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Benefits in the News



The Benefits of Mediation in ERISA Claims
Butterfield Schechter LLP
Dec. 13, 2017
"Mediation can help reduce the chances of the plaintiff being awarded a higher payout, and avoid payment of the defendant's legal fees. A carefully mediated negotiation can allow both parties to walk away content with the outcome, without the unknown outcome that can result from a trial."
Pass-Through Tax Reform Impact on Small Businesses May Be Mitigated by Roth
planadviser
Dec. 12, 2017
"[A] business owner that feels that their pre-retirement tax-bracket is lower than their retirement tax bracket could save significantly more through the 401(k) Roth feature versus a Roth IRA. The Roth feature would allow them for 2018 to contribute $18,500/$24,500, if age 50 by the end of the year, and receive the distribution tax-free assuming current rules. This is significantly more than the $5,500/$6,500, if over age 50, for IRAs for 2018."
Tontines Meet Blockchain: Something Old Could Be New Again
Bloomberg BNA
Dec. 12, 2017
"Variations of the tontine principle could be used to create retirement income products that provide lifetime income, generate higher returns, and guarantee pensions that will always be fully funded ... TontineTrust, a company based in Gibraltar, is building a tontine product using blockchain and smart contract technologies to eliminate fraud and maximize payouts."
Spousal Consent/J&S Issues Under 403(b) Plans May Trigger Document Conflicts
Business of Benefits
[Guidance Overview]
Dec. 12, 2017
"[T]he only way the spousal rights rules apply to 403(b)plans is through ERISA Section 205. This means that if you have a non-ERISA 403(b) plan, the spousal rights rules DO NOT apply. Be careful to avoid inadvertently applying them in the restatement.... HOWEVER, many non-ERISA 403(b) annuity contracts impose the spousal rights rules as a matter of contract language ... It is typical for a 403(b) plan to provide a set percentage of pay as the employer benefit under the plan, much like a money purchase plan. There is a very real and unresolved issue as whether or not this set formula makes the plan a 'money purchase plan' which is subject to the J&S rules[.]"
Employees Fail to Take Advantage of Health Savings Accounts
Willis Towers Watson
Dec. 12, 2017
"To encourage greater participation, a majority (62%) of employers that offer HSAs are giving their employees a head start by contributing seed money to these accounts. In 2017, median seed amounts ranged from $300 to $750 for employee-only coverage and $700 to $1,400 for family coverage, depending on whether employers offered automatic seed money or automatic plus 'earned' seed money."
Text of IRS Notice 2017-76: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for December 2017 (PDF)
Internal Revenue Service [IRS]
[Official Guidance]
Dec. 12, 2017
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."
ERISA Stock Drop Cases Since Dudenhoeffer: The Pleading Standard Has Been Raised
Trucker Huss
Dec. 12, 2017
"The requirement that the plaintiffs 'plausibly' plead that no other prudent fiduciary would find that a proposed alternative action would do more harm to a plan than if that fiduciary took no action at all has proven to be very difficult for plaintiffs to overcome. Nevertheless, ... the plaintiffs' bar continues to attempt to find new ways to satisfy the substantial hurdles presented by Dudenhoeffer."
Ostrich Fiduciaries: Can We Get Their Heads Out of the Sand?
Cohen & Buckmann, P.C.
Dec. 12, 2017
"49% of plan sponsors surveyed, 39% of investment committee members and 22% of administrative committee members didn't understand that they are fiduciaries.... A clueless fiduciary may be: [1] Failing to monitor high plan fees ... [2] Putting plan investments in a 'set it and forget it' category ... [3] Not checking what the vendors are doing ... [4] Not picking the best outside advisers ... [5] Missing reporting deadlines or unaware that forms must be filed. [6] Engaging in prohibited transactions."
Texas Medical Board Substantially Revises Telemedicine Regs
Sheppard Mullin
[Guidance Overview]
Dec. 12, 2017
"[T]he Board repealed two prior requirements that restricted the use of telemedicine in the state: [1] its requirement that the provider conduct an in-person evaluation prior to issuing a prescription, and [2] its requirement that telemedicine services be provided only at 'established medical sites.' ... The Board further relaxed restrictions on the provision of mental health services via telemedicine[.]"
San Francisco Increases Health Care Contribution Requirement
HUB International
[Guidance Overview]
Dec. 12, 2017
"Even though contributions are only owed for employees doing work within the city and county of San Francisco, the level of employer contribution is based on the number of workers (whether or not they are employees) the employer has worldwide."
How Anchoring Hurts 401(k) Retirement Savers
Fiduciary News
Dec. 12, 2017
"Investors will often look at what the market is doing and compare their own returns to that. If the market is up 10% and they are up 5%, they're not happy, even though they're making money. If the market is down 10% and they're only down 5%, they're happy, even though they're losing money. This is perhaps the greatest reason why people miss their goals -- they're anchored to (and therefore aiming at) the wrong target."
If Tax-Deferred Saving in a 401(k) Is Eliminated, Nearly Half of U.S. Investors Would Save Less or Stop Saving
Wells Fargo
Dec. 12, 2017
"Three-quarters of non-retired investors in the survey have a 401(k) plan, and more than half -- 57 percent -- say the most valued feature of their plan is the 'match contribution from their employer.' ... Forty-six percent say they would 'save less' or 'stop saving' in their 401(k) if the tax deferred status of their plan was taken away, whereas 42 percent say they would 'save the same amount.'... 72 percent of investors are 'somewhat' or 'very optimistic' that they will be able to achieve their investment goals over the next five years, up from 52 percent of investors during the same quarter five years ago."
New York Paid Family Leave: How Do We Determine Tax Obligations?
Lockton
Dec. 12, 2017
"[T]ax issues raised by the NYPFL law [include]: Are employee premium payments withheld pre- or post-tax? Are employee premium payments subject to payroll taxes, such as FICA and FUTA? Are premium payments taxable if the employer pays on behalf of employees? Are benefits taxable to employees? How are tax payments or liabilities reported?"
2018 Planning for Health & Welfare Benefit Plan Operations (PDF)
Conduent
Dec. 12, 2017
"[1] Employer reporting and shared responsibility enforcement ... [2] Wellness programs ... [3] Health and welfare plan nondiscrimination testing ... [4] HHS to reconsider prohibitions on gender identity, pregnancy termination discrimination ... [5] PCORI fee."
Online Tool: The Health Spending Explorer
The Peterson-Kaiser Health System Tracker
Dec. 12, 2017
"This interactive tool provides up-to-date information on U.S. health spending by federal and local governments, private companies, and individuals."
'Automatic Retirement Plan Act' Proposes Mandatory Retirement Plans
Ascensus
Dec. 12, 2017
"[Most] employers ... would be required to maintain AC plans for their employees beginning in 2020 ... AC plans would generally be required to [1] include all part time and full time employees ... [2] include automatic-enrollment beginning with a minimum deferral of six percent ... and include automatic increases; [3] invest plan assets in a QDIA in the absence of a participant investment election; and [4] permit participants to elect to receive at least 50 percent of their account balance in the form of a distribution that guarantees them lifetime income."
Are Drugs Cheaper Using Cash?
Frenkel Benefits
Dec. 12, 2017
"Generic drugs reflect 80% of all drugs dispensed but account for less than 30% of an employer's prescription plan costs. The contracts intermediated by employers are largely targeting big-ticket items (brand and specialty drugs) ... even if they will get repeatedly outpriced on the lower-cost drugs as pricing apps, drugstores and generic manufacturers try to gain market share by publicizing cheaper alternatives to the health plan."
Experts Tell Congress How to Cut Drug Prices
Kaiser Health News
Dec. 12, 2017
"[1] Allow the federal government to negotiate drug prices ... [2] Speed approvals of safe and effective generics and biosimilars ... [3] Transparency ... [4] Discourage the pharmaceuticual industry's direct-to-consumer advertising ... [5] Limit what Medicare enrollees pay for drugs ... [6] Increasing oversight of a very specific federal drug discount program ... [7] Revise the Orphan Drug Act ... [8] Make sure doctors prescribe drugs for the right reasons."
Cadillac Tax Dispute Complicates Congress' Talks Over Health Insurance Tax Delay
FierceHealthcare
Dec. 12, 2017
"The GOP, some Democrats and business lobbyists told the publication, may be planning to use the threat of the Cadillac tax as leverage next year -- when it's aiming to enact policies that limit the tax-exempt status of employer plans."
Text of Amicus Brief to Supreme Court: Claim for Misrepresentation-Based ERISA Fiduciary Breach Requires Participant's Detrimental Reliance
American Benefits Council
Dec. 12, 2017
"The Second Circuit's holding that reliance is not an element of a claim for misrepresentation-based fiduciary breach is squarely at odds with the other courts' decisions and the ERISA principles underlying them. But the holding also sanctions claims that are jurisdictionally infirm. A plan participant who did not rely on a misleading communication has no standing to challenge it, because she cannot establish an injury -in-fact that was caused by the alleged ERISA violation.... Plaintiffs' real concern here -- the implementation of less advantageous plan terms -- derives from plan sponsor decisions that are permitted by ERISA, not from the defective communications plaintiffs now challenge." [Osberg v. Foot Locker, Inc., No. 15-3602 (2d Cir. July 6, 2017; cert. pet. filed Nov. 8, 2017)]
Retirement Benefits for Members of Congress (PDF)
Congressional Research Service [CRS]
Dec. 12, 2017
19 pages; topics include: [1] Retirement plans available to members of Congress; [3] Age and length-of-service requirements; [4] Required contributions to retirement programs; [5] Pension plan benefit formulas; [8] Replacement rates; [9] Cost-of-living adjustments; [10] The Thrift Savings Plan; [11] Mandatory coverage under FERS; and [12] Retirement benefits for members with limited service. [Report RL30631, Dec. 5, 2017]
When Can I Afford to Retire and When Should I Commence My Social Security Benefits?
Ken Steiner, FSA Retired
Dec. 12, 2017
"While it is common for retirement experts to tout the benefits of the Social Security deferral strategy as a way to maximize retirement income, ... continuing to work (and at the same time deferring commencement of Social Security benefits) produces much larger increases in expected retirement income than retiring and employing the Social Security deferral strategy."
What Happens If Tax Reform Scuttles Employers' Deduction for Commuter Benefits?
Society for Human Resource Management [SHRM]
Dec. 12, 2017
"One-third of recently polled employers (32.9 percent) offer incentives to employees who use mass transportation, carpool, bike or walk to work ... Among employers that offer mass transportation incentives, 56.8 percent have a pretax benefit program in place, enabling their workers to exclude mass transit or carpool costs from their gross taxable income."
Letter from Trade Groups to Congress Requesting Relief from Cadillac Tax by Year End (PDF)
Employers Council on Flexible Compensation [ECFC] and 36 other employer and trade organizations
[Opinion]
Dec. 12, 2017
"The Cadillac tax must be addressed well in advance of the implementation date to spare employees from even higher deductibles and copays. We are once again approaching that critical two-year window prior to which Congress must act to prevent cost increases and benefit reductions that will hurt millions of American families."
Public Pensions Can Meet Their Obligations
National Public Pension Coalition
[Opinion]
Dec. 12, 2017
"Funded ratio is an important measure to consider when examining the health of a public pension plan, but it is only one measure.... [T]here are usually more good years than bad years as far as investment returns are concerned, and good years allow pension funds to build up a cushion that can cover the shortfall during recession years."

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