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Benefits in the News

Older News | July 28, 2014
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Text of Amicus Brief by SHRM and COLLE Urging Supreme Court to Overrule Sixth Circuit Presumption of Vesting for Retiree Health Benefits (PDF)
Society for Human Resource Management [SHRM] and Council on Labor Law Equality [COLLE] More items by Society for Human Resource Management [SHRM] and Council on Labor Law Equality [COLLE]
7/28/2014 [Opinion]

"The imperative to establish a uniform labor policy requires a consistent and easy to understand test for determining when, in the case of a health plan created in collective bargaining, retirees become vested in a right to receive health-care benefits that cannot be either terminated or altered after the contract itself has expired. The only test consonant with ERISA, federal common law under the NLRA, and general principles of contract law, is one which requires clear and unmistakable language evincing the plan sponsor's intention to vest retired participants in a right to receive such significant and costly employer- provided benefits in perpetuity." [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (on appeal from 6th Cir., cert. granted May 5, 2014)]
New Obamacare Enrollment Data Indicates Decline in Employer-Based Healthcare Coverage
The Heritage Foundation More items by The Heritage Foundation
7/28/2014

"[D]uring the last quarter of 2013, enrollment in individual-market coverage declined by nearly 500,000 individuals, but then increased in the first quarter of 2014 by just over 2.7 million individuals. For the combined six-month period, the result was a net enrollment increase of just over 2.2 million for the individual market.... [O]ver the six-month period, net total enrollment for all three segments of the private coverage market increased by just over 520,000 individuals. Thus, the reduction in employer-sponsored coverage offset 77 percent of the gain in individual-market coverage during the period."
Employers Must Appeal to Needs of Savers, Not Investors, to Boost Retirement Readiness (PDF)
State Street Global Advisors More items by State Street Global Advisors
7/28/2014

"[P]articipants are pursuing a new vision of retirement. In the new vision, an individual's priorities and daily activities shift gradually over time, rather than changing drastically from full-time work to full-time retirement.... Plan sponsors should consider taking some or all of the following steps to help participants make the choices that are appropriate for their own unique paths toward retirement readiness: [1] Connect your Plan Design to retirement readiness... [2] increase employee engagement... [3] Address work force management implications."
HSA Contributions May Produce Large Lifetime Accumulations and Tax Savings (PDF)
Employee Benefit Research Institute [EBRI] More items by Employee Benefit Research Institute [EBRI]
7/28/2014

"HSAs provide account owners a triple tax advantage. Contributions to an HSA reduce taxable income. Earnings on the assets in the HSA build up tax free. And distributions from the HSA for qualified expenses are not subject to taxation.... This paper examines the amount of money an individual could accumulate in an HSA over his or her lifetime. It also examines lifetime tax savings from HSA contributions. Limitations of an HSA are also discussed."
Detroit-Style Pension Cuts: Could It Happen in California?
Calpensions More items by Calpensions
7/28/2014

"In California, pension debt is an unresolved issue in two cities that declared bankruptcy in 2012 about five weeks apart -- Stockton on June 28 and San Bernardino on Aug. 1. But the state law in California and the financial pressure on the two cities, both members of the California Public Employees Retirement System, are different from the situations in Detroit and Central Falls."
Paying for Public Employee Health Costs
National Center for Policy Analysis More items by National Center for Policy Analysis
7/28/2014

"Health insurance premiums for state workers have grown much less rapidly than premiums for those in the private sector. The share of health insurance premiums paid by public employees has been steady or has risen, whereas the share paid by private employees has fallen. For public employees, growth in employee premium share has been especially high in highly unionized states."
Employer-Provided 'Free' Parking May Be Taxable
Thomson Reuters / EBIA More items by Thomson Reuters / EBIA
7/28/2014

"This information letter offers a useful reminder that 'free' parking for employees may result in taxes for both the employee and the employer (since the employer pays a portion of FICA, as well as FUTA taxes). While the fair market value of employer-provided parking often falls short of the maximum excludable amount, monthly parking costs in major cities may regularly exceed the excludable maximum."
IRS and Treasury Officials Provide Informal Views on Various Employee Benefits Issues
Thomson Reuters / EBIA More items by Thomson Reuters / EBIA
7/28/2014

"While some of the answers [to questions posed by the Joint Committee on Employee Benefits (JCEB) of the American Bar Association] clearly have broad significance, others are highly dependent on the factual scenarios presented ... For example, the remarks regarding stock fund investments do not mention the regulations that permit restrictions on the divestiture of stock fund investments when such restrictions are 'reasonably designed' to assure compliance with the federal securities laws. In addition to health care reform, the report also includes items of interest to sponsors of defined benefit plans, 403(b) plans, 457(b) plans, ESOPs, and nonqualified deferred compensation arrangements."
An Article of Faith: The Gratuity Theory of Pensions and Faux Church Plans
Prof. Norman Stein, via Employee Benefits Committee, Section of Labor and Employment Law, American Bar Association [ABA] More items by Prof. Norman Stein, via Employee Benefits Committee, Section of Labor and Employment Law, American Bar Association [ABA]
7/28/2014

"This article ... concludes that the IRS position is inconsistent with the statute's unambiguous text and that the legislative history establishes that the 1980 amendments [to ERISA's definition of 'church plan'] were designed only [1] to allow plans established by churches to continue to cover employees of church-affiliated agencies and [2] to clarify that a church plan did not lose its status as such if it were maintained by an organization controlled or affiliated with a church whose purpose was to fund or administer the plan.... There are, however, two district court opinions taking the opposite position. At present, it seems possible if not probable that the Supreme Court will have to resolve the issue."
The Required Minimum Distribution Rules Do Not Work Well with Longevity Annuities
Ken Steiner, FSA Retired More items by Ken Steiner, FSA Retired
7/28/2014

"[Actuary Steve Vernon] has his hypothetical 65-year-old woman buy a Qualified Longevity Annuity Contract (QLAC), work half-time in retirement until age 70, defer Social Security commencement until age 70 and use some of her accumulated savings from age 65 until she commences Social Security to supplement her employment income until then.... But then Steve inexplicably has her run off the train tracks on her smart retirement train ride by using the RMD rules to determine her annual withdrawals from her accumulated savings. The RMD rules just don't coordinate well with her decision to buy the QLAC."
Target Date Funds: An Investment Fiduciary's Checklist
InvestmentNews More items by InvestmentNews
7/28/2014

"In addition to standard due diligence on the underlying holdings, the investment fiduciary's checklist should include factors relating to the manager's philosophy and practices regarding portfolio composition, and strategic and tactical asset allocation. These include the use of active versus passive funds, correlation among holdings, glide path trajectory, volatility of the TDF's returns over time and whether a 'to' versus 'through' approach is used."
IRS Issues Regs, Forms and Additional Guidance on Exchange Penalties and Subsidies
Thompson SmartHR Manager More items by Thompson SmartHR Manager
7/28/2014 [Guidance Overview]

"The rules and guidance are designed to help individuals and businesses calculate both their penalties if they don't have health coverage, and subsidies, if they are eligible, to help them pay for coverage. The draft forms give an idea of the format in which IRS will be asking companies and individuals to report on the health coverage they had in tax year 2014."
IRS Publishes Draft Versions of Forms for New ACA Employer Reporting Requirement
Hill, Chesson & Woody More items by Hill, Chesson & Woody
7/28/2014 [Guidance Overview]

"[T]he reporting requires collection and disclosure of information including, but not limited to, the following: Social Security numbers of employees, spouses and dependents; ... Number of full-time employees for each calendar month; Total number of employees (full-time equivalents) for each calendar month; ... Employee's share of the lowest-cost monthly premium for self-only, minimum value coverage for each calendar month; and Applicable Section 4980H safe harbor for each calendar month."
Dudenhoeffer Decision: Securities Laws Affect Prudence of Buying More Stock or Disclosing Negative Nonpublic Information
October Three Consulting More items by October Three Consulting
7/28/2014

"[W]hile fiduciaries may have lost the protection of the 'presumption of prudence,' they may have gained something more valuable -- a set of principles that recognizes that, with respect to publicly traded company stock, the idea that prudence compels a sale (or discontinuance of purchase) at market prices must overcome [1] some basic principles of economics ... and [2] a preference for regulating the issue of insider information under the securities laws." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)]
Distribution Planning for Beneficiaries: Why It's Important to Check IRA Agreements and Retirement Plan Provisions
The Slott Report More items by The Slott Report
7/28/2014

"Most employer plans do not offer a stretch option to a non-spouse beneficiary because they do not have to.... On the IRA side, a custodian does not have to offer a direct transfer option.... Other items to check for are the ability to use a trust as a beneficiary, the ability to use a power of attorney and the ability to disclaim inherited retirement assets."
Executive Compensation: Governance and Litigation Considerations
Good Risk Governance Pays More items by Good Risk Governance Pays
7/28/2014

"[C]ompany officers and directors have an obligation to make themselves aware of regulatory mandates as well as the activities of the plaintiffs' bar.... [It] is critical that they track what is going on in large shareholder land. Certain pension plans have been far from shy in taking their complaints to court.... Non-retirement plan investors are proving themselves to be no less active."
Enrollees in Exchanges Need Only Pay 11 of 12 Months, Healthy People Can Wait and Only Pay 9 of 12 Months
Benefit Revolution More items by Benefit Revolution
7/28/2014 [Opinion]

"[W]ithout a correction to these regulations, no healthy person ever needs to pay for the last three months of his or her plan-year coverage. But carriers needn't worry too much about this shortcoming because taxpayers will help them shoulder the burden in their shortfalls during, at least, the first three years of PPACA under the Three R's 'Bailout' program."
States Try to Protect Health Exchange Subsidies in Wake of Court Ruling
The Wall Street Journal; subscription may be required More items by The Wall Street Journal; subscription may be required
7/28/2014

"[S]ome of the 36 states in which the federal government has a role in the exchanges are moving to shore up their status. Some are saying publicly that their exchanges have always been state-operated. Others are trying to make the case that they should be considered to have state exchanges regardless of federal involvement. Still others, such as Arkansas, are pushing ahead to take over their exchanges, which would likely free them from the effects of any court decision."
The Pitfalls for Participants of Choosing Longevity Annuities in 401(k)s
Motley Fool More items by Motley Fool
7/28/2014

"[If] you are offered a longevity annuity, be sure to do your homework before signing on the dotted line. Ask the following questions. What insurance company is guaranteeing this plan? What happens if that company goes bankrupt? ... What happens if I die before my first payment? ... Will my payments keep pace with inflation?"
California Pension Reforms Don't Go Far Enough
Orange County Register More items by Orange County Register
7/28/2014 [Opinion]

"Only in California could a bill that requires 32 years to catch up and fund parts of the California State Teachers' Retirement System's current $74 billion in unfunded liability be hailed as a major reform.... In reality, [Gov. Jerry] Brown's reforms are weak and don't fix the pension mess."
Study Examines Medicare Advantage Cuts Per Congressional District
American Action Network More items by American Action Network
7/28/2014

"[D]istrict-by-district data analysis finds that seniors in every congressional district in the U.S. will experience benefit cuts in 2015. On average nationwide, seniors will face an annual benefits reduction of $1,538 or 13.32%. The largest cuts per district are 26.16% and $4,796 per senior, both in districts in New York." [Full district-by-district data is available.]
IRS Releases Premium Tax Credit Rules and Draft Forms
Timothy Jost for Health Affairs More items by Timothy Jost for Health Affairs
7/28/2014 [Guidance Overview]

"Insurers and self-insured health plans will provide a Form 1095-B to each of their enrollees and members, and file these forms, together with a transmittal Form 1094-B with the IRS. Large employers must provide a Form 1095-C to each employee, and transmit these, together with a transmittal [Form 1094-C] to the IRS. Exchanges will provide their enrollees a Form 1095-A. Individuals who receive premium tax credits will file a Form 8962 ... while individuals claiming an exemption from the individual mandate will file a Form 8965. Though the forms are not accompanied by instructions, they are quite straightforward and track closely the earlier released rules."
Health Plans Learn to Accommodate Information-Hungry Consumers
Healthcare Payer News More items by Healthcare Payer News
7/28/2014

"A decade ago, health plans worked with employers to manage almost all health benefit decisions, leaving consumers relatively unaware of the costs associated with their healthcare needs.... Today, employers and consumers are more frequently choosing plans with higher deductibles; more than 15.5 million Americans are enrolled in such plans ... As a result, more effectively engaging with consumers has become a high priority for health plans to remain competitive and maintain customer satisfaction. To meet these new challenges, [one insurer] has focused on three key aspects of healthcare consumerism: education, administrative and financial."
Text of Amicus Brief by ERIC Urging Supreme Court to Overrule Sixth Circuit Presumption of Vesting for Retiree Health Benefits (PDF)
The ERISA Industry Committee [ERIC] More items by The ERISA Industry Committee [ERIC]
7/28/2014 [Opinion]

"[T]his Court should apply the longstanding rule that the benefits and burdens of a contract do not survive the agreement's expiration (and thus do not vest for life) absent a clear and unequivocal statement to the contrary.... [If] the parties wish to negotiate lifetime healthcare benefits for retirees and their families, they are free to do so. But such lifetime benefits should not be a 'gotcha' sprung by the judiciary on employers who never intended to assume such costly and unpredictable burden." [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (on appeal from 6th Cir., cert. granted May 5, 2014)]
Dispelling the Myth: Is a 3(16) Fiduciary Really Necessary?
Retirement Management Services More items by Retirement Management Services
7/25/2014

"Very few firms offering 3(16) services will actually go as far as being named the 'Plan Administrator' in the plan document, which means that they are limited to taking on 3(16) responsibility only for the areas that are indicated in their contracts, and the Employer as Plan Administrator retains responsibility for administering all other plan functions, plus monitoring the prudence of the 3(16) selection.... [It] is easy for a 3(16) provider to contractually limit its own liability for services when the 3(16) provider does not control the payroll or human resource functions for the Employer."
Designation of Obesity as a Disease: Implications for Health Plan Sponsors
Sibson Consulting More items by Sibson Consulting
7/25/2014

"To some extent, the designation of obesity as a disease will increase plans' immediate costs. However, over the long term, covering obesity treatments is likely to save plans money by avoiding serious and costly chronic diseases and conditions for which obesity is a major risk factor.... Ultimately, prudent plan sponsors will get ahead of this issue and structure benefit coverage to support effective weight-reduction and management programs in a manner that reduces wasteful spending and holds providers and patients accountable for taking action to best manage this disease."
Redesigning Your DC Plan to Help Employees' Retirement Income Last a Lifetime
Sibson Consulting More items by Sibson Consulting
7/25/2014

"There are ... several ways employees can use their DC plan assets to maximize guaranteed lifetime income. Employers need to be familiar with these strategies and, if necessary, redesign the distribution options in their DC plans to help their employees take advantage of them. They should also communicate these strategies to employees who are approaching retirement, to educate them about their options."
What to Outsource in Defined Contribution Plans
Russell Investments More items by Russell Investments
7/25/2014

"In all defined contribution (DC) plans, some functions are delegated to outside service providers, if only record keeping and some investment management. Before undertaking a formal program of outsourcing fiduciary responsibility, however, a sponsor will want to engage in an explicit decision-making process to determine which functions to outsource and which to retain control over. Generally, the outsourcing decision will begin with an inventory of the relevant plan responsibilities, functions, and a determination of the sponsor's plan objectives and resources. This paper explores how DC plan sponsors should think about what functions to outsource and provides a client case study[.]"
Maximizing Your Investment in DC Advisor Value-Added Programs (PDF)
Chatham Partners More items by Chatham Partners
7/25/2014

"[1] There is a strong correlation between being a DC Advisors' preferred provider and offering strong value-added programs. [2] One size does not fit all, programs have varying appeal that is often dependent upon the type of advisor, channel, or, even, target market segment. [3] Value-added programs open doors or break ties. [4] Winning firms have adopted best practices around creating and managing their value-added programs for both DC Advisors and their Broker/Dealer and Advisory firm home offices."
Forms: Draft Versions of IRS Forms for Health Coverage Information Reporting by Employers and Insurers
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

"On July 24, 2014, the IRS released draft forms that employers will use to report on health coverage that they offer to their employees. In accordance with the IRS' normal process, these draft forms are being provided to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them. We anticipate that draft instructions relating to the forms will be posted to IRS.gov in August." Here are the forms: [1] Form 1094-B: Transmittal of Health Coverage Information Returns; [2] Form 1095-B: Health Coverage; [3] Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return; and [4] Form 1095-C: Employer Provided Health Insurance Offer and Coverage. (With a tip of our hat to the American Benefits Council for posting these online.)
How the IRS Harassed the Administration's Political Opponents and Saved its Healthcare Law
The Wall Street Journal; subscription may be required More items by The Wall Street Journal; subscription may be required
7/25/2014 [Opinion]

"The evidence shows that career officials at the IRS did indeed do as Treasury Department and Health and Human Services Department officials told them.... We know this thanks to a largely overlooked joint investigation and February report by the House Oversight and Ways and Means committees into the history of the IRS subsidy rule. We know that in the late summer of 2010, after ObamaCare was signed into law, the IRS assembled a working group -- made up of career IRS and Treasury employees -- to develop regulations around ObamaCare subsidies. And we know that this working group initially decided to follow the text of the law. An early draft of its rule about subsidies explained that they were for 'Exchanges established by the State.'"
Law Firm's Amicus Brief Attempts to Bring Broader View of Retiree Health Care
SCOTUSblog More items by SCOTUSblog
7/25/2014

"By discussing the key provisions in [100 collective bargaining] agreements and tracing patterns in a larger sample size, the [amicus brief filed by Goldstein & Russell] offers a broader view of retiree healthcare in the United States. The study found that 60% of the sampled CBAs (70% in the private sector and 50% in the public sector) include at least one clause that is generally understood to preclude vesting. By contrast, 26% of the agreements (30% private; 22% public) contain at least one clause suggesting that benefits do vest. 14% of the sampled CBAs (6% private; 22% public) include language that is considered ambiguous, and 16% (14% private; 18% public) are completely silent on the question of vesting. There was overlap across the categories." [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (on appeal from 6th Cir., cert. granted May 5, 2014)]
Transcript of IRS Phone Forum on Related Employers, May 22, 2014 (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014

17 pages. Excerpt: "We're talking today about related employers, and for employee benefit purposes, there are two types of employers that are of importance. One are controlled groups, and usually when you're dealing with controlled groups, you're looking at a collection of employers that are linked together because they have some type of common owner attributes. We're also going to talk about affiliated services groups. They also have this linkage of common ownership attributes, but usually that common ownership percentage is far less than it would be to get to a controlled group. But as a substitute for that lesser ownership percentage, you've got some degree of related service, either between the two entities, or the two entities are performing that service together to the public."
IRS Says Uninsured Will Face Maximum Fine of Nearly $2,500
The Hill More items by The Hill
7/25/2014

"[I]ndividuals who fail to get health insurance this year will be fined a maximum of $2,448 and families with five or more members can be fined up to $12,240. The maximum penalty would hit individuals without insurance whose income is above $244,800. For families of five or more, the maximum penalty would affect people making a combined yearly income of $1.2 million."
BLS Report of Employee Benefits in the United States, March 2014 (PDF)
U.S. Bureau of Labor Statistics [BLS] More items by U.S. Bureau of Labor Statistics [BLS]
7/25/2014

"Employer-provided medical care was available to 86 percent of full-time private industry workers in the United States in March 2014 ... By contrast, only 23 percent of part-time workers had medical care benefits available.... Retirement benefits followed a similar pattern as medical care benefits. In private industry, 74 percent of full-time workers had access to a retirement plan, significantly higher than 37 percent of part-time workers."
Fees Dropping for 401(k) Mutual Fund Investors
Investor's Business Daily More items by Investor's Business Daily
7/25/2014

"The average 401(k) stock fund investor was charged 0.58% of assets to cover expenses at year-end 2013 vs. the industry retail average expense ratio of 0.74% ... The 401(k) average expense ratio on stock funds was 0.83% in 2003. On average, the industry charged an expense ratio of 1% of assets from 2000 through 2003."
Text of IRS Comment Request for Form 8717 and Form 8717-A (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

"There are changes being made to the forms at this time, because the user fees were updated by Rev. Proc. 2014-8 ... and are effective for applications filed on or after February 1, 2014. Form 8717 has been renamed, User Fee for Employee Plan Determination Letter Request. Information previously on Form 8717 relating to opinion or advisory letter requests for Volume Submitter and Master or Prototype plans has been deleted. This information may now be found on new Form 8717-A, User Fee for Employee Plan Opinion or Advisory Letter Request,"
Text of OPM Proposed Regs: Federal Employees Health Benefits Program Expansion of Eligibility to Certain Employees on Temporary Appointments and Certain Employees on Seasonal and Intermittent Schedules
U.S. Office of Personnel Management [OPM] More items by U.S. Office of Personnel Management [OPM]
7/25/2014 [Official Guidance]

"Under this proposed regulation, employees on temporary appointments, employees on seasonal schedules who will be working less than six months per year, and employees working intermittent schedules would be eligible to enroll in a [Federal Employees Health Benefits (FEHB)] health plan if the employee is expected to work a full-time schedule of 130 or more hours in a calendar month ... The change in eligibility for coverage set forth in this proposed regulation is intended to ensure, to the greatest extent practicable, that full-time employees, within the meaning of section 4980H of the IRC ... are eligible to enroll in FEHB."
Dear Employers: We Have to Stop Sticking It to Pregnant Moms and Expectant Dads
FMLA Insights More items by FMLA Insights
7/25/2014

"[A] few employers apparently have made some rather foolish decisions lately when terminating the employment of an expectant parent, and it's making the rest of us look like we don't care much for moms and dads or, for that matter, the next generation.... The Timing of a Termination Decision is Important no matter what you think the courts say... When you terminate an employee shortly after they make a request for FMLA leave, please make sure you can back it up! ... Be mindful of the new EEOC guidance regarding pregnancy discrimination.... Moms and Dads make for sympathetic plaintiffs." [Rice v. Kellermeyer Company, No. 13-263 (N.D. Ohio July 15, 2014)]
A Big Hole in the Heart of Obamacare
Ilya Shapiro, for CNN More items by Ilya Shapiro, for CNN
7/25/2014 [Opinion]

"After-the-fact rationalizations notwithstanding, the concession that Obamacare's designers didn't anticipate so many state vetoes doesn't retroactively rewrite the plain language of the law. The fault lies squarely with those drafters, not the lawyers who point out the IRS abuse or the judges who strike it down."
Split Subsidy Decisions No Excuse to Delay Preparation for ACA
Ice Miller LLP More items by Ice Miller LLP
7/25/2014

"Large employers should continue to prepare for the January 1, 2015 effective date for the employer penalties.... Employers who wish to avoid ACA employer penalties should continue to develop systems for tracking hours to determine the full-time employees to whom health coverage should be offered.... [E]mployers with calendar year plans who wish to avoid penalties should make an offer of affordable, minimum value health coverage to full-time employees and their dependent children by January 1, 2015."
Handout for IRS Phone Forum: 403(b) Plans Update and Latest Developments, July 28, 2014 (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Guidance Overview]

28 slides. "Scope of Presentation: [1] Background and Overview of Pre-Approved Plan Program; [2] Changes to the Pre-Approved Plan Program -- Rev. Proc. 2014-28; [3] Effect of Windsor Decision; and [4] Additional Resources."
SEC Approves Amendments to Rules Governing Money Market Funds
Dechert LLP More items by Dechert LLP
7/25/2014 [Guidance Overview]

"In addition to the Amendments, the SEC proposed exemptive relief from Rule 10b-10 of the Securities Exchange of Act 1934. The proposed relief would exempt broker-dealers from the written notification requirements of Rule 10b-10(a), with respect to transactions effected in shares of floating NAV money market funds. The SEC also re-proposed amendments to Rule 2a-7 in order to eliminate the use of credit ratings in Rule 2a-7."
20-Year-Old Presumption of Prudence Rejected by Supreme Court
Warner Norcross & Judd LLP More items by Warner Norcross & Judd LLP
7/25/2014

"At first glance the elimination of the presumption of prudence would appear to be a negative change for all ESOPs, but a review of litigation from 1995-2013 found no decisions involving closely held companies and the presumption of prudence. And although the new standard articulated by the Supreme Court is undoubtedly helpful for fiduciaries of publicly traded companies who invest in employer stock in their retirement plans, it provides little helpful guidance for ESOP fiduciaries in closely held companies." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)]
Puerto Rico Tax Code Amendments Offer Window to Pay Reduced Tax on Retirement Funds (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
7/25/2014 [Guidance Overview]

"It is expected that lump sum distributions taken from a qualified plan following separation from service during the 'window' period will be treated as capital gains taxed at the 8% rate. It is far less certain whether the rate applicable to prepayments before separation from service from qualified plans will be 8% or 15%.... [O]ne possible approach to avail oneself of the 8% rate for qualified plan funds would be to roll over a lump sum distribution to a Puerto Rico IRA and then take advantage of the 8% preferential tax rate on IRA prepayments[.]"
FAQ by Agencies Addresses Disclosure Requirements for Reduction or Elimination of Contraceptive Services (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
7/25/2014 [Guidance Overview]

"Between the time the plan adopts and provides notice of the amendment, the unamended version of the plan will likely remain enforceable for participants and beneficiaries who incurred contraceptive coverage-related expenses in reliance on that version of the plan.... [A] plan that gives notice 60 days prior to the change will comply with the required SPD disclosure as well as the SBC rules for notice of material modifications."
Tips for Managing Executive Compensation in a Global Economy
Towers Watson More items by Towers Watson
7/25/2014

"[E]xecutive compensation themes and practices migrate from one region or country to another.... [L]egislative requirements like say on pay and corporate governance trends, such as the separation of the chairman and chief executive roles, originated in certain countries before spreading to others.... The United Kingdom also has a longstanding practice of companies engaging with shareholders, a trend that is taking off in the United States. So it's important for professionals in the executive compensation field to stay attuned to global trends and emerging best practices."
Update on IRS Rulings on Pension De-Risking
October Three Consulting More items by October Three Consulting
7/25/2014

"[W]hile there may be a small number of these rulings still 'in the pipeline' that may be completed, after that the IRS is unlikely to consider issuing any more. The normal procedure -- where, as in the case of de-risking, there is ongoing demand for more rulings -- is for IRS to issue a Revenue Ruling similar to the previous Private Letter Rulings... The current controversy over de-risking, however, makes it unlikely that IRS will issue such a Revenue Ruling in this case. In at least two states, Connecticut and New York, legislation has been introduced that, if adopted, would significantly restrict de-risking transactions."
Arbitration of ERISA Benefit Claims In Lieu of Judicial Review
Seyfarth Shaw LLP More items by Seyfarth Shaw LLP
7/25/2014

"What would the Court do with an arbitration provision precluding judicial review of ERISA claim and appeal denials? ... ERISA is silent on mandatory arbitration in lieu of judicial review under Section 502(a) of ERISA (although a DOL regulation arguably prohibits it in the non-collective bargaining context). The recent Supreme Court decisions suggest, however, that plan sponsors may condition benefits on an agreement to arbitrate a final claim denial."
Appellate Courts Split on Validity of Key ACA Regulation
Foley & Lardner LLP More items by Foley & Lardner LLP
7/25/2014

"[Some] states, like Massachusetts, that have been considering migrating from a state exchange to a federal exchange for technical convenience should evaluate whether specific state legislation would be helpful. Some may take steps to establish their own state-operated exchanges, which would qualify them for subsidies even if the plaintiffs prevail."
IRS Issues Guidance on In-Plan Roth Rollovers and Latest Cumulative List (PDF)
Groom Law Group, via Journal of Pension Benefits More items by Groom Law Group, via Journal of Pension Benefits
7/25/2014 [Guidance Overview]

"Notice 2013-74 ... provides the ground rules for implementing in-plan Roth rollovers (IRRs), clarifying, in Q&A format, both the rules for existing IRRs that have been available since 2010 ... and the expanded IRRs that have been available since January 2013 ... [A chart in this article] reviews each of the Q&As therein, and describes the impact on both types of IRRs. Second, the IRS issued Notice 2013-84, which opens the determination letter program for Cycle D filers beginning February 1, 2014 (and ending with the January 31, 2015, filing deadline), and provides a list of Internal Revenue Code provisions that will be the subject of IRS review."
Employers Should Heed IRS Notice 2014-35 Providing Late Filers of Form 5500 Relief from Penalties (PDF)
Alston & Bird, LLP More items by Alston & Bird, LLP
7/25/2014 [Guidance Overview]

"The Form 8955-SSA must be filed with the IRS in hard copy by the later of 30 calendar days after the filer completes the DFVC filing or by December 1, 2014. This requirement applies to any DFVC filing submitted through EFAST2 (which includes most DFVC filings from December 31, 2009, to present), regardless of whether the DFVC filing was submitted before the IRS issued this notice regarding the Form 8955-S."
Addressing the Needs of Victims of Domestic Abuse and Spousal Abandonment under the ACA
U.S. Department of the Treasury More items by U.S. Department of the Treasury
7/25/2014 [Guidance Overview]

"Treasury and the Internal Revenue Service (IRS) [have] issued regulations to allow married victims of domestic abuse or spousal abandonment to claim a premium tax credit without filing a joint return for up to three consecutive years. An individual can access this relief by filing with the status of married filing separately, and indicating that he or she is living apart from a spouse and is unable to file a joint return due to domestic abuse, or because a spouse cannot be located after a reasonable effort."
Text of IRS Final and Temporary Regs: Health Insurance Premium Tax Credit and Deduction for Health Insurance Costs for Self-Employed Individuals (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

43 pages. These regs address: "[1] Circumstances in which a Married Taxpayer May Claim a Premium Tax Credit on a Separate Return ... [2] Indexing ... [3] Allocations for Reconciliation of Advance Credit Payments and the Premium Tax Credit ... [4] Reconciliation for Divorced and Separated Taxpayers ... [5] Reconciliation for Married Taxpayers Who File Separately ... [6] Deduction for Health Insurance Costs of Self-employed Individuals."
HHS Is Crowing About How Much Money Has Been Returned to Consumers Because of MLR
National Center for Policy Analysis Health Policy Blog More items by National Center for Policy Analysis Health Policy Blog
7/25/2014 [Opinion]

"Insurers are free to overcharge people, collect the money, earn interest on it during the course of a year, and rebate the overcharge 18 months later. So consumers in effect are simply giving the insurers an interest free loan for a year. That is why there has been $9 billion in rebates."
Hobby Lobby Decision Poses New Questions for Litigation
Bloomberg BNA More items by Bloomberg BNA
7/25/2014

"[B]ecause the court's decision in Hobby Lobby seems to impute a burden that is placed by the ACA on the plan to the plan sponsor, the effect of the holding could be to reverse that effect for suits against the plan. 'If the requirement on the plan burdens the religious beliefs of the plan's sponsor and owner, then what does that say about the independence of the plan and the ability to pierce the corporate veil,' [said Teresa Renaker, a shareholder at Lewis Feinberg Lee Renaker & Jackson P.C.]"
Obamacare Loophole Has Insurers Worried Customers Will Skip December Premium Payments
Vox Media Inc. More items by Vox Media Inc.
7/25/2014

"[CMS Bulletin 10] says that if an Obamacare shopper goes online and re-enrolls in a new insurance plan, any payments towards that new, 2015 plan cannot be applied to outstanding debt on the old, 2014 plan. This ... could make December a bit of a no-man's land for insurers looking to get paid. Somebody could theoretically refuse to pay up in December 2014 and then rejoin their plan -- or buy a new one -- in January or February of 2015. The health plan they had in December can't terminate their coverage or use their new premiums to to cover the outstanding debt."
Money Fund Industry Embraces New SEC Rules
Treasury & Risk More items by Treasury & Risk
7/25/2014

"The threat of regulation by the Financial Stability Oversight Council ... encouraged fund companies to negotiate with the [SEC] on new rules for money-market mutual funds ... The strongest provisions affect funds that hold about one-third of the industry's assets, while those catering to retail investors and holding U.S. government securities were exempted."
The New Rules for Money Market Funds: Broader Than You Think
Morningstar More items by Morningstar
7/25/2014 [Guidance Overview]

"The mutual fund industry liked money market funds just fine the way they were, banks wanted them gutted, and SEC staffers and politicians were caught in the middle. It took many iterations to arrive at [this] barely acceptable compromise, which passed by the minimum margin of 3 to 2.... Several reports seem to suggest, as does the SEC's press release, that the rules apply only to institutional funds. Not so -- the most notable modification, requiring some money funds to float their net asset values rather than fix the price at a constant $1.00, is indeed for institutional funds only. But provisions for liquidity fees and redemption gates apply to all funds, both institutional and retail."
Avoiding Pitfalls in Handling Retirement Plan Forfeitures
Vanguard More items by Vanguard
7/25/2014

7 pages. Excerpt: "Plan sponsors have great flexibility in using forfeited amounts in the administration of their plan. The rules surrounding forfeitures may be less straightforward than expected -- and some plans have received increased IRS scrutiny for their forfeiture practices."
ERIC Joins Letter in Support of 'Auto Enroll Repeal Act'
The ERISA Industry Committee [ERIC] More items by The ERISA Industry Committee [ERIC]
7/25/2014 [Opinion]

"ERIC, along with approximately 170 other businesses and trade organizations, on July 22 wrote to Senator Johnny Isakson (R-GA) expressing support for his legislation, the Auto Enroll Repeal Act (S. 2546). The bill would repeal the requirement under the Affordable Care Act that employers with more than 200 full-time employees that offer enrollment in one or more health benefits plans enroll automatically all new full-time employees in one of those plans."
An Obamacare-Sized Prescription for a Retirement Crisis Misdiagnosis
Ray Harmon, for American Society of Pension Professionals & Actuaries [ASPPA] More items by Ray Harmon, for American Society of Pension Professionals & Actuaries [ASPPA]
7/25/2014 [Opinion]

"Gene B. Sperling, former Director of the Economic Council under the Office of White House Policy for President Obama, put on a white lab coat and diagnosed the tax incentive system for private retirement savings with a serious illness by cherrypicking data points to paint his desired picture. It's no surprise that during Sperling's time working for Obama, the President borrowed his favorite line and called the system 'upside-down.' I criticized the President then for that misdiagnosis and I'll criticize 'Doctor' Sperling now for it too."
Text of IRS Rev. Proc. 2014-46: 2014 Monthly National Average Premium for Bronze-Level Qualified Health Plans (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

"For purposes of Section 5000A(c)(1)(B) and Section 1.5000A-4, the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through Exchanges in 2014 is $204 per individual.... [and] the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through Exchanges in 2014 is $1,020 for a shared responsibility family with five or more members."
Text of IRS Rev. Proc 2014-37: Methodology for Determining Applicable Percentages for Individual Premium Assistance Credits, Affordable Employer-Sponsored Coverage, and Exemption from Individual Shared Responsibility Payments (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

6 pages. Excerpt: "This revenue procedure ... updates the Applicable Percentage Table ... used to calculate an individual's premium tax credit for taxable years beginning after calendar year 2014.... [It] also updates the required contribution percentage ... used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under Section 36B for plan years beginning after calendar year 2014. Additionally, this revenue procedure cross-references the required contribution percentage ... used to determine whether an individual is eligible for an exemption from the individual shared responsibility payment because of a lack of affordable minimum essential coverage."
Text of IRS Rev. Proc. 2014-41: Premium Tax Credits and Deduction of Health Insurance Costs for Self-Employed Individuals (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

15 pages. Excerpt: "This revenue procedure is intended to provide taxpayers with calculation methods that resolve the circular relationship between the Section 162(l) deduction and the Section 36B tax credit and that satisfy the requirements of applicable tax law. Using the calculations in this revenue procedure is optional. A taxpayer may determine amounts of the Section 162(l) deduction and the Section 36B tax credit using any method, provided that the amounts claimed satisfy the requirements of applicable tax law[.]"
Text of District Court Opinion: ERISA Does Not Preempt State Law Estoppel Claim Based on Employer Misrepresentation of Continued Coverage (PDF)
U.S. District Court for the District of Massachusetts More items by U.S. District Court for the District of Massachusetts
7/25/2014

"Relying on [his employer's] assurances, [plaintiff Russell Toomajanian] decided to forgo paying for extended insurance coverage through COBRA or another insurance vehicle.... Toomajanian is not looking to recover benefits allegedly due him under the [group health] ERISA Plan (nor could he as his losses were incurred after his being ejected by his employer from the Plan). The financial harm suffered by Toomajanian -- his out-of-pocket medical bills -- are neither defined by, nor limited to, the benefits he would have been entitled to under the Plan had he remained an employee. Rather, the losses of a victim of misrepresentation are measured under the relevant Massachusetts tort law by the financial harm caused by his reliance on the underlying misrepresentation." [Toomajanian v. Insight Global, Inc., No. 14-12603-RGS (D. Mass. July 24, 2014)]
Future of ACA Could Be in Jeopardy in Many States
Dinsmore More items by Dinsmore
7/25/2014

"The [D.C. Circuit] sided with the Appellants' argument that a plain reading of Section 36B did not permit the extension of the tax subsidies to federally-facilitated Exchanges, as they were not established by the State.... [But the Fourth Circuit] concluded that Congress did not speak directly to the question at issue, and therefore, it left the IRS with the ability to interpret the provision. Since the IRS' interpretation of the statute was based on the implementation of the ACA's stated policy of increasing the number of Americans covered by health insurance and decreasing the cost of such insurance, the Court determined that the IRS's regulation was a permissible construction of the statutory language."

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