In Notice 2020-18 (PDF), the US Treasury Department and the Internal Revenue Service (IRS) announced special Federal income tax return filing and payment relief in response to the ongoing Coronavirus Disease 2019 (COVID-19) emergency.  The IRS has now published Frequently Asked Questions providing additional information on the relief, some of which is relevant to employer-sponsored

US employers are considering many alternatives to address the significant economic hardships caused by the COVID-19 pandemic. One such alternative is putting one or more groups of employees on furlough—a low paid or unpaid leave of absence. However, now more than ever, employers must carefully address health plan coverage during a furlough. See our Legal

The Families First Coronavirus Response Act, signed into law on March 18, 2020, is a  significant piece of federal legislation addressing the 2019 Novel Coronavirus (COVID-19) pandemic.  Among its many provisions is a broad requirement that group health plans and health insurance issuers provide coverage for COVID-19 testing without any cost sharing, prior authorization,

For an update on the Families First Coronavirus Response Act, which requires coverage of testing without cost sharing effective March 18, 2020, see our blog entry.

In an effort to remove barriers to testing for and treatment of the 2019 Novel Coronavirus (COVID-19), the Internal Revenue Service today issued Notice 2020-15. The Notice

The Affordable Care Act contains a provision–the so-called “Cadillac tax”–providing for a 40% exciClassic Cadillacse tax on high cost employer-sponsored health coverage.  The bar for “high cost” is fairly low, and the Cadillac tax is ultimately expected to apply to a significant number of employer-sponsored health plans.

Since the passage of the Affordable Care Act, many employers and insurers (who would be responsible for paying the tax) have actively opposed the implementation of the Cadillac tax provisions, with moderate success.  The Cadillac tax was originally slated to take effect in 2018, but its implementation has been delayed twice–most recently until 2022. 


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In a case of first impression, a federal district court in the Southern District of Texas has ruled that a former parent company’s stock was not an “employer security” under section 407(d)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).[1] As a result, the ERISA exemption from the duty to diversify and the duty of prudence (to the extent the latter requires diversification) were not available where a plan held former parent company stock in a legacy single-stock fund. Although in this case plaintiff participants’ claims were ultimately dismissed, the decision should be on the radar of fiduciaries of plans holding significant amounts of former employer securities.

As background, in 2012, Phillips 66 Company, Inc. (“Phillips 66”) spun off from ConocoPhillips Corporation (“ConocoPhillips”) and sponsored a new defined contribution plan with an employee stock ownership plan (“ESOP”) component, as had ConocoPhillips. In addition to newly issued Phillips 66 stock, however, Phillips 66’s new plan also held more than 25% of its assets in a frozen ConocoPhillips stock fund that was transferred from the old plan in connection with the Phillips 66 spinoff.

When the value of ConocoPhillips stock held by the Phillips 66 plan dropped, participants sued the plan’s investment committee and its members, along with the plan’s financial administrator, alleging imprudence and failure to diversify plan assets in violation of ERISA. In reply, defendants argued that ConocoPhillips stock was not subject to the duty to diversify, as those shares were “employer securities” when issued; ConocoPhillips was previously the employer of the participants. Therefore, defendants argued, ConocoPhillips stock remained exempt from the duty to diversify despite Phillips 66’s spin-off from the ConocoPhillips controlled group.

The court rejected this aspect of defendants’ argument, holding that stock does not indefinitely retain its character as “employer securities” for purposes of ERISA’s diversification and prudence requirements. Ultimately ruling in favor of defendants, the court held that ERISA’s diversification and prudence requirements were not violated because the plan’s investment lineup overall was diversified, public information on the risks of ConocoPhillips stock was reflected in its market price, and because the claims about procedural imprudence lacked factual support in the complaint’s allegations. The Schweitzer court also emphasized that participants were free to shift their ConocoPhillips holdings to other investment options under the plan.


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FICA’s special timing rule for account balance plans is oft-misunderstood – and misapplied – which can lead to unfavorable consequences for employers and employees alike.  Partner Debbie Hoffman and senior associate Stephanie Vasconcellos recently revisited the rule, conducting an in-depth analysis for Bloomberg BNA’s Tax Management Compensation Planning Journal.  Access the full article at www.bna.com