Allocating After-Tax Amounts in Distributions
The Internal Revenue Service (IRS) has issued final regulations eliminating the requirement that each disbursement from a designated Roth retirement plan account that is directly rolled over to an eligible retirement plan must be treated as a separate distribution from any amount paid directly to the employee. Therefore, the disbursement is separately subject to the rule in Section 72(e)(2) of the Internal Revenue Code (IRC) allocating pre-tax and after-tax amounts to each distribution. The regulations are final, the IRS notes, as no comments were received regarding the proposed regulations; additionally, the IRS extended the applicability date: from January 1, 2015, to January of this year. The final regulations are substantively the same as the proposed but express the rule differently to better describe the ongoing and transition rules. Final Rules for Wellness Programs
The U.S. Equal Employment Opportunity Commission (EEOC) issued two final rules that explain how Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) apply to wellness programs offered by employers that request health information from employees and their spouses. These rules offer guidance to employers and employees about how workplace wellness programs can comply with ADA and GINA, consistent with provisions governing wellness programs in the Health Insurance Portability and Accountability Act (HIPAA), as amended by the Patient Protection and Affordable Care Act (ACA).
IRS Sets 2017 HSA Limits
The Internal Revenue Service (IRS) issued Revenue Procedure 2016-28, which provides the 2017 inflation-adjusted amounts for health savings accounts (HSAs) as determined under Section 223 of the Internal Revenue Code (IRC). For calendar year 2017, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan is $3,400; the annual limitation on deductions for an individual with family coverage under a high-deductible health plan will be unchanged at $6,750. Also for 2017, the IRS defines a “high-deductible health plan” as a health plan with an annual deductible not less than $1,300 for self-only coverage or $2,600 for family coverage and where annual out-of-pocket expenses—i.e., deductibles, co-payments and other amounts, but not premiums—do not exceed $6,550 for self-only coverage or $13,100 for family coverage. Penalties for Failure to Provide Disclosures
The Pension Benefit Guaranty Corporation (PBGC) is amending its regulations to adjust the penalties provided for by the Employee Retirement Income Security Act (ERISA) for failing to supply certain notices. The regulations are those concerning Penalties for Failure to Provide Certain Notices or Other Material Information (29 CFR [Code of Federal Regulations] Part 4071) and Penalties for Failure to Provide Certain Multiemployer Plan Notices (29 CFR Part 4302). The new maximum amounts are $2,063 for Section 4071 penalties and $275 for Section 4302 penalties. The amendments are effective August 1.
Court Expands Withdrawal Liability Rules
The U.S. Circuit Court of Appeals has found that a union construction employer owes multiemployer plan withdrawal liability even though a new, nonunion, construction employer continued the first company’s operations within five years after it exited the plan. The court noted that, for most employers contributing to a multiemployer plan, withdrawal liability arises when the employer stops contributing to the plan or ceases covered operations; however, under the Multiemployer Pension Plan Amendment Act (MPPAA), a construction employer will not incur liability unless it continues covered operations or resumes them within five years. The court noted that determination of whether the union employer was liable depended on common control by the two employers at the time operations resumed. —PS