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ERISA Fiduciary

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In addition to tax expertise, our Benefits Group is well versed in ERISA Title I fiduciary and prohibited transaction issues.

We regularly support employers and plan administrators in fulfilling their fiduciary obligations with respect to retirement and welfare benefit plans in a variety of ways, including fiduciary training, governance support, and contract review and negotiation. We act as thought partners with clients and their registered investment advisors (RIAs) in designing and implementing retirement plan fee structures, adopting managed account products and overseeing investment options through regular participation in investment committee meetings. We provide practical advice with respect to, and assistance in drafting, Investment Policy Statements, committee charters and conflict of interest policies.

For our clients in the financial services industry, we advise on investment management agreements and assist in structuring pension plan investments to avoid ERISA where possible including use of the significant participation exception and use of venture capital operating companies (VCOCs) and real estate operating companies (REOCs).

 

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Winter 2023 Employment and Benefits Updates
As part of a large year-end piece of legislation, the provisions known as SECURE 2.0 Act of 2022 (“SECURE 2.0”) were enacted into law. SECURE 2.0 represents a broadly bipartisan piece of legislation that continues efforts over the last few years to modify and improve (generally) the retirement provisions of the Internal Revenue Code and ERISA. While the new law includes close to 100 different provisions, in contrast to the original SECURE Act, many of the provisions in SECURE 2.0 have delayed effective dates, thus permitting a more gradual rollout of changes, which will no doubt be helpful to employers, advisors and recordkeepers scrambling to keep up. Moreover, we would say that there are relatively fewer truly significant provisions in SECURE 2.0; much of what is in the law falls into the “fine-tuning” adjustments category. We summarize below the more significant and/or immediate changes that are part of SECURE 2.0. Immediate (Mostly) Changes The following changes are generally effective this year. MRD changes.  In order to impose some outer limit on the benefits of tax deferral, the Internal Revenue Code has historically mandated the payment of so-called minimum required distributions (“MRDs”). A failure to make (or take) MRDs can result in the loss of tax qualified status for plans and a 50% excise tax on the individual, in addition to any income tax otherwise payable. For many years, MRDs were required to begin shortly after an individual attained age 70½. The SECURE Act increased the starting point from age 70½ to age 72, applying with respect to individuals born on or after July 1, 1949. As a result of SECURE 2.0 and beginning this year (2023), MRDs are not required until the individual attains age 73. This means that anyone who attains age 72 in 2023 need not receive an MRD for 2023. Beginning in 2033ish (there is a glitch in the law), the age will be further increased to age 75. As a reminder, a critical exception for retirement plans (but not IRAs) allows older workers to defer MRDs until retirement, provided the worker does not own more than 5% of the business and assuming the retirement plan permits continued deferral. The age 73 requirement will generally apply to all forms of tax-favored retirement plans including 401(k), 403(b), profit sharing, money purchase pension, stock bonus, defined benefit and 457(b) plans) as well as IRAs. In addition, the 50% excise tax penalty for failing to satisfy the MRD rules, which is payable by a participant or IRA owner and is in addition to applicable income taxes, has been reduced to a 25% excise tax penalty, with the opportunity for a 10% rate if certain corrective actions are timely taken to report and cure an MRD failure. Because this excise tax was self-reported on Form 5329, a failure to file Form 5329 meant that the statute of limitations never ran on the penalty, leaving the individual significantly exposed. As a result of a SECURE 2.0 change, the individual’s Form 1040 is now the tax filing that begins the statute of limitations for purposes of this excise tax. Finally, while not effective until 2024, MRDs with respect to the Roth portion of a retirement plan account are not required while the participant remains alive. This makes the in-plan Roth rule similar to the existing Roth IRA rule. A lot of Roth.  No doubt because Roth contributions are immediately taxable – which raises revenue – SECURE 2.0 has added a host of Roth (after-tax) related changes. Beginning for contributions made in 2023, plans may be amended to allow participants to elect to treat vested matching and/or profit sharing contributions as Roth contributions (akin to an immediate in-plan Roth conversion). Note that a plan is not required to offer this election, and we generally advise clients to wait until guidance is issued and recordkeeping systems are able to administer this provision before adopting. On the guidance front, there are a number of open questions including, for example: whether the election is available with respect to partially vested contributions; who, as between the payroll provider and plan recordkeeper, is reporting the income; and confirmation (hopefully) that any resulting income inclusion is not treated as part of a plan’s compensation for benefit accrual and other purposes. Also beginning in 2023, SEPs and SIMPLE IRAs may now include a Roth feature, including for employer contributions. Whether this is required is unclear. More changes to long-term part-time employee participation requirements.  The original SECURE Act mandated 401(k) deferral contribution eligibility for long-term employees who perform at least 500 hours of service with an employer for at least three consecutive years, beginning on or after January 1, 2021. (The individual must also be at least age 21 at the end of the period.) This is an override to the historic age 21/one year of service (generally 1,000 hours) for 401(k) deferral contribution eligibility. Assuming a plan is operating on a calendar year basis, the first time such an employee would be eligible would be in 2024. These so-called long-term part-time employees are not required to receive matching or profit sharing contributions and can be excluded from top heavy and nondiscrimination testing, but if they receive matching or profit sharing contributions, the plan must credit vesting for each year in which they completed at least 500 hours of vesting service. As noted in an earlier advisory, Keeping Up With All the Changes, for vesting purposes the Internal Revenue Service took the position that a year of vesting service must be credited to long-term, part-time employees even for years prior to 2021, unless some other exemption applied (the plan provided that years prior to attaining age 18 were not counted for vesting purposes, for example). This presented employers with very difficult recordkeeping issues. SECURE 2.0 has made three important changes to these rules. First, the provision is extended to 403(b) arrangements that are otherwise subject to ERISA, effective for plan years beginning in 2025. Second, the three consecutive year requirement has been dropped to a two consecutive year requirement also effective for plan years beginning in 2025 (although counting only 12-month periods beginning on or after January 1, 2023 for this purpose). And finally, Congress overrode the Internal Revenue Service’s vesting interpretation, effective retroactively. The latter means that any long-term part-time employee who first becomes eligible under the original provision in 2024 will not have any vesting service counted before 2021. And going forward, only service on or after 2021 (for qualified plans) or 2023 (for 403(b) arrangements) will need to be counted for vesting purposes with respect to long-term part-time employees. Tax credits.  SECURE 2.0 continues the trend of offering tax credits to encourage smaller employers to offer retirement plans to employees, with a new twist. In general, smaller employers (not more than 50 employees) are eligible for credits of up to 100% (increased from 50%) of the “startup” costs of a qualified plan, SEP, SIMPLE IRA or SIMPLE 401(k), up to $5,000, for up to three years. (Employers with up to 100 employees remain eligible for the 50% credit.) SECURE 2.0 also expanded the availability of these credits to small employers that join an existing multiple employer plan (or “MEP”) or pooled employer plan (or “PEP”). In addition, SECURE 2.0 includes a handful of provisions pursuant to which an employer is able to obtain a federal tax credit with respect to contributions made to participant accounts in various types of retirement plans. One example is a new small employer credit of up to $1,000 per employee (available for up to five years and phased out beginning with the second year following the year the plan is established) with respect to contributions to defined contribution plans on behalf of lower paid employees. (The amount phases out for employers with 50 to 100 employees.) QDRO tweaks.  Effective after 2022, tribal governments are now able to issue domestic relations orders (“DROs”). Plan administrators will need to evaluate whether such an order is a qualified domestic relations order (a “QDRO”). Plan documents and QDRO procedures will need to be revised to reflect this change. Expanded availability of MEPs and PEPs. SECURE 2.0 expanded changes made by the original SECURE Act that allows employers to utilize MEPs and PEPs. These are plans that are offered to unrelated employers that are not part of a single employer affiliated (or controlled) group. MEPs and PEPs are generally intended to allow smaller employers to share the administrative costs associated with running a retirement plan, including, for example, by enjoying the benefits of lower investment-level fees typically associated with higher account balances. SECURE 2.0 allows most employers offering 403(b) arrangements to participate in MEPs or PEPs, effective immediately. Significant Changes On The Horizon While not immediately effective, the following SECURE 2.0 provisions are likely to be of importance to retirement plans and plan sponsors. Catch-up contribution changes.  Any catch-up contributions to most forms of retirement plans (other than SARSEPs and SIMPLE IRAs) will need to be made on a Roth (after-tax) basis beginning after 2023. This was a significant revenue raising provision, although in its final form, only those making more than $145,000 in the prior year from the employer are subject to this rule. Interestingly, the $145,000 limit is based on the definition of wages used for FICA (Social Security, Medicare and Additional Medicare) tax purposes, which may make this even more difficult to administer if an employer also has deferred compensation plans subject to the quirky (and all-to-often misapplied) timing rules of Internal Revenue Code Section 3121(v). Moreover, since self-employed individuals (partners, for example) are subject to the SECA tax system, it appears that the rule might not apply to those persons, although this may not have been what Congress had in mind. Employers and recordkeepers will need to modify systems to ensure that this new rule is administered correctly and guidance is needed to address a host of questions, including who, as between the payroll provider and plan recordkeeper, is responsible for reporting the taxable amount, particularly with respect to amounts recharacterized as catch-up contributions after year end. And presumably if a plan does not currently offer a Roth feature and has higher-paid participants, it either must be amended to add Roth or all catch-up contributions will need to be eliminated (both with respect to the sponsor’s plan and the plans of any of the sponsor’s affiliates). That said, due to a drafting glitch, SECURE 2.0 actually eliminated the availability of all catch-up contributions beginning in 2024. It will be interesting to see whether Congress is able to enact a legislative fix before year-end, or whether the Treasury Department and Internal Revenue Service decide that they can plug this hole in the absence of a law change. Looking further ahead, SECURE 2.0 also provides for increased retirement plan catch-up contributions. Beginning in 2025, individuals aged 60, 61, 62 and 63 will have an opportunity to make larger catch-up contributions (albeit as Roth catch-up contributions for those who are higher paid). The new limits will be indexed for inflation but would be $10,000 ($5,000 for SIMPLE IRAs and SIMPLE 401(k) plans), versus $7,500 ($3,500 for SIMPLE IRAs and SIMPLE 401(k) plans) in 2023. (In each case the dollar amount would be 150% of the regular indexed amount, if larger.) Finally, the $1,000 catch-up contribution amount for IRAs, which has not been indexed for inflation, will now begin to be indexed beginning in 2024. Small balance cash-outs.  Beginning in 2024, the small balance cash-out limit is being raised from $5,000 to $7,000, although the amount is still not indexed for inflation. As a reminder, the Internal Revenue Service position is that if a qualified plan includes this provision, it must operationally make these distributions to terminated participants. A failure to do so can result in plan disqualification. SECURE 2.0 also adds a new prohibited transaction exemption designed to facilitate “auto-portability” of small balance cash-outs. Required automatic enrollment.  Generally effective for plan years beginning in 2025, 401(k) plans and 403(b) arrangements will be required to automatically enroll participants at a minimum 3% (maximum 10%) of compensation contribution rate, with an annual automatic increase of 1% of compensation per year (to between 10% and 15% of compensation). The requirement does not apply to SIMPLE 401(k) plans, certain small employer plans (generally with 10 or fewer employees), plans adopted by new businesses (less than three years) or, importantly for existing plans, plans established before December 29, 2022. In contrast to the long-term part-time employee provisions discussed earlier, there is no explicit exception from employer contributions for this feature. Additional 403(b) arrangement changes.  SECURE 2.0 also teased sponsors of 403(b)(7) arrangements into believing that collective investment trusts (or “CITs”) might soon be available. In general, the operating expenses of CITs tends to be lower than the operating expenses of mutual funds. And while SECURE 2.0 did remove an impediment to offering CITs to 403(b)(7) arrangements on the tax side, a required change to federal securities law was not included, and so additional Congressional action is needed before CITs are available to 403(b)(7) arrangements. ESOPs.  Sellers of “S” corporation stock to an ESOP may, beginning in 2028, take advantage of the tax deferral provisions of Internal Revenue Code Section 1042 with respect to 10% of the gain on the sale of shares to the ESOP. A Few More Things To Come As noted at the beginning, SECURE 2.0 includes a lot of changes, many of which have delayed effective dates and/or cannot as a practical matter be implemented until guidance is published. This final section discusses some of these provisions that are broadly applicable to employers. Changes affecting contributions. SECURE 2.0 permits plans to offer a new pension-linked emergency savings account (a “PLESA”). The basic idea is that non-highly compensated employees can elect into or be automatically enrolled into a Roth (after-tax) savings arrangement of up to 3% of compensation for a total account balance of up to $2,500. The amount contributed to the PLESA, which must be matched if the plan otherwise includes a match feature, is then available for the employee’s emergencies. While PLESAs can begin to be offered as early as 2024 and may be particularly attractive to employers looking to boost participation rates, like many provisions of SECURE 2.0, it is unlikely employers will make this feature available until guidance has been issued and the recordkeeping industry has had a chance to catch up. Beginning with contributions made for plan years beginning in 2024, employers may treat “qualified student loan repayments” as elective deferrals for matching contribution purposes under a 401(k) or governmental 457(b) plan or a 403(b) arrangement or SIMPLE IRA. SECURE 2.0 provides some loosening, beginning with the 2024 plan year, of the date by which a qualified plan may be amended in order to increase benefit accruals (other than any match) for the prior year. Changes affecting distributions. Beginning in 2024, eligible distributions of generally up to $10,000 may be made from a variety of retirement plan vehicles (other than money purchase pension and defined benefit plans) to a domestic abuse victim. This distribution is not subject to the 10% early withdrawal excise tax and can be repaid within three years. Also beginning in 2024, various plans can be amended to permit employees access to a once-per-year distribution of up to $1,000 as an “emergency personal expense distribution.” Such a distribution can be recontributed within three years but additional distributions are not available during that period (unless the amount is recontributed). Changes affecting plan administration. Congress appears to continue to view favorably the steps the Internal Revenue Service has taken to encourage plan sponsors to identify and resolve issues under its Employee Plans Compliance Resolution System (“EPCRS”). It has done this by encouraging self-correction of “eligible inadvertent failures,” including an expanded ability to self-correct plan loan failures, incorporation into the law of certain correction provisions relating to automatic enrollment and automatic increase failures that are due to expire at the end of this year and expanding the availability of EPCRS to IRA custodians. Several provisions are aimed at reevaluating the tsunami of notices that are required under the Internal Revenue Code and ERISA. SECURE 2.0 directs both the Internal Revenue Service and the Department of Labor to undertake studies of the efficacy of various notices and to considering whether consolidation is possible. That said, in a potential step back from the all-electronic approach to participant communication, SECURE 2.0 will generally require a paper statement once a year for defined contributions plans and once every three years for defined benefit plans, beginning after 2025. The Department of Labor is tasked with establishing a new Retirement Savings Lost and Found searchable database, the goal of which is to connect individuals with their “lost” retirement plan savings. Amendment Timing SECURE 2.0 generally provides that plan documents need not be amended until the last day of the plan year beginning on or after January 1, 2025 (December 31, 2025 for calendar year plans) unless a later date is established by Treasury. This amendment timing rule applies to changes under the original SECURE Act, the CARES Act and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and expands the Internal Revenue Service’s prior extension of the amendment timing rule for these provisions to generally include all types of plans, including 403(b) arrangements. (A 2027 amendment date applies to governmental plans.) Given the sheer number of changes, plan sponsors and plan administrators are urged to keep careful track of the implementation date of each change. The Internal Revenue Service requires that accurate effective dates for plan changes be part of required plan amendments. We are already seeing the inability to identify a specific implementation date as a problem with respect to CARES Act and original SECURE Act amendments, particularly with respect to terminating plans that must be amended in connection with their termination. Employment and Labor Law Updates Changes To Confidentiality And Non-Disparagement Provisions The National Labor Relations Board has issued a decision finding that certain (and fairly standard) confidentiality and non-disparagement provisions in severance agreements required employees to waive rights under the National Labor Relations Act (“NLRA”) and were impermissible. This recent change in the law is most important for dealing with employees who are not in a managerial or supervisory role because managers and supervisors do not have the same rights under the NLRA. In light of this decision, employers should have their severance agreements reviewed for any necessary revisions; this is also a good opportunity to review employee handbooks, confidentiality agreements and other employment forms that may have confidentiality and/or non-disparagement provisions. Possible Changes To Non-Competition Agreements The Federal Trade Commission (“FTC”) has proposed a rule that would ban post-employment non-competition restrictions. This rule would be retroactive and employers with non-competes in place would be required to rescind those agreements. Under the proposed rule, there would be a limited exception available when a business is sold – an owner, member or partner owning at least a quarter of the business could be required to agree to a noncompete. This proposed rule has already generated heated debate, and if the FTC does enact the rule, we can expect litigation. If the rule is enacted, employers will need to not only revise their restrictive covenants agreements to exclude post-employment noncompete provisions but also to ensure that they are receiving maximum protection from confidentiality and non-solicitation provisions. Increased Protections For Pregnant And Post-Partum Workers Two new federal laws increase the accommodations that many employers must provide to pregnant and post-partum workers. (Small employers may be exempt from one or both of the new laws.) These two laws add to protections established by the Pregnancy Discrimination Act of 1978 and the Americans with Disabilities Act. The Providing Urgent Maternal Protections for Nursing Mothers Act (“PUMP for Nursing Mothers Act”) requires employers to provide break time and a private location (which cannot be a bathroom) for nursing employees for up to two years. The Pregnant Workers Fairness Act requires employers to make reasonable accommodations related to pregnancy, childbirth and related medical conditions, and it prohibits discrimination against employees who have requested or used reasonable accommodations. Key 2023 Benefits Related Limits Training Reminders A variety of training requirements apply in the employment and benefits realm. For example, so-called “covered entities,” which potentially picks up employer sponsored self-insured health arrangements (such as HRAs and health care flexible spending accounts), are required to provide training with respect to protected health information (“PHI”) under HIPAA. In addition, other employment and/or benefits training is often encouraged by regulators, or viewed as a best practice, even where not required. In Massachusetts, for example, employers are encouraged to conduct anti-discrimination and sexual harassment training annually. And employees responsible for plans subject to ERISA, such as 401(k) plans, often benefit from periodic fiduciary training and operational compliance reviews. If you are interested in arranging training on these or other employment or benefits-related topics, please contact a member of the Employment and Benefits Practice Group.
Year-End Limit, Vaccine and Credit Updates
The Federal Vaccine Mandate Preparing for OSHA's COVID-19 Requirements The Occupational Safety and Health Administration (OSHA) has released an Emergency Temporary Standard (ETS) regarding COVID-19-related compliance requirements, including vaccine and testing requirements, that apply to certain large employers. OSHA estimates that the ETS, "will reach two-thirds of the nation’s private sector workforce." What are the key deadlines for compliance? A set of frequently asked questions reflect that employers generally must comply with the ETS by December 6, 2021, and that employers have until January 4, 2022 to comply with the requirement that employees who are not fully vaccinated undergo regular testing. The ETS states that the rule is intended to preempt inconsistent state and local vaccine requirements, including bans or limits on an employer’s ability to require vaccination, face covering or testing. Numerous plaintiffs filed lawsuits regarding the ETS. In response to a stay issued in one of these lawsuits, OSHA announced that it "has suspended activities related to the implementation and enforcement of the ETS pending future developments in the litigation." It is currently unknown when, if at all, the ETS will go into effect. What is happening with the litigation? On November 16, 2021, the lawsuits were consolidated at the Federal Court of Appeals for the Sixth Circuit, which normally hears appeals of decisions from federal courts in Kentucky, Michigan, Ohio, and Tennessee.  It is likely that the U.S. Supreme Court will ultimately be asked to decide the fate of the ETS. Who does this apply to? This ETS applies to private employers that have 100 or more employees in total, regardless of whether those employees work at the same location.  The details of this critical requirement are set forth in the FAQ, which state, for example, that an employer with five locations, and 20 employees working at each location, will be subject to the ETS and that whether employees are or are not already vaccinated is irrelevant for purposes of determining headcount. Independent contractors are not included in an employer’s headcount, but part-time and seasonal employees are, which could affect businesses in seasonal industries. This ETS also applies to certain government employers that are subject to OSHA state plans. It does not apply to employees that are already covered by OSHA’s separate ETS for the healthcare industry or an executive order regarding vaccination. Why does this apply only to employers with 100 or more employees? What about small employers? OSHA has explained that the current ETS is limited to employers with 100 or more employees based on an economic feasibility determination.  OSHA is confident that the burdens the ETS will impose, which include paid time off for vaccination and record keeping responsibilities, are feasible for larger employers. OSHA is actively considering whether small employers have the capacity to implement this standard. While aspects of this ETS have been signaled in previous weeks, some of the biggest news is that small employers may have similar obligations in the coming months. Key 2022 Benefits Related Limits 2021 2022 Taxable wage base $142,800 $147,000 Compensation limit $290,000 $305,000 Section 415(b) limit $230,000 $245,000 Section 415(c) limit $58,000 $61,000 Section 402(g)/401(k) limit $19,500 $20,500 Catch-up contributions $6,500 $6,500 HCE threshold $130,000 $135,000 Officer (top heavy) threshold $185,000 $200,000 Health Care Flexible Spending Accounts 2021 2022 Annual limit $2,750 $2,850 Carry over limit $550 $570 Health Savings Accounts 2021 2022 Individual contribution limit $3,600 $3,650 Family contribution limit $7,200 $7,300 What do covered employers have to do? Employers must: determine each employee’s vaccination status (unvaccinated, partially vaccinated, or fully vaccinated) and collect and maintain proof of vaccination status; provide four hours of paid leave (including travel time) for employees to be vaccinated; and provide certain leave for employees who experience post-vaccine side effects. Fully vaccinated for this purpose means an employee’s status two weeks after receiving one or both injections, as applicable, of the vaccine but does not include any requirement to obtain a booster. Employers must remove employees who have COVID-19 infections from the workplace, and they must report COVID-19 hospitalizations and fatalities to OSHA. Covered employers are also required to create a vaccine workplace policy, but here, they have a choice. Employers may create a mandatory vaccine policy that requires all employees to be vaccinated unless they have a legitimate exemption based on a disability, medical condition or religious belief or practice that conflicts with the vaccination requirement. (Information on reasonable accommodations for disability or religious belief exceptions can be found here.) Alternatively, employers may create an employee-option policy that gives each employee the choice of being vaccinated or undergoing regular testing and wearing a face covering in shared workspaces. Under this alternative, unvaccinated employees, including generally those that qualify for a legitimate exemption, who report to a workplace where any other individuals are present at least once a week must be tested on a weekly basis; unvaccinated employees who report to shared workplaces less frequently must be tested within seven days before reporting to a workplace where others are present. Regardless of which policy an employer chooses, the policy must be readily accessible to employees. The ETS does not require fully vaccinated employees to wear face coverings in the office. Does this apply to all employees? No.  Employees whose work is exclusively remote or outdoors count toward the 100 or more employee headcount trigger for the ETS, but they are not required to be vaccinated or tested. If employees are tested instead of vaccinated, who pays for testing? The FAQ states that employers are not required to pay for testing.  However, other federal and state laws may be relevant to determining whether employers or employees must pay for regular testing of unvaccinated employees.  If employers pay for testing, they may consider using "pooled testing," which can be more cost-effective and is specifically allowed under the ETS. *   *   *   *   * If you have questions or need assistance in preparing required policies and employee communications, please contact a member of the Employment and Benefits Practice Group. Going, Going, Gone. . . . The End of the Employee Retention Credit The recently enacted Infrastructure Investment and Jobs Act (the "Infrastructure Act") introduced an early end to the employee retention credit.  Our first alert on the employee retention credit provided an overview of the provision, which was originally set to expire as of December 31, 2020.  We then covered the Consolidated Appropriations Act’s extension of the employee retention credit through June 30, 2021.  The American Rescue Plan Act of 2021 ("ARPA") further extended the availability of the credit through December 31, 2021. In what appears to be the final act of this multi-part drama, for most employers the Infrastructure Act changes the expiration of this provision with respect to wages paid from December 31, 2021 to September 30, 2021 – three months earlier than provided under ARPA. There is, however, an exception for "recovery startup businesses," generally smaller businesses begun after February 15, 2020, which are able to continue to take advantage of the credit for wages paid through December 31, 2021. Please reach out to a member of the Employment & Benefits Practice Group if you have questions about whether your company may qualify as a recovery startup business or if you have any other questions about the many nuances of and changes to the employee retention credit. Training Reminders A variety of training requirements apply in the employment and benefits realm.  For example, so-called "covered entities," which potentially picks up employer sponsored self-insured health arrangements (such as HRAs and health care flexible spending accounts), are required to provide training with respect to protected health information ("PHI") under HIPAA.  In addition, other employment and/or benefits training is often encouraged by regulators, or viewed as a best practice, even where not required.  In Massachusetts, for example, employers are encouraged to conduct anti-discrimination and sexual harassment training annually.  And employees responsible for plans subject to ERISA, such as 401(k) plans, often benefit from fiduciary training and operational compliance reviews. If you are interested in arranging training on these or other employment or benefits-related topics, please contact a member of the Employment & Benefits Practice Group.
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Sullivan & Worcester Ranked by Best Law Firms® in 2024
Boston, MA - Sullivan & Worcester has been recognized in the 2024 edition of Best Law Firms,® ranked by Best Lawyers,® with 15 practice areas ranked nationally and 23 ranked regionally. Firms included in the 2024 Best Law Firms® list are recognized for professional excellence with persistently impressive ratings from clients and peers. To be considered for this milestone achievement, at least one lawyer in the law firm must be recognized in the 2024 edition of The Best Lawyers in America.® Achieving a tiered ranking in Best Law Firms® on a national and/or metropolitan scale signals a unique credibility within the industry. The transparent, collaborative research process employs qualitative and quantitative data from peer and client reviews that is supported by proprietary algorithmic technology to produce a tiered system of industry-led rankings of the top 4% of the industry. Sullivan received the following rankings in the 2024 edition: National Rankings Tier 1 Banking and Finance Law Commercial Litigation Corporate Law Environmental Law Litigation – Environmental  Mutual Funds Law  Real Estate Law Securities Regulation Trusts & Estates Tier 2 Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law   Litigation and Controversy - Tax Mergers & Acquisitions Law Securities / Capital Markets Law  Tax Law Tier 3 Litigation - Bankruptcy Metropolitan Tier 1 Boston Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law Commercial Litigation Corporate Compliance Law Corporate Governance Law Corporate Law Employee Benefits (ERISA) Law Litigation - Bankruptcy Litigation - Tax Mergers & Acquisitions Law Nonprofit / Charities Law Real Estate Law Securities / Capital Markets Law Tax Law Trusts & Estates Law New York Banking and Finance Law Corporate Law Washington, D.C. Environmental Law Litigation - Environmental Mutual Funds Law Securities Regulation Metropolitan Tier 2 New York Mutual Funds Law Trusts & Estates Law Metropolitan Tier 3 Boston Mass Tort Litigation / Class Actions - Defendants About Sullivan Sullivan & Worcester (Sullivan) is a global law firm with approximately 200 attorneys in Boston, London, New York, Tel Aviv and Washington, D.C. Sullivan’s clients, including Fortune 500 companies, leading financial services firms and asset managers, boards of directors, and emerging businesses, rely on Sullivan’s ability to navigate complex legal and operational landscapes, the impeccable judgement of its lawyers, and its commitment to best‑in‑class client service.
43 Sullivan & Worcester Attorneys Listed in Best Lawyers in America® 2024 Edition
Boston, MA – International law firm Sullivan & Worcester announced today that 35 attorneys have received recognition in the 2024 edition of Best Lawyers in America® and eight attorneys have been named to the Best Lawyers: Ones to Watch list. Best Lawyers is based solely on peer review, in which attorneys cast more than 9.4 million votes on the legal abilities of other lawyers in their practice areas. Best Lawyers highlights the top 5% of practicing attorneys in the United States, covering more than 148 different practice areas. Best Lawyers has been published since 1983 and selections will be featured in the 2024 Edition of The Best Lawyers in America®. The Sullivan attorneys listed as Best Lawyers in America® are: Victor Baltera – Real Estate Law Carole Bass – Trusts and Estates Howard Berkenblit – Corporate Governance Law, Corporate Law J. Truman Bidwell – Corporate Law Harvey Bines – Corporate Compliance Law, Corporate Governance Law, Corporate Law Ashley Brooks – Real Estate Law Joel Carpenter – Tax Law John Chilton – Mutual Funds Law Henry Comstock, Jr. – Trusts and Estates Nicole Crum – Mutual Funds Law Christopher Curtis – Tax Law Patrick Dinardo – Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law, Litigation/Bankruptcy John Graham – Non-Profit/Charities Law, Tax Law Ira Gross – Commercial Litigation David Guadagnoli – Employee Benefits (ERISA) Law, Tax Law Warren Heilbronner – Real Estate Law Kimberly Herman – Trademark Law Richard Jones – Litigation and Controversy/Tax, Tax Law Jeffrey Karp – Environmental Law Karen Kepler – Real Estate Law David Leahy – Mutual Funds Law David Mahaffey – Mutual Funds Law, Securities Regulation Leonard Miller – Environmental Law, Litigation/Environmental Lisa Mingolla – Trusts and Estates Louis Monti – Real Estate Law Cornelius Murray – Trusts and Estates David Nagle – Litigation and Controversy/Tax, Tax Law Nicholas O’Donnell – Commercial Litigation Ameek Ashok Ponda – Tax Law Domenick Pugliese – Mutual Funds Law Constantine Ralli – Trusts and Estates Gregory S. Sampson – Environmental Law, Real Estate Law, Land Use, Zoning Law Lewis Segall – Mergers and Acquisitions Law Amy Sheridan – Employee Benefits (ERISA) Law Laura Steinberg – Commercial Litigation The Sullivan attorneys listed as Ones to Watch are: Steven Cunningham, Jr. – Trusts and Estates Natalie Lederman – Corporate Law Michael Palmisciano – Intellectual Property Law Avinash Rao – Corporate Law Aaron Schleicher – Securities/Capital Markets Law Ashley Tan – Real Estate Law Ryan Tompkins – Tax Law, Trusts and Estates Shu Wei – Corporate Law About Sullivan Sullivan & Worcester (Sullivan) is a global law firm with approximately 200 attorneys in Boston, London, New York, Tel Aviv and Washington, DC. Sullivan’s clients, including Fortune 500 companies, leading financial services firms and asset managers, boards of directors, and emerging businesses, as well as private clients, rely on Sullivan’s ability to navigate complex legal and operational landscapes, the impeccable judgement of its lawyers, and its commitment to best‑in‑class client service.

ERISA Fiduciary

In addition to tax expertise, our Benefits Group is well versed in ERISA Title I fiduciary and prohibited transaction issues.

We regularly support employers and plan administrators in fulfilling their fiduciary obligations with respect to retirement and welfare benefit plans in a variety of ways, including fiduciary training, governance support, and contract review and negotiation. We act as thought partners with clients and their registered investment advisors (RIAs) in designing and implementing retirement plan fee structures, adopting managed account products and overseeing investment options through regular participation in investment committee meetings. We provide practical advice with respect to, and assistance in drafting, Investment Policy Statements, committee charters and conflict of interest policies.

For our clients in the financial services industry, we advise on investment management agreements and assist in structuring pension plan investments to avoid ERISA where possible including use of the significant participation exception and use of venture capital operating companies (VCOCs) and real estate operating companies (REOCs).

 

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Winter 2023 Employment and Benefits Updates
As part of a large year-end piece of legislation, the provisions known as SECURE 2.0 Act of 2022 (“SECURE 2.0”) were enacted into law. SECURE 2.0 represents a broadly bipartisan piece of legislation that continues efforts over the last few years to modify and improve (generally) the retirement provisions of the Internal Revenue Code and ERISA. While the new law includes close to 100 different provisions, in contrast to the original SECURE Act, many of the provisions in SECURE 2.0 have delayed effective dates, thus permitting a more gradual rollout of changes, which will no doubt be helpful to employers, advisors and recordkeepers scrambling to keep up. Moreover, we would say that there are relatively fewer truly significant provisions in SECURE 2.0; much of what is in the law falls into the “fine-tuning” adjustments category. We summarize below the more significant and/or immediate changes that are part of SECURE 2.0. Immediate (Mostly) Changes The following changes are generally effective this year. MRD changes.  In order to impose some outer limit on the benefits of tax deferral, the Internal Revenue Code has historically mandated the payment of so-called minimum required distributions (“MRDs”). A failure to make (or take) MRDs can result in the loss of tax qualified status for plans and a 50% excise tax on the individual, in addition to any income tax otherwise payable. For many years, MRDs were required to begin shortly after an individual attained age 70½. The SECURE Act increased the starting point from age 70½ to age 72, applying with respect to individuals born on or after July 1, 1949. As a result of SECURE 2.0 and beginning this year (2023), MRDs are not required until the individual attains age 73. This means that anyone who attains age 72 in 2023 need not receive an MRD for 2023. Beginning in 2033ish (there is a glitch in the law), the age will be further increased to age 75. As a reminder, a critical exception for retirement plans (but not IRAs) allows older workers to defer MRDs until retirement, provided the worker does not own more than 5% of the business and assuming the retirement plan permits continued deferral. The age 73 requirement will generally apply to all forms of tax-favored retirement plans including 401(k), 403(b), profit sharing, money purchase pension, stock bonus, defined benefit and 457(b) plans) as well as IRAs. In addition, the 50% excise tax penalty for failing to satisfy the MRD rules, which is payable by a participant or IRA owner and is in addition to applicable income taxes, has been reduced to a 25% excise tax penalty, with the opportunity for a 10% rate if certain corrective actions are timely taken to report and cure an MRD failure. Because this excise tax was self-reported on Form 5329, a failure to file Form 5329 meant that the statute of limitations never ran on the penalty, leaving the individual significantly exposed. As a result of a SECURE 2.0 change, the individual’s Form 1040 is now the tax filing that begins the statute of limitations for purposes of this excise tax. Finally, while not effective until 2024, MRDs with respect to the Roth portion of a retirement plan account are not required while the participant remains alive. This makes the in-plan Roth rule similar to the existing Roth IRA rule. A lot of Roth.  No doubt because Roth contributions are immediately taxable – which raises revenue – SECURE 2.0 has added a host of Roth (after-tax) related changes. Beginning for contributions made in 2023, plans may be amended to allow participants to elect to treat vested matching and/or profit sharing contributions as Roth contributions (akin to an immediate in-plan Roth conversion). Note that a plan is not required to offer this election, and we generally advise clients to wait until guidance is issued and recordkeeping systems are able to administer this provision before adopting. On the guidance front, there are a number of open questions including, for example: whether the election is available with respect to partially vested contributions; who, as between the payroll provider and plan recordkeeper, is reporting the income; and confirmation (hopefully) that any resulting income inclusion is not treated as part of a plan’s compensation for benefit accrual and other purposes. Also beginning in 2023, SEPs and SIMPLE IRAs may now include a Roth feature, including for employer contributions. Whether this is required is unclear. More changes to long-term part-time employee participation requirements.  The original SECURE Act mandated 401(k) deferral contribution eligibility for long-term employees who perform at least 500 hours of service with an employer for at least three consecutive years, beginning on or after January 1, 2021. (The individual must also be at least age 21 at the end of the period.) This is an override to the historic age 21/one year of service (generally 1,000 hours) for 401(k) deferral contribution eligibility. Assuming a plan is operating on a calendar year basis, the first time such an employee would be eligible would be in 2024. These so-called long-term part-time employees are not required to receive matching or profit sharing contributions and can be excluded from top heavy and nondiscrimination testing, but if they receive matching or profit sharing contributions, the plan must credit vesting for each year in which they completed at least 500 hours of vesting service. As noted in an earlier advisory, Keeping Up With All the Changes, for vesting purposes the Internal Revenue Service took the position that a year of vesting service must be credited to long-term, part-time employees even for years prior to 2021, unless some other exemption applied (the plan provided that years prior to attaining age 18 were not counted for vesting purposes, for example). This presented employers with very difficult recordkeeping issues. SECURE 2.0 has made three important changes to these rules. First, the provision is extended to 403(b) arrangements that are otherwise subject to ERISA, effective for plan years beginning in 2025. Second, the three consecutive year requirement has been dropped to a two consecutive year requirement also effective for plan years beginning in 2025 (although counting only 12-month periods beginning on or after January 1, 2023 for this purpose). And finally, Congress overrode the Internal Revenue Service’s vesting interpretation, effective retroactively. The latter means that any long-term part-time employee who first becomes eligible under the original provision in 2024 will not have any vesting service counted before 2021. And going forward, only service on or after 2021 (for qualified plans) or 2023 (for 403(b) arrangements) will need to be counted for vesting purposes with respect to long-term part-time employees. Tax credits.  SECURE 2.0 continues the trend of offering tax credits to encourage smaller employers to offer retirement plans to employees, with a new twist. In general, smaller employers (not more than 50 employees) are eligible for credits of up to 100% (increased from 50%) of the “startup” costs of a qualified plan, SEP, SIMPLE IRA or SIMPLE 401(k), up to $5,000, for up to three years. (Employers with up to 100 employees remain eligible for the 50% credit.) SECURE 2.0 also expanded the availability of these credits to small employers that join an existing multiple employer plan (or “MEP”) or pooled employer plan (or “PEP”). In addition, SECURE 2.0 includes a handful of provisions pursuant to which an employer is able to obtain a federal tax credit with respect to contributions made to participant accounts in various types of retirement plans. One example is a new small employer credit of up to $1,000 per employee (available for up to five years and phased out beginning with the second year following the year the plan is established) with respect to contributions to defined contribution plans on behalf of lower paid employees. (The amount phases out for employers with 50 to 100 employees.) QDRO tweaks.  Effective after 2022, tribal governments are now able to issue domestic relations orders (“DROs”). Plan administrators will need to evaluate whether such an order is a qualified domestic relations order (a “QDRO”). Plan documents and QDRO procedures will need to be revised to reflect this change. Expanded availability of MEPs and PEPs. SECURE 2.0 expanded changes made by the original SECURE Act that allows employers to utilize MEPs and PEPs. These are plans that are offered to unrelated employers that are not part of a single employer affiliated (or controlled) group. MEPs and PEPs are generally intended to allow smaller employers to share the administrative costs associated with running a retirement plan, including, for example, by enjoying the benefits of lower investment-level fees typically associated with higher account balances. SECURE 2.0 allows most employers offering 403(b) arrangements to participate in MEPs or PEPs, effective immediately. Significant Changes On The Horizon While not immediately effective, the following SECURE 2.0 provisions are likely to be of importance to retirement plans and plan sponsors. Catch-up contribution changes.  Any catch-up contributions to most forms of retirement plans (other than SARSEPs and SIMPLE IRAs) will need to be made on a Roth (after-tax) basis beginning after 2023. This was a significant revenue raising provision, although in its final form, only those making more than $145,000 in the prior year from the employer are subject to this rule. Interestingly, the $145,000 limit is based on the definition of wages used for FICA (Social Security, Medicare and Additional Medicare) tax purposes, which may make this even more difficult to administer if an employer also has deferred compensation plans subject to the quirky (and all-to-often misapplied) timing rules of Internal Revenue Code Section 3121(v). Moreover, since self-employed individuals (partners, for example) are subject to the SECA tax system, it appears that the rule might not apply to those persons, although this may not have been what Congress had in mind. Employers and recordkeepers will need to modify systems to ensure that this new rule is administered correctly and guidance is needed to address a host of questions, including who, as between the payroll provider and plan recordkeeper, is responsible for reporting the taxable amount, particularly with respect to amounts recharacterized as catch-up contributions after year end. And presumably if a plan does not currently offer a Roth feature and has higher-paid participants, it either must be amended to add Roth or all catch-up contributions will need to be eliminated (both with respect to the sponsor’s plan and the plans of any of the sponsor’s affiliates). That said, due to a drafting glitch, SECURE 2.0 actually eliminated the availability of all catch-up contributions beginning in 2024. It will be interesting to see whether Congress is able to enact a legislative fix before year-end, or whether the Treasury Department and Internal Revenue Service decide that they can plug this hole in the absence of a law change. Looking further ahead, SECURE 2.0 also provides for increased retirement plan catch-up contributions. Beginning in 2025, individuals aged 60, 61, 62 and 63 will have an opportunity to make larger catch-up contributions (albeit as Roth catch-up contributions for those who are higher paid). The new limits will be indexed for inflation but would be $10,000 ($5,000 for SIMPLE IRAs and SIMPLE 401(k) plans), versus $7,500 ($3,500 for SIMPLE IRAs and SIMPLE 401(k) plans) in 2023. (In each case the dollar amount would be 150% of the regular indexed amount, if larger.) Finally, the $1,000 catch-up contribution amount for IRAs, which has not been indexed for inflation, will now begin to be indexed beginning in 2024. Small balance cash-outs.  Beginning in 2024, the small balance cash-out limit is being raised from $5,000 to $7,000, although the amount is still not indexed for inflation. As a reminder, the Internal Revenue Service position is that if a qualified plan includes this provision, it must operationally make these distributions to terminated participants. A failure to do so can result in plan disqualification. SECURE 2.0 also adds a new prohibited transaction exemption designed to facilitate “auto-portability” of small balance cash-outs. Required automatic enrollment.  Generally effective for plan years beginning in 2025, 401(k) plans and 403(b) arrangements will be required to automatically enroll participants at a minimum 3% (maximum 10%) of compensation contribution rate, with an annual automatic increase of 1% of compensation per year (to between 10% and 15% of compensation). The requirement does not apply to SIMPLE 401(k) plans, certain small employer plans (generally with 10 or fewer employees), plans adopted by new businesses (less than three years) or, importantly for existing plans, plans established before December 29, 2022. In contrast to the long-term part-time employee provisions discussed earlier, there is no explicit exception from employer contributions for this feature. Additional 403(b) arrangement changes.  SECURE 2.0 also teased sponsors of 403(b)(7) arrangements into believing that collective investment trusts (or “CITs”) might soon be available. In general, the operating expenses of CITs tends to be lower than the operating expenses of mutual funds. And while SECURE 2.0 did remove an impediment to offering CITs to 403(b)(7) arrangements on the tax side, a required change to federal securities law was not included, and so additional Congressional action is needed before CITs are available to 403(b)(7) arrangements. ESOPs.  Sellers of “S” corporation stock to an ESOP may, beginning in 2028, take advantage of the tax deferral provisions of Internal Revenue Code Section 1042 with respect to 10% of the gain on the sale of shares to the ESOP. A Few More Things To Come As noted at the beginning, SECURE 2.0 includes a lot of changes, many of which have delayed effective dates and/or cannot as a practical matter be implemented until guidance is published. This final section discusses some of these provisions that are broadly applicable to employers. Changes affecting contributions. SECURE 2.0 permits plans to offer a new pension-linked emergency savings account (a “PLESA”). The basic idea is that non-highly compensated employees can elect into or be automatically enrolled into a Roth (after-tax) savings arrangement of up to 3% of compensation for a total account balance of up to $2,500. The amount contributed to the PLESA, which must be matched if the plan otherwise includes a match feature, is then available for the employee’s emergencies. While PLESAs can begin to be offered as early as 2024 and may be particularly attractive to employers looking to boost participation rates, like many provisions of SECURE 2.0, it is unlikely employers will make this feature available until guidance has been issued and the recordkeeping industry has had a chance to catch up. Beginning with contributions made for plan years beginning in 2024, employers may treat “qualified student loan repayments” as elective deferrals for matching contribution purposes under a 401(k) or governmental 457(b) plan or a 403(b) arrangement or SIMPLE IRA. SECURE 2.0 provides some loosening, beginning with the 2024 plan year, of the date by which a qualified plan may be amended in order to increase benefit accruals (other than any match) for the prior year. Changes affecting distributions. Beginning in 2024, eligible distributions of generally up to $10,000 may be made from a variety of retirement plan vehicles (other than money purchase pension and defined benefit plans) to a domestic abuse victim. This distribution is not subject to the 10% early withdrawal excise tax and can be repaid within three years. Also beginning in 2024, various plans can be amended to permit employees access to a once-per-year distribution of up to $1,000 as an “emergency personal expense distribution.” Such a distribution can be recontributed within three years but additional distributions are not available during that period (unless the amount is recontributed). Changes affecting plan administration. Congress appears to continue to view favorably the steps the Internal Revenue Service has taken to encourage plan sponsors to identify and resolve issues under its Employee Plans Compliance Resolution System (“EPCRS”). It has done this by encouraging self-correction of “eligible inadvertent failures,” including an expanded ability to self-correct plan loan failures, incorporation into the law of certain correction provisions relating to automatic enrollment and automatic increase failures that are due to expire at the end of this year and expanding the availability of EPCRS to IRA custodians. Several provisions are aimed at reevaluating the tsunami of notices that are required under the Internal Revenue Code and ERISA. SECURE 2.0 directs both the Internal Revenue Service and the Department of Labor to undertake studies of the efficacy of various notices and to considering whether consolidation is possible. That said, in a potential step back from the all-electronic approach to participant communication, SECURE 2.0 will generally require a paper statement once a year for defined contributions plans and once every three years for defined benefit plans, beginning after 2025. The Department of Labor is tasked with establishing a new Retirement Savings Lost and Found searchable database, the goal of which is to connect individuals with their “lost” retirement plan savings. Amendment Timing SECURE 2.0 generally provides that plan documents need not be amended until the last day of the plan year beginning on or after January 1, 2025 (December 31, 2025 for calendar year plans) unless a later date is established by Treasury. This amendment timing rule applies to changes under the original SECURE Act, the CARES Act and the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and expands the Internal Revenue Service’s prior extension of the amendment timing rule for these provisions to generally include all types of plans, including 403(b) arrangements. (A 2027 amendment date applies to governmental plans.) Given the sheer number of changes, plan sponsors and plan administrators are urged to keep careful track of the implementation date of each change. The Internal Revenue Service requires that accurate effective dates for plan changes be part of required plan amendments. We are already seeing the inability to identify a specific implementation date as a problem with respect to CARES Act and original SECURE Act amendments, particularly with respect to terminating plans that must be amended in connection with their termination. Employment and Labor Law Updates Changes To Confidentiality And Non-Disparagement Provisions The National Labor Relations Board has issued a decision finding that certain (and fairly standard) confidentiality and non-disparagement provisions in severance agreements required employees to waive rights under the National Labor Relations Act (“NLRA”) and were impermissible. This recent change in the law is most important for dealing with employees who are not in a managerial or supervisory role because managers and supervisors do not have the same rights under the NLRA. In light of this decision, employers should have their severance agreements reviewed for any necessary revisions; this is also a good opportunity to review employee handbooks, confidentiality agreements and other employment forms that may have confidentiality and/or non-disparagement provisions. Possible Changes To Non-Competition Agreements The Federal Trade Commission (“FTC”) has proposed a rule that would ban post-employment non-competition restrictions. This rule would be retroactive and employers with non-competes in place would be required to rescind those agreements. Under the proposed rule, there would be a limited exception available when a business is sold – an owner, member or partner owning at least a quarter of the business could be required to agree to a noncompete. This proposed rule has already generated heated debate, and if the FTC does enact the rule, we can expect litigation. If the rule is enacted, employers will need to not only revise their restrictive covenants agreements to exclude post-employment noncompete provisions but also to ensure that they are receiving maximum protection from confidentiality and non-solicitation provisions. Increased Protections For Pregnant And Post-Partum Workers Two new federal laws increase the accommodations that many employers must provide to pregnant and post-partum workers. (Small employers may be exempt from one or both of the new laws.) These two laws add to protections established by the Pregnancy Discrimination Act of 1978 and the Americans with Disabilities Act. The Providing Urgent Maternal Protections for Nursing Mothers Act (“PUMP for Nursing Mothers Act”) requires employers to provide break time and a private location (which cannot be a bathroom) for nursing employees for up to two years. The Pregnant Workers Fairness Act requires employers to make reasonable accommodations related to pregnancy, childbirth and related medical conditions, and it prohibits discrimination against employees who have requested or used reasonable accommodations. Key 2023 Benefits Related Limits Training Reminders A variety of training requirements apply in the employment and benefits realm. For example, so-called “covered entities,” which potentially picks up employer sponsored self-insured health arrangements (such as HRAs and health care flexible spending accounts), are required to provide training with respect to protected health information (“PHI”) under HIPAA. In addition, other employment and/or benefits training is often encouraged by regulators, or viewed as a best practice, even where not required. In Massachusetts, for example, employers are encouraged to conduct anti-discrimination and sexual harassment training annually. And employees responsible for plans subject to ERISA, such as 401(k) plans, often benefit from periodic fiduciary training and operational compliance reviews. If you are interested in arranging training on these or other employment or benefits-related topics, please contact a member of the Employment and Benefits Practice Group.
Year-End Limit, Vaccine and Credit Updates
The Federal Vaccine Mandate Preparing for OSHA's COVID-19 Requirements The Occupational Safety and Health Administration (OSHA) has released an Emergency Temporary Standard (ETS) regarding COVID-19-related compliance requirements, including vaccine and testing requirements, that apply to certain large employers. OSHA estimates that the ETS, "will reach two-thirds of the nation’s private sector workforce." What are the key deadlines for compliance? A set of frequently asked questions reflect that employers generally must comply with the ETS by December 6, 2021, and that employers have until January 4, 2022 to comply with the requirement that employees who are not fully vaccinated undergo regular testing. The ETS states that the rule is intended to preempt inconsistent state and local vaccine requirements, including bans or limits on an employer’s ability to require vaccination, face covering or testing. Numerous plaintiffs filed lawsuits regarding the ETS. In response to a stay issued in one of these lawsuits, OSHA announced that it "has suspended activities related to the implementation and enforcement of the ETS pending future developments in the litigation." It is currently unknown when, if at all, the ETS will go into effect. What is happening with the litigation? On November 16, 2021, the lawsuits were consolidated at the Federal Court of Appeals for the Sixth Circuit, which normally hears appeals of decisions from federal courts in Kentucky, Michigan, Ohio, and Tennessee.  It is likely that the U.S. Supreme Court will ultimately be asked to decide the fate of the ETS. Who does this apply to? This ETS applies to private employers that have 100 or more employees in total, regardless of whether those employees work at the same location.  The details of this critical requirement are set forth in the FAQ, which state, for example, that an employer with five locations, and 20 employees working at each location, will be subject to the ETS and that whether employees are or are not already vaccinated is irrelevant for purposes of determining headcount. Independent contractors are not included in an employer’s headcount, but part-time and seasonal employees are, which could affect businesses in seasonal industries. This ETS also applies to certain government employers that are subject to OSHA state plans. It does not apply to employees that are already covered by OSHA’s separate ETS for the healthcare industry or an executive order regarding vaccination. Why does this apply only to employers with 100 or more employees? What about small employers? OSHA has explained that the current ETS is limited to employers with 100 or more employees based on an economic feasibility determination.  OSHA is confident that the burdens the ETS will impose, which include paid time off for vaccination and record keeping responsibilities, are feasible for larger employers. OSHA is actively considering whether small employers have the capacity to implement this standard. While aspects of this ETS have been signaled in previous weeks, some of the biggest news is that small employers may have similar obligations in the coming months. Key 2022 Benefits Related Limits 2021 2022 Taxable wage base $142,800 $147,000 Compensation limit $290,000 $305,000 Section 415(b) limit $230,000 $245,000 Section 415(c) limit $58,000 $61,000 Section 402(g)/401(k) limit $19,500 $20,500 Catch-up contributions $6,500 $6,500 HCE threshold $130,000 $135,000 Officer (top heavy) threshold $185,000 $200,000 Health Care Flexible Spending Accounts 2021 2022 Annual limit $2,750 $2,850 Carry over limit $550 $570 Health Savings Accounts 2021 2022 Individual contribution limit $3,600 $3,650 Family contribution limit $7,200 $7,300 What do covered employers have to do? Employers must: determine each employee’s vaccination status (unvaccinated, partially vaccinated, or fully vaccinated) and collect and maintain proof of vaccination status; provide four hours of paid leave (including travel time) for employees to be vaccinated; and provide certain leave for employees who experience post-vaccine side effects. Fully vaccinated for this purpose means an employee’s status two weeks after receiving one or both injections, as applicable, of the vaccine but does not include any requirement to obtain a booster. Employers must remove employees who have COVID-19 infections from the workplace, and they must report COVID-19 hospitalizations and fatalities to OSHA. Covered employers are also required to create a vaccine workplace policy, but here, they have a choice. Employers may create a mandatory vaccine policy that requires all employees to be vaccinated unless they have a legitimate exemption based on a disability, medical condition or religious belief or practice that conflicts with the vaccination requirement. (Information on reasonable accommodations for disability or religious belief exceptions can be found here.) Alternatively, employers may create an employee-option policy that gives each employee the choice of being vaccinated or undergoing regular testing and wearing a face covering in shared workspaces. Under this alternative, unvaccinated employees, including generally those that qualify for a legitimate exemption, who report to a workplace where any other individuals are present at least once a week must be tested on a weekly basis; unvaccinated employees who report to shared workplaces less frequently must be tested within seven days before reporting to a workplace where others are present. Regardless of which policy an employer chooses, the policy must be readily accessible to employees. The ETS does not require fully vaccinated employees to wear face coverings in the office. Does this apply to all employees? No.  Employees whose work is exclusively remote or outdoors count toward the 100 or more employee headcount trigger for the ETS, but they are not required to be vaccinated or tested. If employees are tested instead of vaccinated, who pays for testing? The FAQ states that employers are not required to pay for testing.  However, other federal and state laws may be relevant to determining whether employers or employees must pay for regular testing of unvaccinated employees.  If employers pay for testing, they may consider using "pooled testing," which can be more cost-effective and is specifically allowed under the ETS. *   *   *   *   * If you have questions or need assistance in preparing required policies and employee communications, please contact a member of the Employment and Benefits Practice Group. Going, Going, Gone. . . . The End of the Employee Retention Credit The recently enacted Infrastructure Investment and Jobs Act (the "Infrastructure Act") introduced an early end to the employee retention credit.  Our first alert on the employee retention credit provided an overview of the provision, which was originally set to expire as of December 31, 2020.  We then covered the Consolidated Appropriations Act’s extension of the employee retention credit through June 30, 2021.  The American Rescue Plan Act of 2021 ("ARPA") further extended the availability of the credit through December 31, 2021. In what appears to be the final act of this multi-part drama, for most employers the Infrastructure Act changes the expiration of this provision with respect to wages paid from December 31, 2021 to September 30, 2021 – three months earlier than provided under ARPA. There is, however, an exception for "recovery startup businesses," generally smaller businesses begun after February 15, 2020, which are able to continue to take advantage of the credit for wages paid through December 31, 2021. Please reach out to a member of the Employment & Benefits Practice Group if you have questions about whether your company may qualify as a recovery startup business or if you have any other questions about the many nuances of and changes to the employee retention credit. Training Reminders A variety of training requirements apply in the employment and benefits realm.  For example, so-called "covered entities," which potentially picks up employer sponsored self-insured health arrangements (such as HRAs and health care flexible spending accounts), are required to provide training with respect to protected health information ("PHI") under HIPAA.  In addition, other employment and/or benefits training is often encouraged by regulators, or viewed as a best practice, even where not required.  In Massachusetts, for example, employers are encouraged to conduct anti-discrimination and sexual harassment training annually.  And employees responsible for plans subject to ERISA, such as 401(k) plans, often benefit from fiduciary training and operational compliance reviews. If you are interested in arranging training on these or other employment or benefits-related topics, please contact a member of the Employment & Benefits Practice Group.
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Sullivan & Worcester Ranked by Best Law Firms® in 2024
Boston, MA - Sullivan & Worcester has been recognized in the 2024 edition of Best Law Firms,® ranked by Best Lawyers,® with 15 practice areas ranked nationally and 23 ranked regionally. Firms included in the 2024 Best Law Firms® list are recognized for professional excellence with persistently impressive ratings from clients and peers. To be considered for this milestone achievement, at least one lawyer in the law firm must be recognized in the 2024 edition of The Best Lawyers in America.® Achieving a tiered ranking in Best Law Firms® on a national and/or metropolitan scale signals a unique credibility within the industry. The transparent, collaborative research process employs qualitative and quantitative data from peer and client reviews that is supported by proprietary algorithmic technology to produce a tiered system of industry-led rankings of the top 4% of the industry. Sullivan received the following rankings in the 2024 edition: National Rankings Tier 1 Banking and Finance Law Commercial Litigation Corporate Law Environmental Law Litigation – Environmental  Mutual Funds Law  Real Estate Law Securities Regulation Trusts & Estates Tier 2 Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law   Litigation and Controversy - Tax Mergers & Acquisitions Law Securities / Capital Markets Law  Tax Law Tier 3 Litigation - Bankruptcy Metropolitan Tier 1 Boston Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law Commercial Litigation Corporate Compliance Law Corporate Governance Law Corporate Law Employee Benefits (ERISA) Law Litigation - Bankruptcy Litigation - Tax Mergers & Acquisitions Law Nonprofit / Charities Law Real Estate Law Securities / Capital Markets Law Tax Law Trusts & Estates Law New York Banking and Finance Law Corporate Law Washington, D.C. Environmental Law Litigation - Environmental Mutual Funds Law Securities Regulation Metropolitan Tier 2 New York Mutual Funds Law Trusts & Estates Law Metropolitan Tier 3 Boston Mass Tort Litigation / Class Actions - Defendants About Sullivan Sullivan & Worcester (Sullivan) is a global law firm with approximately 200 attorneys in Boston, London, New York, Tel Aviv and Washington, D.C. Sullivan’s clients, including Fortune 500 companies, leading financial services firms and asset managers, boards of directors, and emerging businesses, rely on Sullivan’s ability to navigate complex legal and operational landscapes, the impeccable judgement of its lawyers, and its commitment to best‑in‑class client service.
43 Sullivan & Worcester Attorneys Listed in Best Lawyers in America® 2024 Edition
Boston, MA – International law firm Sullivan & Worcester announced today that 35 attorneys have received recognition in the 2024 edition of Best Lawyers in America® and eight attorneys have been named to the Best Lawyers: Ones to Watch list. Best Lawyers is based solely on peer review, in which attorneys cast more than 9.4 million votes on the legal abilities of other lawyers in their practice areas. Best Lawyers highlights the top 5% of practicing attorneys in the United States, covering more than 148 different practice areas. Best Lawyers has been published since 1983 and selections will be featured in the 2024 Edition of The Best Lawyers in America®. The Sullivan attorneys listed as Best Lawyers in America® are: Victor Baltera – Real Estate Law Carole Bass – Trusts and Estates Howard Berkenblit – Corporate Governance Law, Corporate Law J. Truman Bidwell – Corporate Law Harvey Bines – Corporate Compliance Law, Corporate Governance Law, Corporate Law Ashley Brooks – Real Estate Law Joel Carpenter – Tax Law John Chilton – Mutual Funds Law Henry Comstock, Jr. – Trusts and Estates Nicole Crum – Mutual Funds Law Christopher Curtis – Tax Law Patrick Dinardo – Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law, Litigation/Bankruptcy John Graham – Non-Profit/Charities Law, Tax Law Ira Gross – Commercial Litigation David Guadagnoli – Employee Benefits (ERISA) Law, Tax Law Warren Heilbronner – Real Estate Law Kimberly Herman – Trademark Law Richard Jones – Litigation and Controversy/Tax, Tax Law Jeffrey Karp – Environmental Law Karen Kepler – Real Estate Law David Leahy – Mutual Funds Law David Mahaffey – Mutual Funds Law, Securities Regulation Leonard Miller – Environmental Law, Litigation/Environmental Lisa Mingolla – Trusts and Estates Louis Monti – Real Estate Law Cornelius Murray – Trusts and Estates David Nagle – Litigation and Controversy/Tax, Tax Law Nicholas O’Donnell – Commercial Litigation Ameek Ashok Ponda – Tax Law Domenick Pugliese – Mutual Funds Law Constantine Ralli – Trusts and Estates Gregory S. Sampson – Environmental Law, Real Estate Law, Land Use, Zoning Law Lewis Segall – Mergers and Acquisitions Law Amy Sheridan – Employee Benefits (ERISA) Law Laura Steinberg – Commercial Litigation The Sullivan attorneys listed as Ones to Watch are: Steven Cunningham, Jr. – Trusts and Estates Natalie Lederman – Corporate Law Michael Palmisciano – Intellectual Property Law Avinash Rao – Corporate Law Aaron Schleicher – Securities/Capital Markets Law Ashley Tan – Real Estate Law Ryan Tompkins – Tax Law, Trusts and Estates Shu Wei – Corporate Law About Sullivan Sullivan & Worcester (Sullivan) is a global law firm with approximately 200 attorneys in Boston, London, New York, Tel Aviv and Washington, DC. Sullivan’s clients, including Fortune 500 companies, leading financial services firms and asset managers, boards of directors, and emerging businesses, as well as private clients, rely on Sullivan’s ability to navigate complex legal and operational landscapes, the impeccable judgement of its lawyers, and its commitment to best‑in‑class client service.

ERISA Fiduciary

Judith G.H. Edington
Judith G.H. Edington
Counsel
617 338 2422Email
John Graham
John K. Graham
Partner
617 338 2941Email
David Guadagnoli
David A. Guadagnoli
Partner
617 338 2938Email
William Hanson
William C. Hanson
Partner
617 338 2983Email
Janice Lee
Janice W. Lee
Associate
617 338 2820Email
Nicole Rives
Nicole Rives
Partner
617 338 2433Email
Amy Sheridan
Amy E. Sheridan
Partner
617 338 2897Email

ERISA Fiduciary

November 2, 2023

–Press Release

Sullivan & Worcester Ranked by Best Law Firms® in 2024

August 17, 2023

–Press Release

43 Sullivan & Worcester Attorneys Listed in Best Lawyers in America® 2024 Edition

The Best Lawyers in America®

July 17, 2023

–Press Release

Top 10 Most Influential Employee Benefits Lawyers in Massachusetts 2023

November 3, 2022

–Press Release

Sullivan Receives Top Rankings in the 2023 U.S. News – Best Lawyers® "Best Law Firm" Rankings

August 18, 2022

–Press Release

41 Sullivan & Worcester Lawyers Named to 2023 Best Lawyers® List

Best Lawyers in America, 2023

November 4, 2021

–Press Release

Sullivan Receives Top Rankings in the 2022 U.S. News – Best Lawyers® "Best Law Firm" Rankings

August 19, 2021

–Press Release

46 Attorneys from Sullivan Recognized in the 2022 Edition of The Best Lawyers in America®

January 20, 2021

–Quoted

The Value of Having a Retirement Plan Committee Charter

PlanSponsor

November 1, 2019

–Press Release

Sullivan Receives Top Rankings in the 2020 U.S. News – Best Lawyers® "Best Law Firms" Rankings

Sullivan Press Release

August 15, 2019

–News

Sullivan Attorneys Named to the 2020 Best Lawyers® List

The Best Lawyers in America 2020®

Overview Matters People Viewpoints News Events

Featured

Events
Financing the Future: From Defence to Critical Raw Materials

Geoffrey Wynne will participate in a panel discussion at ITFA's 52nd Annual International Trade and Forfaiting Conference alongside Ailsa McNeil, Director at Texel, and Hernan Mayol, Board Member and Representative of ITFA Americas and Chair of ITFA’s Latin America Regional Committee (LARC). The session, titled “Financing the future: From defence to critical raw materials,” will be moderated by Clarissa Dann, Editorial Director at Deutsche Bank AG.  The session will explore how trade

Viewpoints
Hiring: Add a Colleague, Not a Liability

Hiring a new employee is typically a moment of optimism—and sometimes, the relationship really does go wonderfully for its entire length and ultimately ends on good terms. But when that hope is treated as an assumption, companies make themselves vulnerable. If a client-facing employee does not have a non-solicitation agreement, a business’s customers could be poached. A new employee, hired because of their great industry relationships, might actually have an

Events
The Next Generation: Three Emerging Leaders, Three Ideas

Simon Cook, in his role as ITFA's Head of Education, will jointly moderate a Q&A on “The next generation: Three emerging leaders, three ideas”, together with Charlie O'Mulloy, chair of ITFA’s Emerging Leader Committee and Associate Banker at EBRD, at ITFA’s 52nd Annual International Trade and Forfaiting Conference in Split, Croatia on September 9. The Q&A will follow the presentations made by the finalists of the 2026 ITFA Emerging Leader

News
Upon Review: The 2026 World Cup's Biggest Legal Stories

Ryan Rosenblatt was quoted in Law360's article, "Upon Review: The 2026 World Cup's Biggest Legal Stories," which examines the legal, regulatory and policy disputes that emerged during the 2026 World Cup, including issues involving FIFA's disciplinary decisions, immigration challenges, public art protections and the legal dispute surrounding Gillette Stadium's hosting of World Cup matches. Discussing the agreement reached between FIFA's affiliate Boston 2026 and the Town of Foxborough over security fees

News
Sullivan Highlighted in Law360 Roundup of New York City's Largest Real Estate Transactions

Sullivan & Worcester was featured in Law360 Real Estate Authority's "NYC Real Estate Week In Review," which highlighted the largest New York City real estate transactions recorded during the week. The publication recognized Sullivan's representation of Fattal Hotel Group in its acquisition of the Blakely Hotel, a Manhattan hospitality property located at 136 West 55th Street. The approximately $38.5 million transaction was among the week's largest deals to hit public records.

Events
Basics of Estate and Trust Administration

Molly Depew will present “Basics of Estate and Trust Administration” at the American Bar Association (ABA)’s Skills Training for Estate Planners, a virtual conference taking place September 17–18 and sponsored by the ABA Real Property, Trust & Estate Law Section. The program offers a streamlined, practice-focused introduction to estate planning for attorneys building skills in trusts and estates. Ideal for young lawyers and those transitioning into the field, the course provides

Viewpoints
SEC Proposes New Regulation E-Delivery

On July 16, 2026, the Securities and Exchange Commission (“SEC”) proposed a new rule, Regulation E-Delivery, that would expand the ability of issuers, including registered investment companies, investment advisers, and broker-dealers, to use electronic delivery (“e-delivery”) to satisfy information delivery requirements under the federal securities law.  If adopted as proposed, Regulation E-Delivery would broadly address the e-delivery of “covered information” by “covered entities” to “covered recipients” (each as described further

News
Sullivan Represents Fattal Hotel Group in Acquisition of The Blakely Hotel in Midtown Manhattan

Sullivan & Worcester represented Fattal Hotel Group, owner and operator of 329 hotels across 22 countries and based in Tel Aviv, in its acquisition and financing of The Blakely Hotel in Midtown Manhattan. The acquisition marks the client's first hotel investment in the United States and is a milestone in its evolution from a leading European hospitality operator into a global hotel group. The acquisition was completed on July 7,

Viewpoints
Impact of 21st Century ROAD to Housing Act on Institutional Investor Ownership of Single-Family Rental Homes

The U.S. Congress passed the 21st Century ROAD to Housing Act (the “Housing Act”) and presented it to President Trump on June 29, 2026. At midnight on July 10, 2026, the Housing Act became law because the President did not return it to Congress within ten days (Sundays excepted). The Housing Act includes a wide range of housing reforms designed with the goal of making housing more available and affordable.  This alert

Viewpoints
SEC Establishes Retail Fraud Working Group to Combat Fraud Targeting Everyday Investors

The U.S. Securities and Exchange Commission (“SEC”) announced on July 7, 2026, the creation of the Retail Fraud Working Group, a new initiative within the Division of Enforcement designed to identify and combat fraud targeting main street investors. The announcement formalizes a priority that SEC Enforcement Director David Woodcock previewed in his May 13, 2026, remarks to the Managed Funds Association Legal & Compliance Conference, reflecting the current Commission’s broader

Events
Financing the Future: From Defence to Critical Raw Materials

Geoffrey Wynne will participate in a panel discussion at ITFA's 52nd Annual International Trade and Forfaiting Conference alongside Ailsa McNeil, Director at Texel, and Hernan Mayol, Board Member and Representative of ITFA Americas and Chair of ITFA’s Latin America Regional Committee (LARC). The session, titled “Financing the future: From defence to critical raw materials,” will be moderated by Clarissa Dann, Editorial Director at Deutsche Bank AG.  The session will explore how trade

Viewpoints
Hiring: Add a Colleague, Not a Liability

Hiring a new employee is typically a moment of optimism—and sometimes, the relationship really does go wonderfully for its entire length and ultimately ends on good terms. But when that hope is treated as an assumption, companies make themselves vulnerable. If a client-facing employee does not have a non-solicitation agreement, a business’s customers could be poached. A new employee, hired because of their great industry relationships, might actually have an

Events
The Next Generation: Three Emerging Leaders, Three Ideas

Simon Cook, in his role as ITFA's Head of Education, will jointly moderate a Q&A on “The next generation: Three emerging leaders, three ideas”, together with Charlie O'Mulloy, chair of ITFA’s Emerging Leader Committee and Associate Banker at EBRD, at ITFA’s 52nd Annual International Trade and Forfaiting Conference in Split, Croatia on September 9. The Q&A will follow the presentations made by the finalists of the 2026 ITFA Emerging Leader

News
Upon Review: The 2026 World Cup's Biggest Legal Stories

Ryan Rosenblatt was quoted in Law360's article, "Upon Review: The 2026 World Cup's Biggest Legal Stories," which examines the legal, regulatory and policy disputes that emerged during the 2026 World Cup, including issues involving FIFA's disciplinary decisions, immigration challenges, public art protections and the legal dispute surrounding Gillette Stadium's hosting of World Cup matches. Discussing the agreement reached between FIFA's affiliate Boston 2026 and the Town of Foxborough over security fees

News
Sullivan Highlighted in Law360 Roundup of New York City's Largest Real Estate Transactions

Sullivan & Worcester was featured in Law360 Real Estate Authority's "NYC Real Estate Week In Review," which highlighted the largest New York City real estate transactions recorded during the week. The publication recognized Sullivan's representation of Fattal Hotel Group in its acquisition of the Blakely Hotel, a Manhattan hospitality property located at 136 West 55th Street. The approximately $38.5 million transaction was among the week's largest deals to hit public records.

Events
Basics of Estate and Trust Administration

Molly Depew will present “Basics of Estate and Trust Administration” at the American Bar Association (ABA)’s Skills Training for Estate Planners, a virtual conference taking place September 17–18 and sponsored by the ABA Real Property, Trust & Estate Law Section. The program offers a streamlined, practice-focused introduction to estate planning for attorneys building skills in trusts and estates. Ideal for young lawyers and those transitioning into the field, the course provides

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