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David Ledermann

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David Ledermann works with publicly traded companies, closely held businesses and non-profit employers in complex employee benefits matters under ERISA (the Employee Retirement Income Security Act) and the Internal Revenue Code. His representations involve tax-qualified retirement plans and nonqualified deferred compensation arrangements, as well as group health plans and other employer-provided welfare benefit plans. David is often sought out by other attorneys, from both within and outside the firm, to provide guidance and assistance in this dynamic and highly regulated field. When necessary, and as appropriate, he represents clients before government agencies, including the Internal Revenue Service, the United States Department of Labor and the Pension Benefit Guaranty Corporation.

Benefit Plans

David’s work with qualified retirement plans and their sponsors ranges from the design and implementation stages to plan termination, and includes amending plans to achieve employer objectives in response to changing circumstances. He is also involved with correcting operational compliance failures when they occur and negotiating the status of plans in mergers, acquisitions and other transactions. Plan types include defined contribution, such as 401(k) profit sharing plans, and defined benefit, as well as Section 403(b) and Section 457 plans of tax-exempt and governmental organizations.

The 2010 Patient Protection and Affordable Care Act (“ACA”) continues to evolve due to ongoing legislative, regulatory and judicial developments, presenting continuing challenges for employers. David assists clients in navigating the pitfalls and opportunities organizations may encounter under the ACA, and advises employers in connection with both insured and self-funded group health plan coverage. In addition, David advises employers concerning the adoption of, and regulatory compliance for, other welfare benefit programs, including cafeteria plans, flexible spending accounts, dependent care assistance plans, health reimbursement arrangements, health savings accounts, short- and long-term disability plans, severance pay, life insurance, educational assistance and supplemental unemployment benefits.

Executive Compensation Programs

David also helps organizations with the recruitment and retention of managerial and executive talent through various forms of nonqualified deferred compensation arrangements. He has substantial experience with the design, drafting, implementation and operation of these executive compensation programs, including performance-based and equity-funded variations of them. Through wide-ranging applications of deferred compensation principles, as regulated pursuant to Internal Revenue Code Section 409A, David has been able to help clients establish meaningfully and mutually beneficial arrangements, notwithstanding the often onerous restrictions imposed by this statute.

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401KEmployers who sponsor retirement plans for their employees must periodically restate the plans for changes in applicable laws to maintain the plans’ favorable tax status. The Internal Revenue Service generally requires that plans be restated on a six-year cycle, the last of which concluded in 2016.

The current cycle is the third since the six-year cyclical program of plan restatements was implemented. Cycle 3 restatements of pre-approved defined contribution plans, including most 401(k) and profit sharing plans, must be adopted by no later than July 31, 2022.

The Appeal of Pre-Approved Retirement Plans

Pre-approved plans are retirement plans offered by a document provider (such as a financial institution or benefits practitioner) for adoption by employers. The plan document typically includes a variety of elective provisions from which an employer may choose and effectively customize the plan to best serve the needs of the organization and its employees.

Before making the plan document available for adoption by employers, the document provider will have obtained IRS approval of the plan as meeting the requirements applicable to tax-qualified retirement plans under the Internal Revenue Code.Continue Reading The retirement plan for your employees may need a fresh look – soon

health insuranceSponsors of group health plans have new responsibilities following the passage of the American Rescue Plan Act (“ARPA”) on March 11, 2021. Under ARPA, certain participants and beneficiaries of employer-sponsored health plans are eligible for a federal subsidy, which will cover for a limited period 100% of the premium for COBRA continuation coverage. The subsidy is also available in the case of plans covered by Florida’s mini-COBRA law, which applies to group health plans of employers having fewer than 20 employees.

The Importance of Being an “Assistance Eligible Individual”

Federally subsidized COBRA coverage is available only to a person who is an Assistance Eligible Individual (“AEI”) under ARPA. This term comprehends an employee or former employee, and any dependent, losing group health plan coverage as a result of an employee’s reduction in work hours or involuntary termination.

Persons losing coverage because of an employee’s voluntary retirement are not AEIs. Nor is anyone who is eligible for coverage under another group health plan, such as through a spouse’s employment, or for Medicare, an AEI, even though they don’t enroll in the alternative coverage. These individuals may be eligible to elect COBRA, but they will generally have to pay for the coverage themselves.

ARPA Subsidy Availability

The COBRA subsidy first became available on April 1, 2021, but can be retroactively effective to that date for AEIs having COBRA coverage at the time, who may be reimbursed for premiums they paid or receive a credit against future premiums.

In many cases, an AEI who was not already covered by COBRA at the beginning of the subsidy period will be able to elect COBRA continuation coverage retroactive to April 1, 2021, and have the cost of the coverage completely paid by the federal government, regardless of its cost or the individual’s income level.

The longest period any AEI can qualify for a subsidy is six months, and no AEI can receive a subsidy for a coverage period extending beyond September 30, 2021.

Employer Role in Payment Process

Continue Reading Employer Responsibilities under the Temporary Federal COBRA Subsidy

Many employers are all too familiar with the experience of having to refund contributions made to the organization’s 401(k) plan by highly compensated employees to remedy the previous year’s failed actual deferral percentage (“ADP”) test. The ADP test is designed to ensure that the average deferral rates for highly and non-highly compensated employees are roughly equal. Thanks to the Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”), the experience of refunding highly compensated employees’ deferrals in order to satisfy the ADP test will in many cases be consigned to history. The below addresses how the SECURE Act relaxes some of the rules affecting 401(k) plan testing.

Q: Can a 401(k) plan retroactively avoid ADP testing?

The year 2021 presents for the first time the opportunity to retroactively escape the prior year’s ADP test without regard to the extent by which contributions from highly compensated employees exceeded the average deferral percentage contributed by the organization’s non-highly compensated employees. Under the SECURE Act, it is now possible to adopt a safe harbor nonelective 401(k) feature that will exempt the plan from ADP testing with respect to the previous year. Unlike in the past, a notice to participants before the beginning of the year in which the safe harbor nonelective contribution applies is no longer required. As such, employers can now wait until the end of the year, or even longer, before deciding whether to make a safe harbor nonelective contribution for the year.

Q: How are safe harbor nonelective contributions similar to, or different from, safe harbor matching contributions?

Continue Reading New 401k rules could end “refunded contributions”