Set forth below is a list highlighting some employee benefits deadlines and compliance requirements taking effect in 2005. This list is not intended to be comprehensive, but merely identifies some issues that may require your attention. If you have questions, you should contact your employee benefits advisor.
401(k) Regulations: Final regulations have now been published. They largely reflect existing guidance. Compliance with the final regulations is required for plan years beginning on or after January 1, 2006.
403(b) Regulations: The IRS has issued proposed regulations for 403(b) plans. This is the first time any regulations have been issued for this type of plan in more than 40 years.
Automatic Rollover Requirements: There are new rules affecting distributions of participant accounts valued between $1,000 and $5,000. If the participant does not elect a form of distribution, then the distribution must be rolled over to an IRA. A plan sponsor has until the end of 2005 to establish an arrangement with an IRA provider. Without the IRA arrangement, the plan will be prohibited from cashing out these participants without an election.
COBRA Notices: Effective January 1, 2005, new rules became effective modifying the content and distribution procedure for COBRA notices.
Dependents Definition: Effective January 1, 2005, the definition of "dependent" has been modified under the Internal Revenue Code for some purposes. Despite efforts to minimize the effect of these changes employers should consider how their plans define dependents.
HIPPA: For many health plans, compliance with HIPAA´s security provisions is required by April 20, 2005. The rules affecting the portability of health coverage will take effect on the first day of the plan year beginning on or after July 1, 2005.
Medicare Prescription Drug Coverage: New Medicare Part D will make prescription drug coverage available to those covered by Medicare. This will affect employers who offer retiree medical coverage. The deadline for applying for a 2006 subsidy is September 30, 2005.
Military Leave: Employees who elect to continue health coverage during a military leave on or after December 10, 2004 are entitled to as much as 24 months of coverage.
New Deferred Compensation Rules: A new section 409A has been added to the Internal Revenue Code setting forth comprehensive rules governing nonqualified deferred compensation plans, including but not limited to executive compensation, severance plans and section 457(f) plans. While compliance in 2005 is required, the IRS is providing significant transitional relief and guidance.