News Items

"This notice provides additional temporary nondiscrimination relief for closed defined benefit plans (that is, defined benefit plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date) that generally meet the eligibility conditions for the relief provided in Notice 2014-5 ... Specifically, this notice provides that, if a plan satisfies the conditions specified in this notice, the plan is deemed to have satisfied certain of the nondiscrimination requirements relating to benefits, rights, and features....

"The temporary relief ... applies to defined benefit plans for which the relief under Notice 2014-5 (as extended) is available (except that eligibility for this relief does not depend on the method used to satisfy the nondiscrimination requirements for the plan year beginning in 2013)....

'The temporary relief ... applies for plan years ending after November 13, 2019, and beginning before January 1, 2021. Accordingly, the last plan year for which this relief applies is the same as the last plan year for which the relief under Notice 2014-5, as extended most recently by Notice 2019-49, applies.'

"Treasury has determined that the Plan is eligible to reduce benefits under MPRA and that your application satisfies the requirements of ... section 432(e)(9) ... as added by MPRA. This notification is not a final authorization to implement the benefit reduction described in your application.... [N]o reduction of benefits can take effect before a vote of the participants and beneficiaries of the Plan with respect to the proposed reduction."

"On November 7, 2019, the SEC's Office of Compliance Inspections and Examinations (OCIE) published a Risk Alert highlighting the most often cited deficiencies and weaknesses observed in recent examinations of registered investment companies, including as related to national examination initiatives focusing on money market funds and target date funds."

"A federal district court denied class certification to health plan participants who claimed the plan promised them lifetime benefits. The court found too many individualized questions about what the plan told each participant, and the claims could not be resolved on a class-wide basis." [Fitzwater  v. Consol Energy, Inc., Nos. 16-9849 and 17-3861 (S.D. W. Va. Oct. 15, 2019)]

"Two recent cases illustrate -- in differing ways -- how plan fiduciaries' missteps in dealing with benefit claims led to losses in court, and why implementation [of] best practices are essential to avoid exposure to denial of benefit litigation and the associated costs."

"The current RMD life expectancy tables use (obsolete) individual annuity mortality tables plus individual annuity mortality improvement assumptions. The proposal takes a different approach, using an individual annuity mortality base scale but a general population mortality improvement scale. Using an individual annuity mortality improvement scale generally would produce even longer life expectancies (for RMD purposes) than does the approach taken by the proposal."

"[W]hen considering someone with an IRA valued at $1 million, the first year RMD would only decrease by roughly $2,100, and only a portion of that amount would have been due as taxes; the value of deferring that tax liability is only the growth potential on those taxes ... which are hardly amounts that could significantly alter someone's overall financial picture later in life[.]"

"The City Council unanimously passed the Domestic Worker Bill of Rights ... [which] will create a portable benefits system for domestic workers -- such as housecleaners, home health aides, and nannies -- to receive paid time off. It is expected to benefit upwards of 16,000 workers right off the bat, with that number increasing in future years.... ['[W]hat happens here could be a model for millions of American workers without adequate access to benefits because they are subcontractors or juggling multiple part-time jobs or driving for Uber to supplement their income -- so-called nontraditional work arrangements'."

"In this position paper, the American College of Physicians expands on its position paper from 2016 by offering additional recommendations to improve transparency in the PBM industry and highlighting the need for reliable, timely, and relevant information on prescription drug pricing for physicians and patients."

"Now that the cost of living adjustments have been issued for 2020, it is time for plan sponsors to finalize and issue their annual notices to participants. The 401(k) safe harbor, qualified default investment alternative (QDIA), and automatic enrollment notices must all be sent to plan participants between 30-90 days before the beginning of the plan year (i.e., no later than December 2nd for calendar year end plans)."

13 pages. "[This paper examines] a reform package designed to stabilize the [PBGC] guarantee fund without relying upon loans from the federal government.... [1] Any plan within 15 years of projected insolvency ... would be required to cut benefits to the level guaranteed by the PBGC.... [2] [PBGC coverage] would be 100% up to a benefit rate of $25, and 0% above that level.... [3] The existing 'flat' premium would be increased from $29 to $80 per participant per year ... [4] A variable rate premium would be introduced[.]"

"The increasing price of prescription drugs is an ongoing concern for Medicare and Medicaid ... Shifts in benefit design, including higher deductibles and a movement away from copayments to coinsurance, have increased patient out-of-pocket costs and put pressure on program budgets. In this paper, the American College of Physicians ... offers additional recommendations to decrease out-of-pocket costs for patients, enhance the government's purchasing power, and address existing policies that add costs to the health care system."

"CMS reports that 177,082 consumers selected a plan [on Nov. 1 or Nov. 2] in the 38 states that use HealthCare.gov.... The new SBC includes additional information about what qualifies as minimum essential coverage.... More significant changes were made to instructional guides for group and individual plans to comply with the SBC requirement."

"[The author presents] a simple model to calculate the household wealth and saving rates necessary for stylized earners to achieve income-specific retirement income replacement rate targets, net of scheduled Social Security benefits. For very low earners, roughly the poorest quintile of the earning distribution, little savings are necessary on top of Social Security."

"Lawmakers and professional regulators, perhaps implicitly recognizing the arbitrariness and unfairness in mandatory age retirements, have imposed no such requirements for physicians who are employees. To the contrary, physician-employees may enjoy significant federal and state protections from age discrimination, and health care employers who may be tempted to require physician-employees to retire based on age would be strongly advised against doing so."

"If employers can begin to empathize with employees' lack of understanding by providing consistent benefits training and education and empowering benefits engagement throughout the year, employees will be able to make more informed benefits decisions for themselves and their families."

"Policies extending well beyond restatements are still a minority practice (outside of financial services). Now, however, compensation committees are asking, What tools will we need in the event of a scandal, particularly one causing reputational or financial harm short of a restatement? ... The primary area of change is the expansion of what triggers a clawback or forfeiture."

"[Rev. Rul. 2012-3] is an actuary's dream, with specific, almost painful details outlining the machinations of how the J&S rules apply when making lifetime income payments from a plan which otherwise is designed to avoid this issue.... [F]our of the most basic concerns are addressed by 2012-3: [1] The annuities are investments, not protected plan benefits.... [2] The joint and survivor rules apply only to the elected annuity contract, not to the entire plan-or even to the entire account balance of the participant.... [3] The J&S rules won't apply until the 'annuity starting date.' ... [4] Making the annuity the default method of payment under the plan won't trigger the J&S rules if the participant can elect out of it before the annuity starting date."

"[D]efault-investment acceptance increases by approximately 0.7% for each additional fund that a plan adds to the core investment menu (moving from 10 to 30 funds).... [P]articipants in plans with about 10 funds had an average of 4.4 holdings in their portfolio; participants in plans with around 30 funds had an average of 8.6 holdings.... [I]ncreasing a fund menu from 10 funds to 30 funds, which would result in an average increase in holdings of approximately three funds per participant, would result in an estimated increase of alpha of 11 basis points for those participants self-directing their accounts."

"PBGC is proposing modifications to the 2020 Schedule R (Retirement Plan Information) and its related instructions. Schedule R is part of the Form 5500 Series. The proposed modifications to Schedule R affect multiemployer defined benefit plans covered by title IV of ERISA. PBGC also is proposing minor modifications to the Form 5500 Series to improve the accuracy of reported information."

"The beauty and danger of the DOL proposed rule is that it is purposely and purposefully broadly-worded to allow for innovations in technology. For instance, the requirement that the participant have an email address or a smartphone number allows for creative methods of notice: Email? Text? In-app or push notifications? So long as the safe harbor is met, it would seem all of the above are acceptable to the DOL. But just because you can do something, doesn’t mean you should. To avoid DOL scrutiny, administrators should be careful not to push participants past their technological comfort zones."

"A retirement savings plan has become a standard benefit, with the 401k plan long ago replacing the pension plan as the preferred vehicle.... [Plan] administration takes time. Larger companies could afford to hire dedicated staff for this purpose. Other companies, well, the proverbial buck stopped at the president's desk.... [It] may take more than auto-enrollment to boost employee savings rates.... The underlying structure of the plan requires fiduciary oversight.... Picking the right service provider becomes critical should the plan sponsor face a lawsuit. "

46 pages. "Benefits are among the most important job features for state and local employees.... [T]he vast majority agree they could earn a higher salary in the private sector, and a pension factors into the competitiveness of their compensation.... State and local government employees overwhelmingly have favorable views of pensions ... Most public workers feel they will be financially secure in retirement, but the vast majority of state and local employees are highly concerned about cuts to retirement benefits and government officials underfunding of pension plans.... Millennials working in state and local government generally share the views of Baby Boomers and GenXers on their job, serving the public, pay, and benefits."

"The [DOL] has issued updated summary of benefits and coverage (SBC) templates, instructions, and related materials for use in completing SBCs, as required under the [ACA]. The updated materials reflect the Tax Cuts and Jobs Act's (TCJA) reduction to zero of the penalty for violating the ACA's individual mandate. HHS also updated its SBC-related documents, which -- like the DOL's updated SBC documents -- must be used for plan or policy years beginning on or after January 1, 2021."

"The state's waiver proposal has two primary phases: first is a reinsurance program to help insurers pay high-cost claims (and thus lower premiums), set to go into effect in 2021. Then there's the 'Georgia Access Model,' which starting in 2022 would: [1] Direct consumers to buy coverage through private broker or insurer websites, rather than HealthCare.gov; [2] Put the state in control of ACA subsidies; and [3] Allow health plans that don't cover all 10 of the ACA's essential health benefits (EHB) categories to be sold alongside qualified health plans (QHPs)."