2015 the Internal Revenue Service issued Notice 2015-17, which provides temporary relief from the excise tax under Code section 4980D for employer programs that reimburse employees for the cost of health insurance coverage purchased on the individual market (including coverage obtained through an Exchange).  The Notice also extends limited excise tax relief to health care arrangements covering 2-percent shareholder-employees, employer reimbursements of Medicare Part B or D premiums, and programs that reimburse the medical expenses of employees enrolled in TRICARE. The Notice provides a brief but welcome respite for small employers that wish to reimburse employees for the cost of obtaining individual health insurance policies (on a pre-tax basis) rather than maintaining a group health insurance plan.

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When a “Termination” is Not a Termination

Employers grapple with the employee benefits consequences of employment terminations in a variety of contexts.  In the retirement plan context when a vested participant’s employment ends the most significant consequence typically will be the participant's right to receive a benefit distribution.  In most cases – where there is a complete cessation of employment, such that no further services will be provided to the employer or any member of its controlled group – the terms of the retirement plan governing benefit distributions (and the attendant administrative procedures) should apply without complication.  But what happens if the terminating employee intends and expects to continue to work for the employer or to resume employment in some capacity after a short hiatus?   In such cases, one must ask whether a bona fide termination of employment has really occurred.  More specifically, the question is whether the “termination” is a termination that supports the payment of retirement benefits out of the employer’s tax qualified retirement plan.

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2014 Year-End Employee Benefit Plans Compliance Advisory

The 2014 end-of-year rush seems somewhat less frantic than in years past.  Nevertheless, with a month left in the year many employers may find themselves scrambling to meet plan amendment and notice deadlines, and planning for 2015 may still be in process for some.  This summary discusses a few key developments regarding employee benefit plans – especially group health plans – for employers to consider as they finish 2014 and move into 2015, including developments in:

  • Retirement Plans,
  • Health Plans and Health Care Reform, and
  • EEOC Challenges to Wellness Programs.

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