News Items

"The [SECURE Act] has made a number of changes to Internal Revenue Code requirements for governmental plans, particularly in the required minimum distribution (RMD) requirements ... and made a number of other changes to the plan distribution rules. Accommodating these changes may present particular administrative burdens for public plans. Governmental plans should start considering what changes in plan terms, recordkeeping, reporting and communications may be necessary to reflect the new distribution rules."

"[It's] never too early to start planning for next year. This is especially true now that many employers feel they've maxed out on healthcare cost-shifting to plan members. And, more than ever, they realize the need to address all the dimensions of wellbeing -- physical, mental, emotional, financial and purpose. Here are some questions and ideas to get you started with your 2021 strategy."

"Notice requirements for retirement plans can be daunting. It may seem that, between the [DOL], [IRS], and [PBGC], there is an unlimited array of notices that need to be provided. Luckily, many notices only need to be provided annually and many will not apply to a plan at all. Even better, if notices are missed, this can be corrected.... A good listing of the possible notices that must be provided can be found here."

"OCR is issuing a Notice of Violation to the state of California, formally notifying California that it cannot impose universal abortion coverage mandates on health insurance plans and issuers in violation of federal conscience laws. California has deprived over 28,000 people of plans that did not cover elective abortion, but now must cover abortion due to California’s mandate."

EBSA has released a new search tool for Form 5500 filings. In addition to searching for specific filings, users now can search for filings using new filters including plan type, plan asset value, number of participants, employer plan types, business codes, form years, and locations. The number of search results generated increased to 5,000 filings. Users may export search results to a CSV file. Form 5500 filings with the Department since January 2010 are available in the new search tool.

"In two months (on March 31, 2020), the window closes for 403(b) plan sponsors to take advantage of the unique opportunity to retroactively amend their 403(b) retirement plans to correct document errors retroactively all the way back to January 1, 2010. After March 31, 2020, 403(b) plans likely will be subject to amendment deadlines that mirror 401(k) plans unless otherwise announced by the IRS."

"Complete this part only if one or more of the following apply. [1] You made nondeductible contributions to a traditional IRA for 2019. [2] You took distributions from a traditional, SEP, or SIMPLE IRA in 2019 and you made nondeductible contributions to a traditional IRA in 2019 or an earlier year.... [3] You converted part, but not all, of your traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2019 and you made nondeductible contributions to a traditional IRA in 2019 or an earlier year."

"This Technical Update provides [PBGC] guidance for cooperative and small-employer charity (CSEC) plans (as defined in section 210(f)(1) of ERISA) on filing PBGC premiums for 2019 and 2020 plan years that reflect the premium changes under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). This guidance supersedes any inconsistent information with respect to CSEC plans in PBGC's premium filing instructions. PBGC will amend its premium rates regulation (29 CFR part 4006) at a later date in a rulemaking to incorporate the SECURE Act premium changes."

"In addition to following the ordinary instructions provided for Form 990-T, an organization that is filing an amended return solely to claim the refund or credit due to the repeal of Section 512(a)(7) should write 'Amended Return -- Section 512(a)(7) Repeal' at the top of the Form 990-T. The organization should revise the return to not include any amount attributable to Section 512(a)(7) and attach a statement indicating the lines for which the numbers changed from the original return and stating 'repeal of Section 512(a)(7)' as the reason for the changes."

"The D.C. government has published a notice that provides employees with information about the Paid Family Leave law ... Employers with employees in D.C. must post this notice in 'a conspicuous place' at their worksites ... [B]eginning February 1, 2020, employers must provide employees with the notice in electronic or physical form: [1] at the time of hiring; [2] at least once between February 1, 2020 and February 1, 2021 and a least once a year every following year; and [3] whenever the employer 'receives direct notice' of an employee's need to take leave for an event that could qualify for benefits under the Paid Family Leave program."

"This article talks about two practical issues: [1] the need for the guaranteed retirement income products to be on recordkeeping platforms, and [2] the role of plan advisors in helping 401(k) fiduciaries understand and select the insurance company and the product."

"Low rates mean 'borrow to fund' strategies are back in favor.... Another opportunity arises when falling risk-free rates are combined with widening credit spreads.... It can be very cost effective for a multinational plan sponsor to plug a pension deficit in a country with a weakening currency.... Pension funds are pouring into the longevity market to take advantage of today's attractive prices."

"The amended New Jersey WARN Act will impose significantly stricter obligations (including potential individual liability) and make New Jersey the first state to mandate severance pay to employees separated as a result of certain layoffs, transfers, or terminations of operations -- even if the employer provides the requisite advance notice. The law takes effect on July 19, 2020."

"While no benefits are available under the MAPFML until 2021, ... the first quarterly reports and contributions to the Commonwealth's MAPFML fund (i.e. to cover the period from October 1 to December 31, 2019) must be remitted on or before January 31, 2020."

44 pages. "The overall average expense for all respondents to administer the funds and to pay investment manager fees is 55 basis points. This is down from 60 basis points in the prior year.... Reporting funds saw, on average, one-year returns around 4.5 percent.... The average assumed rate of return on investment for responding funds is 7.24 percent, compared with 7.34 percent last year.... About 82 percent of all responding funds are considering lowering or have lowered their assumed rate of return, and 51 percent are implementing or considering higher benefit age/service requirements."

"The Supreme Court's decision leaves in place the Dudenhoeffer standard ... Nevertheless, the remand order highlights arguments available to defendants in ERISA stock-drop actions where plaintiffs allege that defendants were required to act on the basis of inside information. The Supreme Court left unresolved both whether ERISA fiduciaries are ever required to act on the basis of inside information to benefit an ERISA plan, and whether Dudenhoeffer requires ERISA fiduciaries to cause disclosures that are not otherwise required by the federal securities laws." [Retirement Plans Committee of IBM v. Jander, No. 17-3518 (S. Ct. Jan. 14, 2020)]

"The percentage of the population with a high deductible has continued to increase.... Traditional plan users prioritized low out-of-pocket costs, whereas HDHP users reported that low premiums were more important than out-of-pocket costs when selecting their plan.... HDHP enrollees were less satisfied with the number of health plan choices offered than traditional enrollees."

"A group of 18 Blue Cross Blue Shield health insurers ... announced they will spend $55 million to partner with Civica Rx to create a new subsidiary dedicated to lowering the cost of select generic drugs.... Civica is a nonprofit organization formed in 2018 by three philanthropies and numerous health care organizations ... While Civica had been focused on providing drugs to hospitals, this partnership will focus on drugs that are purchased at pharmacies outside of hospitals."

"While the allegations are reminiscent of those in other, similar suits, this one cites as evidence 'Defendants' own certified annual plan Forms 5500 ... for the ten plan years of 2009 to 2018.'... The suit also treads some new ground in making arguments that the investment funds on the menu are ill-diversified, specifically that 'the Plans' equity funds have a 90% correlation with no provision to make available to participants less-correlated foreign bond, real estate, commodity funds, etc.' " (Fleming v. Rollins, Inc., No. 19-5732 (N.D. Ga., complaint filed Dec. 23, 2019)]

"Repeating a number of excessive fee lawsuits filed, the complaint says the plan, which has more than $2 billion dollars in assets, ... has substantial bargaining power regarding the fees and expenses charged.... It also accuses the defendants of failing to monitor or control the plan's recordkeeping expenses." [Freck v. Cerner Corp., No. 20-043 (W.D. Mo. complaint filed Jan. 21, 2020)]

"[1] Wellbeing programs (health risk management) ... [2] Prescription drug carve-out plans ... [3] Dependent audit ... [4] Claims audit."

"OCR's news release indicates that this is the second settlement stemming from a right of access enforcement initiative announced in 2019.... Although the dollar amount of the settlement [$85,000] may be considered modest, keep in mind that only one individual was affected by this violation and for only 20 days (resulting in a penalty of $4,250 per day)."

"The U.S. Supreme Court has an unusual number of [ERISA] petitions before it in the 2019-20 term. Two recent decisions may increase uncertainty around the use of actively managed funds, as well as the inclusion of company stock, in a defined contribution (DC) plan's investment lineup." [Putnam Investments, LLC v. Brotherston, No. 17-1711 (1st Cir. Oct. 15, 2018; cert. pet. denied Jan. 13, 2020, No. 18-926); Retirement Plans Committee of IBM v. Jander, No. 17-3518 (S. Ct. Jan. 14, 2020)]

"[1] More entities are covered by the deduction limitations than you think! ... [2] Companies that are voluntary filers, voluntarily provide public disclosure, or are not subject to Exchange Act registration or reporting on the last day of the tax year are not subject to Section 162(m) limitations ... [3] Covered employees are not limited to those reported in the proxy or 10-K ... [4] The deduction limitations cannot be avoided by having another entity pay the compensation ... [5] The existence of a clawback policy could result in a loss of grandfathering and the retroactive loss of a deduction ... [6] Potential need to modify deferred compensation arrangements in 2020 ... [7] Compensation paid in another capacity or following termination of employment (even upon death) may not be deductible."

"This infographic outlines the process when CBO and the staff of the Joint Committee on Taxation (JCT) are tasked with analyzing major legislative proposals that would affect health insurance choices for people under age 65. Together, CBO and JCT develop a cost estimate that reflects the middle of the distribution of potential outcomes."