Author: Erwin Kratz

Erwin Kratz practices exclusively in the areas of ERISA and employee benefits law, focusing on tax and regulatory matters relating to qualified and nonqualified deferred compensation and welfare benefits.

IRS Announces COLA Adjusted Retirement Plan Limitations for 2025

The Internal Revenue Service released Notice 2024-80 announcing cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2025.

Highlights Affecting Plan Sponsors of Qualified Plans for 2025

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $23,000 to $23,500.
  • The catch-up contribution limit for individuals aged 50 or over remains at $7,500.
  • The new special catch-up contribution limit for individuals who attain age 60, 61, 62, or 63 in 2025 is $11,250.
  • The Roth catch-up wage threshold for 2024, which is used to determine whether an individual’s catch-up contributions for 2025 must be designated Roth contributions, remains $145,000.
  • The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $345,000 to $350,000.
  • The limitation on annual additions to defined contribution plans under Section 415(c)(1)(A) is increased from $69,000 to $70,000.
  • The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $275,000 to $280,000.
  • The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $155,000 to $160,000.
  • The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $220,000 to $230,000.
  • The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $16,000 to $16,500.
  • The limit on annual contributions to an IRA increased remains at $7,000. The additional catch-up contribution limit for individuals aged 50 and over remains at $1,000.

The IRS previously updated Health Savings Account limits for 2025. The following chart summarizes various significant benefit Plan limits for 2023 through 2025:

Type of Limitation202520242023
415 Defined Benefit Plans$280,000$275,000$265,000
415 Defined Contribution Plans$70,000$69,000$66,000
Defined Contribution Elective Deferrals$23,500$23,000$22,500
Defined Contribution Catch-Up Deferrals$7,500
($11,250 for age 60-63)		$7,500$7,500
SIMPLE Employee Deferrals$16,500$16,000$15,500
SIMPLE Catch-Up Deferrals$3,500
($5,250 for age 60-63)		$3,500$3,500
Annual Compensation Limit$350,000$345,000$330,000
SEP Minimum Compensation$750$750$650
SEP Annual Compensation Limit$350,000$345,000$330,000
Highly Compensated$160,000$155,000$150,000
Key Employee (Officer)$230,000$220,000$215,000
Income Subject To Social Security Tax  (FICA)$176,100$168,600$160,200
Social Security (FICA) Tax For ER & EE (each pays)6.20%6.20%6.20%
Social Security (Med. HI) Tax For ERs & EEs (each pays)1.45%1.45%1.45%
SECA (FICA Portion) for Self-Employed12.40%12.40%12.40%
SECA (Med. HI Portion) For Self-Employed2.90%2.90%2.90%
IRA Contribution$7,000$7,000$6,500
IRA Catch-Up Contribution$1,000$1,000$1,000
HSA Max. Contributions Single/Family Coverage$4,300/ $8,550$4,150/ $8,300$3,850/ $7,750
HSA Catchup Contributions (age 55)$1,000$1,000$1,000
HSA Min. Annual Deductible Single/Family$1,650/
$3,300		$1,500/ $3,200$1,500/ $3,000
HSA Max. Out Of Pocket Single/Family$8,300/
$16,600		$8,050/ $15,000$7,500/ $15,000

Attorney Kristi Hill Receives Distinguished Legal Writing Award

ERISA Benefits Law is proud to announce that attorney Kristi Hill has been recognized as one of the nations finest law firm writers, by the Burton Awards, a national 501(c)(3) non-profit program, which is run in association with the Library of Congress. This award is made to a select group of 20 attorneys who demonstrate the highest standard of excellence in legal writing. Kristi won the award for her article Secure Act 2.0 – New and Enhanced Retirement Tools, which was published in the April 2023 edition of the Arizona Attorney magazine.

Kristi’s Law360 Distinguished Legal Writing Award will be presented by lead sponsor Law360, and co-sponsored by the American Bar Association, at an awards program to be held at the Library of Congress on May 20, 2024.

Congratulations, Kristi!

Attorney Kristi Hill Joins ERISA Benefits Law

ERISA Benefits Law, PLLC is pleased to welcome ERISA attorney Kristi L. Hill as a Partner to the firm. Prior to joining ERISA Benefits Law Kristi was Vice-Chair of the ERISA/Employee Benefits practice group at Fennemore, an Am Law 200 firm.


Kristi L. Hill
[email protected]
(602) 613-0786 (Direct)
(602) 282-0313 (Phoenix Office)
Bio: https://erisabenefitslaw.com/kristi-hill/

At ERISA Benefits Law, Kristi will continue to focus her practice on counseling employers with the administration of their benefit plans, as well as helping trustees and administrators comply with important federal laws related to employee benefits, including the Tax Code, ERISA, the Affordable Care Act (ACA), COBRA, and HIPAA.

Kristi is experienced in all aspects of qualified retirement plan compliance (401(k), profit sharing, 403(b), ESOP, defined benefit, and governmental plans), including document drafting and review, plan design, administration, compliance resolution/corrections, and prohibited transaction analysis. She regularly advise employers on health and welfare plan compliance matters, including cafeteria, flexible spending and health savings account plans, the Affordable Care Act, HIPAA, and COBRA. Kristi is also well-versed in nonqualified deferred compensation (409A, 457(b) and 457(f)), equity compensation matters (ESPPs, ISOs, NQSOs, RSUs), defending IRS and DOL audits, and analyzing controlled group/affiliated service group issues.
Kristi also has significant experience guiding clients through plan mergers, terminations, and spin-offs.

With Kristi’s addition to the firm, ERISA Benefits Law ensures we have further depth and breadth of expertise to meet our clients’ needs. We will continue to employ a team approach to each client and each matter, allowing us to apply the necessary expertise to solve your ERISA and employee benefits-related legal issues as efficiently and effectively as possible.

Learn More – Kristi’s Full Bio

IRS Announces COLA Adjusted Retirement Plan Limitations for 2024

The Internal Revenue Service released Notice 2023-75 announcing cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2024.

Highlights Affecting Plan Sponsors of Qualified Plans for 2024

  • The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $22,500 to $23,000.
  • The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) is increased from $150,000 to $155,000.
  • The limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $265,000 to $275,000.
  • The limitation for defined contribution plans under Section 415(c)(1)(A) is increased from $66,000 to $69,000.
  • The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $330,000 to $345,000.
  • The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $215,000 to $220,000.
  • The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five year distribution period is increased from $1,330,000 to $1,380,000, while the dollar amount used to determine the lengthening of the five year distribution period is increased from $265,000 to $275,000.
  • The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts is increased from $15,500 to $16,000.
  • The limit on annual contributions to an IRA increased from $6,500 to $7,000. The additional catch-up contribution limit for individuals aged 50 and over is now subject to an annual cost-of-living adjustment, but remains $1,000 for 2024.

The IRS previously updated Health Savings Account limits for 2023. See our post here.

The following chart summarizes various significant benefit Plan limits for 2022 through 2024:

Type of Limitation202420232022
415 Defined Benefit Plans$275,000$265,000$245,000
415 Defined Contribution Plans$69,000$66,000$61,000
Defined Contribution Elective Deferrals$23,000$22,500$20,500
Defined Contribution Catch-Up Deferrals$7,500$7,500$6,500
SIMPLE Employee Deferrals$16,000$15,500$14,000
SIMPLE Catch-Up Deferrals$3,500$3,500$3,000
Annual Compensation Limit$345,000$330,000$305,000
SEP Minimum Compensation$750$650$650
SEP Annual Compensation Limit$345,000$330,000$305,000
Highly Compensated$155,000$150,000$135,000
Key Employee (Officer)$220,000$215,000$200,000
Income Subject To Social Security Tax  (FICA)$168,600$160,200$147,000
Social Security (FICA) Tax For ER & EE (each pays)6.20%6.20%6.20%
Social Security (Med. HI) Tax For ERs & EEs (each pays)1.45%1.45%1.45%
SECA (FICA Portion) for Self-Employed12.40%12.40%12.40%
SECA (Med. HI Portion) For Self-Employed2.90%2.90%2.90%
IRA Contribution$7,000$6,500$6,000
IRA Catch-Up Contribution$1,000$1,000$1,000
HSA Max. Contributions Single/Family Coverage$4,150/ $8,300$3,850/ $7,750$3,650/ $7,300
HSA Catchup Contributions$1,000$1,000$1,000
HSA Min. Annual Deductible Single/Family$1,600/
$3,200		$1,500/ $3,000$1,400/ $2,800
HSA Max. Out Of Pocket Single/Family$8,050/
$14,100		$7,500/ $15,000$7,050/ $14,100

ARPA Includes Voluntary Extension and Expansion of FFCRA Paid Leave

The American Rescue Plan Act of 2021 (ARPA), signed by President Biden on March 11, 2021, includes a voluntary 6-month extension of the refundable tax credits available to employers for providing Emergency Paid Sick Leave (EPSL) and Emergency FMLA (EFMLA) under the Families First Coronavirus Response Act (FFCRA). For employers that want to take advantage of the extension, the ARPA also expands the EPSL and EFMLA paid leave entitlements that must be provided. 

Background

The FFCRA paid leave provisions, which required employers with fewer than 500 employees to provide paid EPSL and EFMLA paid leave, originally expired on Dec. 31, 2020. The tax credits covering the cost of EPSL and EFMLA paid leave were extended through March 31, 2021 (see our post here), helping employers to voluntarily continue providing such paid leave for employees who did not use up all of their paid leave entitlement by December 31, 2020. 

The ARPA Extension and Expansion

An employer’s decision to extend EPSL and EFMLA paid leave is entirely voluntary. Employers are, therefore, not required to take any action in response to this aspect of the ARPA.

However, employers wishing to take advantage of the refundable tax credits will need to comply with the EPSL and EFMLA requirements, as modified by the ARPA. Employers should note the following key points in this regard:

  • The employer must provide every employee with a new grant of 10 days of Earned Paid Sick Leave as of April 1. This is 80 hours for full time employees and is pro rated for part time employees, as under the original FFCRA.
  • The qualifying reasons for leave are expanded. There were originally 5 qualifying reasons for an employee to take EPSL, including
    • three “personal” reasons: the employee is (1) subject to government quarantine or (2) has been advised by a health care provider to self-isolate or (3) is experiencing COVID-19 symptoms and is seeking a diagnosis, and
    • two “caring” reasons: the employee is (4) caring for someone who is subject to one of the three “personal” COVID-19 issues or (5) is caring for a child whose school or place of care is closed  or unavailable due to COVID-19 precautions.
    • EFMLA paid leave (i.e. paid leave after the first two weeks of EPSL) was only available for the two “caring” reasons).
    • The ARPA expands the qualifying reasons for paid leave in two ways:
  • The ARPA makes the three “personal” qualifying reasons for paid EPSL leave also available for paid EFMLA leave.
  • The ARPA adds three new “personal” reasons for taking paid EPSL and EFMLA leave: 
    • the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis, or 
    • the employee is obtaining immunization related to COVID–19 or 
    • the employee is recovering from any injury, disability, illness, or condition related to immunization related to COVID-19 
  • The tax credit is available on paid leave taken with respect to the period from April 1 to September 30, 2021. An employer that elects to extend the EPSL and EFMLA paid leave can claim the credit for qualifying leave paid “with respect to the period beginning on April 1, 2021, and ending on September 30, 2021.” This covers leave taken between April 1 and September 30, even if the wages are paid after September 30 (i.e. on the last payroll covering the period up through September 30, 2021)
  • The aggregate amount of EFMLA wages that can be subject to the credit increased from $10,000 per employee to $12,000.
  • The first 10 days of EFMLA leave is now paid leave. Under the original FFCRA the first 10 days of EFMLA leave was unpaid (because it was paid as EPSL). Accordingly, the total available paid EFMLA leave is extended to 12 weeks (from 10). The law therefore appears on its face to require payment of both EPSL and EFMLA leave concurrently during the first 10 days, but this is unlikely the intention. More likely, the intention is to provide an additional 10 days of paid leave in total, on top of whatever an employee had “left over” when their EPSL and EFMLA leave entitlement otherwise expired (December 31, 2020 unless voluntarily extended to March 31, 2021).
  • The employer need NOT have voluntarily extended its EPSL and EFMLA leave policies to March 31, 2021 in order to take advantage of the new extension. expired on 
  • The employer must comply with all of the requirements of the FFCRA paid leave law (notice, documentation of leave requests and approvals, no retaliation for taking leave, etc…)
  • The ARPA explicitly denies a double tax benefit to the employer, providing that the employer’s gross income shall be increased by the amount of the tax credit received.
  • The extension includes a non-discrimination provision that disallows the credit for any employer that discriminates “with respect to the availability of the provision of qualified sick leave wages” in favor of:
    • highly compensated employees (within the meaning of Code section 414(q)), 
    • full-time employees, or 
    • employees on the basis of employment tenure with the employer. 
  • The credit does not apply to amounts that are taken into account as payroll costs in connection with certain specified relief programs:
    • a covered loan under section 7(a)(37) or 7A of the Small Business Act,
    • a grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act, or
    • a restaurant revitalization grant under section 5003 of the American Rescue Plan Act of 2021. 

Next Steps

Employers wishing to adopt this latest extension and expansion of the FFCRA paid leave program will need to revise their policies and related leave request and leave determination forms and procedures. If you used ERISA Benefits Law’s model EPSL/EFML Policies, Leave Request Form and Leave Determination Form to administer your FFCRA paid leave program in 2020, email your contact at the firm to get details on how we can assist you in efficiently updating those documents to implement the extension.

Families First Coronavirus Response Act Paid Leave – Voluntary Extension Through March 31, 2021

The Consolidated Appropriations Act, 2021 (H.R. 133), which was signed into law on December 27, 2020, includes provisions that allow employers to voluntarily extend their Families First Coronavirus Response Act Emergency Paid Sick Leave and Emergency Paid FMLA leave through March 31, 2021 if they want to.

Importantly, the Act does NOT provide an additional 80 hours of Emergency PSL, and it does NOT provide an additional 10 weeks of EFMLA leave. Employers that decide to extend their leave should consider the following:

  1. Revise the end date in the Policies we previously provided, from December 31, 2020 to March 31, 2021 .
  2. Continue tracking the leave as before, and continue taking the tax credit, up through March 31, 2021, as you did in 2020.
  3. Anyone who used up their paid leave entitlement in 2020 will not benefit from the extension, because they already used it up. Anyone who did not use all the paid leave will have three more months to do so.
  4. Apply the extension to all employees.

ERISA Benefits Law Receives Recognition as a Top Tier Law firm in 2021 U.S. News – Best Lawyers® “Best Law Firms” Rankings

We are happy to announce that ERISA Benefits Law has again been recognized as a top tier law firm in the 2021 US News Best Lawyers® “Best Law Firms” rankings. The firm received a Tier 1 rankings in Employee Benefits (ERISA) Law and in Employment Law – Management. We are grateful for the recognition of our peers and the trust of our clients as a niche ERISA and employee benefits law firm focused on providing the highest quality legal services at the most affordable rates anywhere.

The U.S. News – Best Lawyers “Best Law Firms” rankings are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations, peer review from leading attorneys in their field, and review of additional information provided by law firms as part of the formal submission process.

DOL Issues Revised FFCRA Leave Regulations in Response to Court Decision

The U.S. Department of Labor’s Wage and Hour Division (WHD) today posted revisions to regulations that implemented the paid sick leave and expanded family and medical leave provisions of the Families First Coronavirus Response Act (FFCRA).

The revisions made by the new rule clarify workers’ rights and employers’ responsibilities under the FFCRA’s paid leave provisions, in light of the U.S. District Court for the Southern District of New York’s August 3, 2020 decision in State of New York v Department of Labor, which found portions of the regulations invalid.

Background

The DOL issued its temporary rule to carry out the paid leave provisions of the FFCRA on April 1, 2020. See 85 FR 19326 (published April 6, 2020); see also 85 FR 20156 (April 10, 2020 correction and correcting amendment to April 1 rule).

On April 14, 2020, the State of New York filed suit in the United States District Court for the Southern District of New York (“District Court”) challenging certain parts of the temporary rule. On August 3, 2020, the District Court ruled that four parts of the temporary rule are invalid:

(1) the requirement under § 826.20 that paid sick leave and expanded family and medical leave are available only if an employee has work from which to take leave;

(2) the requirement under § 826.50 that an employee may take FFCRA leave intermittently only with employer approval;

(3) the definition of an employee who is a “health care provider,” set forth in § 826.30(c)(1), whom an employer may exclude from being eligible for FFCRA leave; and

(4) the statement in § 826.100 that employees who take FFCRA leave must provide their employers with certain documentation before taking leave.

The DOL’s Revised Rules

Today’s revisions to the temporary rules, effective immediately, reaffirm the prior regulations in part, revise the regulations in part, and further explain the DOL’s positions. Specifically, the DOL’s revised rules:

(1) Reaffirm that paid sick leave and expanded family and medical leave may be taken only if the employee has work from which to take leave and explains further why the DOL believes this requirement is appropriate. This temporary rule clarifies that this requirement applies to all qualifying reasons to take paid sick leave and expanded family and medical leave.

(2) Reaffirms that, where intermittent FFCRA leave is permitted by the regulations, an employee must obtain his or her employer’s approval to take paid sick leave or expanded family and medical leave intermittently under § 825.50 and explains further the basis for this requirement.

(3) Revises the definition of “health care provider” under § 825.30(c)(1) to mean employees who are health care providers under 29 CFR 825.102 and 825.125,3 and other employees who are employed to provide diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care.

(4) Revises § 826.100 to clarify that the information the employee must give the employer to support the need for his or her leave should be provided to the employer as soon as practicable.

(5) Revises § 826.90 to correct an inconsistency regarding when an employee may be required to give notice of expanded family and medical leave to his or her employer.

More…

ERISA Benefits Law Attorney Erwin Kratz Named to the Best Lawyers in America© 2021

ERISA Benefits Law attorney Erwin Kratz was recently selected by his peers for inclusion in The Best Lawyers in America© 2021 in the practice area of Employee Benefits (ERISA) Law. Mr. Kratz has been continuously listed on The Best Lawyers in America list since 2010.

Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. Lawyers are not required or allowed to pay a fee to be listed; therefore inclusion in Best Lawyers is considered a singular honor. Corporate Counsel magazine has called Best Lawyers “the most respected referral list of attorneys in practice.”

Attorney Lisa Dursey Joins ERISA Benefits Law

ERISA Benefits Law, PLLC is pleased to welcome ERISA attorney Lisa Dursey to the firm.

Prior to joining ERISA Benefits Law, Lisa practiced employee benefits at Stoel Rives in Seattle from 2016 to 2020, and corporate transactions at Alston & Bird in New York City from 2013-2016. Lisa received her law degree, cum laude, from Boston University in 2012, and a BA in Science and Technology Studies, with honors, from Cornell University in 2008.

Lisa D. Dursey
[email protected]
(206) 618-9363 (Seattle)
(602) 282-0313 (Arizona)
Bio: https://erisabenefitslaw.com/lisa-dursey/
Hourly Billing Rate: $295

Lisa’s ERISA practice focuses on advising employers on the design, implementation, and administration of all types of employee benefits plans. She is passionate about providing comprehensive, easily digestible, and pragmatic advice for her clients. Clients seek her guidance to help them realize the maximum value from their employee benefit programs.

Lisa assists clients with a wide range of benefits matters, including qualified and nonqualified retirement plans, executive compensation programs, health and welfare programs, and other fringe benefit programs. She regularly advises employers on design changes to their benefit plans to address regulatory updates and to optimize the company’s benefit offerings. Lisa is also experienced in helping plan sponsors correct operational failures, including through corrective filings with the IRS and Department of Labor when necessary. 

Lisa’s addition provides ERISA Benefits Law further depth to meet our clients’ needs. Lisa and Erwin will bring a team approach to each client and each matter, allowing us to apply the necessary expertise to continue solving your ERISA and employee benefits-related legal issues as efficiently and effectively as possible.

Learn More – Lisa’s Full Bio