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Recently, the House Ways and Means Committee released its proposal to fund the $3.5 trillion “Build Back Better” reconciliation spending package. As expected, the proposal takes aim at several estate planning opportunities and vehicles that wealthy individuals have traditionally utilized to reduce gift and estate tax. The most significant estate planning provisions of this proposal are summarized below, however, it is important to note that this proposal is far from final. In fact, the proposal is the third piece of legislation introduced this year that would significantly impact high-net-worth estate planning (we wrote about the STEP Act and the For…
RETIREMENT PLAN DEVELOPMENTS IRS Sets Dates and Procedures for Cycle 2 Submissions for 403(b) Pre-Approved Plans Employers with Internal Revenue Code (Code) section 403(b) pre-approved plans (i.e., prototype and volume submitter plans) can soon take advantage of a second remedial amendment submission cycle (Cycle 2). The IRS announced in Revenue Procedure 2021-37 that the on-cycle submission period for Cycle 2 applications will extend from May 2, 2022 through May 1, 2023. The procedures for the 403(b) pre-approved plan program will be similar to the Section 401(a) pre-approved plan program. Changes include: Eliminating the distinction between prototype and volume submitter plans; The issuance of a Cumulative List of…
A well-drafted personal guaranty of payment and performance provides peace of mind for the diligent lender. It is not only irrevocable, but also covers future extensions of credit and includes broad waivers of defenses. Even when a lender is faced with a bankruptcy proceeding, the guarantor’s promise to pay the full amount of a debt is inviolate: a claim against the guarantor need not be reduced to account for recoveries from other sources unless and until the creditor is paid in full. As long as the creditor does not collect more than it is owed, it may prosecute its bankruptcy…
On September 9, 2021, President Biden laid out his multi-pronged COVID-19 Action Plan to address the highly contagious Delta variant. The most critical piece of the Plan requires employers with more than 100 employees to ensure that their employees are either vaccinated or tested weekly. While not a true vaccine mandate, the Biden Plan provides employees an either/or choice: get vaccinated or tested weekly. These provisions of the Plan are not in effect immediately. The Occupational Safety and Health Administration (OSHA) is tasked with developing rules to implement the new requirement. It is unclear when we can expect to see…
Global Intangible Low-Taxed Income (GILTI) is the income of a foreign subsidiary in excess of 10 percent of the foreign subsidiary’s tangible assets. A U.S. owner pays U.S. tax on its share of a foreign subsidiary’s GILTI. The policy underlying GILTI is to deter moving intangibles abroad by taxing excess income that presumably the intangibles produce. For example, if a foreign subsidiary earned $1.5 million and had $10 million of tangible assets, the GILTI taxed in the United States would be $500,000 ($1.5 million less 10 percent of $10 million). To avoid any excess income that would incur tax as GILTI,…
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On August 26, 2021, Illinois Gov. JB Pritzker issued COVID-19 Executive Order No. 87 (the Order) reinstating a statewide public mask mandate as well as introducing COVID-19 vaccination and testing requirements for health care workers, education workers (K-12 and higher education) and certain state facilities. This article focuses on obligations for health care workers and their employers. Under the Order, health care workers must: (1) Receive, at a minimum, the first dose of a two-dose COVID-19 vaccination series or a single-dose COVID-19 vaccine by September 5, 2021 (10 days after the Order was issued), and; (2) Be fully vaccinated against…
As the growing scrutiny of per- and polyfluoroalkyl (PFAS) chemicals mounts, increased regulations and enforcement seem imminent, as does an onslaught of lawsuits against companies considered responsible for releasing the compounds into the environment. PFAS chemicals include more than 4,000 different chemical compounds and are widely used in everyday products, including stain and water-resistant fabrics and carpeting, cleaning products, cookware, paints and fire extinguishing foams. There are growing concerns over potential health effects of a small subset of PFAS compounds. Two of the most concerning – PFOA and PFOS – are no longer manufactured in the United States. However, the…
RETIREMENT PLAN DEVELOPMENTS IRS Releases Guidance Regarding Changes to Single-Employer Defined Benefit Plan Funding under ARPA On July 30, 2021, the Internal Revenue Service (IRS) released Notice 2021‑48, providing guidance regarding changes made under the American Rescue Plan Act of 2021 (ARPA) to the funding rules for single‑employer defined benefit pension plans. ARPA made two significant changes affecting defined benefit pension plans: (1) extending the amortization period for unfunded liabilities from seven to 15 years; and (2) reinstating the pre‑ARPA interest rate stabilization program, which was set to phase out beginning in 2021. For more information refer to our alert, Impact of American Rescue Plan Act …
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On August 5, 2021, the Wisconsin Senate introduced a bi-partisan bill that would require Wisconsin employers to provide “reasonable” unpaid lactation breaks to nursing mothers. Senate Bill 493 (SB 493) is similar to portions of the Fair Labor Standards Act (FLSA) that require most employers to provide nursing mothers with unpaid lactation breaks in a place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public. SB 493 does not specify what length of break is “reasonable,” but does state that employers are not required to compensate employees for “any work time spent”…
Conflicts involving trusts and estates are often difficult and complex, both legally and emotionally. Instead of taking the shape of typical civil litigation, the emotional and familial aspects are more like those of a divorce. These conflicts can be referred to as “fiduciary litigation,” “financial elder abuse” or “will or trust contests.” They typically involve a person, acting in a fiduciary capacity, taking advantage of another person through undue influence and/or exploiting their incapacity. These conflicts have multiplied in recent years. Demographics play a role, too. As the baby boom population ages and ultimately dies, and as family members are…
On July 15, 2021, the Internal Revenue Service (IRS) published an updated version of the Employee Plans Compliance Resolution System (EPCRS) in Revenue Procedure 2021-30. This updated version supersedes the previous version outlined in Revenue Procedure 2019-19 and includes changes applicable to both defined benefit and defined contribution plans. Notably, the updated version of EPCRS provides the following: Expanded guidance regarding the correction of overpayment errors, including two new correction methods. Effective January 1, 2022, the anonymous submission procedure under the voluntary correction program (VCP) is eliminated and replaced with an option for a plan representative to request an anonymous,…
PBGC and IRS Issue Guidance Detailing Multiemployer Plan Assistance On July 9, the Pension Benefit Guaranty Corporation (PBGC) issued interim final rules implementing a new Special Financial Assistance (SFA) Program for financially troubled multiemployer pension plans. The interim final rules implement provisions of the American Rescue Plan Act that provides approximately $94 billion in assistance to eligible plans that are severely underfunded. The PBGC intends for the SFA Program to provide eligible multiemployer plans with financial assistance in the amounts required to pay all benefits due during the period beginning on the date of payment of the assistance through the…
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On June 10, 2021, the Occupational Safety and Health Administration (OSHA) issued a new emergency temporary standard (ETS) that applies, with limited exceptions, to settings where any employee provides health care services or health care support services. Affected health care employers were required to comply with many of the new ETS requirements by July 6, 2021, and the remaining requirements must be implemented by July 21, 2021. General Overview of OSHA’s ETS The first step is for employers to assess whether they are covered by the ETS. The ETS applies to workplaces where employees provide health care support services,…
CMBS Loan Maturities and COVID-19 Last year was a rough year for many CMBS borrowers, particularly those owning hotels, retail space (shopping centers) and office buildings. In a matter of a few short weeks our nation went into lockdown. Even in red states where many businesses were allowed to stay open, people stopped traveling. Vacationers disappeared. Restaurants closed and America……
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On June 3, 2021, the U.S. Supreme Court issued a decision in Van Buren v. United States that will make it harder for employers to recover damages against current and former employees who misuse information stored on company computer systems. The Computer Fraud and Abuse Act (CFAA) prohibits individuals (including employees) from accessing computer systems without authorization (e.g., hackers who lack authorization to access a company’s computer system at all). But the statute also prohibits individuals with authorized access (like current employees) from exceeding their authorization to those computer systems. The issue before the Supreme Court in Van Buren v.…
RETIREMENT PLAN DEVELOPMENTS “SECURE 2.0” Approved by House Ways and Means Committee Unanimously On May 5, 2021, the House Ways and Means Committee approved the Securing a Strong Retirement Act of 2021 by a unanimous vote. This bill contains multiple key provisions that would enable employees and retirees to save more money at the conclusion of their careers, as well as increase coverage for retirement plans. Some of these key provisions are as follows: 401(k) plans adopted after the date of enactment must default participants into the plan at a contribution rate of at least 3 percent of pay, increasing by 1…