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Benefits in the News

Older News | September 15, 2014

IRS Affirms Treatment of Short Sales for UBTI Purposes
Mintz Levin More items by Mintz Levin

"Since there are many hedge funds that utilize short selling as part of their investment strategy, it is important for hedge fund investors, including tax exempt organizations, to understand the U.S. tax treatment of these transactions.... It is well known that tax-exempt investors, including ... public and private employee pension funds, are among the largest and most influential investors in alternative investment strategies such as private equity and hedge funds.... From a U.S. federal income tax perspective, the key issue impacting hedge fund investment by tax exempt organizations is the UBTI rules imposed under Sections 511 through 514 of the Internal Revenue Code ... The IRS has recently reaffirmed this position regarding short sales [in] PLR 201434024 (8/22/14)[.]"
Text of District Court Opinion Awarding Moen Retirees Nearly $800,000 in Attorney's Fees in Successful Challenge to Termination of Health Benefits (PDF)
U.S. District Court for the Northern District of Ohio More items by U.S. District Court for the Northern District of Ohio

"In light of the clear contractual language and supportive extrinsic evidence, Moen's actions were culpable.... [T]here may be some deterrent effect to companies in Moen's position in the future. However, the relative size of the benefit obligations at stake and the attorney's fees may mitigate this effect to some degree.... Finally, the Court considers the relative merit of the parties' positions. As described above, Plaintiffs' position had clear merit, while Defendant Moen's position did not. Accordingly, this factor also counsels in favor of an award.... For the foregoing reasons, the Court grants Plaintiffs' motion for attorney's fees in the amount of $765,620 [.]" [Gallo et al. v. Moen, No. 1:13-cv-02440-JG (N.D. Ohio Sept. 11, 2014)]
Limits of Risk Adjustment in Protecting Traditional Medicare under Premium Support
Center on Budget and Policy Priorities More items by Center on Budget and Policy Priorities
9/12/2014 [Opinion]

"Premium support proponents contend that this problem of adverse selection (the separation of healthier and less-healthy people into different insurance arrangements) can be addressed through a risk adjustment system, which would raise or lower payments to private plans and traditional Medicare based on their enrollees' health status. But risk adjustment is imperfect and captures only part, rather than all, of the cost variation resulting from differences in beneficiaries' health."
New California Law Provides Employees with Paid Sick Days Effective July 1, 2015
Liebert Cassidy Whitmore More items by Liebert Cassidy Whitmore

"The Paid Sick Leave law only exempts the following employees: Employees covered by a valid collective bargaining agreement if the agreement expressly provides paid sick days or paid leave for sick days, final and binding arbitration of disputes about paid sick days, premium wage rates for all overtime, and a regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate; Employees in the construction industry covered by a valid collective bargaining agreement; Providers of in-home support services; and Employees of an air carrier flight deck or cabin crew members."
The Top Ten Things to Do If Your 401(k) Plan Fails Nondiscrimination Testing
TRI-AD More items by TRI-AD

"Assess alternate testing methods.... Make any necessary refunds.... Consider making a Qualified Non-Elective Contribution (QNEC) or Qualified Matching Contribution (QMAC).... Institute automatic enrollment.... Institute automatic increases... Implement a safe harbor 401(k) plan.... Make your match go further.... Build a case for retirement savings.... Target non-highly-compensated employees for a participation campaign.... Keep it simple."
The IRS Wants You to Know About the Form 5500-EZ Penalty Relief Program Before It's Too Late
Bloomberg BNA More items by Bloomberg BNA
9/12/2014 [Guidance Overview]

"The pilot program gives, in part, sponsors and administrators of retirement plans not covered by Title I of ERISA automatic relief from IRS late filing penalties on past due Forms 5500-EZ. Non-ERISA plans covering only a 100% business owner or one or more partners, and their spouses, are eligible for the relief. If the business or partnership has employees other than the owner, spouse, or partners' spouses, the correction program cannot be used. In addition, if the plan includes employer stock, the plan would own part of the business and, therefore, would not qualify for the relief."
Text of PBGC Monthly Interest Rate Update for October and Fourth Quarter 2014
Pension Benefit Guaranty Corporation [PBGC] More items by Pension Benefit Guaranty Corporation [PBGC]
9/12/2014 [Official Guidance]

"The fourth quarter 2014 interest assumptions under the allocation regulation will be 3.10 percent for the first 20 years following the valuation date and 3.29 percent thereafter. In comparison with the interest assumptions in effect for the third quarter of 2014, these interest assumptions represent no change in the select period, (the period during which the select rate (the initial rate) applies), a decrease of 0.33 percent in the select rate, and a decrease of 0.37 percent in the ultimate rate (the final rate). The October 2014 interest assumptions under the benefit payments regulation will be 1.00 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for September 2014, these interest assumptions represent a decrease of 0.25 percent in the immediate annuity rate and are otherwise unchanged."
Annual Notice Requirements for Employer Group Health Plans for 2015
Miller Johnson More items by Miller Johnson

"Women's Health and Cancer Rights Act (WHCRA) ... Medicare Part D Notice of Creditable or Non-Creditable Coverage ... HIPAA Notice of Privacy Practices ... Children's Health Insurance Program Reauthorization Act (CHIPRA) ... Summary of Benefits and Coverage ... Notice of Exchange Availability ... Notice Regarding Grandfathered Plan Status."
GASB 67/68: Substantively Automatic Plan Provisions (PDF)
Milliman More items by Milliman
9/12/2014 [Guidance Overview]

"This [article] discusses 'substantively automatic' plan provisions and their inclusion in the determination of a plan's total pension liability (TPL). For many plans, the concept of 'substantively automatic' is critical to the treatment of cost of living adjustments (COLAs), which are often granted on a discretionary or ad hoc basis."
District Court Deems Claim for Equitable Relief Appropriate Under Amara and Varity
Womble Carlyle More items by Womble Carlyle

"The Court noted that the key to the Varity analysis was whether both theories of recovery were based upon the same alleged conduct; if so, the claim for equitable relief under ERISA Section 502(a)(3) was not appropriate. But here ... the alleged wrongful conduct was not [the insurer's] benefit determination, but rather the employer's failure to provide the conversion application in a timely manner. In fact, as a direct result of the employer's alleged breach, plaintiffs had no a claim for benefits pursuant to ERISA Section 502(a)(1)(B) under the policy terms; they had a claim under ERISA Section 502(a)(3) or nothing." [Biller v. Prudential Ins. Co. and Six Continents Hotels, Inc., No. 1:13-CV-03495-RWS. (N.D. Ga. Aug. 26, 2014)]
DOL Seeks Information on Use of Brokerage Windows (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
9/12/2014 [Guidance Overview]

"The stated purpose of the RFI is to increase the DOL's understanding of the prevalence and role of brokerage windows in these plans. The DOL is seeking information to determine what regulatory standards or guidance may be necessary to protect participant savings. The goal is to ensure participants are not exposed to undue risk and that fiduciaries understand the scope of their responsibilities when brokerage windows are part of the investment platform.... The DOL seems to have a particular concern about the use of non-designated investment alternatives as the exclusive means of investing in a plan to avoid any fiduciary or reporting obligations."
Health Converges with Wealth Across the Generations
Manning & Napier More items by Manning & Napier

"Health care costs can be hard to estimate over the long-term and are dependent on many personal characteristics, but for most [people], the costs are likely to be significant.... Participants at all life stages will need to create a strategy for funding their retirement that includes the cost of health care. These costs are likely to increase over time, even while they are living out their retirement years.... While monthly financial needs are relatively predictable, future retirees will need help planning for the unpredictable, potentially significant expenses that are likely to come in retirement. Their retirement savings will need to last longer, and grow more, than any previous generations."
Seventh Circuit Hears Oral Argument in Case That Struck Down Tax Code's Parsonage Allowance
CNS News More items by CNS News

"A three-judge panel of the 7th Circuit Court of Appeals heard oral arguments [September 9] in an appeal of a ruling by a federal judge in Wisconsin that struck down the tax code's 60-year-old 'parsonage allowance'.... Clergy members say that [the District Court] ruling, which will not go into effect until the appeals process is finished, would have a significant financial impact on them.... Other pastors said that if the ruling stands, they may be forced back into the secular workforce." [The 2011 district court decision that found the provision to be unconstitutional is Freedom from Religion Foundation v. Geithner, No. 11-CV-626 (W.D. Wis. Sept. 13, 2011)]
Can Insurance Companies Save Public Pensions?
The Washington Post; subscription may be required More items by The Washington Post; subscription may be required

"Does it make sense for local governments to turn over the assets of their employee pension plans to insurance companies, who would in turn make monthly payments to retirees? ... [The Urban Institute] gave the idea its top grade, saying it eliminates a troublesome financial risk for state and local governments, protects workers who change jobs frequently, and rewards young workers -- all while providing a steady stream of income for retirees."
Auditor for State of Ohio Warns GASB Reporting Rule Could Hurt Local Government Budgets
Cleveland Plain Dealer More items by Cleveland Plain Dealer

"State law allows pension systems to offer medical insurance, but there is no legal obligation to employers beyond the employer pension contribution. [Ohio Auditor Dave] Yost noted in his written testimony that Ohio's pension systems choose to fund medical care through established contributions. Yost said the proposed rule requires employers to record a liability they have no control over and, in Ohio, a liability state retirement systems have no duty to ever provide."
Understanding the Census Bureau's Upcoming Health Insurance Coverage Estimates
Center on Budget and Policy Priorities More items by Center on Budget and Policy Priorities

"While the CPS is the most widely used source of health coverage information, significant changes in its health coverage questions [which were] instituted for 2013 -- the result of a multi-year Census initiative to improve the reliability and accuracy of the survey's health coverage estimates -- mean that the 2013 results cannot be compared to those for prior years. Moreover, because the CPS estimates are for 2013, they will not show the effects of the [ACA's] major coverage expansions, implemented starting in January 2014."
2014 Retirement Research Consortium Meeting Presentations, August 7-8, 2014
Center for Retirement Research at Boston College More items by Center for Retirement Research at Boston College

Target page includes links to video, slides, summaries, and papers presented. Topics include: [1] Social Security Provisions; [2] Social Security and Vulnerable Populations; [3] Social Security Claiming; [4] 401(k)s: Saving and Investing Decisions; [5] Retirement Saving: Adequacy and Risks; [6] Working Longer; and [7] Lessons from Other Nations.
Employer Rejects Employee's Fitness for Duty Certification, Faces FMLA Liability
FMLA Insights More items by FMLA Insights

"Because the hospital did not provide Vanessa and her doctor a job description or list of essential duties, guess who got to decide what her duties were? Yep -- Vanessa! So, when Vanessa's doctor asked her if she felt able to type, and she responded 'yes,' Vanessa's opinion carried the day.... But the employer had no say in the matter because its return to work certification process was not compliant.... When you don't provide the health care provider with essential job functions, you potentially create problems for yourself ... Update job descriptions/essential job duties before you provide them to the health care provider ... Don't insist that an employee return to work fully or 100% healed. And even more, don't put it in writing!" [Budhun v. Reading Hospital and Medical Center, No. 11-4625 (3rd Cir. Aug. 27, 2014)]
The Early Impact of the ACA: Individual Premiums Up Substantially
The Brookings Institution More items by The Brookings Institution

"[N]ational enrollment trends obscure significant variation across states, as a result of the types of people who opted in and how insurers set premiums. Across all states, from before the fourth quarter of 2013 to the first half of 2014, enrollment-weighted average per-person premiums in the individual health insurance market rose by 24.4% beyond what they would have had they simply followed state-level seasonally-adjusted trends. This large increase stands in contrast to the experience in Massachusetts, which saw premium decreases after its 2006 reform."
Government Share of Health Care Spending at Record High
National Center for Policy Analysis More items by National Center for Policy Analysis

"Ten years ago, the government was paying for 39 percent of all health care spending, but that share has only risen. Obamacare is part of this increase: In 2014 alone, federal health care spending is projected to increase by 14.7 percent, rising faster than the growth of private health care spending for the next decade.... [CMS] projects Medicaid spending to rise by 18.4 percent in 2014."
House Subcommittee to Hold September 17 Hearing: 'Private Employer Defined Benefit Pension Plans'
Committee on Ways and Means, U.S. House of Representatives More items by Committee on Ways and Means, U.S. House of Representatives

"The hearing [by the Subcommittee on Select Revenue Measures] will focus on some of the challenges facing employers, employees, and retirees who rely on defined benefit pension plans to help provide retirement security. It will examine the funding rules governing multiemployer plans, as well as selected issues that affect single employer plans."
Senate Finance Committee to Hold Hearing: 'Updating Savings Policy for the Modern Economy'
U.S. Senate Committee on Finance More items by U.S. Senate Committee on Finance

Testimony will be provided by: [1] John C. Bogle, Founder and Former CEO, Vanguard; [2] Dr. Brian Reid, Chief Economist, Investment Company Institute; [3] Ellen Schultz, Author and Investigative Reporter, formerly with The Wall Street Journal; [4] Scott Betts, Senior Vice President, National Benefit Services; [5] Dr. Brigitte C. Madrian, Aetna Professor of Public Policy and Corporate Management, Harvard University, John F. Kennedy School of Government; and [6] Dr. Andrew G. Biggs, Resident Scholar, American Enterprise Institute.
Text of IRS Notice 2014-50: September 2014 Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
9/12/2014 [Official Guidance]

"This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), ... the 24-month average segment rates[,] ... the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate ... and the minimum present value segment rates ... as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by [MAP-21]."
Principles of Successful Retirement Plan Design: A Focus on Employee Retirement Readiness
Bronfman E.L. Rothschild More items by Bronfman E.L. Rothschild

"Designing a 401(k) plan to serve your company and its employees is more than just selecting the right investments.... Incorporate behavioral finance fundamentals to help improve participant and plan results.... Deliver participant advice on a one to one basis.... Include plan design features to make enrollment and investment selection easy for participants.... Provide financial wellness services to improve the financial health of your employees.... Have a sound investment process."
CMS Webinar Slides: FF-SHOP Updates and Live Q&A, September 9, 2014 (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS] More items by Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
9/12/2014 [Guidance Overview]

34 presentation slides. "FF-SHOP will launch SHOP Early Access in the following states prior to November 15 on Delaware, Illinois, New Jersey, Missouri, Ohio; Early Access will make key portions of FF-SHOP functionality available in targeted markets prior to November 15; Accessible to small employers, agents, and brokers; Allows for incremental release of Marketplace functionality and consumer testing of the FF-SHOP online environment prior to go-live in all states; CMS will hold technical assistance and engagement events in each of the 5 SHOP Early Access states."
Text of IRS Notice 2014-53: Guidance on Pension Funding Stabilization Under the Highway and Transportation Funding Act of 2014 (HATFA) (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
9/12/2014 [Official Guidance]

"This notice provides guidance on certain issues relating to HATFA. Notice 2012-61 continues to apply except to the extent the statutory provisions have changed.... Except as [otherwise provided in this notice], a plan sponsor elects to defer the use of the HATFA segment rates ... until the first plan year beginning on or after January 1, 2014, by providing written notice to the enrolled actuary for the plan and to the plan administrator. The notice must specify the name of the plan, employer identification number and whether the use of the HATFA segment rates is deferred for all purposes or only for determination of the AFTAP used to apply benefit restrictions under Section 436. The election described in this section III.A is irrevocable, and must be made no later than the later of: [1] the deadline for filing the Form 5500, Form 5500-SF or Form 5500-EZ (including extensions) for the plan year beginning in 2013; or [2] December 31, 2014."
More Seniors Carry Student Loan Debt Into Retirement
U.S. News & World Report More items by U.S. News & World Report

"There are now approximately 706,000 senior citizen households that still have student loan debt.... Social Security offsets to pay student loan debt grew by 500 percent from approximately 6,000 in 2002 to 36,000 in 2013 among people age 65 and older. The Treasury collected about $24 million by withholding Social Security benefits from debtors in 2002, a number that increased to $150 million in 2013."
Mental Health Parity Act: A Litigation Update
Proskauer's ERISA Practice Center More items by Proskauer's ERISA Practice Center

"The Federal Mental Health Parity and Addiction Equity Act ..., like many similar state parity laws, mandates that financial requirements ... and treatment limitations ... applicable to mental health benefits generally can be no more restrictive than the requirements and limitations applied to medical benefits. These parity laws, which are enforceable under ERISA, have been at issue in an increasing number of cases. Three district courts, all of which are located within the Ninth Circuit, have released rulings over the past few weeks."
IRS Verdict Is In, But Buyer Jury Is Out, on QLACs
Todd Berghuis, for Ascensus More items by Todd Berghuis, for Ascensus

"The question no one is able to answer at this point is how attractive this investment option will be to those with assets accumulated in IRAs or employer plans. It is a safe assumption that it will take time for interest to grow. Longevity annuities are not actually a new product, but until now they did not offer the tax benefits provided by these final regulations."
Support Builds for Employee Health Care Protection Act Ahead of House Vote
Energy & Commerce Committee, U.S. House of Representatives More items by Energy & Commerce Committee, U.S. House of Representatives
9/11/2014 [Opinion]

"The House of Representatives will vote [on Sept. 11] on H.R. 3522, the Employee Health Care Protection Act, authored by Rep. Bill Cassidy (R-LA). The bill helps to protect American workers from the president's #BrokenPromises by allowing health insurance plans currently available on the group market to continue to be offered through 2019. Ahead of the vote, a wide range of stakeholders voiced support for the bill and praised the committee for working to prevent the administration from doing any more damage to our nation's health care."
California Enacts Statewide Paid Sick Leave Law
Littler More items by Littler
9/11/2014 [Guidance Overview]

"If an employer has a PTO policy that provides an amount of paid time off sufficient to meet the law's requirements and may be used for the same purposes and under the same conditions as paid sick leave under the law, it need not provide additional paid sick time. However, employers should not assume that just having a PTO policy is enough, as the policy must be viewed in light of the paid sick leave law's accrual, cap, and reinstatement rules.... Employers that have employees who perform work in California are advised to take one or more of [the listed] actions[.]"
Do Workplace Wellness Programs Work? Usually Not.
The New York Times; subscription may be required More items by The New York Times; subscription may be required

"The programs are generally offered not directly by insurance companies, but by specialist firms that tell employers they will reduce spending on employees' care by encouraging the employees to take better care of their health. Wellness programs have grown into a $6 billion industry because employers believe this. In fact, asked which programs are most effective at reducing costs, more firms picked wellness programs than any other approach."
'Observation Care' vs. 'Inpatient Care' at the Hospital: Why it Matters to Seniors on Medicare
Kaiser Health News More items by Kaiser Health News

"Seniors must have three consecutive days as admitted patients to qualify for Medicare coverage for follow-up nursing home care, and no amount of observation time counts for that three-day tally. That leaves some observation patients with a tough choice: Pay the nursing home bill themselves -- often tens of thousands of dollars -- or go home without the care their doctor prescribed and recover as best they can.... Although Medicare officials recently began experimenting with limited exemptions, they have been unable to resolve the problem. But most observation patients with private health insurance don't face such tough choices. Private insurance policies generally pay for nursing home coverage whether a patient had been admitted or not."
IRS Instructions for Form 2848 (Rev. July 2014) (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
9/11/2014 [Official Guidance]

"Use Form 2848 to authorize an individual to represent you before the IRS. See Substitute Form 2848 ... for information about using a power of attorney other than a Form 2848 to authorize an individual to represent you before the IRS. The individual you authorize must be eligible to practice before the IRS." [Revision date is July, 2014; released online September 9, 2014.]
Updated HIPAA Business Associate Agreements Needed by September 22, 2014
Holland & Knight More items by Holland & Knight
9/11/2014 [Guidance Overview]

"Covered entities and business associates have only until September 22, 2014 to update business associate agreements that were in place as of January 25, 2013. For those members of the health industry and their vendors that are still working to update these agreements, here are seven things to remember: Noncompliant agreements ... Minimum changes ... Consider addenda ... Consider the OCR template ... Sale of PHI ... Timeframes for reporting improper uses and disclosures ... State law."
Reducing Pension Plan Headcount Reduces Risk and PBGC Premiums
October Three Consulting More items by October Three Consulting

"PBGC premiums function more like a tax. Unless your plan ultimately goes through a distress termination, the premiums you pay go to fund other companies' benefits. Thus, reducing PBGC variable-rate premiums reduces real costs; increasing funding simply accelerates the payment of costs you will, at some point, have to pay in any case."
Governor Brown Signs California's Mandatory Paid Sick Leave Law
Ogletree Deakins More items by Ogletree Deakins

"[E]very employer with a paid sick leave policy will now have to review their policies to ensure they meet the minimum requirements of the law. Many paid sick leave policies, for example, exclude part-time, temporary, and seasonal employees from paid sick leave benefits. The new law provides no such limitation and will place employers with such limited policies squarely in violation of the law."
Health Plans, TPAs and PBMs Are Still on the Hook to Provide Contraceptive Coverage
Mintz Levin More items by Mintz Levin

"The new rules establish a second mechanism for eligible organizations to take advantage of the religious exemption from providing coverage for contraceptive services. Now, eligible organizations can use the process set out in the 2013 rules, or, simply notify HHS in writing of its religious objection. In turn, HHS or DOL will notify the health plan, third party administrator, or PBM responsible for providing enrollees in the health plan with contraceptive services at no cost for as long as they remain enrolled in the health plan."
New Money Market Fund Rules Require Review by Retirement Plan Sponsors
McDermott Will & Emery More items by McDermott Will & Emery

"Retirement plan fiduciaries have a fiduciary obligation to consider whether to continue utilizing money market funds in light of the likely increases in expenses, potential limitations on liquidity and administrative challenges under the new money market rules. In addition, a defined contribution plan fiduciary who decides to retain a money market fund as a plan investment will need to take steps to prepare for participant communications on changes in fees and the imposition of restrictions on redemptions."
Retirement Plan Leakage and Retirement Readiness
Milliman Retirement Town Hall More items by Milliman Retirement Town Hall

"There is no clear answer to the leakage problem in plans. A good retirement plan design can greatly influence the behavior of its participants. It has to include and encourage regular employer and employee contributions to help build retirement accounts. Withdrawal provisions and loans in plans don't signify poor plan design, but tighter administrative controls around the plan provisions, such as allowing only one in-service withdrawal per year, helps keep money in the plan."
Actively vs. Passively Managed Funds (PDF)
Ekon Benefits More items by Ekon Benefits

"While the opportunity for outperformance of actively managed funds is appealing, the argument against actively managed funds is that management fees and transaction costs cut into the investor's profit.... The argument against passively managed funds is that in market downturns, the passively managed funds follow the overall market, missing the opportunity to customize investments for the specific market environment.... The best option ... may be to mix active and passive investments, benefiting from the advantages of both fund styles."
New California Law Entitles Employees to Paid Sick Leave
Fisher & Phillips LLP More items by Fisher & Phillips LLP
9/11/2014 [Guidance Overview]

"In anticipation of these sweeping new changes, California employers should update their sick leave and record-retention policies to ensure compliance. Managers and supervisors need to be informed of the company's new policy changes and advised of their added responsibilities. Employers must also ensure that their employee wage statements for California employees comply with the new notice requirements."
Is a Fully Insured Defined Benefit Plan Right for Your Company?
Las Vegas Review-Journal More items by Las Vegas Review-Journal

"Employers find 412(e)(3) Plans so attractive because they avoid the complications commonly associated with traditional defined benefit plans. For example, no enrolled actuary's certification is needed; there are no required quarterly contributions; there is no full funding limitation applied that might limit contributions; and administrative costs are generally lower."
Vanguard Founder John Bogle Calls for Less Trading, Favors Fiduciary Standard
On Wall Street More items by On Wall Street
9/11/2014 [Opinion]

"If John Bogle were writing the rules, not only would broker-dealers be considered fiduciaries, but to fulfill those obligations there would be a lot less trading activity. Bogle, the founder of fund giant Vanguard Group, argues that the financial services sector as a whole is chasing short-term gains and in the process saddling investors with the costs of higher trading volumes and often not acting in their best interests."
CFOs Waging All-Out Attack on Healthcare Costs
Treasury & Risk More items by Treasury & Risk

"Plan design is one big area of attack, with more companies adopting high-deductible health plans. Another recent survey of large employers that was conducted by the National Business Group on Health found that 81% expect to offer at least one consumer-directed health plan next year, up from 72% this year. And 32% will offer a consumer-directed plan as the only option next year, up from 22% this year."
ERISA's Rich History: A Conversation with Phyllis C. Borzi, Assistant Secretary of Labor of EBSA
Bloomberg BNA More items by Bloomberg BNA

"One area of ERISA that has proven difficult over the years is the function of the Pension Benefit Guaranty Corporation. 'There was never agreement when ERISA was passed and there isn't agreement now as to what PBGC was supposed to be,' she said. 'The reason the PBGC has proved to be a vexing, difficult program is because unlike these other areas of ERISA, where there was broad, general consensus,' there was dispute over what it should look like, she said."
Premiums and Employee Contributions for Employer-Sponsored Coverage, 1999-2014
Henry J. Kaiser Family Foundation More items by Henry J. Kaiser Family Foundation

"Since 1999 the Employer Health Benefits Survey has documented trends in the employer-sponsored health insurance market. Every year about two thousand private and non-federal public employers with three or more employees have completed the full survey. Among other topics, the survey asks firms for the premium or full per person cost of their health coverage as well as the share that workers are responsible for. [This graphing tool] allows users to look at changes in premiums and worker contributions for covered workers at different types of firms, over time."
Administrative Exhaustion, Futility and the Last Refuge of the Scoundrel
Stephen Rosenberg of The Wagner Law Group More items by Stephen Rosenberg of The Wagner Law Group

"The case nicely highlights how high the bar is to prove futility in this context, and raises the question of what then would be enough to prove futility. Many lawyers often find that a hard question to answer, for the specific reason that most lawyers have never actually had a case in which the opportunity to recover benefits voluntarily from a plan was so futile that, in fact, futility could be proven for these purposes." [Carson v. Int'l Headquarters Pension and Beneficiaries Plan of the Int'l Union of Operating Engineers, No. 5:14-cv-11617 (S.D.W.V. Sept. 9, 2014)]
Does Apple's HealthKit Signal the End of Employer-Based Health Insurance?
Employee Benefit News More items by Employee Benefit News

"Apple is launching ... a mobile heath tracking system that will enable people to gather information on their health via their iPhone or soon-to-be released Apple Watch and, in time, automatically route that information to an online health record that can be accessed by their primary care physician immediately. While it may take some time to create this portable, web, and mobile health information environment, ... what Apple is doing is one of three main drivers that will move health insurance from being employer based to consumer based. This may forever change the way health care is financed and delivered."
Leaving a Legacy: Three Differences Between Roth IRAs and Life Insurance
Slott Report More items by Slott Report

"Life insurance and Roth IRAs have a lot in common. They are both often used as wealth transfer tools to help facilitate an efficient transfer of assets from one generation to the next, and they are both able to provide a tax-free legacy, just to name a few.... [1] Roth IRAs are always included in your estate ... [2] There's a limit to the amount you can contribute to a Roth IRA ... [3] There are no RMDs for life insurance."
CalPERS Audit Finds Loose Controls, But No Illegal Spiking
Calpensions More items by Calpensions

"Many employers, in contract bargaining with unions, agree to pay [each employee-member's mandatory contribution] to CalPERS, often around 8 percent of pay, in addition to the much higher employer contribution. A provision in the 1993 bill allows this 'employer paid member contribution' to be counted as pay during the final year on which pensions are based.... Most of the recent well-publicized spiking cases, and related court action, has been in the 20 independent county systems, for which anti-spiking legislation similar to the 1993 CalPERS measure failed, SB 2003 in 1994."
Offering Brokerage Windows in 401(k) Plans: Don't Do It
Employee Fiduciary More items by Employee Fiduciary
9/10/2014 [Opinion]

"The fiduciary responsibility model in 401k plans produces optimal results. When appropriately implemented, fiduciary standards work fine. Sponsors and fiduciary advisors quietly add value and help participants prepare for retirement. Brokerage windows undermine the fiduciary process and devalue the beneficial work done by fiduciaries. What seems like increased choice is actually a rejection of the fiduciary process. Bottom line: the increased choice often results in a net loss versus a fiduciary solution."
Yes, You Are Paying a Lot More for Your Employer Health Plan Than You Used To
The Washington Post; subscription may be required More items by The Washington Post; subscription may be required

"While premiums in employer plans have grown 26 percent in the past five years, that's been outpaced over the same time by the 47 percent rise in the average deductible -- the amount of care a worker has to pay for before insurance kicks in. In 2014, 80 percent of people covered by employee plans faced an average annual deductible of $1,217, compared to $826 in 2009. About 41 percent of all companies have an average deductible of at least $1,000, which is a big jump from 10 percent of firms in 2006. And 18 percent of firms have average deductibles of at least $2,000, which is up from just 3 percent in 2006."
Handout for IRS Webinar: Retirement News and 'Hot Topics', September 11, 2014 (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
9/10/2014 [Guidance Overview]

Topics: myRA; IRA One-Rollover Rule; Invalid SSN; Form 5500-EZ Penalty Relief Program; Pre-Approved DC Plans; Plan definition of spouse; Longevity Annuities.
Global Benefit Attitudes Survey Reveals Retirement Confidence
Towers Watson More items by Towers Watson

"[In] most economies, a majority of employees are confident of being able to afford 15 years of retirement. But confidence declines substantially when employees are asked to look further into the future. In developed economies, typically two-thirds of respondents believe their financial resources will support 15 years of retirement, but less than half are confident when considering 25 years into retirement."
Premiums for Family Health Coverage Rise 3% in 2014
Health Affairs More items by Health Affairs

"This year's increase continues a recent trend of moderate premium growth. Premiums increased more slowly over the past five years than the preceding five years (26 percent vs. 34 percent) and well below the annual double-digit increases recorded in the late 1990s and early 2000s. This year's increase also is similar to the year-to-year rise in worker's wages (2.3 percent) and general inflation (2 percent)."
PBGC Coverage May No Longer Apply to Puerto Rico-Only Qualified Retirement Plans
Bloomberg BNA More items by Bloomberg BNA

"Since few Puerto Rico plans have made an election under ERISA Section 1022(i)(2) due to the strict U.S. laws applicable to such arrangements, this new PBGC position will affect a number of Puerto Rico-only defined benefit plans. PBGC officials also stated that if the PBGC determines that a plan is not covered under Title IV of ERISA, it may refund up to six years of premiums."
Employer Costs for Employee Compensation, June 2014 (PDF)
U.S. Bureau of Labor Statistics [BLS] More items by U.S. Bureau of Labor Statistics [BLS]

"In June 2014, average costs in private industry for retirement and savings benefits were $1.23 per hour worked, or 4.1 percent of total compensation. The average cost per hour worked for defined benefit plans -- retirement plans that specify a benefit typically based on age, years of service, and earnings -- was 58 cents or 1.9 percent of total compensation. The average cost for defined contribution plans -- retirement plans usually based on employer contributions to individual employee accounts -- was 65 cents or 2.2 percent of total compensation."
CBO Cost Estimate for S. 2511, a Bill to Amend ERISA to Clarify the PBGC Definition of Substantial Cessation of Operations
Congressional Budget Office [CBO] More items by Congressional Budget Office [CBO]

"CBO estimates that S. 2511 would reduce the contributions that plan sponsors are required to make to their plans as a result of terminating operations, leading to increases in revenues and decreases in direct spending (including the effects on offsetting receipts, which are recorded as an offset to direct spending). CBO estimates that enacting S. 2511 would, on net, decrease direct spending by $15 million over the 2015-2024 period. The staff of the Joint Committee on Taxation (JCT) estimates that enacting the bill would increase revenues by $14 million over the 2015-2024 period. In total, CBO and JCT estimate that enacting S. 2511 would reduce deficits by $29 million over the 2015-2024 period."
Obamacare's Impact on Small Business Wages and Employment
American Action Forum More items by American Action Forum
9/10/2014 [Opinion]

"[R]esearch finds that [ACA] regulations are reducing small business (20 to 99 workers) pay by at least $22.6 billion annually. In addition, ACA regulations and rising premiums have reduced employment by more than 350,000 jobs nationwide, with five states losing more than 20,000 jobs."
Lessons from Efforts to Manage the Shift Away from DB Plans to DC Plans in Australia, the United Kingdom, and the United States
Elizabeth F. Brown, Georgia State University -- Department of Risk Management and Insurance More items by Elizabeth F. Brown, Georgia State University -- Department of Risk Management and Insurance

"While defined contribution plans provide employees with some advantages over defined benefit plans (e.g., portability, early vesting, greater autonomy), they also force employees to manage certain risks (longevity risk, investment risk) that they are ill prepared to manage. In addition, the differences in the way funds in defined contribution plans and defined benefit plans are managed affects the distribution of funds within financial markets that is potentially damaging to the economy.... These factors played a role in the recent financial crisis and, if left unaddressed, may contribute to future financial crises."
Four Ways Your 401(k) Participants Can Save More
Lawton Retirement Plan Consultants More items by Lawton Retirement Plan Consultants

"Many studies ... indicate that workers should save at least 12% to 15% of their income each year. It is likely that most of your 401(k) plan participants are not saving anything near this amount.... [Here] are four ideas on your 401(k) plan participants could save more: Make a budget ... Raise your 401(k) savings rate with each salary increase.... Collect the full company match.... Invest appropriately for your age and risk tolerance."
California State Controller's Review of CalPERS Pension Controls and Mechanisms (PDF)
California State Controller More items by California State Controller

Dated September 2014. "The State Controller's Office (SCO) has completed a review of the California Public Employees ' Retirement System (CalPERS) to determine whether controls are in place to detect and prevent pension payments based on unusually large or excessive final compensation amounts, commonly known as pension spiking.... The available resources limit [CalPERS'] annual reviews to only 45, or 1.5% of the more than 3,000 reporting entities. At this current rate, pension spiking could go undetected for an extended period of time, as each reporting entity would be reviewed, at the earliest, every 66 years."
Puerto Rico Plans and Insurance Company Separate Accounts Permitted in U.S. Group Trusts (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
9/10/2014 [Guidance Overview]

"Rev. Rul. 2014-24 removes uncertainty for group trusts when they accommodate insurance company separate accounts and Puerto Rico qualified plans. Plan sponsors will be able to enjoy providing the same investment options to both U.S. and Puerto Rico plans, which should ease administration and lower fees. For Puerto Rico plans in group trusts, the ruling also signals the end to the transition period and the coverage testing relief."
Departments Provide Guidance on Contraceptive Coverage Mandate for Employers with Religious Objections (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
9/10/2014 [Guidance Overview]

"Notably, a religious nonprofit entity could self-administer its self-insured plan directly rather than contracting with a TPA, or engage a religious TPA that, in turn, objects to providing contraceptive coverage. In those situations, the entity's employees would appear not be able to obtain contraceptive coverage services."
Nonprofit Religious Employers to Move Forward with Lawsuits Despite Revised Contraceptive Coverage Regs
The Wall Street Journal; subscription may be required More items by The Wall Street Journal; subscription may be required

"The government says its revised system accommodates religious employers' beliefs while ensuring their employees have access to the same range of contraception methods through their insurance as other workers. It plans to offer the new arrangement to nonprofit employers and some for-profit companies with religious objections to contraception. Religious groups say the compromise remains inadequate, and the administration should allow affiliated employers to omit contraception coverage entirely from health plans, as houses of worship are allowed to do."
Fee Equality: Leveling the Playing Field for Participants (PDF)
Arnerich Massena More items by Arnerich Massena

"Employers don't usually intend to charge fees unfairly, but may be surprised to know that fees are often inadvertently structured inequitably. Fee equalization can eliminate fee imbalances across the participant base to help plan sponsors embed fundamental fairness into the plan. In this paper, [the authors] examine the ways in which traditional fee structures create imbalances among participants and consider ways to equalize fees.
The Accidental Fiduciary: When a Signature is More Than Just a Name
Fox Rothschild LLP More items by Fox Rothschild LLP

"[T]his decision is only on a motion to dismiss ... However, the ruling from the Court does seem to suggest that at least some argument can be made that company officers could be liable for fiduciary breaches unless they can demonstrate that they did not control plan assets. Therefore, it might be worthwhile for employers as plan sponsors to actually formally [separate] plan assets [and to] limit the signatory authority on those accounts to people actually intended to be plan fiduciaries." [Perez v. Geopharma, No. 8:14-cv-66-T-33T (M.D. Fla. July 25, 2014)]
Aon Hewitt 401(k) Index Observations, August 2014
Aon Hewitt More items by Aon Hewitt

"August trading activity continued to be light in defined contribution plans, with only 0.020% of balances transferring. This marks the tenth consecutive month that trading activity was below 0.03%. Total transfer activity was $214 million or 0.13% of total assets, with zero days in August having above normal trading activity."
California Repeals 60-Day Limit on Health Insurance Waiting Periods
Proskauer's ERISA Practice Center More items by Proskauer's ERISA Practice Center

"The new law, effective January 1, 2015, prohibits California insurance companies from applying any 'waiting or affiliation period' under a group or individual health benefit plan. So where does that leave California employers, who are permitted under federal law (the ACA) to have a one-month orientation period and up to a 90-day waiting period? They'll be able to continue applying ACA-compliant orientation periods and waiting periods, as the law prohibits carriers -- but not employers -- from imposing a waiting period."
GASB Exposure Drafts Propose New Disclosures for OPEB
Segal Consulting More items by Segal Consulting
9/10/2014 [Guidance Overview]

"This Bulletin summarizes the key proposed changes in the Exposure Drafts, which are intended to provide a more comprehensive picture of the costs associated with state and local governments' OPEB promises. If GASB decides to include the changes it has proposed in final Statements, sponsors of public sector plans will face significant additional work in order to prepare their financial statements."

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