The IRS recently released an updated version of EPCRS, the IRS’s program for correcting errors that occur under tax-qualified retirement plans. The latest version of EPCRS makes it easier for plan sponsors to self-correct certain types of plan loan, operational and plan document failures without filing a VCP submission.

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A recent summary-judgment decision explains how individual releases can bar the individual from pursuing ERISA fiduciary-breach claims on behalf of the plan. A plan, employer or fiduciary that wants to ensure a release that includes ERISA claims on behalf of a plan should consider language that addresses the court’s areas of inquiry in the case, which are outlined in this article.

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The City of Dallas recently passed an ordinance requiring employers to provide paid sick leave to workers. Starting August 1, 2019, employers with more than five employees who perform at least 80 hours of work in a year in Dallas should be prepared to comply with the new ordinance.

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Long-distance trips may be something to boast about, with wanderlust-driven influencers posting perfectly filtered photos on their social media accounts. Work-sponsored road trips also may sound glamorous but workers should recognize the potential negative impacts of business travel on their health.

Frequent business travel is associated with poorer health outcomes, according to “Business Travel and Behavioral and Mental Health,” a 2018 article from the Journal of Occupational and Environmental Medicine. The analysis found that people who traveled more often for work were more likely to smoke, have trouble sleeping and show higher levels of anxiety and depression symptoms. The study concluded that “employers should provide programs to help employees manage stress and maintain health while traveling for work.”

Hal F. Rosenbluth, chairman and CEO of New Ocean Health Solutions, at one point hit the road every other week for work. Rosenbluth knows the challenges of regular business travel within the U.S. and abroad. For people who travel overseas, there’s “always the possibility of sickness or geopolitical events that require immediate attention and sometimes evacuation,” he said.

Also read: Helping HR Care for the Business Traveler

Medical and travel security services firm International SOS and medical insurance provider Geo Blue are among the options for these travelers. “I typically use it if I’m traveling to countries where medical care isn’t terrific or I’m out of the city somewhere where there isn’t a lot of care. If something goes wrong, I know I can have a plane or a helicopter get me to where I need to go,” Rosenbluth said.

Lengthy international trips may “cause a person to lack focus after arrival” and Rosenbluth recommends travelers delay meetings for 24 hours to recover from the flight and adapt to time changes.

Whether someone is traveling domestically or abroad, work-life balance may take a hit. Especially for people with young families, the partner who remains at home with the children may feel overwhelmed, Rosenbluth said, and that communication is important.

Business professionals informally polled on LinkedIn by Workforce had several suggestions to stay healthy while traveling for work and how employers can help.

  • Find quick, healthy grab-and-go options near the hotel to resist the urge to eat fast food.
  • Join a gym with multiple locations to use the membership while traveling.
  • Employers can maintain a company culture that stresses positive health behaviors like getting enough sleep and allowing people time to eat.
  • Reimburse reasonable wellness expenses for fitness classes in travel destinations.

Rosenbluth suggests that travelers exercise, which may be difficult if there’s no fitness center or if the destination poses a safety hazard for walks offsite. Business travelers also should be careful about what they eat and should carefully consider food safety.

Also read: Got Breast Milk? These Female Business Travelers Do

The post Business Travelers May Need Help Managing Their Health appeared first on Workforce.

As an update on an important matter that we raised during McDermott’s May 8 Tax Symposium, it is critical to promptly assess whether to report any excise taxes imposed under Section 4960 as the deadline for filing Form 4720 is May 15, 2019 for calendar year taxpayers. Section 4960 of the Internal Revenue Code imposes a 21% excise tax on compensation over $1 million paid to the five highest paid employees of a tax exempt organization, including a private foundation (PF). For purposes of applying Section 4960, the Internal Revenue Service includes compensation paid by related taxable organizations, which may include publicly held or privately held corporations that control who sits on the PF’s board of trustees.

Set forth below are the key issues relevant to establishing a reasonable, good faith position under Notice 2019-9 that the Section 4960 excise tax should not apply to volunteer officers of a PF who receive all of their compensation from taxable organizations related to such PF. What is important to understand is that the Section 4960 excise tax only applies if volunteer officers are treated as employees of the related PF. Whether an employee relationship exists is a facts and circumstances test, and having someone serve as an officer to meet state law nonprofit corporation requirements does not result, by itself, in employee status.

We have also provided steps that companies may follow in developing the facts necessary to establish such reasonable, good faith position pending the issuance of proposed regulations. Please feel free to contact us for assistance in developing such position or with any questions concerning Section 4960.


  • Notice 2019-9 provides that only a “common law” employer is subject to excise tax under Section 4960 (Notice 2019-9, Q&A-3).
  • Whether an entity is the common law employer of an individual is determined based on the facts and circumstances, and focuses largely on the entity’s ability to exert control over the individual and the services provided by such individual to the entity.
  • Under Sections 3401 and 3121, an officer can also be considered a common law employee of an entity.
  • Section 3401 and 3121 regulations provide that an officer who only performs minor services and neither receives nor is entitled to receive remuneration, directly or indirectly, is not an employee of the PF.
  • Title does not determine officer status for tax purposes—whether an individual is an “officer” for tax purposes should be based on facts and circumstances.
  • Section 280G regulations require regular and continuing services for someone to be an officer regardless of title, and Section 280G concepts are incorporated into Section 4960 in determining the amount of compensation that is subject to the 21% excise tax upon an involuntary termination.
  • A director (as opposed to an officer) of the PF should not automatically be considered a “common law” employee of a PF. Such a determination can only be made after reviewing the facts and circumstances of the service relationship.
  • It appears that the issue of highly paid executives of public companies or large private companies serving as PF officers on a non-compensated basis was not formally considered before the issuance of Notice. The IRS National Office is seeking more information regarding these type of situations and seems willing to clarify its position on this issue, perhaps through the issuance of a safe harbor.


  1. Distinguish between services provided as director and services provided by officers. It is common for senior executives of companies related to a PF to serve in both a volunteer director and a volunteer officer position. Services provided solely as a director do not generally rise to the level of being a common law employee of a PF. Accordingly, in determining the quantitative and qualitative services provided by a senior executive to a PF for purposes of this analysis, identify and exclude services appropriately classified as provided as a director.
  2. Document the actual responsibilities and day-to-day activities conducted by the volunteer officers. To review their qualitative roles, first review the PF’s bylaws and any board-delegated duties to specific “officers.” Just because someone has the title of an officer does not automatically make such individual a covered employee for purposes of the Section 4960 excise tax. Instead, what makes such “officer” an employee is a facts and circumstances test that looks to the responsibilities delegated to such person (under the state corporation code, bylaws or resolutions) and the level and importance of the services actually provided by such individual.
  3. Document the number of hours per week (or month or year) the officers spend on their officer duties at the PF, as opposed to their role as employees of the related corporation. In many situations, individuals who are listed as “officers” of the PF only spend a few hours, at most, on PF business annually, and these individuals’ involvement is largely limited to satisfying state law nonprofit corporation and governance requirements. The day-to-day work and officer-like responsibilities are often carried out by other volunteer staff members or even paid employees of the PF.

    While there is no specific percentage at which an individual is automatically included or excluded as an officer, if the individual spends on average less than 5% of his or her time on PF matters, that is generally a helpful fact. The lower the percentage, the stronger the fact. In addition, make sure the weekly hours disclosed on Form 990-PF accurately reflect the officer’s level of involvement.

  4. Document the analysis. Until we have further guidance from the IRS, it is important to fully analyze and document the above analysis to form the basis for your reasonable good faith interpretation.

The $5 trillion in retirement plans have become a “tempting target” for hackers to access sensitive information held by plan providers in the industry, so two legislators asked the Government Accountability Office to examine data protections, processes and procedures within the private retirement system.

cybersecurity, retirement

U.S. Sen. Patty Murray, D-Washington, and U.S. Rep. Robert C. “Bobby” Scott, D-Virginia., sent the letter in February, saying that cybersecurity protections are ill-defined, especially when it comes to what needs to be done in the event of a data breach. The legislators asked the GAO to examine 10 pointed questions around the safety of the private retirement system.

“It is important that workers and retirees know their savings are in fact safe, and that a cyberattack will not throw the retirement they have spent years working and planning for into jeopardy,” the letter said.

While there is no hard data on retirement-savings breaches, and organizations remain tight-lipped to minimize exposure to cybersecurity risks, it appears to be a growing threat to companies large and small that offer retirement plans.

Currently there is no comprehensive national law governing cybersecurity in the private retirement sector, a December working paper published by the Pension Research Council reported. The intent of the paper was to put into context the challenges faced by the industry today, said Ben Taylor, senior vice president at Callan LLC and one of the four authors of the paper.

In the retirement business, a lot of money and personal information is at stake. Names, birthdates, addresses, Social Security numbers, bank accounts and other sensitive information are all common data points that are transferred between organizations and providers. Right now, there is no set framework or standard for how this information should be protected, Taylor said.

“There is a lot of gray area when it comes to cybersecurity,” he added.

While there is no hard data on retirement-savings breaches, it appears to be a growing threat to companies large and small that offer retirement plans.

In fact, Taylor noted that in some cases, it is hard to determine where a plan sponsor needs to go to report a hack. He added that one client, who didn’t know which law enforcement handled breaches in his area, ended up going to the state highway patrol — the presiding authority for cyberthreats in that state.

“It’s a pretty complicated matrix of threat responses,” for plan sponsors to know about, he added.

The private sector hasn’t waited for the federal government to come up with cybersecurity standards for the industry. The SPARK Institute, which stands for the Society of Professional Asset-Managers and Recordkeepers, created the Industry Best Practice Data Security Reporting standards in September 2017. With this paper, SPARK established 16 data security control objectives that service providers can use as a communication tool to show their level of cybersecurity sophistication.

Also read: The Long, Winding Road to Retirement 

Providing information to plan sponsors in the world of cybersecurity can be complicated for service providers, said Tim Rouse, SPARK’s executive director and co-author to the Pension Research Council’s working paper. Plan sponsors want providers to explain how data are protected from breaches. Meanwhile, providers need to keep some level of secrecy to protect against being hacked. The SPARK standards created a base of communication between providers and plan sponsors that uses a third-party auditor to evaluate and then relay to plan sponsors the provider’s level of data protection.

Rouse said the standards are not meant to guarantee against data breaches. It’s more of a tool for plan sponsors to use when evaluating service providers.

“If a provider’s [security processes] information gets distributed to a plan sponsor, it’s just as good as becoming public knowledge. It becomes the road map that the bad guys can use to get into someone’s system,” Rouse said. “A third party auditor brings flexibility to the system. The hackers don’t know what they are up against.”

Using a third-party auditor to evaluate a provider’s level of sophistication has worked well, said Neal Ringquist, executive vice president for Retirement Clearinghouse, an industry service supplier, specializing in providing consolidation and portability services to defined contribution plans.

To protect Retirement Clearinghouse’s process, “There are certain things that we would not want to disclose” to a client, Ringquist said. “This is a middle ground that can accommodate both sides.”

Also read: Remodeling Retirement for the 21st Century

While SPARK’s standards help provide some level of assurance, industry experts agreed national standards are needed.

“It is clear that the lack of cybersecurity expertise in the adviser community, the need for plan sponsors to protect participant data, and the lack of a uniform standard or process for third-party audits of cybersecurity measures all call for a solution,” the working paper said.

Getting to that national solution for the retirement industry will be difficult, experts agreed. Issues including determining the regulator for cybersecurity, coordinating state and federal rules, possibly setting a required level of insurance coverage are all part of creating an overall solution. In addition, lawmakers will need to consider whether failing to protect plan data would result in plan sponsors breaking their fiduciary obligations.

“The industry is looking for clarity on how to respond and distinguish different types of threats,” Taylor said. “Determining how and when to do what can be an extraordinary challenge.”


The post Cybersecurity Retirement Risks Trouble Benefits Leaders appeared first on Workforce.

Join us Friday, May 17, as Allison Wilkerson, Brian Tiemann and Sarah Engle join host Judith Wethall to talk through the value of conducting a proactive self-audit of 401(k) plans. They will provide best practices designed to reduce the risk of costly government investigations. Attendees will come away prepared and confident in their position, and ready to respond assertively if an investigation comes to pass.

Our lively 45-minute discussion will cover the following points:

  • Self-auditing common compliance issues raised during IRS audits, including errors in administering the plan’s eligibility rules, compensation definition, loan procedures and minimum required distribution provisions
  • Self-auditing common issues raised during DOL audits, including late payroll deposits
  • Tips to enhance plan governance procedures

Friday, May 17, 2019

10:00 – 10:45 am PST
11:00 – 11:45 am MST
12:00 – 12:45 pm CST
1:00 – 1:45 pm EST

Register Now.

Score a perfect 100 for corporate social responsibility.

corporate social responsibility
CSAA Insurance Group employees scored a 100 percent volunteer rate in 2018. Here they work at a local food bank.

CSAA Insurance Group announced that the company achieved a 100 percent employee volunteerism rate in 2018.

All 3,800 employees, including executive leadership, donated a total of 47,045 hours through the company’s 609 volunteer events across the United States. The hours employees spent volunteering represented about $1.16 million, according to company officials. Some of the volunteer projects supported nonprofit organizations such as American Heart Association, Habitat for Humanity, Junior Achievement and The Crayon Initiative.

The AAA insurer is based in Walnut Creek, California, and provides AAA-branded insurance to 23 states and the District of Columbia. CSAA, which is based in Walnut Creek, California that provides AAA-branded insurance to 23 states and the District of Columbia, originally set a corporate goal in 2012 to achieve 80 percent volunteerism participation among their employees, said Senior Manager of Community Affairs Vanessa Chan. The company did not initially aspire to have all of its employees participate in the volunteer program, she said.

“That wouldn’t be authentic of us,” Chan said. “We wanted volunteers, not volun-tolds.” The following years saw employee participation climb to 98 percent in 2015 and finally 100 percent in 2018.

Chan gave credit to the employees for making that happen. In fact, Chan noted that she was not surprised that the volunteer programs achieved 100 percent participation.

corporate social responsibility
Vanessa Chan

“Our company values include being caring and doing the right thing. When you hire people based on those values, our results are not surprising,” she said.

While the employees manifested this achievement, leadership played an important role by reaffirming a culture that empowered employees to pursue their passions.

“Part of that culture comes from leadership volunteering alongside our employees,” Chan said. Another aspect of creating a socially responsible corporation comes from empowering the employees through company initiatives and policy, said Chan, who emphasized that a company should approach volunteer programs in a way that is reflective of the corporate values.

“As a company, you really need to understand why you want a volunteer program,” Chan explained, “You have to be authentic when you roll out a volunteer program.”

In order to make the volunteer program more accessible to employees, CSAA has eight locations. These locations are operated employees who serve on a volunteer committee that is supported by a full-time volunteer manager. Employees have the option to propose an event to the committee based on their passion for a project or organization and the committees collectively manage the volunteer events. For Chan, having employees be a part of the planning and decision-making has made the program more authentic, and therefore successful.

“I think that the more authentic that you can be, the better.”

Employee resource groups have also been integrated into the volunteer program at CSAA including Somos, the Hispanic/Latino resource group; the Black Employees Association; and the Asian/Pacific Islander connection group.

“We look to our ERGs to help us identify volunteer activities, so we are making an impact in those communities,” Chan said.

corporate social responsibility
CSAA employees donated 47,045 hours through the company’s 609 volunteer events across the United States, including here at The Crayon Initiative.

Chan’s advice to companies wanting to develop a volunteer program or grow a pre-existing one is to utilize data to support leadership decisions.

“One of the things that really helped us get the support from [leadership] when we started was looking at the data. Data can help inform a lot of things like how many people are volunteering, which locations are most successful, and looking at best practices,” Chan said. Data was key to adding on-site volunteering opportunities for employees that worked in CSAA call centers.

“We recognized that it was harder for them to get off the phone in order to have more flexibility in terms of volunteering,” Chan said.

CSAA partnered with Maryland-based VeraWorks, a consulting firm that helps companies with socially responsible initiatives. Over a six-month period, employees who participated in volunteer events showed an uptick in engagement.

The research also showed 97 percent of employees reported that they were satisfied with the volunteer program. Employees also reported that volunteerism was one of the most meaningful things in their lives, second only to family.

Chan attributes this success to the top-down support of volunteer efforts, active volunteer committees and a year-round volunteer program. CSAA also offers 24 days of paid time off annually in order for employees to take advantage of volunteer opportunities.

“Without the volunteer committees and offering time off, I don’t think we would have as many people volunteering,” Chan said.

Alongside the company’s commitment to charity, CSAA is also focused on sustainability and conservation. “It’s not just our company saying, ‘Employees what can you do to be green?’ It’s the company leading by example as well,” Chan said. The insurer’s headquarters in Northern California is ‘Gold’ certified in Leadership in Energy and Environmental Design, which is the second highest LEED rating a building can achieve. This building is also designed with electric vehicle charging stations for the company’s fleet of hybrid vehicles.

Environmental awareness is also a part of the company’s community outreach initiatives. In conjunction with their regular volunteer practices CSAA held a Heart-to-Earth event in April of this year which is a week-long campaign that supports environmental organizations through volunteer services, awareness, education and financial support. “We also offer a sustainability community of practice that encourages employees to regularly discuss how we can improve our efforts to go green,” Chan said.

Chan doesn’t expect the company to change the volunteer program.

“Even though we hit 100 percent last year, we don’t have the goal of hitting 100 percent. What’s really important to us is having an authentic program,” Chan said. “We want to make sure that we are doing work that is important to all of our employees.”

The post Employees Literally All in With Corporate Social Responsibility appeared first on Workforce.

Last week, the Department of Labor (DOL) responded to the district court decision striking down the final regulations expanding the ability for a group of unrelated employers to form an organization in order to offer health care to its members. The DOL’s statement setting forth policy positions regarding association health plans (AHPs) indicated its intent to fight the district court decision, and offered interim relief for those employers who have obtained health coverage from AHPs relying on the DOL’s final regulations. The DOL noted that the agency is committed to taking all appropriate action within its legal authority to minimize undue consequences on employees and their families. Thus, employers participating in insured AHPs can generally maintain that coverage through the end of the plan year or, if later, the contract term. During this time, the DOL will not pursue enforcement actions involving AHP in reliance of the DOL’s final rules.

affordable care actSince the passage of the Affordable Care Act in 2010, fewer people are uninsured but the number of underinsured has spiked, especially among people covered by employer-sponsored health plans, according to a recent study.

An estimated 44 million people who were insured throughout 2018 did not have adequate coverage because of high out-of-pocket costs and deductibles, up from 29 million in 2010, according to a report by The Commonwealth Fund. The biggest increase in underinsured adults is occurring among those in employer health plans.

“What we are seeing is a steady upward trend of higher out-of-pocket costs and deductibles,” said Sara Collins, a co-author of the report. “We are seeing an increase in the size of deductibles relative to income. It’s a trend in employer benefits as employers look for ways to share health care costs. People in the individual market are most likely to be uninsured, but the trend in employer-based plans is distinctive.”

The report defines the underinsured as those with out-of-pocket costs that are 10 percent or more than their household income or deductibles that exceed 5 percent of their household income.

Fewer people are uninsured since the Affordable Care Act was passed in 2010, but of the 194 million U.S. adults ages 19 to 64 in 2018, about 45 percent lacked adequate coverage, according to the report.

“We expected to see a decline in the uninsured but we hadn’t predicted the ongoing steady growth in the number of underinsured,” Collins said. “Much of that growth is among those in employer plans, which are outside of the reach of the ACA.”

More than half of Americans under age 65 — about 158 million — get their health insurance through an employer, according to The Commonwealth Fund. The ACA requires large employers to provide affordable coverage, but the requirement amounts to just 60 percent of overall costs.

“Employers are at an inflection point where deductibles have risen so far that it’s putting people’s access to health care in jeopardy,” Collins said. “There needs to be some rethinking of employee benefit design. It points to the fact that the real issue that needs to be addressed is the rise in health care costs and that’s going to take a systematic national effort to address.

Also read: The 4 Myths of Health Care Cost Reduction

The post Affordable Care Act Wins and Losses appeared first on Workforce.