The Department of Labor has issued a regulation that expands the procedural requirements for disability claims made under employee benefit plans. Plans are required to be in compliance with the regulation by January 1, 2018.
This regulation, as might be expected, will apply to claims made under short-term and long-term disability plans. What might not be expected is that the regulation will also govern a claim by a participant that he or she is entitled to receive benefits under a qualified retirement plan or other deferred compensation arrangement because he or she is disabled.
Many employers have entered into plans or agreements whereby they provide nonqualified deferred compensation to employees in accordance with Section 409A of the Internal Revenue Code. These arrangements will need to comply with the DOL’s regulation.
Section 409A and regulations thereunder severely limit an employer’s ability to amend a nonqualified deferred compensation arrangement. We believe, however, that such an arrangement can be brought into compliance with the new regulation by having the employer adopt a supplement to the claims and review procedure for the arrangement.
If Woods Rogers can be of assistance in putting such a supplement in place for your nonqualified deferred compensation arrangements, please feel free to contact either of us.