News Items

25 pages. "The California Secure Choice Retirement Savings Trust Act takes away the freedom of choice that lies at the core of ERISA by forcing employers either to establish their own ERISA plan or to maintain an equivalent plan under the Act.... [The Act] disregards Congress's careful determination that employers should not be required to maintain employee pension benefit plans. Because the Secure Choice Act disregards and runs afoul of ERISA's statutory scheme by effectively requiring employers to maintain such plans, it is preempted by ERISA's broad, express preemption provision that disallows any state laws that 'relate to any employee benefit plan.' " [Howard Jarvis Taxpayers Assoc. v. The California Secure Choice Ret. Savings Prog. (CalSavers), No. 18-1584 (E.D. Cal. Mar. 28, 2019)]

12 pages. "[Working with an advisor] materially altered equity risk-taking for two-thirds of the sample, reduced cash holdings for nearly three in ten investors, and eliminated home bias for over 90%. ... Eight in ten [investors who have established a retirement goal] have an 80% or greater probability of achieving a secure retirement... [E]motional outcomes account for 45% of total perceived value."

"The practice of not offering participants the lowest cost share class available for a given investment strategy is out of alignment with industry best practices standards because it reduces the transparency of fees for participants and may cause certain participants to pay more for the operation of the plan than others, simply as a result of selecting certain investment alternatives."

"Going forward, an independent investment consultant is required to work with plan executives to issue requests for proposals from at least three record keepers. These record keepers must identify their fee policy as a total fixed fee per participant instead of a percentage of plan assets. Future record keepers will not be allowed to solicit plan participants to cross-sell products and services for individual retirement accounts, non-plan managed accounts, life or disability insurance, investment products, or wealth management services, unless initiated by the plan participant."

"The Section 404(b) regulations provide a narrow exception to its blanket prohibition on holding assets outside the jurisdiction of the district courts of the United States.... Section 404(b) offers two basic avenues by which this narrow range of assets can be held."

"[Y]our financial wellness program should ... be able to come up with personalized solutions designed to meet [your employees'] specific needs.... [A] financial wellness program has to inspire employees to take action.... If you're an employer of educated professionals under 40, you should make student debt a priority ... [A] best-in-class retirement plan might be the most important component of an employee financial wellness program."

"The notice, which must be sent to all eligible employees 90 days before the benefit is offered, is primarily intended to inform eligible employees of how the ICHRA affects premium tax credits. This information will help employees make an informed decision on whether to participate in the ICHRA or opt out. It also notifies employees that a benefit is being offered and what they can expect from the ICHRA."

"Nearly 38% of all respondents believe the rules will lead to lower costs for hospital services, while an identical number are unsure about the impact and the remaining 24% believe it would have none.... A slight majority (57%) are confident health plan members will use the information to make better value-based healthcare decisions.... A resounding 61% of employers think the rules will lead to more patients being steered to lower cost, higher quality hospitals."

"It is critically important for local governments and public agencies that use such plans to understand that the document provider (your recordkeeper and investment provider) does not always review and confirm that your operation or administration of the plan (as completed in the adoption agreement) complies with applicable federal and local law. Many local agencies incorrectly assume that, because they are using a pre-approved plan document, nothing can go wrong with it."

"[R]educing the use of high-cost, low-value drugs could lead to $63 million in annual savings among the 15 plan sponsors, which represents approximately 3% to 24% of overall pharmacy spending.... Wasteful prescriptions represented 3% to 12% of total claims per sponsor evaluated, with an average savings of $413 per script ... Brand-name drugs made up 42% of wasteful prescriptions, with an average savings of $682 per wasteful script."

"A sure-fire solution to cashout leakage is to eliminate participant choice by prohibiting pre-retirement 401k withdrawals altogether.... A promising solution comes in the form of emergency-savings plans ... Facilitating portability evens the scales for job-changers by making portability easy -- and in the case of small balances -- an automatic default."

"The SEC's Regulation BI is terribly disappointing. It not only fails to protect consumers; it actually makes the situation worse.... But the rule is unlikely to be implemented; it's being challenged not only by financial advisors who are fiduciaries, seven states and the District of Columbia have filed lawsuits against the SEC. And dozens of states are drafting their own regulations and legislation to do what the SEC has so far failed to do."

"[T]he Health Insurance Tax (HIT), which was suspended by the [IRS] for 2019, will become relevant again next year.... The tax is meant to raise over $15.5 billion collectively from health insurance carriers in 2020, almost double that of the 2014 fee.... This is expected to add around 2.5-3% to your fully-insured plan's premium."

"Although the federal courts have been deciding ERISA preemption claims for decades, this case illustrates the complexity -- and unpredictability -- of litigating an ERISA preemption dispute in the health plan subrogation/reimbursement space.' [Rudel v. Hawai'i Management Alliance Association, No. 17-17395 (9th Cir. Sept. 11, 2019)]

"Michael Kitces and Alan Moore are risking their time and treasure by suing the SEC (and chiding the FPA for failing to do so.) ... [T]he question [is] not whether these guys will win; even if they lose, they'll win the more important branding and PR war. The bigger question, then, is why nobody else stepped into this breach on RIAs' behalf? Conflicts, uncertainty, inertia and short memories[.]"

"[A] report recently released by the Social Security Administration that contains a comprehensive menu of actions that Congress can take to fix those problems.... You'll learn what those measures cost or save. You'll be able to read brief and understandable explanations of each of them.... [And] you'll be able to see which member of Congress or organization proposed them."

"Leaders of the House Energy and Commerce Committee [on September 16] announced a bipartisan investigation of business practices they say have fueled the rise of surprise medical billing, including the role of private equity firms that own physician staffing and emergency transportation companies."

"A new analysis of public spending on employee health insurance ... found that workers toiling in California's cities, counties, special districts and state offices received health benefits costing about 50 percent more than the average in California, which is $9,476. And, surprisingly often, benefits cost two, three, four, up to even eight times as much."

"[The district court] opened the door to a few questions, such as how much education and experience does it take for someone to be sophisticated enough to sign a release, the extent to which the release was valid against plan trustees, and whether a shorter timeline for signing would be equally sufficient. Further, the court noted that the employee's release did not bar the plan itself from asserting claims against the plan fiduciaries in the future." [Innis v. Bankers Trust Co. of South Dakota, No. 16-650, (S.D. Ia. Apr. 30, 2019)]

"Whole Foods, the grocery chain owned by Amazon, plans to cut health benefits for its part-time workers.... [T]he changes take effect Jan. 1 and would affect 2% of Whole Foods' workforce, or approximately 1,900 employees."

"[The California Consumer Privacy Act (CCPA)] can apply to businesses even if they do not have offices or employees in California. It can also reach activities conducted outside of California.... [H]ealthcare entities, health plans and other businesses operating in the healthcare sector likely create, maintain or otherwise process personal information that falls outside these exemptions. Therefore, businesses should evaluate data processing activities across operations to identify any such outliers."

"The threshold question that any paid leave law presents is whether the law establishes an ERISA-covered plan.... Provisionally at least, ... employers subject to the MAPFML should not be faulted for failing to conform their programs to ERISA.... The question of the extent to which, if any, state paid leave laws are preempted by ERISA is best described as an 'emerging' area of the law."

"More than half of respondents under age 35 (57 percent) said stock plan benefits are an important consideration when changing jobs, compared with 46 percent of their Baby Boomer counterparts.... However, only 25 percent of young participants understand how taxes may impact their benefits, compared with 38 percent of Baby Boomers[.]"

"Texas Governor Greg Abbott signed legislation in spring 2019 that gradually raises plan contributions by the state, school districts, and employees. Additional contribution hikes may be necessary to close the plan’s funding gap ... Revising the plan’s benefit structure ... could also improve retirement security for teachers who spend less than a full career in the pension system[.]"

Sep. 13, 2019. "Use Form 8955-SSA to report information about separated participants with deferred vested benefits under the plan.... A Form 8955-SSA need not be filed for a year if no information is required to be provided for that year by these instructions. Form 8955-SSA may be filed electronically through the FIRE system or on paper."