New Tax Law May Provide Relief for Employers Plus ERISA Final Rule

The federal Tax Cuts and Jobs Act was recently signed into law and, among many other things, provides a tax credit for eligible employers who offer income replacement to employees for family and medical leaves.   The tax credit will be dependent on the percentage of total income replaced and maxes out at 50%. The credit is temporary and will not apply to income replaced after December 31, 2019.  To be an eligible employer, a company must have a written policy that provides:

  • At least two weeks of income replacement for family and medical leaves for all qualified employees
  • For qualified part-time employees, income replacement that is proportional to the amount for full-time employees as explained above
  • Income replacement that is at least 50% of the normal pay for employees

An eligible employee is one who has been employed for one or more years and whose salary is $72,000 or less.  If an employee earns more than $72,000 per year, his or her income replacement is not eligible for the credit.

The type of leaves that qualify are similar to those reasons granted for under the Family and Medical Leave Act (FMLA) and under the California Family Rights Act (CFRA).

Please consult with your tax professional for specific details regarding the new Tax Law.  The Larkin Company is not qualified nor licensed to give tax advice.

ERISA Final Rule

The United States Department of Labor (DOL) has now announced and confirmed that the ERISA Final Rule amending 29 CFR 2560.503-1 will be effective as of April 1, 2018.  This rule adds language to eliminate conflict of interest, expansion of explanations for denial notices, provisions for claimants to review information used in a denial, Non-English language notices, and contractual limitations notices.

These changes have been incorporated into the documents for Plans administered by The Larkin Company and clients will receive updates prior to April 1.