On July 28, 2021, the Court of Appeals for the Seventh Circuit held that ERISA did not preempt a claim for state-law breach of corporate fiduciary duties but did preempt a state-law claim for aiding and abetting. In Halperin v. Richards (7th Cir., No. 20-2793, July 28, 2021), the trustees of the Chapter 11 bankruptcy for Appvion filed suit alleging that Appvion’s directors and officers had inflated the company’s stock value to conceal the company’s financial decline and benefit themselves.

In the August 6, 2021, edition of Employee Plan News, the IRS clarified a provision of the SECURE Act regarding plan adoption. Effective January 1, 2020, the SECURE Act permits an employer to adopt a retirement plan after the close of the employer’s tax year. The employer may treat the plan as having been adopted as of the last day of the taxable year as long as the adoption occurs by the tax return due date (including extensions).

On July 22, 2021, the IRS published a Voluntary Correction Program (VCP) Submission Kit for employers who sponsored a SIMPLE IRA but were ineligible to do so because they had more than 100 employees or sponsored another retirement plan. Employers are only eligible to sponsor a SIMPLE IRA if they have 100 or fewer employees and do not offer any other retirement plan. The VCP Submission Kit provides the steps employers can follow in correcting the mistake of sponsoring a SIMPLE IRA without being eligible.

On July 23, 2021, the IRS issued a notice of proposed rulemaking, amending the rules for electronically filing certain partnership, corporate income tax, unrelated business income tax, withholding tax, and excise tax returns. The proposed rule requires entities that will file more than 100 forms to file electronically, lowering the threshold from 250 returns to 100 returns. Additionally, the proposed rule clarifies that an entity would aggregate all the required forms when determining if they meet the 100-return threshold. The 100-return threshold will also decrease to 10 returns for any form...

The IRS recently released Rev. Proc. 2021-30, which modifies the Employee Plans Compliance Resolution System (EPCRS). Rev. Proc. 2021-30 supersedes the prior version of EPCRS under Rev. Proc. 2019-19, and generally became effective on July 16, 2021.

On July 26, 2021, the DOL released temporary implementing FAQs regarding lifetime income illustrations for ERISA defined contribution plans, which include 401(k) and 403(b) plans. The FAQs largely address questions regarding the timing of the new disclosures to plan participants.

On July 9, 2021, the Pension Benefit Guarantee Corporation (PBGC) issued interim final rules and assumptions on special financial assistance (SFA) for multiemployer pension plans, as provided by the American Rescue Plan Act (ARPA). The ARPA authorized PBGC to provide SFA to multiemployer pension plans that are in critical and declining or critical status, were approved to suspend benefits under the Multiemployer Pension Reform Act of 2014, or became insolvent after December 16, 2014, but have not been terminated.

On June 24, 2021, the IRS released Notice 2021-40, which extends the COVID-19 temporary relief from the physical presence requirement for certain retirement plan elections. The notice also requests comments regarding whether changes to the physical presence requirement should be adopted on a permanent basis.

On June 11, 2021, the IRS updated the Funding Deficiencies Strategy section of their Employee Plans Compliance Unit (EPCU) webpage. Funding deficiencies generally occur when a defined benefit plan has failed to make the minimum required contributions to sustain the solvency of the plan. The EPCU conducts compliance checks and performs data analysis, focusing on areas of potential noncompliance (such as funding).

On June 3, 2020, the IRS updated their operational compliance list (“OC List”) to recognize the final regulations relating to required minimum distributions and eligibility for long-time part-time workers, further reflecting all the changes made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act. The OC List is provided by the IRS to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification requirements effective during a calendar year.