Compliance May 2, 2016

Owed Retirement Plan Contributions Non-Dischargeable in Bankruptcy

Though a plan fiduciary filed bankruptcy, he still owes court-ordered retirement plan contributions.
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A plan fiduciary ordered to restore unremitted contributions to his now-defunct company’s retirement plan cannot discharge this debt in bankruptcy, a court has ruled.

In December 2009, the U.S. Department of Labor (DOL) filed a complaint in U.S. District Court for the Middle District of Pennsylvania alleging that the fiduciaries of the Dalton Mechanical SIMPLE IRA Plan, including Scott Louis Slocum and Dalton Mechanical Inc., breached their statutory duties to the plan participants under the Employee Retirement Income Security Act (ERISA). From 2006 through 2009, the plan trustees specifically failed to ensure employee contributions were remitted to the plan as required by ERISA. The total amount due to the plan participants, including lost interest, was determined to be $41,093.44.

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Dalton Mechanical Services Inc. is a now defunct HVAC contractor formerly located in Clarks Summit, Pennsylvania.

In May 2011, a consent judgment was entered requiring Slocum to make payments to the plan, which he did initially. However, he fell into default subsequently with late and missed payments. The judgment also provided that if Slocum filed for bankruptcy prior to the full restitution to the plan, he would not oppose the Secretary of Labor having the debt to the plan declared non-dischargeable.

On August, 24, 2015, Slocum filed chapter 7 bankruptcy, and the department filed an adversary action. On April 4, 2016, the court entered a default judgment declaring Slocum’s debt to the plan non-dischargeable in bankruptcy. The total outstanding amount is $28,180.64.

Compliance May 2, 2016

IRS Sets 2017 HSA Limits

The annual limitation on deductions for an individual with self-only coverage will change, while the limitation for individuals with family coverage will not.
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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.

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. For calendar year 2017, the annual limitation on deductions for an individual with family coverage under a high deductible health plan is unchanged at $6,750.

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For calendar year 2017, the IRS defines a “high deductible health plan” as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,550 for self-only coverage or $13,100 for family coverage.

Text of Revenue Procedure 2016-28 is here.

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