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New IRS Guidance May Require Amendments to Section 125 ("Cafeteria") Plans

Many employers permit employees to pay for employer-sponsored health coverage, on a pre-tax basis, under Internal Revenue Code section 125 (“cafeteria”) plans. These plans generally require employees to make an irrevocable election to participate before the beginning of the health coverage period. Internal Revenue Service (IRS) rules typically do not allow mid-year changes to cafeteria plan elections, unless the employer adopts special change in status rules and incorporates those rules in a written cafeteria plan document. Change in status rules apply in fairly limited circumstances and generally permit prospective mid-year election changes only when an employee experiences certain personal status changes (e.g., family, residence, employment) or when there are significant cost or coverage changes under the employer’s health plan. Moreover, the cafeteria plan consistency rule requires any proposed election change to be consistent with the employee’s status change.

IRS Releases 2015 Pension Plan Limits

The Internal Revenue Service recently released a detailed list of pension plan and other retirement-related contribution and compensation limitations for tax year 2015 that were triggered by an increase in the cost-of-living index. As stated in the release, “[m]any of the pension limitations will change because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged for 2015.”

CMS Clarifies Health Plan ID Requirement for Wrap Plans

The Centers for Medicare and Medicaid Services (CMS) has revised its Health Plan ID (HPID) FAQs to provide clearer guidance for employers who wrap multiple self-funded benefit programs into a single ERISA plan for purposes of the annual Form 5500 filing. In what was previously unclear, the updated guidance confirms that a plan sponsor may obtain a single HPID for all self-funded “controlling health plans” (CHP) offered through a wrapped ERISA plan.

Impact of Supreme Court's Recent Actions on Employee Benefits

On October 6, 2014, the Supreme Court of the United States denied review of seven petitions challenging federal court of appeal rulings in the Fourth, Seventh, and Tenth Circuits that had struck down state bans on same-sex marriage. The Supreme Court’s orders do not legalize same-sex marriage in all states; however, they mean that the lower-court decisions striking down bans in Indiana, Wisconsin, Utah, Oklahoma, and Virginia will go into effect and that same-sex marriages will be allowed in these states. States are reacting quickly. For example, on October 7, 2014, the Colorado Supreme Court followed suit and lifted an injunction against clerks in three counties; the Colorado State Attorney General has ordered county clerks across the state to begin issuing marriage licenses to same-sex couples.

IRS Releases 2015 Pension Plan Limits

The Internal Revenue Service recently released a detailed list of pension plan and other retirement-related contribution and compensation limitations for tax year 2015 that were triggered by an increase in the cost-of-living index. As stated in the release, “[m]any of the pension limitations will change because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged for 2015.”

IRS Announces 2015 COLA Increases for Dollar Limitations on Benefits and Contributions

On October 23, 2014 the Internal Revenue Service (IRS) announced the cost-of-living adjustments impacting tax-qualified pension plans for 2015. The increase in the cost-of-living index met the statutory thresholds that trigger adjustments. As a result, increases were made to most of the general pension limitations, including the individual limits on deferrals and catch-up contributions, as well as the limit on annual compensation. The following table highlights some of the key limits that affect tax-qualified pension plans.

IRS Announces 2015 COLA Increases for Dollar Limitations on Benefits and Contributions

On October 23, 2014 the Internal Revenue Service (IRS) announced the cost-of-living adjustments impacting tax-qualified pension plans for 2015. The increase in the cost-of-living index met the statutory thresholds that trigger adjustments. As a result, increases were made to most of the general pension limitations, including the individual limits on deferrals and catch-up contributions, as well as the limit on annual compensation. The following table highlights some of the key limits that affect tax-qualified pension plans.

2015 Cost of Living Adjustments for Retirement Plans

The Internal Revenue Service recently announced its cost-of-living adjustments applicable to dollar limitations for retirement plans and Social Security generally effective for Tax Year 2015 (see IR-2014-99). Most notably, the limitation on annual salary deferrals into a 401(k) plan will increase from $17,500 to $18,000.

IRS Announces Adjusted Plan Limits for 2015

The Internal Revenue Service has announced the 2015 limits that affect the operation of tax-qualified retirement plans, including 401(k) plans, and certain other types of employee benefit plans, including deferred compensation plans that may be subject to Internal Revenue Code §409A. The amount by which the limits are adjusted each year is based on a cost of living index. Not all limits increase every year. Please see the accompanying table for the limits that are effective January 1, 2015, as well as a reference for comparison purposes to the 2014 limits, where different.

IRS Announces Impending Tighter Enforcement of Employer-Provided Meals, Fringe Benefits

Internal Revenue Code § 119 allows employers to deduct 100% of the value of meals provided to employees when they are for the convenience of the employer, and they are furnished on the business premises of the employer. Meals provided for “the convenience of the employer” are also excludable from the employee’s taxable income. However, last month, the IRS announced that it plans to change that interpretation, which will have significant implications for both tax and wage and hour liability. The IRS announced as part of its Priorities Guidance Plan that it plans to issue new guidance regarding employer-provided meals, which we can assume is not a positive development for employers. The Wall Street Journal reported that IRS auditors have already started “flagging the issue and demanding back taxes from companies amounting to 30% of the meals’ fair market value.”