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Benefits in the News

Older News | October 31, 2014

arrow icon Text of Rev. Proc. 2014-61: Inflation-Adjusted Limits for 2015 Under Section 125 and Other Code Provisions (PDF)
Internal Revenue Service [IRS]
10/30/2014 [Official Guidance]

The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014. Under the small business health care tax credit, the maximum credit is phased out based on the employer's number of full-time equivalent employees in excess of 10 and the employer's average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014. The monthly limitations for qualified transportation fringe benefits are unchanged ($130 for commuter vehicles and transit passes; $250 for qualified parking).
arrow icon How Halbig and Three Related Cases Could Affect Health Insurance Under the ACA
Families USA

"[I]f proponents of these lawsuits prevail, the government will strip premium tax credits from residents in all of the 36 states with federally facilitated marketplaces. Those tax credits help low- and moderate-income residents afford to pay their monthly health insurance premiums. Without this benefit, millions of residents would not be able to pay for their health insurance. The scale of the problem is large."
arrow icon Biometric Screening Requirement Under Wellness Program Violates ADA and GINA, According to EEOC Suit
Jackson Lewis

"Failure to participate in the screenings would subject the employee to financial penalties. For example, an employee that does not participate would not be able to receive a company contribution to the employee's health savings account of up to $1,500 for the year. Additionally, the employee would be subject to a $500 surcharge on medical plan costs, as well as tobacco surcharges of $1,000 that apply to the employee and the employee's spouse if they fail to take the screenings.... Because of the incentives ... the EEOC claims that the examinations are involuntary, effectively forcing employees to submit to the biometric screenings. The Eleventh Circuit rejected a similar challenge in Seff v. Broward County, FL, applying a separate 'safe harbor' provision of the ADA." [EEOC v. Honeywell Int'l Inc., No. 14-cv-04517-ADM-TNL (D. Minn., petition filed Oct. 27, 2014)]
arrow icon Text of EEOC Memorandum on Law in Support of Application for Temporary Restraining Order Against Honeywell International (PDF)
Equal Employment Opportunity Commission [EEOC], via Jackson Lewis

"Based upon the EEOC's preliminary review, Honeywell's medical examinations are unlawful. The ADA prohibits employers from conducting medical examinations that are not job-related and consistent with business necessity. While an employer can ask the employees to undergo voluntary health exams, an examination is not voluntary when the employer imposes a penalty on the employee if he or she declines to participate. The EEOC's preliminary investigation also indicates that the ongoing medical testing violates GINA. Honeywell requires that the employees' spouses be tested or the employees will be penalized. GINA prohibits employers from offering inducements (or alternatively imposing penalties) to employees to obtain medical information about an employee's family members. Honeywell's program, if not enjoined, will irreparably harm the EEOC and Honeywell's employees. The EEOC's mission will be thwarted. It will be forced to sit by and watch Honeywell violate the ADA and GINA, thereby irreparably damaging the EEOC's role as the agency charged with enforcing those statutes and preventing discrimination under them." [EEOC v. Honeywell Int'l Inc., No. 14-cv-04517-ADM-TNL (D. Minn., petition filed Oct. 27, 2014)]
arrow icon GFOA Best Practice: Enhancing Reliability of Actuarial Valuations for Pension Plans
Government Finance Officers Association

"Because actuarial information directly affects the funded level and sustainability of pension plans, the GFOA urges pension plan fiduciaries to take the following steps to obtain additional information that will enhance the reliability of their actuarial valuations: ... Engage the actuary to perform additional services, to validate the actuarial assumptions used for the valuation or to help the plan with risk management strategies and future trends forecasting. Such services include: ... [1] Actuarial Gain/Loss Analysis ... [2] Actuarial Experience Study ... [3] Actuarial Projections ... [4] Asset/Liability Study ... [5] Sensitivity Analysis ... [6] Analysis of Proposed Benefit Changes. In considering benefit changes, decision makers need to understand the potential cost implications of the changes before they are enacted."
arrow icon Many U.S. Companies Performed Executive Pay-for-Performance Analyses But Did Not Disclose in 2014 Proxies
Towers Watson

"Six in 10 U.S. public companies have conducted analyses to assess how closely their executive pay levels align with company performance. However, nearly two-thirds of those companies did not disclose the results of those analyses in their 2014 proxy statements, mostly because they are awaiting soon-to-be-released pay-for-performance disclosure guidance from the Securities and Exchange Commission (SEC)[.]"
arrow icon Honeywell: Driving Health Engagement
Business Roundtable [BRT]

A description of the health & wellness program sponsored by Honeywell International. Excerpt: "Today, Honeywell has shifted from just offering health care as a benefit to engaging and equipping employees to lead healthier and productive lives, and has found that incentives coupled with targeted communications can be effective in engaging employees."
arrow icon IRS Pub. 4546 (Rev. 11-2014): 403(b) Plan Checklist (PDF)
Internal Revenue Service [IRS]
10/30/2014 [Guidance Overview]

The publication is a PDF document that contains clickable links. Excerpt: "Every year it's important that you review the requirements for operating your 403(b) retirement plan. Use this checklist to help you keep your plan in compliance with many of the important rules. For additional information (including examples) on how to find, fix and avoid each mistake, click on '(More).'"
arrow icon Six Ways to Make Active Management Work for You
Lawton Retirement Plan Consultants

"Think there is no point to active management? Consider the following ... [1] Eliminate all closet indexers.... [2] Index efficient asset classes.... [3] Hire active managers for inefficient asset classes.... [4] [S]ome mutual fund managers are really good defenders of your investment ... [so] choose mutual funds that have a down market capture rate of less than 100%. [5] Review the performance of all your mutual fund managers over a full market cycle.... [6] Use active management to determine your allocations between asset classes."
arrow icon Small Business Owners Are Redefining the Market for 401(k) Plans
Employee Fiduciary

"[S]mall business owners ... are accustomed to making complex purchasing decisions and, as a group, are much more dynamic in making financial decisions. Collectively, these entrepreneur-driven companies are reshaping the 401k market. Literally, tens of thousands of small business owners are putting their personal preference for choice first and foremost when choosing a 401k provider. Conversely, larger companies often have competing needs when selecting a 401k provider and often are slower to make changes."
arrow icon Puerto Rico Retirement Plans Tax Prepayment Window to be Extended (PDF)
Groom Law Group
10/30/2014 [Guidance Overview]

"[A] technical corrections bill to the Puerto Rico Tax System Adjustment Act ... is expected to be enacted into law later this week ... [which] would extend until December 31, 2014, the current window period for the pre-payment of income taxes under the Puerto Rico Internal Revenue Code of 2011 ... on balances and benefits in qualified and non-qualified retirement plans (the 'Prepayment Window'). In addition, the Puerto Rico Treasury Department ... recently issued Circular Letter of Tax Policy No. 14-02 ... providing additional guidance on the Prepayment Window."
arrow icon Stockton Bankruptcy Ruling Will Decide Fate of Public Pensions in California
Los Angeles Times

"[A] federal judge on Thursday is expected to decide whether the bankrupt city of Stockton can continue to pay employees generous pensions that soon could consume one-fifth of municipal revenues. The ruling has been much anticipated since U.S. Bankruptcy Judge Christopher M. Klein recently said that California's rich and powerful public pension system should be treated like all other creditors -- with no special protection. His comments stunned state and local officials and public employee unions, who had long considered pensions untouchable, even in bankruptcy."
arrow icon Text of Fifth Circuit Opinion Upholding Denial of Accidental Death Benefits for Police Shooting Victim Who Was Suicidal (PDF)
United States Court of Appeals for the Fifth Circuit

"ReliaStar relied on an administrative record that supported finding Rice's death was not accidental. Rice was suicidal and had been drinking heavily on the day he was shot. Rice took eleven prescription pills while drinking, and he told the bartender at the bar where he had been drinking that he left his pills behind because 'it's over.' Rice was also heard revving the engine in his truck while the garage was closed, suggesting he may have been trying to kill himself through carbon monoxide poisoning. Further, Rice approached police officers with a loaded weapon even after the officers told him to put his gun down; he told the officers 'I want to commit suicide' and after Rice's death, the sheriff's investigation committee found a note Rice left his sister that appeared to be a suicide note.... Thus, ReliaStar did not abuse its discretion in finding that Rice's death was not accidental, that is, not an 'unexpected, external, violent and sudden event.' " [Rice v. ReliaStar Life Insurance Company, No. 13-30639 (5th Cir. Oct. 27, 2014)]
arrow icon National Business Group on Health Sees Profound Implications for Corporate Wellness Programs from EEOC Lawsuit Against Honeywell International
National Business Group on Health [NBGH]
10/30/2014 [Opinion]

"The EEOC is suing Honeywell International over a wellness program that provides financial incentives to employees and their spouses who undergo biometric screenings and participate in smoking cessation programs.... Wellness programs with incentives for biometric screenings are prevalent: According to a survey by the National Business Group on Health and Fidelity Investments, 95% of employers offer a health risk assessment, biometric screening or other wellness program in 2014. About three in four (74%) employers use incentives to engage employees in these programs." [EEOC v. Honeywell Int'l Inc., No. 14-cv-04517-ADM-TNL (D. Minn., petition filed Oct. 27, 2014)]
arrow icon ERISA @ 40: A Midlife Crisis
Former PBGC Directory Joshua Gotbaum, via The Brookings Institution
10/30/2014 [Opinion]

"Thirty-five years ago, 25 percent of people surveyed were concerned about adequate retirement income; today that's 61 percent and the percentage has been rising. Retirement insecurity is now the most broadly felt component of economic insecurity (more widespread than Americans' previous top concern: healthcare costs). The ERISA community, by comparison, seems passive. Some quibble about whether this is a 'crisis.' Others seem to be channeling Elisabeth Kübler-Ross: some are in denial; others accept that 'pensions are dead.' "
arrow icon Majority of IRA Owners Hold 'Extreme' Asset Allocations (PDF)
Employee Benefit Research Institute [EBRI]

"23.7 percent of IRA owners have less than 10 percent in equities and 35.5 percent have more than 90 percent in equities.... [A]lmost 1 in 5 IRA owners (18.5 percent) had more than 90 percent of their assets in bonds and money." [From an EBRI study entitled 'IRA Asset Allocation, 2012, and Longitudinal Results, 2010-2012.']
arrow icon Roth vs. Regular 401(k): Doing the Math
October Three Consulting

"From the point of view of plan participants and plan sponsors, Roth math can be a little confusing. For some participants, Roth contributions will produce greater benefits (net of taxes) than regular contributions. For others, they produce smaller benefits. Which outcome applies often depends on the participant's marginal tax rate when the contribution is made and when it is distributed."
arrow icon As Employers Try to Avoid ACA Excise Tax, Lower-Cost Health Plans Face Biggest Test
Bloomberg BNA

"The excise tax should be given a more middle-class status name, such as the 'Camry tax,' because it is to affect more than just high-cost plans, [said Helen Morrison, a principal with Ernst & Young LLP]. Even plans with a 70 percent actuarial value -- a silver-tier plan under the ACA -- will reach the thresholds soon after 2018 ... Because the tax threshold is tied to the urban consumer price index and not to health cost trends, which has been rising much faster, the tax will affect more than just high-cost plans, Morrison said."
arrow icon EEOC Sues Honeywell Over Employee Wellness Testing

"Honeywell employees could be penalized up to $4,000 each, through surcharges and lost contributions to health plans, if they or their spouses do not comply with the biometric testing, according to the lawsuit, filed on [October 27] in U.S. District Court in Minnesota.... Of Honeywell employees and spouses enrolled in a health plan, 77 percent of participated in the company's wellness program last year, up from 36 percent in 2011, the company said." [EEOC v. Honeywell Int'l Inc., No. 14-cv-04517-ADM-TNL (D. Minn., petition filed Oct. 27, 2014)]
arrow icon ERIC Outraged Over Latest Wellness Suit Brought by EEOC
The ERISA Industry Committee [ERIC]
10/30/2014 [Opinion]

"Workplace wellness programs have a central role to play in the nation's efforts to improve the health of American workers, and they have proved effective in containing health costs, reducing disability claims, and improving workers' productivity. 'These suits by the EEOC will undercut efforts by employers to create a healthier workplace, will put a damper on the future development of wellness programs, will deny employees and their spouses the opportunity to live healthier lives, and ultimately, if left unchecked, will lead to a sicker population,' [said Gretchen Young, ERIC Senior Vice President for Health Policy]." [EEOC v. Honeywell Int'l Inc., No. 14-cv-04517-ADM-TNL (D. Minn., petition filed Oct. 27, 2014)]
arrow icon Final Regs Issued on ACA $500,000 Compensation Deduction Limit for Health Insurers (PDF)
Groom Law Group
10/30/2014 [Guidance Overview]

"The final regulations largely adopt, with some modification, the provisions set forth in the proposed regulations. [They] apply to taxable years beginning on or after September 23, 2014.... [and] provide some relief and clarifications on the entities that are subject to the deduction limitation.... [If] an entity becomes a [Covered Health Insurance Provider (CHIP)] solely as a result of a corporate transaction, the entity generally will not be a CHIP for the taxable year in which the transaction occurs."
arrow icon Common Wellness Program Designs Under Attack by EEOC (PDF)

"[C]ourts are loathe to assume that Congress intended to make laws that conflict with each other. Where laws appear to conflict, as the ADA and ACA/HIPAA appear to do with respect to wellness programs, courts will search for a way to reconcile them. It seems plausible to us that the courts will allow the ACA/HIPAA rules to trump the EEOC's more restrictive interpretation under the ADA. But all that remains to be seen."
arrow icon Lights Out for a 401(k) Fund? Check the Blackout Rules
Mintz Levin

"Replacement of an investment option or a permanent restriction on new contributions to an investment fund does not, in and of itself, trigger a blackout notice requirement. However, if pursuant to such actions the rights to diversify investments or take loans or distributions are suspended, a blackout notice may be in order."
arrow icon More Pension Relief from Low Rates -- But Is It Worth It?

Includes charts comparing the MAP-21 and HAFTA corridors and an example of the potential changes in effective discount rates over time under MAP-21 corridors versus HAFTA. "With lower interest rates still posing difficulties for some DB plans -- because of the impact it has on discount rates and ultimately their funding ratios -- this type of legislative relief provides for certain increases in the discount rate. Higher discount rates mean decreased plan liabilities, which in turn inflates the funding ratio, said Kimberly Stockton, an investment analyst in Vanguard Investment Strategy Group. 'However, it's important to remember that the ultimate inflation of the funding ratios under this scenario is somewhat artificial,' she said."
arrow icon De-Risking At Risk? Lawmakers Urge Changes
Osler, Hoskin & Harcourt LLP

"[I]n a letter addressed to the heads of the IRS, Department of Labor, PBGC and the new Consumer Financial Protection Bureau. Ron Wyden, Chairman of the Senate Committee on Finance, and Tom Harkin, Chairman of the Committee on Health, Education, Labor and Pensions urge these agencies 'to consider clarifying all of the circumstances and conditions under which de-risking strategies are permissible in the absence of a formal plan termination' and 'to move forward expeditiously with rules to protect plan participants.' While acknowledging the right of employers to terminate parts of their plans, the Senators want guidance requiring advance notice and expanded disclosure of the risks to participants, and new rules to clarify the standards that apply to the choice of an annuity provider and other fiduciary duties involved."
arrow icon 2015 Instructions for IRS Forms 1099-SA and 5498-SA (PDF)
Internal Revenue Service [IRS]
10/29/2014 [Official Guidance]

"File Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA, to report distributions from made from a health savings account (HSA), Archer medical savings account (Archer MSA), or Medicare Advantage MSA (MA MSA). The distribution may have been paid directly to a medical service provider or to the account holder. A separate return must be filed for each plan type.... File Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, with the IRS on or before June 1, 2016, for each person for whom you maintained a health savings account (HSA), Archer medical savings account (Archer MSA), or Medicare Advantage MSA (MA MSA) during 2015."
arrow icon Issues Surrounding Investment Return Assumptions by Public Pension Plans
National Association of State Retirement Administrators [NASRA]

"As of June 30, 2014 state and local government retirement systems held assets of $3.70 trillion.... [P]rojecting public pension fund investment returns requires a focus on the long-term. This brief discusses how investment return assumptions are established and evaluated and compares these assumptions with public funds' actual investment experience."
arrow icon CMS Clarifies Health Plan ID Requirement for Wrap Plans
10/29/2014 [Guidance Overview]

"While this clarification may be good news for many employers, remember that CHPs that do not qualify for the 'small controlling health plan' exception are required to obtain HPIDs no later than November 5, 2014."
arrow icon California Faces Death by Pension
The Spectator
10/29/2014 [Opinion]

"[T]he people who benefit from CalPERS have complete control over it. Those who pay the tab have little if any say.... California's entire public-sector compensation system is absurdly generous. For instance, the median pension for a recent state Highway Patrol retiree is $98,000 a year -- available at age 50, and paid for the life of the retiree and that retiree's spouse."
arrow icon 2014 IRPAC Public Report: Trouble Ahead in Determining 2014 Minimum Essential Coverage
Information Return Reporting and Advisory Committee [IRPAC], Internal Revenue Service [IRS]

"Tax professionals will be confused about what type of documentation to accept in preparation of individual income tax returns for 2014 regarding [minimum essential coverage (MEC)]. The chart on the IRS webpage about the individual shared responsibility provision lists 28 examples of differing types of health insurance coverage. IRPAC commends IRS for the detailed listing of coverages and the work that was involved in the listing. The difficulty will be for taxpayers to match the type of coverage from the list to the coverage they have. This is especially true for the examples of coverages with references to special federal laws. Combining the complexity of tax rules together with the complexity of understanding health insurance creates a near perfect storm for taxpayers and tax professionals."
arrow icon '4-Part Harmonization' on Rollovers
American Society of Pension Professionals & Actuaries [ASPPA]

"Advisors seeking to capture IRA rollovers face a 'four-part harmonization' of regulatory and other government entities -- that is, SEC, DOL, FINRA and GAO -- in the words of ERISA attorney Fred Reish.... As they look at distributions from DC plans and rollover issues, the four groups are all concerned with conflicts of interest and fees for mutual funds and advice. Reish highlighted the commonalities among the 2013 GAO report, DOL Advisory Opinion 2005-23A and FINRA Regulatory Notice 13-45. And both FINRA and the SEC included IRA rollover practices as an examination priority in 2014."
arrow icon $460 Billion in DC Plan Assets in Search of a New Home
Cogent Reports

"After years of extremely low turnover, retirement plan sponsors are giving serious consideration to altering their 401(k) plan recordkeeping relationships. With the current US-based 401(k) retirement plan assets estimated at $4.4 trillion ... assets controlled by plan sponsors planning a move represents a $460 billion opportunity for providers that can effectively differentiate themselves in an increasingly commoditized marketplace.... [F]our in 10 (40%) plan sponsors are very likely to initiate a formal review of their plan over the next year. Meanwhile, 11% of all plan sponsors are already planning to switch providers during the same period."
arrow icon Health Benefit Cost Trends in 2015: Expect More Variation (PDF)
Segal Consulting

Infographic. "Health benefit plan cost trend rates for 2015 are forecast to drop slightly for some coverage, but increase substantially for prescription drug coverage.... Open-access preferred provider organization (PPO) and point-of-service (POS) plans show a marginal decline.... Prescription drug carve-out coverage is projected to jump substantially for both actives and retirees under 65 and retirees 65 and older."
arrow icon Extended Predicted Lifespans May Increase Interest in Lifetime Distribution Options
Winstead PC

"Since 2000 men's average life expectancies have increased 2 years and women's average life expectancy increased 2.4 years.... The Wall Street Journal reported that this increase in life expectancy could eventually increase retirement liabilities by roughly 7% for most [defined benefit] pension plans.... While defined contribution [DC] plans provide a mechanism for accumulating an account balance and most do not have an obligation to pay benefits in the form on lifetime annuities ... this change in life expectancies will also impact [DC] plans by potentially exerting pressure on plan sponsors to consider to amend the [DC] plans to add a mechanism that permits employees to elect a distribution method that will last over the employee's lifetime."
arrow icon Impact on Employee Benefit Plans of the Supreme Court's Recent Actions on Marriage
Ogletree Deakins

"[F]or employee benefit plan issues that are not dictated by the Code or ERISA -- such as designing the eligibility of a health or welfare plan -- the recent Supreme Court decision does not directly impact an employer's ability to decide whether to extend coverage to a same-sex spouse. As the law stands today, sponsors of self-insured health plans may continue to choose whether or not to offer coverage to same-sex spouses (and a state law that provides otherwise should be preempted by ERISA).... [This article includes] a list of the protections and rules that currently apply under ERISA and the Code to 'spouses,' using the IRS's and DOL's definition that looks to the state of ceremony for determining the legality of the marriage."
arrow icon Required 2014 Qualified Retirement Plan Amendments and Cycle D Determination Letter Filing Deadline
Practical Law Company

"The [IRS] publishes an annually updated cumulative list that provides the latest statutory and regulatory changes that must be included in plan documents.... The 2014 Cumulative List should be issued in late October or early November and applies to Cycle D determination letter applications (to be submitted between February 1, 2014 and January 31, 2015).... This Article summarizes amendments that plans may be required to adopt for the 2014 plan year as well as plan document considerations for plans that are scheduled to apply for an IRS determination letter under Cycle D."
arrow icon Obamacare and the Language of Law
American Thinker
10/29/2014 [Opinion]

"In the text of ObamaCare there are 58 iterations of the word 'behalf,' and not a one of them is connected to 'State.' ... ObamaCare is a federal program; compliance is handled by a federal agency, our beloved IRS. In establishing federal exchanges, the feds weren't doing anything on 'behalf' of the States."
arrow icon How Can Plan Sponsors Handle PBGC Premiums for Underfunding?

"The [PBGC] charges pension plans a portion of their underfunding each year. Through 2013, the charge was 0.9% of the underfunding. By 2016, that rate will triple to approximately 2.9%.... How can plan sponsors handle this? ... [An] option is to borrow money to fund the pension plan.... If a plan sponsor borrows money, funds the pension plan, and invests the borrowed proceeds in AA-rated corporate debt, it has roughly swapped one type of debt for another. The goal here is not to beat the market; the goal is to avoid paying a 'tax' of 2.9% per year."
arrow icon District Court Finds New Rules on Contraceptives to Be Too Demanding for Religious School

"The Obama administration's attempt last summer to find a new way to give religious non-profit groups an exemption from the new health care law's mandate for birth-control services did not go far enough, a federal judge in Florida decided in a temporary ruling on Tuesday.... Ave Maria University sent HHS a written notice that it was a religious organization and that it was claiming the exemption, but it did not include any information about the insurer of its employee health plan, did not provide information for contacting the insurer, and did not name its plan or identify its type. Organizations like Ave Maria University have contended that it would violate their religions to do anything to implement the birth-control mandate to which they object for religious reasons, beyond simply claiming the exemption -- period." [Ave Maria University v. Burwell, No. 13-cv-630-JSM-CM (M.D. Fla. Oct. 28, 2014)]
arrow icon Underfunded Multiemployer Pension Plans: A Proposal to Spread the Pain
Center for Retirement Research at Boston College

"A small, but significant, number of multiemployer pension plans face insolvency in the next 20 years -- despite actions to reduce benefits and raise contributions. To avoid insolvency, a Commission with representatives from plans, employers, and unions has proposed allowing plans to cut accrued benefits of current workers and retirees. Critics are concerned that such a tool is unnecessary and would unfairly hurt plan participants, particularly retirees. [The authors'] analysis of one large plan suggests that the proposal would improve overall participant welfare, but leave the plan operating largely on a pay-as-you-go basis. Thus, before approving the use of such a tool, regulators should have access to detailed plan data to ensure not only solvency, but also a reasonable level of funding."
arrow icon Lawsuit Contends Actuarial Firm Misled Detroit Pension Plan
The New York Times; subscription may be required

"With the nation's states and cities slowly sinking in a $3 trillion pension hole, the professionals who advise their pension plans have long wondered whether the fingers of blame might eventually point to them. One of those fingers has surfaced in bankrupt Detroit, and it is singling out Gabriel, Roeder, Smith, a top actuarial consultant for public pensions, which has hundreds of clients across the country that rely on it to keep track of data, calculate required annual contributions and advise on crucial assumptions like future investment returns.... Gabriel Roeder said the three lawsuits 'are factually, legally and procedurally infirm and reflect a gross misunderstanding of the nature of actuarial services.' "
arrow icon Meet the Hedge Fund Wiz Kid Who's Shrinking America's Pensions

"A white paper on the ... website [of the Arnold Foundation, created by John Arnold,] depicts all forms of defined benefit pensions for public workers as doomed to failure, and lays out four principal ideas for addressing 'this looming crisis' in public pension funding... The paper proposes either wholly replacing traditional pensions with defined-contribution 401(k)-style plans, radically reforming the way traditional pensions are funded, or shifting to the sort of hybrid approach that [Rhode Island Treasurer] Gina Raimondo employed."
arrow icon Qualified Retirement Plan Amendments and IRS Filings: Do You Need to Amend or File in 2014?
Alston & Bird LLP

"Plans that define 'spouse' or 'marriage' in a manner that excludes married couples of the same sex may need to be amended no later than December 31, 2014.... Plan sponsors who have added optional features to a retirement plan during 2014 (e.g., a plan loan feature) must ensure the relevant amendments are signed no later than December 31, 2014 (for calendar year plans).... 'Cycle D' plans ... will generally need to be amended and restated no later than January 31, 2015. Note: if a Cycle D plan has discretionary amendments, those amendments still must be adopted by December 31, 2014 (for calendar year plans)."
arrow icon Premiums and HATFA and Hybrids, Oh My!
American Society of Pension Professionals & Actuaries [ASPPA]

"Thomas Finnegan, Principal at the Savitz Organization, ... addressed [at the ASPPA 2014 Annual Conference] some of the fallout of [the Highway and Transportation Funding Act (HATFA)].... Is reporting under ERISA Section 4010 or on PBGC Form 10/200 eliminated due to HATFA? Will penalties for late reporting be refunded? May 2013 HATFA changes be explained with the 2014 annual funding notice (AFN), rather than revising or redistributing? When will changes to model AFN language regarding HATFA and its impact on contribution requirements be available?"
arrow icon Employer Stock Plan Fiduciaries Can Take Liability-Shielding Measures, Attorneys Say
Bloomberg BNA

"The Dudenhoeffer ruling, while on its face benefiting participants in employer stock plans by eliminating a common defense to suits challenging declining stock value, arguably made it more difficult for plaintiffs to bring these challenges.... [Recently] panelists discussed several possibilities, including the appointment of independent fiduciaries, removing or limiting employer stock from retirement plans and adopting plan terms that mandate investment in employer stock."
arrow icon Insurers Limit Access to Pricey Drugs for Hepatitis C Patients Unless Illness Is Advanced
Kaiser Health News

"Faced with a cost per patient of roughly $95,000 or more for a 12-week course of treatment, many public and private insurers are restricting access to those who already have serious liver damage. Other strategies that limit access include restricting who can prescribe the drugs or requiring early proof the drug is working before continuing with treatment. In addition, many state Medicaid programs require that patients be drug and alcohol free for a period of months before they can get the hepatitis C drugs."
arrow icon What Will Be the Impact of the Employer Mandate on the U.S. Workforce? (PDF)
The Commonwealth Fund

"Fewer than 10 percent, less than 0.3 percent of the U.S. labor force, might see reductions in employment or hours in the short run. Over time, employment patterns might change, leading to fewer firm sizes and work schedules near the thresholds, potentially affecting up to 0.5 percent of the workforce."
arrow icon Amount of Savings Needed for Health Expenses for People Eligible for Medicare: Good News Not So Rare Anymore (PDF)
Employee Benefit Research Institute [EBRI]

"In 2014, a man would need $64,000 in savings and a woman would need $83,000 if each had a goal of having a 50 percent chance of having enough money saved to cover health care expenses in retirement. If either instead wanted a 90 percent chance of having enough savings, $116,000 would be needed for a man and $131,000 would be needed for a woman.... Savings targets declined between 2 percent and 10 percent between 2013-2014. For a married couple both with drug expenses at the 90th percentile throughout retirement who wanted a 90 percent chance of having enough money saved for health care expenses in retirement by age 65, targeted savings fell from $360,000 in 2013 to $326,000 in 2014."
arrow icon HHS Releases Additional Guidance on HPID Requirements (PDF)
Buck Consultants at Xerox
10/29/2014 [Guidance Overview]

"Sponsors of self-insured large health plans must apply for an HPID for each controlling health plan by November 5, 2014. Guidance issued [on Oct. 27] confirms that employers can obtain just one HPID for each ERISA plan.... The ability to treat an ERISA plan as a [Controlling Health Plan (CHP)] with a single HPID will greatly ease the HPID application process for employers. CHPs must also certify compliance with electronic transactions by December 31, 2015. Fewer HPIDs should also help with that compliance requirement."
arrow icon Do You Need to Send an Annual Notice to Your Defined Contribution Plan Participants?
Alston & Bird LLP

"[A] table provides a list of the content and deadlines for the most common notices that plan sponsors may need to distribute. It includes: [1] Traditional Safe Harbor 401(k) Notice; [2] Qualified Automatic Contribution Arrangements for a Safe Harbor 401(k) Notice; [3] Eligible Automatic Contribution Arrangement Notice; [4] Qualified Default Investment Alternative Notice (QDIA); [and] [5] Non-Safe-Harbor Automatic Contribution Arrangement Notice."
arrow icon The Back Door Roth IRA Contribution: Unintended Tax Consequences
Baker Newman Noyes

"The back door Roth technique involves making a nondeductible contribution to a traditional IRA and immediately converting it to a Roth IRA. Because the contribution to the traditional IRA is nondeductible, converting those assets to a Roth would result in no income tax upon conversion. An often overlooked aspect of this technique is that IRS rules don't allow a taxpayer to hand select which IRA assets he or she wishes to convert. If an individual has other IRA accounts, there is the potential for a tax surprise[.]"
arrow icon The United States of Pension Poverty?
Pension Pulse
10/28/2014 [Opinion]

"Let's take a closer look at the Wells Fargo survey which finds saving for retirement is not happening for a third of the middle class ... If you read the Wells Fargo survey, it extolls the virtues of 401(k)s as a savings plan but neglects to mention America's 401(k) nightmare which is actually still going on even if the stock market bounced back since the crisis.... [The author's] solution is to bolster defined-benefit plans for all Americans, not just public sector workers, and have the money managed by well-governed public pension funds at a state level."

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