Rehiring Employees and Its Benefits Impact

It’s not uncommon that employees who terminate employment with an employer later return to service with the same employer, full- or part-time. If an employee is rehired within five years of the employee’s previous severance of employment and that employee was participating in (or eligible to participate in) the employer’s 401(k) plan prior to the employee’s severance of employment, the employee will be eligible to participate in the 401(k) plan immediately upon rehire.

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• Employee Furlough Considerations in the Time of COVID-19
  Remember that employee furloughs, while largely a 2020 issue, may have seeped into 2021. Furloughs, unlike layoffs, should not have resulted, alone, in a termination of employment, but may have resulted in a break in service, depending on plan terms.

• Leave of Absence Effects on Employee Benefit Plans
  Remember that an unpaid furlough may interrupt active service and may ultimately reduce the amount of a participant’s defined benefit plan benefit, delay entry into a plan, or delay the time when a plan benefit becomes nonforfeitable. It’s good practice to notify affected individuals about the plan’s treatment of service interruptions.

Practical Guidance Updates

Featuring the latest updates from your Practical Guidance account.   

• Employee Benefits & Executive Compensation Key Legal Developments Tracker
  Stay informed on new developments.
  • ERISA Litigation
    Supreme Court hears oral arguments in ERISA fiduciary breach suit over 403(b) plan’s investment menu selection and excessive fees. Divane v. Northwestern Univ., 953 F.3d 980 (7th Cir. 2020), cert. granted, Hughes v. Northwestern Univ., 2021 U.S. LEXIS 3583 (2021). Oral arguments transcript.
  • Retirement Plans
    IRS issues 2021 Required Amendments List for individually designed plans qualified under 401(a) and for Section 403(b) plans (sole entry relates to multiemployer plans seeking special financial assistance). I.R.S. Notice 2021-64. [Note, the required amendments lists fails to mention the December 31, 2021 deadline for making hardship amendments to a 401(k) plan to comport with final regulations under the Bipartisan Budget Act of 2019.]
  • Health and Welfare Plans.
    IRS announces proposed regulations to apply an automatic 30-day extension to ACA deadlines to furnish health coverage information statements to employees under I.R.C. §§ 6055 and 6056 and to permit a simplified alternative method for the Form 1095-B (and certain 1095-C) disclosures so long as the ACA individual mandate penalty remains at $0.  86 Fed. Reg. 68,939 (Dec. 6, 2021); see also IRS, Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers (Section 6056) (updated 11/23/21).
    
    HHS, DOL, and IRS announce interim final rule under Section 204, Div. BB, Consolidated Appropriations Act, 2021 ( L. No. 116-260) on annual disclosure requirements for health plans and health insurance issuers to furnish spending data on prescription drugs and other health care services to the agencies. 86 Fed. Reg. 66,662 (Nov. 23, 2021); see also CMS, Prescription Drug and Health Care Spending Interim Final Rule with Request for Comments.
    
    HHS issues inflation-adjusted civil penalty amounts, including for HIPAA violations. 86 Fed. Reg. 62,928 (Nov. 15, 2021).

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