Armanino Blog

Time for the C Suite to Become Involved

by Gary Wyatt
May 30, 2017
Practically every decision regarding administration, oversight or investment of assets of an employee benefit plan carries the weight of fiduciary liability. Increasingly, the litigators and the Department of Labor (DOL) have become interested in asserting breaches of this liability against those in power. The net can be broad and the stakes are high:
  • Did the 401(k) committee select an adequate array of good investment choices for plan participants?
  • Are plan costs paid by participants prudent?
  • If an investment manager (ERISA section 3(38)) was appointed was due diligence given to the selection?
  • Is the plan auditor qualified to do the job or simply the lowest bidder?
The Trade Preferences Extension Act (June 29, 2015) basically doubled the penalties previously existing for failures to file (or incorrect filings of) information returns. A few years ago, this would have primarily meant Forms W-2 and 1099. However, under the Affordable Care Act (ACA), there are numerous other forms that are the subject of these penalties. In certain instances, a failure to file information returns could subject an employer to penalties of $500 per statement for intentional failure to file.

Adding fuel to the fire, on July 15, 2015 the DOL released Administrator’s Interpretation No. 2015-1. This is a lengthy discussion of the circumstances under which a worker would be viewed as either an employee or as an independent contractor. The DOL’s view seems to clearly be that in most instances where there is doubt, the worker is an employee. Traditionally, this has been an issue for employment taxes and the Fair Labor Standards Act. Now this comes into play when determining many thresholds under the ACA and related law.

Executives need to “open the hood” and look at the engine that drives their company’s employee benefits.

For more information about compensation and benefits planning, contact your local Armanino expert.

May 30, 2017

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