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Benefits in the News

Older News | October 1, 2014
   

Much Ado about Signature Authority: Embezzled Plan Assets and the Inconvenience of Triggering Fiduciary Status
ERISA Fiduciary Administrators LLC More items by ERISA Fiduciary Administrators LLC
10/1/2014

"CEOs and other executives who prefer to avoid fiduciary status with respect to the company's ERISA plans can take steps to accomplish this.... [T]hey should direct the company to maintain adequate internal controls over remittances of employee contributions to segregate them from the company's assets in compliance with DOL plan asset regulations.... [A]mending the plan to name an independent fiduciary for this purpose would establish a solid buffer between the executive and fiduciary status."
Quirky FMLA Counting Rules: Overtime
Benefits Bryan Cave More items by Benefits Bryan Cave
10/1/2014

"[R]equired overtime hours must be factored into the FMLA entitlement calculation for eligible employees. In other words, employees who are normally required to work overtime are entitled to more than 480 hours (12 weeks x 40 hours per week) of FMLA leave in the applicable 12-month period."
IRS Webcast Audio Recording: Defined Benefit Plan Terminations
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
10/1/2014 [Guidance Overview]

Topics: Defining 'Date of Termination'; Reversions -- what needs to be done; Funding Requirements -- must be satisfied as of the date of termination; PGBC issues; and Notice of Intent to Terminate the Plan -- what is needed. Recorded August 14, 2014.
Text of Amicus Brief for Labor and Benefits Law Professors to Supreme Court on Appeal of Sixth Circuit Decision Upholding Lifetime Retiree Health Benefits Under Collective Bargaining Agreement (PDF)
33 Professors of Employment and Labor Law More items by 33 Professors of Employment and Labor Law
10/1/2014

"Petitioners and their amici argue that employers were and continue to be unlikely to grant vested retiree health benefits because of the potential for those benefits to become unpredictably expensive over time. Accordingly, they argue that a court should determine that retiree health benefits are vested only if the relevant CBA contains a clear statement to that effect. Whether or not this assessment of employer reasoning is correct today, it is seriously flawed as to the period of time during which many retiree health benefits clauses were first negotiated: the mid-1960s through mid-1970s. Moreover, because the language governing retiree health insurance has often been carried, basically unchanged, from CBA to CBA, the conditions surrounding initial negotiations remain relevant to interpretation of CBA language today." [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (on appeal from 6th Cir., cert. granted May 5, 2014)]
Claim Based on Health Plan's Failure to Cover Same-Gender Spouse Survives under Title VII as Gender Discrimination Claim
Practical Law Company More items by Practical Law Company
10/1/2014

"The district court found that BNSF's reading of Hall's claim as one of sexual orientation discrimination ignores the plain language of the Amended Complaint and improperly restricts the class of employees affected by the policy at issue in which Hall is a member. A careful reading of the Amended Complaint, construed in favor of Hall as the non-moving party, demonstrates that Hall alleges disparate treatment based on his [gender] ... specifically that he (as a male who married a male) was treated differently to his female coworkers who also married males." [Hall v. BNSF Railway Company, No. C13-2160 RSM (W.D. Wash. Sept. 22, 2014)]
Considering a 401(k) Loan? Weigh Your Options Before Borrowing
Fidelity More items by Fidelity
10/1/2014

"Over the past year alone, more than 27,000 investors took loans specifically for the purchase of a home. While it's a small percentage of Fidelity's overall 401(k) loan-taking population, it is a trend the company has seen increasing over the past five years. Today's average home loan is $23,500, far higher than the average general loan value of $9,100. It represents 25 percent of an average borrower's 401(k) pre-loan balance, versus 17 percent for a general loan."
Which Retirement Plan Fiduciary Most Drives 401(k) Plan Design?
Fiduciary News More items by Fiduciary News
10/1/2014

"[T]here remain many specific circumstances, especially when the corporate sponsor cannot afford to hire employees committed exclusively to running the plan, where plan design requires the service provider to take the lead.... The need for expert guidance is most acute among smaller employers.... Still, there is one factor that might overcome the lack of expertise in these companies, and that is the personal objectives of the owners."
Roth IRAs and the Magical Disappearing and Reappearing Compensation Trick for Individuals with Foreign Earned Income
Bloomberg BNA More items by Bloomberg BNA
10/1/2014

"In determining compensation for purposes of the 'dollar limitation' applicable to Roth IRAs ... compensation does NOT include foreign earned income (nor any amounts excluded through the foreign housing exclusion).... On the other hand, ... foreign-earned income IS treated as income for purposes of ... the phase-out limit.... Under phase-out rules, the contribution limit for Roth IRAs may be reduced based on a combination of the amount of a taxpayer's modified adjusted gross income (AGI) and federal income tax filing status.... AGI is computed for purposes of the 'phase out limitation' without regard to the I.R.C.'s provisions excluding certain foreign earned income or housing costs from gross income."
Three Ways to Increase Employee Participation in Your 401(k) Plan
Moss Adams LLP More items by Moss Adams LLP
10/1/2014

"Many plans with auto-enrollment have a 90 percent or greater participation rate, but it appears many employers have yet to embrace this approach.... Target date funds appear to be a popular option among employers. In our 2013 survey only 29 percent said they didn't offer them. ... If your plan doesn't currently offer a match, consider adding this feature."
The Boomerang Generation's Retirement Planning
Milliman Retirement Town Hall More items by Milliman Retirement Town Hall
10/1/2014

"The Millennial generation has gotten a bad rap concerning their retirement planning habits -- or lack thereof.... [This infographic] features 12 tips Millennials should consider when developing their retirement strategy."
Chart of 401(k) Fee Litigation, September 2014
Groom Law Group More items by Groom Law Group
10/1/2014

"The focus of the lawsuits against the plan sponsors evolved over time to include broader challenges to, among other things, the selection of actively managed mutual funds as plan investment options, the use of retail share classes, the investment and transaction drag associated with unitized stock funds, the use of a bundled service provider and the fiduciaries' purported failure to capture additional revenue streams for the benefit of the plan.... [L]awsuits ... against 401(k) plan service providers ... typically are based on allegations that the service providers are 'functional fiduciaries' under ERISA. The plaintiffs claim that, in negotiating for and receiving revenue sharing, the service providers breached fiduciary duties and engaged in 'prohibited transactions' under ERISA."
IRS Modifies Cafeteria Plan Rules to Allow Certain Employees to Drop Employer-Provided Group Health Plan Coverage (PDF)
Groom Law Group More items by Groom Law Group
10/1/2014 [Guidance Overview]

"This modification of the irrevocable election rules provided by the Notice does not apply to cafeteria plan elections to contribute to a flexible spending arrangement. [Notice 2014-55] applies to cafeteria plan elections to contribute to group health plans that provide minimum essential coverage. This means that cafeteria plan elections for stand-alone dental and vision plans or critical illness plans (which are excepted benefits and do not provide minimum essential coverage) cannot be changed based on this guidance."
District Court Rules Against Premium Tax Credits in ACA Federal Exchanges
Timothy Jost, in Health Affairs More items by Timothy Jost, in Health Affairs
10/1/2014

"Judge White's decision is remarkably narrow.... Judge White proceeded to explicate the text of the ACA, concluding that only the text was relevant. He observed that 'where the meaning of a statute is clear, it is both unnecessary and improper to resort to legislative history to divine legislative intent.' Indeed, he stated, quoting Judge Easterbrook, 'Legislative intent is a fiction' and cannot be used to create ambiguity when the wording of statute is clear. It does not matter what Congress thought it was doing; only the words of the statute matter." [Oklahoma ex rel. Pruitt v. Burwell, No. CIV-11-30-RAW (E.D. Okla. Sept. 30, 2014)]
Best Practices in Employee Financial Security, 2014 (PDF)
The Principal Financial Group More items by The Principal Financial Group
10/1/2014

"Provide employees with meaningful financial benefits to help them save for retirement.... Make it easy for employees to participate in securing their financial future, and give them incentives to do so.... Make a lifecycle fund the default asset allocation choice for 401(k) plans.... Help employees become more financially literate so they can take greater responsibility for their financial future.... Offer employees benefits, tools, and resources to help them achieve health wellness.... Design benefit programs that are accessible and flexible enough to accommodate changing lifestyles and needs."
Lump Sum Term-Vested Payouts from DB Plans: Is Now the Time?
SEI More items by SEI
10/1/2014

8 pages. "While lumping out term-vested plan participants is perhaps the lowest cost strategy for reducing pension plan risk, it is one component of an overall de-risking strategy.... A plan engaged in an asset optimization strategy is to some degree undermining its own strategy by reducing assets under management, and giving up the potential for positive investment returns. This is particularly the case for plan sponsors delaying de-risking strategies based on anticipated increase in interest rates. Under the current low interest rate environment, costs of settling benefits now may turn out to be relatively high."
Are Women and Men Different When It Comes to Retirement Plan Savings?
Vanguard More items by Vanguard
10/1/2014

"[W]omen demonstrate an inclination toward savings -- they are 10% more likely to enroll in their workplace saving plans than men. And once enrolled, women across all income levels save at rates anywhere from 6% to 12% higher than those of their male counterparts."
How to Help Millennials Save For Retirement: Four Tips for Plan Sponsors
Francis Investment Counsel LLC More items by Francis Investment Counsel LLC
10/1/2014

"[L]earning about and using their employer's retirement program is just plain boring or worse yet, scary, to Millennials. So how can plan sponsors support and engage this fast-growing critical group of employees? Harness their inertia.... Reestablish the link between having money and spending money.... Provide directions at their level.... Educate them about investing in the stock market."
Text of Oklahoma Federal District Court Opinion Disallowing Premium Subsidies for Health Insurance Purchased Through Federally-Facilitated Marketplace (PDF)
U.S. District Court for the Eastern District of Oklahoma More items by U.S. District Court for the Eastern District of Oklahoma
10/1/2014

"Under 42 U.S.C. 18024(d), 'State' cannot mean the federal government. This definition is dispositive when combined with the interpretive hurdle presented by the phrase 'established by.' In other words, the 'legal fiction' reading does not appear to comport with normal English usage ... At the first step of the Chevron analysis, the court asks 'whether Congress has directly spoken to the precise question at issue' ... On this particular 'precise question,' however, case law does not provide 'wiggle room' for finding ambiguity. This is because tax credits must be expressed in 'clear and unambiguous language.'" [Oklahoma ex rel. Pruitt v. Burwell, No. CIV-11-30-RAW (E.D. Okla. Sept. 30, 2014)]
Oklahoma Federal Judge Limits Health Care Subsidies
SCOTUSblog More items by SCOTUSblog
10/1/2014

"In Oklahoma, U.S. District Judge Ronald A. White of Muskogee became the latest to rule on the dispute. For the time being, his is the only ruling still in effect that would strike down the federal marketplace tax credits (and it is subject to appeal).... Meanwhile, a federal trial judge in Indianapolis ... is scheduled to hold a hearing [on October 9] on a challenge by Indiana and thirty-nine public school districts in that state, seeking to block subsidies for those buying insurance on an exchange that is run by the federal government." [Oklahoma ex rel. Pruitt v. Burwell, No. CIV-11-30-RAW (E.D. Okla. Sept. 30, 2014)]
Summary of Finances of Selected State and Local Government Employee Retirement Systems, Second Quarter 2014 (PDF)
U.S. Census Bureau More items by U.S. Census Bureau
10/1/2014

"For the 100 largest public-employee pension systems in the country, cash and security holdings totaled $3,365.4 billion in the second quarter of 2014. Cash and security holdings had a quarter-to-quarter increase of 4.6 percent, from $3,218.2 billion last quarter, and a year-to-year increase of 14.3 percent, from $2,945.6 billion in the second quarter of 2013. Earnings on investments totaled $129.4 billion in the second quarter of 2014."
Text of GAO Legal Opinion on HHS Authority to Make 2015 'Risk Corridor' Payments to Qualified Health Plans (PDF)
U.S. Government Accountability Office [GAO] More items by U.S. Government Accountability Office [GAO]
10/1/2014

"Section 1342 of PPACA directs the Secretary of HHS to collect from and make payments to qualified health plans. The CMS PM appropriation for FY 2014 would have been available to CMS to make the payments specified in section 1342(b)(1). The CMS PM appropriation for FY 2014 also would have appropriated to CMS user fees collected pursuant to section 1342(b)(2) in FY 2014. HHS stated that it intends to begin collections and payments under section 1342 in FY 2015. However, ... for funds to be available for this purpose in FY 2015, the CMS PM appropriation for FY 2015 must include language similar to the language included in the CMS PM appropriation for FY 2014."
Text of Federal District Court Opinion: Plan Administrator's Rounding of Interest Rate Used for Cash Balance Plan Calculations Was Not Abuse of Discretion (PDF)
U.S. District Court for the Middle District of North Carolina More items by U.S. District Court for the Middle District of North Carolina
10/1/2014

"[R]ounding random numbers will produce half the number set rounding up and half rounding down.... [G]enerally, rounding is more fair than truncating. If the Plan Administrator had decided to truncate the decimal after five digits it would have the practical effect of always rounding the Monthly Interest Rate down. More fundamentally, the relevant ERISA analysis is one of administrator discretion, not whether 'the court itself would have reached a different conclusion.' ... The mere fact that the Plan Administrator made a discretionary decision that did not benefit Plaintiff does not, by itself, render that decision unreasonable." [Johnson v. Duke Energy Retirement Cash Balance Plan, No. 1:13CV156 (M.D.N.C. Sept. 29, 2014)]
'Dumping' Sick Employees -- It's Legal But Is It Right?
William Gallagher Associates More items by William Gallagher Associates
9/30/2014

"As written, the ACA regulators will allow an employer who can identify their sickest chronic employees to potentially incent those members to drop their group coverage and sign up for the local state exchange. Nothing in the federal regulations today prohibits an employee from waiving their group health care and buying individual coverage on the exchange -- an omission that may prove costly for the government exchanges."
IRS LESE Program Identifies Noncompliance Issues (PDF)
Retirement Management Services More items by Retirement Management Services
9/30/2014

"In 2007, the [IRS] initiated the Learn, Educate, Self-Correct and Enforce (LESE) program. LESE projects involve the focused examination by the IRS of a random selection of approximately 50 Form 5500 returns with similar characteristics. The IRS reviews the plans in the random sample for compliance issues and releases the results and findings ... To date, 17 projects have been completed and information on the findings is available on the web. The findings from the LESE examinations are expected to improve the ability of the IRS to identify plans likely to be noncompliant so they can focus their audit activity on those plans."
John Hancock Dodges ERISA Class Action
The Lowenbaum Partnership and FRA PlanTools More items by The Lowenbaum Partnership and FRA PlanTools
9/30/2014

"The cases are holding with few exceptions that the functional fiduciary test under 3(21)(A)(i) must show that the fiduciary actually exercised their discretion. In decisions in favor of AUL and John Hancock, the plaintiffs were unable to show that. In decisions against Transamerica, MassMutual, and ING, the plaintiffs were able to either show the exercise of discretion or that it was a issue of fact for trial.... The open question from these cases is whether 3(21)(A)(iii) requires the actor to actually exercise their discretion or not, i.e. it's a fiduciary breach to be both malfeasant and nonfeasant."
Supreme Court Strikes Down ESOP Presumption of Prudence and Imposes New Limits and Standards for Stock Drop Claims (PDF)
Groom Law Group More items by Groom Law Group
9/30/2014

"[P]lan fiduciaries and their advisers must now identify an approach to monitoring the plan's investment in company stock designed to fulfill ERISA's prudence requirement while recognizing that ERISA's diversification requirement does not apply.... [It] is likely that the plaintiff's bar will test the limits of the Dudenhoeffer decision quickly.... [T]he plaintiff's bar could explore claims that offering company stock was imprudent regardless of the market price due to dim future prospects, participation in a dying industry, or other examples of why investment in such a company may not be a prudent long term investment[.]" [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)]
Dealing with Changes to an Employee's Measurement Period
Benefits Bryan Cave More items by Benefits Bryan Cave
9/30/2014 [Guidance Overview]

"[A] new variable hour, part-time or seasonal employee who transfers to a position where he or she is reasonably expected to average at least 30 hours of service per week will no longer be subject to an initial measurement period. Rather, the full-time status of such an employee will be determined on the basis of hours of service in each month, until that employee has been employed for a full standard measurement period applicable to the second position.... Upon a change in the measurement period applicable to a category of employees, each employee's full-time or non-full-time status for a transition period following the effective date of the change is determined as if the employee had transferred from a position to which the original measurement method applies to a position to which the revised measurement method applies."
Can the PBGC Save Multiemployer Plans?
Center for Retirement Research at Boston College More items by Center for Retirement Research at Boston College
9/30/2014

"[T]he PBGC's insurance fund for multiemployer plans is projected to be exhausted within the next 10 years. One idea is to head off plan insolvencies through 'partitions' that transfer some costs to the PBGC, but little support exists for hiking premiums to cover the costs. The bottom line is that the PBGC, as currently structured, will not be able to stave off plan insolvencies or fully protect workers in plans that become insolvent."
First Circuit Rules for Insurers in Two Retained Asset Account Cases; Insurer Does Not Need 'To Don the Commercial Equivalent of Sackcloth and Ashes'
Goodwin Procter More items by Goodwin Procter
9/30/2014

"Both suits were brought by beneficiaries of group life insurance plans whose sponsors had purchased group life insurance contracts from the insurer-defendants. In both cases, the insurers paid benefit claims under the group contracts through interest-bearing accounts backed by funds that the insurers retained until the account holders wrote checks or drafts against the account. The plaintiffs challenged the practice, which they claimed constituted a breach of fiduciary duty and a prohibited transaction under ERISA."
U.S. Employers Looking to Enhance 401(k) Investment Structures
Towers Watson More items by Towers Watson
9/30/2014

"40% of the 457 U.S. employers surveyed recognize that using a multi-manager, white-label investment strategy is a more efficient approach to active management than single, stand-alone active options. Additionally, about half of the respondents see the value of custom TDFs."
2015 Projection: 401(k) Retirement Plan Contribution Limits
401kHelpCenter.com More items by 401kHelpCenter.com
9/30/2014

"Based on the current CPI information through August, here are the projected 2015 retirement plan limits as calculated by a number of reliable sources. The IRS will release the official numbers on or about October 22, 2014. Remember, these are just projected 2015 numbers."
Text of CMS FAQs on Health Plan Identifiers (HPIDs)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services More items by Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services
9/30/2014 [Guidance Overview]

Includes: "Are fully-insured plans exempt from the HPID requirement? ... Who is responsible for obtaining HPIDs for fully-insured health plans? ... Can I use my Health Plan Identifier (HPID) for other business purposes? ... When must a health plan obtain a Health Plan Identifier (HPID)? ... What is a small health plan and what does my organization do if it does not have annual receipts? ... Are self-insured health plans required to get a Health Plan Identifier (HPID)?" (Generated by a search for "HPID" in the CMS FAQ database.)
Kaiser Permanente Chairman Bernard Tyson on the 'Kaiserfication' of America
Forbes More items by Forbes
9/30/2014 [Opinion]

"Increasingly, hospitals are looking to offer health insurance ... Kaiser, which reported $53 billion in revenue last year, has been there, done that.... [1] Don't tell physicians how to practice ... [2] If you must tell physicians how to practice, show them the data ... [3] To show them data, you must have technology ... [4] Think hard before launching a health plan."
Obamacare Mystery: Why Can't You Buy Vision Insurance?
Bloomberg Businessweek More items by Bloomberg Businessweek
9/30/2014

"No one will be shopping for separate eye-care plans, an exclusion that roils companies that sell vision insurance. Even though they aren't getting new customers, vision insurers still have to pay the [ACA's] tax on health insurance providers. Why did vision get left out of Obamacare? ... When [insurer VSP Global] paid the fee last week, the levy amounted to $25 million. In a letter to the Internal Revenue Service along with the payment, VSP's general counsel said the company intends to seek a refund."
How Poor Plan Design Damages Retirement Readiness
Fiduciary News More items by Fiduciary News
9/30/2014

"[H]igh fees were not the worst culprit when it comes to siphoning value out of retirement accounts. In fact, of the four identified sources of the $273,000 loss, fees contributed the least.... [A recent analysis by Alicia Munnell, director of the Center for Retirement Research at Boston College,] estimated the toll from fees was only $59,000. Leakages ate up $78,000 while poor savings habits resulted in losses of $136,000 ($71,000 from 'Intermittent Contributions' and $65,000 from 'Immature System,' i.e., the failure to save early)."
The Payment Reform Landscape: Value-Oriented Payment Jumps, and Yet ...
Health Affairs More items by Health Affairs
9/30/2014

"40 percent of commercial sector payments to doctors and hospitals now flow through value-oriented payment methods, defined as payment methods designed to improve quality and reduce waste. This is a dramatic increase since 2013 when the figure was just 11 percent.... The proliferation of value-based payment arrangements only matters if they succeed at reducing costs and improving the quality of care. And for many value-oriented payment models, we still don't have the evidence."
Planning for Health Care: How Excellent Health and Longevity Impact Retirement Income Planning
Insured Retirement Institute [IRI] More items by Insured Retirement Institute [IRI]
9/30/2014

"Average cumulative health care expenses including insurance premiums, for a 65-year-old male in excellent health can be expected to reach $345,000; the corresponding estimate for a 65-year-old male in poor health is about $246,000. Those in excellent health will spend less on an annual basis, but more over their retirement due to their longer expected lifespans."
Morningstar Removes Gold-Level Rating on PIMCO Total Return Fund and Predicts Possible Exit of 'Tens of Billions' in Assets
RIABiz More items by RIABiz
9/30/2014

"[Morningstar has] lowered its rating on the Newport Beach, Calif.-based firm by two full levels, from gold to bronze, citing the departure of Bill Gross from PIMCO and the unintended consequences of that sudden exit. 'Given Bill Gross's abrupt departure, investors have focused on the possibility that out-flows could wreak havoc on the portfolio. Snap estimates of expected outflows have been all over the map, but it seems likely that outflows could total in the tens of billions of dollars,' wrote senior analyst Eric Jacobsen about PIMCO's Total Return Fund."
IRS Final Regs Address Market Rates of Return for Hybrid Plans
October Three Consulting More items by October Three Consulting
9/30/2014 [Guidance Overview]

"The final regulations adopt an exclusive list of permitted cash balance plan interest crediting rates.... The preamble to the final regulations confirms that it is acceptable to determine an investment-crediting rate based on a specified blend of multiple rates.... [T]he list of permitted interest crediting rates in the final regulations is exclusive.... The final regulations do not permit a cash balance plan to allow participants to choose among different interest crediting rates."
EEOC Sues Employer, Alleging 'So-Called Voluntary' Wellness Plan Violated ADA
Poyner Spruill LLP More items by Poyner Spruill LLP
9/30/2014

"[To date,] the EEOC has not promulgated regulations regarding what level of financial consideration renders an employee's participation in a wellness plan in effect not voluntary ... This case may not provide much guidance to employers on this issue ... especially if the court determines the employee was fired for refusing to participate in the wellness plan.... [It] does serve as a reminder to employers that this issue has not yet been resolved and financial consequences that are tied to participating in health risk assessments and screenings that constitute medical inquiries or examinations could subject the employer to an ADA challenge." [EEOC v. Orion Energy Systems, No. 1:14-cv-1019 (E.D. Wis., filed Aug. 20, 2014)]
What's Behind Public Marketplace Renewals and Redeterminations
HighRoads More items by HighRoads
9/30/2014

"The goal of this redetermination process is to ensure that as many first-year QHP enrollees as possible remain insured in perpetuity. To this end, the processes established by HHS seek to make the redetermination and re-enrollment process automatic and continuous.... By providing two alternative redetermination processes that are subject to the annual approval of the secretary, HHS is giving itself wide discretion to adjust and hone the process as it sees fit year over year without having to go through the onerous rule-making process."
ACA Changes the Insured vs. Self-Insured Decision Process
Lindquist Solutions More items by Lindquist Solutions
9/30/2014 [Guidance Overview]

"The essential health benefits requirement leaves insurance carriers with limited room for flexibility in design and pricing.... [I]nsured plans will all be community rated.... Self-insured plans can, with the right employee demographics, come out ahead. However, the insurance companies that provide the stop-loss coverage (an essential feature of a self-insured plan) will request health data from all employees and their dependents before pricing their coverage. If it turns out your workforce isn't so healthy and you have had a bad claims history, you probably would come out ahead with an insured plan. And you might be better off than you would otherwise have been prior to community rating since your premiums will be based on average claims."
HATFA Extends MAP-21 Pension Funding Stabilization
Littler More items by Littler
9/30/2014 [Guidance Overview]

"[A] plan sponsor can irrevocably elect to defer use of the HATFA rates until the first plan year beginning after January 1, 2014, by providing written notice of the election to the plan's enrolled actuary and plan administrator.... A plan sponsor will be deemed to elect to defer the HATFA rates to 2014 if the Form 5500 and Schedule SB for the plan year beginning in 2013 uses the MAP-21 rates. The IRS permits a plan sponsor to revoke a deemed election to defer in one of several ways."
Plaintiffs and DOL Ask Supreme Court to Permit ERISA Fiduciary Breach Lawsuit More Than Six Years After Initial Selection of Investment
Goodwin Procter More items by Goodwin Procter
9/30/2014

"Every federal court of appeals to have addressed the issue has held that, absent materially changed circumstances, ERISA's statute of repose bars challenges to the prudence of investments selected more than six years before suit was filed. The federal government has now asked the Supreme Court to reject that reading of the statute and to hold instead that regardless whether circumstances change after the initial selection of a plan investment, a plan fiduciary can be liable under ERISA for investments held to be imprudent that were selected more than six years before a suit is commenced." [Tibble v. Edison International, No. 13-550 (S. Ct., cert. petition filed Oct. 30, 2013); the 319-page petition for a writ of certiori to the 9th Circuit, dated Aug. 1, 2013, is online.]
Third Circuit Serves Up Big Win for Retirement Plan Service Providers
Alston & Bird LLP More items by Alston & Bird LLP
9/30/2014

"The Third Circuit found that a service provider owes no fiduciary duty to a plan with respect to the terms of its service agreement if the plan trustee exercised final authority in deciding whether to accept or reject those terms.... Of course, the opinion does not immunize service providers from fee claims if there is a sufficient nexus between the fee allegations and the scope of the service provider's fiduciary duties. However, to state a successful claim, plaintiffs will likely need to show that the service provider had fiduciary control over the amount of its own fees." [Santomenno v. John Hancock Life Ins. Co., No. 13-3467 (3d Cir. Sept. 26, 2014)]
Let's Enable ERISA Plans to Use More Electronic Delivery
Todd Berghuis, for Ascensus More items by Todd Berghuis, for Ascensus
9/30/2014 [Opinion]

"EBSA's preference -- reflected in its regulations governing electronic delivery of retirement plan communications of many kinds -- requires that plan participants and beneficiaries affirmatively declare their willingness to receive notices, election requests, summaries and other information, electronically. Many ... believe EBSA should be more flexible and more in line with the rest of financial industry in this area. Given the inclination of many people to put off decision making, or to fail to take action simply out of inertia, it is likely that the lack of an election to receive communications electronically is not necessarily a rejection of that form of delivery."
ESOPs Can Increase a Company's Sales, Profitability, Employee Satisfaction and Job Security
Fox Rothschild LLP More items by Fox Rothschild LLP
9/30/2014

"[N]umerous studies have shown that ESOP companies tend to be more profitable, more likely to weather economic downturns and more likely to retain and grow their workforce.... ESOP companies perform better in the post-ESOP period than their pre-ESOP performance would have predicted.... ESOP companies are more likely to offer a second defined contribution plan than non-ESOP companies are to offer any defined contribution plan at all ... [O]n average ESOP companies contributed 75 percent more to their ESOPs than other companies contributed to their primary 401(k) or profit sharing plan.... ESOP and broad-based equity plan companies are also less likely to lay off employees."
Now Is the Time to Review Compensation Arrangements for Section 409A Compliance
Fox Rothschild LLP More items by Fox Rothschild LLP
9/30/2014

"[E]arlier this year, ... the IRS began a compliance initiative project (CIP) focused on Internal Revenue Code Section 409A.... Even though this initial CIP is limited in scope, practitioners expect that the IRS will implement a much broader Section 409A enforcement initiative in the not so distant future. Before the IRS begins its examination ... in full force, all compensation arrangements, especially customized deferred compensation plans for highly paid executives, should be carefully reviewed for Section 409A compliance."
Actuarial Funding Policies and Practices for Public Pension Plans (PDF)
Conference of Consulting Actuaries, Public Plans Community More items by Conference of Consulting Actuaries, Public Plans Community
9/30/2014

"This White Paper represents groundbreaking actuarial research in that it develops a principles based, empirically grounded Level Cost Allocation Model (LCAM) for use as a basis for funding policies for public pension plans throughout the US.... [The authors] believe that the funding policies developed herein could serve as a rigorously defensible basis for an 'actuarially determined contribution' under Statements 67 and 68 of [GASB] .... [This] White Paper is intended to provide guidance not just in the evaluation of particular current policy practices but also in the development of actuarially based funding policies in a consistent and rational manner."
Auto-Renewing Your Health Insurance May Be Bad for You, and for Competition
The New York Times; subscription may be required More items by The New York Times; subscription may be required
9/30/2014

"Next year, the premiums of the currently cheapest silver-rated plans are going up by an average of 8.4 percent. Because of that, many of those plans will no longer be the cheapest. The customers who switch to the silver plans that are the cheapest in 2015 will see their premiums rise by only 1 percent on average. So in raising their rates by that much, those plans may be assuming that status quo bias will keep many of their enrollees from switching to new, cheaper plans offered by competitors."
60 Percent of Health Plans that Could Meet Obamacare's Essential Health Benefits are Illegal
National Center for Policy Analysis Health Policy Blog More items by National Center for Policy Analysis Health Policy Blog
9/30/2014

"[A] bronze plan can cover 58 percent to 62 percent of costs, but not 63 percent. So there is a gap between 62 percent to 68 percent AV (and 72 percent to 78 percent, and 82 percent to 88 percent, and above 92 percent) in which it is illegal for an insurer to offer a plan.... [As] plans roll from 2014 to 2015, their AV's will spill outside the bands and the plans will be cancelled.'"
Pension Benefit Plan Design Innovation: Labor Unions as Agents of Change
Pension Research Council, Wharton School of the University of Pennsylvania; free registration required More items by Pension Research Council, Wharton School of the University of Pennsylvania; free registration required
9/30/2014

"This paper uses a case study of a private sector union to demonstrate how labor unions can influence the renegotiation of the pension contract for American workers. The case study describes how one union evaluated the pension crisis from a sustainability viewpoint, and responded pro-actively by developing a hybrid pension plan that attempted to align the interest of all the stakeholders through equitable risk sharing. The hybrid plan developed by this union eventually had a broader influence on the pension community at large and the public policy debate around the pension crisis."
Back to the Future: Hybrid Co-operative Pensions and the TIAA-CREF System
Pension Research Council, Wharton School of the University of Pennsylvania; free registration required More items by Pension Research Council, Wharton School of the University of Pennsylvania; free registration required
9/30/2014

"Hybrid retirement plans that combine the best features of defined benefit and defined contribution plans can provide an efficient and equitable method of ensuring retirement security for workers. Co-operative pension structures also enhance retirement security through risk pooling and leveraging economies of scale.... The TIAA-CREF system ... provides an example of a plan design with features of a hybrid co-operative pension. [The authors] examine the historical performance of the core components, TIAA (a guaranteed fixed annuity) and CREF (a variable annuity), discuss key design features, and analyze data on contributions, investment returns, risk pooling, and retirement distribution characteristics."
Departments Finalize Excepted Benefits Rules for Dental and Vision Benefits, EAPs
Wolters Kluwer Law & Business More items by Wolters Kluwer Law & Business
9/30/2014 [Guidance Overview]

"[T]he final regulations do not undermine the inclusion of pediatric vision or dental coverage as essential health benefits. The requirement that issuers in the small group market offer coverage of essential health benefits is not changed, and that rule does not apply to large or self-insured plans.... [T]he final regulations clarify that limited-scope vision or dental benefits do not have to be offered in connection with a separate offer of major medical or 'primary' group health coverage under the plan in order to meet the statutory criterion that such benefits are 'otherwise not an integral part of the plan.'"
Tax Incentives for Retirement Savings Need Reform
Center on Budget and Policy Priorities More items by Center on Budget and Policy Priorities
9/30/2014 [Opinion]

"Roughly 9,000 taxpayers have IRAs with balances that top $5 million, a [GAO] study found. Despite contribution limits to tax-advantaged retirement accounts, such balances are possible because some executives buy shares of stock for their IRAs at extremely low valuations -- sometimes less than a penny each. Those balances then swell when the stocks are valued at market price -- and the gain is tax-free."
Excepted Benefits Final Rule Issued by Government Agencies
Timothy Jost, in Health Affairs More items by Timothy Jost, in Health Affairs
9/30/2014 [Guidance Overview]

"The final rules clarify that limited scope vision and dental benefits do not have to be offered in connection with a separate offer of major medical or 'primary' group health benefits to meet the statutory 'not an integral part' requirement.... The final rule permits employee assistance programs to be recognized as excepted benefits if they meet four requirements."
The Consumer Factor: Four Elements to Consider with Private Exchanges
The Institute for HealthCare Consumerism [IHCC] More items by The Institute for HealthCare Consumerism [IHCC]
9/30/2014

"The advent of private exchanges will accelerate [the] consumer-centric shift in the employee benefits sector. Individuals and their family members can now select the combination of benefits that is right for their circumstances and budget. The days of one-size-fits-all is over.... [1] Haven't We Seen This Before?... [2] Look Beyond the Software.... [3] Beware of Advisors Steering You Away from Exchanges.... [4] Keep an Eye on Carriers."
Obamacare Nightmare for Low Income Families: Why Many Kids Lose Their Pediatrician After One Month
Benefit Revolution More items by Benefit Revolution
9/30/2014 [Opinion]

"Generally speaking, healthcare reimbursements are best from employer insurance plans, second best from Medicare (insurance for the elderly), third best from the Obamacare Exchange plans and worst from Medicaid/Medi-Cal. Most doctors accept (or are in network with) private plans and Medicare. Covered California's networks often offer as little as half of those providers and Medi-Cal has even fewer doctors accepting new patients."
Don't Be Worried and Confused About Making Your Money Last During Retirement
Ken Steiner, FSA Retired More items by Ken Steiner, FSA Retired
9/30/2014

"One of the big problems with the 4% Rule and other 'safe' withdrawal strategies is that after the first year, you have no real way of knowing whether you are still 'on track.' ... The Actuarial Approach automatically adjusts for actual experience as it emerges and annually lets you know whether you can increase your spending or whether you should decrease your spending based on your personal situation and objectives."
Text of GAO Report: Largest Issuers of Health Coverage Participated in Most Exchanges, and Number of Plans Available Varied
U.S. Government Accountability Office [GAO] More items by U.S. Government Accountability Office [GAO]
9/29/2014

"GAO was asked to examine the number and types of issuers participating in both the individual and small-business exchanges beginning in 2014, as well as how this compared with issuer participation in the individual and small-group markets prior to the exchanges. In this report, GAO describes [1] the extent to which issuers that previously offered health plans in the individual and small-group markets participated in the exchanges in 2014, and [2] the issuers that participated in 2014 exchanges and the health plans they offered." [Report dated August 29, 2014; released online September 29, 2014.]
Apprenticeship and Training Plan Notice (DOL Filing Page)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] More items by Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
9/29/2014 [Official Guidance]

"Plan administrators of welfare plans that provide apprenticeship or training benefits, or both, may use this web page to electronically file the notice described in section 2520.104-22 of the [DOL's] regulations. The [DOL] recently published a proposed regulation that would make it mandatory to electronically file the notice. In the interim, plan administrators are encouraged to file plan notices using this electronic system. Plan administrators who use the electronic filing system will have satisfied the filing requirements under the current regulation."
Top Hat Plan Statement (DOL Filing Page)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] More items by Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
9/29/2014 [Official Guidance]

"Plan administrators of 'top hat' plans can use this web page to electronically file the statement described in section 2520.104-23 of the [DOL's] regulations. Top hat plans are unfunded or insured pension plans for a select group of management or highly compensated employees. The [DOL] recently published a proposed regulation that would make it mandatory to electronically file the statement. In the interim, plan administrators of top hat plans are encouraged to file plan statements using this electronic system. Plan administrators who use this electronic filing system will have satisfied the filing requirements under the current regulation."
IRS Notice 2014-49 Offers Useful Guidance on Changes in Measurement Periods or Changes in Testing Methods
Mintz Levin More items by Mintz Levin
9/29/2014 [Guidance Overview]

"[T]he final regulations do not address whether, or under what conditions, an employer that uses a measurement method for a category of employees may subsequently change that measurement method.... The approach envisioned by [Notice 2014-49] varies depending on whether the transferring employee is in a measurement, stability, or administrative period. (The notice reminds us that an initial measurement period does not apply to new employees who are full-time employees, and so are not variable-hour, seasonal, or part-time employees.)"
IRS Issues Final Regs on Retirement Plan Electronic Filing Requirements
Ascensus More items by Ascensus
9/29/2014 [Guidance Overview]

"Minor modifications include the following. [1] Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, must be filed under the Filing Information Returns Electronically (FIRE) system. [2] One-participant or foreign plans eligible to file the Form 5500-EZ, Annual Return of One-Participant (Owners and Their Spouses) Retirement Plan, may use the DOL's computerized ERISA Filing Acceptance System (EFAST2) to file without being subject to any of the attachment filing requirements. [3] The regulations specify that the economic hardship exemption to the electronic filing requirement guidance will be issued separately and that the Treasury anticipates granting the waivers only in exceptional cases."
Text of DOL Proposed Regs: Electronic Filing of Notices for Apprenticeship and Training Plans and Statements for Pension Plans for Certain Select Employees
Employee Benefits Security Administration [EBSA], U.S. Department of Labor More items by Employee Benefits Security Administration [EBSA], U.S. Department of Labor
9/29/2014 [Official Guidance]

"This document contains proposed regulations that would revise filing procedures for apprenticeship and training plan notices and 'top hat' plan statements ... to require electronic submission of these notices and statements.... The Department has determined that regular mail or personal delivery are no longer the most efficient or cost-effective ways to file and process these notices and statements. The Department annually receives approximately 120 apprenticeship and training plan notices and approximately 2,000 top hat plan statement filings. To make the information on these notices and statements accessible, the Department converts each paper filing to electronic format. The proposal will eliminate the need for this time-consuming task."
New Cafeteria Plan Guidance Eases Transitions to Exchange Coverage
E is for ERISA More items by E is for ERISA
9/29/2014 [Guidance Overview]

"Making that transition primarily will appeal to employees with household incomes in ranges that qualify them for financial assistance on the Exchange, in the form of premium tax credits and cost sharing. Those ranges are between 100% and 400% of federal poverty level in states that have not expanded Medicaid, and between 138% and 400% of federal poverty level in states that have expanded Medicare."
Pension Funds Feel Heat on Climate Change Issue
Calpensions More items by Calpensions
9/29/2014

"Pension funds have used their investment clout for targeted social goals, notably divestments or stock boycotts of apartheid South Africa and tobacco. Curbing the use of carbon-emitting fossil fuels said to be disastrously warning the climate is a much larger global undertaking."
Florida Doc Stamp Tax Applies to 401(k) Loans
Benefits Bryan Cave More items by Benefits Bryan Cave
9/29/2014 [Guidance Overview]

"Under its revenue laws, Florida imposes a document tax on loan transactions that are made, signed, executed, issued, or otherwise transacted in the State. The Florida Department of Revenue has specifically ruled that 401(k) plan loans are subject to the tax. The law further provides that no state court may enforce the provisions of a promissory note if the document tax is not paid. [The authors] believe it would be a challenge to sustain a position that the Florida statute is preempted by ERISA."
IRS Reaches a Split Decision on Rollover Allocation Rules
Sutherland Asbill & Brennan LLP More items by Sutherland Asbill & Brennan LLP
9/29/2014 [Guidance Overview]

"The guidance issued in Notice 2014-54 becomes effective on January 1, 2015. For periods before January 1, 2015, the Notice permits a reasonable interpretation of the statutory rollover rules, which would include allowing pre-tax and after-tax amounts to be directed to separate destinations. Plan administrators using the IRS model rollover notice or a notice with similar language may consider revising their rollover notices to reflect the new guidance."
Fewer Companies Offer Paid Family Leave, More Use PTO Plans
Thompson SmartHR Manager More items by Thompson SmartHR Manager
9/29/2014

"[O]ne in five companies today offer paid family leave -- down from one in four companies that reportedly offered it from 2010 to 2012 ... Instead ... there is a rise in the number of organizations offering a paid time off plan, which combines traditional vacation time, sick leave and personal days into one comprehensive plan. Under PTO plans, employees have more freedom and flexibility in managing their leave -- and 58 percent of organizations, compared to 47 percent in 2010, now offer this type of plan[.]"
Research Suggests L.A. Has No Cardiologists in Obamacare Networks; Chicago Has No Diagnostic Radiologists
National Center for Policy Analysis Health Policy Blog More items by National Center for Policy Analysis Health Policy Blog
9/29/2014

"In seven of the nine urban areas, fewer than half of specialists sampled belonged to provider networks in Obamacare exchanges ... [One chart] indicates that some of these areas have zero physicians of one specialty in-network.... This corresponds with previous research indicating that Obamacare incentivizes health plans to design their networks (and prescription-drug formularies) to attract the healthy and shun the sick."

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