Month: December 2019

Congress Passes SECURE Act

Yesterday (December 19, 2019), Congress finally passed the Setting Every Community Up for Retirement Enhancement Act (i.e., the “SECURE Act”), and President Trump is expected to sign it. The SECURE Act was previously passed by the U.S. House of Representatives in May on a 417-3 vote, but got held up in the Senate for political reasons, even though it enjoyed virtually unanimous support there as well.

The version of the Act that was eventually passed includes only minor changes from the version that the House passed in the Spring. This legislation is the most significant change to the laws governing retirement plans since the Pension Protection Act of 2006. Among the significant changes made by the SECURE Act are:

  • Relaxation of the rules governing eligibility to participate in a multiple employer retirement plan, which will make it easier for unrelated employers to participate in the same plan (also known as “Open MEPs”).
  • Increase in the age for required minimum distributions (“RMDs”) from 70½ to 72.
  • Required retirement plan eligibility, at least for elective deferral purposes, for long-term part-time employees who work at least 500 hours during each of three consecutive years. The Act does contain nondiscrimination testing relief with respect to these individuals.
  • Relaxation of certain timing and notice rules relating to safe harbor 401(k) plans.
  • Penalty-free distributions from qualified retirement plans for births and adoptions.

These changes, and others included in the SECURE Act, will have a major impact on both plan sponsors and participants, and will eventually require plan amendments. These changes will also have a significant impact on existing and future estate plans that involve retirement plan assets. Most of the changes are effective January 1, 2020, and thus will require almost immediate changes to plan administration.

If you have any questions about the upcoming changes made by the SECURE Act, please contact Brian Gallagher at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Client Alert: IRS Releases Final 2019 ACA Employer Reporting Forms and Instructions

The Internal Revenue Service (“IRS”) has just released the Final Forms and Instructions for 2019 information reporting by employers and other entities under Internal Revenue Code sections 6055 and 6056. The links to the Final Forms and Instructions are below:

2019 Forms for Applicable Large Employers (Code section 6056):

2019 Forms for Employers who Self-Fund (Code section 6055):

These instructions and forms reflect only minor changes, such as a few formatting modifications and the reflection of indexed penalty amounts for reporting failures. The instructions also reflect the extension of due dates for furnishing statements from January 31, 2020 to March 2, 2020, as well as the extension of good faith relief for reporting and furnishing as reflected in our most recent Client Alert. Additionally, the IRS will not impose a penalty for failure to furnish Form 1095-C to any employee enrolled in an Applicable Large Employer member’s self-insured health plan who is not a full-time employee for any month of 2019 if certain conditions are met. The IRS will also not impose a penalty for failure to furnish Form 1095-B to individuals if certain conditions are met. See Notice 2019-63 at https://www.irs.gov/pub/irs-drop/n-19-63.pdf.

The increased penalties are now as follows for 2019 tax year returns (and may be waived in certain circumstances):

  • The penalty for failure to file a correct information return is $270 for each return for which the failure occurs, with the total penalty for a calendar year not to exceed $3,339,000.
  • The penalty for failure to provide a correct payee statement is $270 for each statement for which the failure occurs, with the total penalty for a calendar year not to exceed $3,339,000.
  • Special rules apply that increase the per-return and per-statement and total penalties with no maximum limitations if there is intentional disregard of the requirement to file the returns and furnish recipient statements.

Additionally, the instructions for Forms 1094-B and 1095-B state that health insurance issuers and carriers are encouraged (but not required) to report coverage in catastrophic health plans enrolled in through the Marketplace for months in 2019.

The remainder of the provisions remain intact, including the mandatory electronic filing for Forms reaching the 250-return threshold.

If you should have questions regarding employer reporting requirements or other ACA mandates, the Employee Benefits Department at Fraser Trebilcock can assist.

Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

Client Alert: Delay of Deadline to Furnish Forms 1095-B and 1095-C to Individuals

Statements to Individuals

The Internal Revenue Service (“IRS”) has extended the deadline for 2019 Information Reporting by employers (and other entities) to individuals under Internal Revenue Code sections 6055 and 6056 by just over a month. However, the deadline for these entities to file with the Internal Revenue Service (IRS) remains the same.

IRS Notice 2019-63 extends the due dates for the following 2019 information reporting Forms from January 31, 2020 to March 2, 2020:

  • 2019 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage
  • 2019 Form 1095-B, Health Coverage

Please note that no further extension beyond the March 2, 2020 deadline is allowed. Therefore, this deadline for furnishing the Forms to individuals must be met. 

Reporting to IRS

However, the due dates for filing these Forms and their Transmittals with the IRS remains unchanged. Specifically, the due date for filing the following documents with the IRS is February 28, 2020 for paper filings; however, if filing electronically, the due date is March 31, 2020 (employers who are required to file 250 or more Forms must file electronically):

  • 2019 Form 1094-B, Transmittal of Health Coverage Information Returns, and the 2019 Form 1095-B, Health Coverage
  • 2019 Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and the
  • 2019 Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

Additional extensions may still be available for filing these Forms with the IRS.

Good-Faith Transition Relief

IRS Notice 2019-63 also extends the good-faith transition relief from Code section 6721 and 6722, which are the Code sections imposing penalties for filing incorrect or incomplete information on the return or statement. Specifically, entities showing that they have made good faith efforts to comply may avoid penalties for incorrect or incomplete information reporting.  However, relief is not available to entities who fail to file returns or furnish the statements, miss a deadline, or otherwise had not made good faith efforts to comply.  The Notice states that in determining good faith, the IRS “will take into account whether an employer or other coverage provider made reasonable efforts to prepare for reporting the required information to the Service and furnishing it to employees and covered individuals, such as gathering and transmitting the necessary data to an agent to prepare the data for submission to the Service or testing its ability to transmit information to the Service.”

Penalty Relief for Form 1095-B Statement to Responsible Individuals

Last, the Notice addresses that as the individual shared responsibility payment was reduced to zero for months beginning after December 31, 2018, the IRS and Department of Treasury are continuing to analyze if and how the section 6055 reporting requirements should change in the future.  Comments are requested.  However, because an individual will not need the information on Form 1095-B to compute his or her federal tax liability or to file an income tax return with the IRS, the Treasury Department and the IRS have determined that relief from penalties associated with furnishing a statement under section 6055 is appropriate.  Therefore, the IRS will not assess a penalty under section 6722 against reporting entities who fail to furnish a Form 1095-B to responsible individuals if two conditions are met: 

  • First, the reporting entity posts a notice prominently on its website stating that responsible individuals may receive a copy of their 2019 Form 1095-B upon request, accompanied by an email address and a physical address to which a request may be sent, as well as a telephone number that responsible individuals can use to contact the reporting entity with any questions.
  • Second, the reporting entity furnishes a 2019 Form 1095-B to any responsible individual upon request within 30 days of the date the request is received.

This relief does not extend to the requirement that applicable large employers (ALEs) must furnish Forms 1095-C to full-time employees, whether or not self-insured health plans.  Those statements must continue to be provided.  However, the penalty relief will apply to employees enrolled in an ALE’s self-insured health plan who are not full-time employees for any month of 2019.

You can find the full Notice here: https://www.irs.gov/pub/irs-drop/n-19-63.pdf.

If you should have questions regarding employer reporting requirements or other ACA mandates, the Employee Benefits Department at Fraser Trebilcock can assist.

Elizabeth H. Latchana, Attorney Fraser TrebilcockElizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.