Corporate

Employee Benefits

Executive Orders and Memoranda
  • Executive Order on Enforcing the Regulatory Reform Agenda dated February 24, 2017, requires each agency to establish a Regulatory Reform Task Force that will, at a minimum, attempt to identify regulations that: (i) eliminate jobs, or inhibit job creation; (ii) are outdated, unnecessary, or ineffective; (iii) impose costs that exceed benefits; (iv) create a serious inconsistency with regulatory reform initiatives and policies; (v) are inconsistent with section 515 of the Treasury and General Government Appropriations Act or the guidance thereunder; or (vi) derive from or implement other Executive Orders or Presidential Directives that have been subsequently rescinded or substantially modified. Each Task Force is required to provide the agency head a report detailing the progress within 90 days of the order. The order extends to, among other agencies, the Department of Labor and the Department of the Treasury.
Bills Passed in the House or Senate
  • A bill (S. 1) was passed in the Senate on December 2, 2017 by a vote of 51-49 that would: (i) (A) extend the period during which a qualified plan loan offset amount may be contributed to an eligible retirement plan as a rollover contribution, (B) repeal the special rule that allows IRA contributions to one type of IRA (either traditional or Roth) to be recharacterized as a contribution to the other type of IRA, (C) apply a single aggregate limit for contributions to 403(b) plans and 457(b) plans, (D) repeal current rules allowing additional elective deferrals and catch-up contributions to 403(b) plans and Section 457(b) plans, (E) repeal the rule allowing employer contributions to 403(b) plans for up to five years after termination of employment, and (F) allow Section 529 plans to be used for expenses relating to students at public, private and religious elementary and secondary schools, and for students that are home schooled; (ii) (A) repeal key exceptions to the $1 million limitation on the deductibility of compensation under Section 162(m), (B) impose an excise tax of 20% on compensation in excess of $1 million and on "parachute" payments paid by a tax-exempt organization to certain of its employees, (C) cause Section 83(b) elections to be no longer be available with respect to restricted stock units, (D) allow certain employees of certain non-publicly traded corporations that settle stock options to defer income recognition for five years and (E) generally require a three-year holding period in order for service providers to have long-term capital gains from carried interests granted with respect to real-estate and investment businesses; (iii) (A) repeal the exclusion from income for qualified moving expense reimbursement, (B) repeal the exclusion from income for qualified bicycle commuting reimbursements; and (iv) reduce the penalty for failure to purchase health insurance coverage enacted as part of the Affordable Care Act to zero.

  • A bill (H.R. 1) was passed by the House of Representatives on November 16, 2017 by a vote of 227-205 that would (i) (A) make certain modifications to the nondiscrimination rules governing tax-qualified retirement plans, (B) permit in-service distributions under tax-qualified "pension" plans and Section 457(b) governmental plans at age 59-½, (C) direct Treasury to modify regulations preventing a participant from continuing to make deferrals after the receipt of a hardship distribution, (D) allow earnings in certain plans to be distributed on account of hardship, (E) extend the period during which a qualified plan loan offset amount may be contributed to an eligible retirement plan as a rollover contribution, (F) repeal the special rule that allows IRA contributions to one type of IRA (either traditional or Roth) to be recharacterized as a contribution to the other type of IRA and (G) allow up to $10,000 per year under a Section 529 plan to be used for expenses relating to students at private elementary and secondary schools, and allow parents to establish Section 529 plans for unborn children; (ii) (A) repeal key exceptions to the $1 million limitation on the deductibility of compensation under Section 162(m), (B) impose an excise tax of 20% on compensation in excess of $1 million and on "parachute" payments paid by a tax-exempt organization to certain of its employees, (C) cause Section 83(b) elections to no longer be available with respect to restricted stock units and (D) generally require a three-year holding period in order for service providers to have long-term capital gains from carried interests granted with respect to real-estate and investment businesses; and (iii) (A) limit the amount that may be excluded from gross income for employer-provided lodging and (B) repeal the exclusions for (I) dependent care assistance programs, (II) qualified moving expense reimbursements, (III) adoption assistance programs and (IV) employee achievement awards (and repeal the deduction limitation for such awards).
Bills Introduced in the House or Senate
  • The Tax Cuts and Jobs Act was signed into law by President Trump on December 22, 2017 that: (i) (A) extends the period during which a qualified plan loan offset amount may be contributed to an eligible retirement plan as a rollover contribution and (B) allows the conversion of IRA funds from a traditional IRA to a Roth IRA, but disallows other IRA conversions; (ii) (A) repeals key exceptions to the $1 million limitation on the deductibility of compensation under Section 162(m) (but provides a transition rule for grandfathered agreements), (B) revises the definition of “covered employee” under Section 162(m) and provides that once an employee qualifies as a covered employee, the deduction limitation will apply so long as the corporation pays remuneration to the employee (or to any of the employee’s beneficiaries), (C) expands the definition of “publicly held corporation” for Section 162(m) purposes to include any company that has reporting obligations under Section 15(d) of the Securities and Exchange Act of 1934, (D) imposes an excise tax of 21% on compensation in excess of $1 million and on "parachute" payments paid by a tax-exempt organization to certain of its employees, (E) imposes Section 162(m)-like provisions on tax-exempt organizations, (F) imposes Section 280G-like provisions on tax-exempt organizations, (G) expressly makes Section 83—including  the Section 83(b) deferral rules—generally inapplicable to restricted stock units, (H) allows certain employees of certain non-publicly traded corporations that settle stock options or restricted stock units in the form of stock to defer income recognition for five years, and (I) generally requires a three-year holding period in order for service providers to have long-term capital gains from carried interests granted with respect to real-estate and investment businesses; (iii) (A) suspends the exclusion from income for qualified moving expense reimbursements, (B) suspends the exclusion from income for qualified bicycle commuting reimbursements and (C) allows Section 529 plans to be used for expenses relating to students at public, private and religious elementary and secondary schools, and for students that are home schooled; and (iv) reduces the penalty for failure to purchase health insurance coverage enacted as part of the Affordable Care Act to zero.

  • A bill (H.R. 4219) was introduced in the House of Representatives on November 2, 2017 that would exempt employers from state and local paid leave obligations if they give workers a certain amount of general paid leave (varying from 12 to 20 days, based on the business's size and the time the worker has been on the job) that can be used for medical, family, bereavement and other reasons.
Resolutions
  • H. J. Res. 66 and H. J. Res. 67, submitted by Reps. Francis Rooney (R-Fla.), Tim Walberg (R-Mich.) and Virginia Foxx (R.N.C.) (Feb. 7, 2017) - would overturn two Department of Labor rules (81 Fed. Reg. 59464 (Aug. 30, 2016), 81 Fed. Reg. 92639 (Dec. 20, 2016)) that were issued last year promoting the creation of certain types of IRA-style programs by cities and states. Both H.J. Res. 66 (for states) and H.J. Res. 67 (for political subdivisions of states) were passed by the House of Representatives on February 15, 2017. H.J. Res. 67 was passed by the Senate on March 30, and signed into law by the President on April 13, 2017. H.J. Res. 66 was passed by the Senate on May 3.
Legislative and Administrative Reports
  • The U.S. Department of the Treasury issued a report on October 27, 2017, pursuant to Executive Order 13772, titled “A Financial System that Creates Economic Opportunities, Asset Management and Insurance,” which addresses, among other things, the promotion of long-term care insurance. The report states that (i) over the past several years long-term care insurance has “experienced a steep decline based primarily on the business decisions of numerous insurers to exit the market," (ii) the Treasury Department has determined that, given the “growing social need for [long-term care insurance] and the resulting strain on public resources, state and federal officials should collaborate on addressing the challenges of financing LTC,” and (iii) Treasury will convene an inter-agency task force to develop policies to complement reforms at the state level relating to the regulation of long-term care insurance, particularly as it relates to certain potential changes including allowing participants in employer-sponsored retirement plans to make penalty-free withdrawals to purchase long-term care insurance, creating long-term care savings accounts similar to Health Savings Accounts and establishing more generous tax incentives for long-term care insurance.
  • The U.S. Department of the Treasury issued a report on October 27, 2017, pursuant to Executive Order 13772,‎ titled “A Financial System that Creates Economic Opportunities, Asset Management and Insurance,” which addresses, among other things, the promotion of in-plan annuity options. The report (i) states that, despite the unique benefits that annuities offer to retirement savings (including that they are, “apart from Social Security and pensions, the only retirement savings product that offers a guaranteed income stream that cannot be outlived”), they are not widely offered in defined contribution plans, in part because of concerns of legal liability to the employer under ERISA’s fiduciary rules, (ii) notes that the DOL adopted a “safe harbor” rule in 2008 to address these concerns, but that “many employers and their professional advisors are not comfortable relying on the safe harbor,” and (iii) recommends that the DOL and Treasury “develop proposals” that would address the fiduciary issues that concern employers in this regard.
  • Report of the House Freedom Caucus (Dec. 14, 2016) recommendation #139 (remove the NLRB’s standard to determine joint-employer status as articulated in its decision in Browning-Ferris Industries).
  • Report of the House Freedom Caucus (Dec. 14, 2016) recommendation #143 (remove Administrator’s Interpretation 2015-1, The Application of the Fair Labor Standards Act’s “Suffer or Permit” Standard in the Identification of Employees Who are Misclassified as Independent Contractors).
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