News Archive

Failure to Provide ERISA-Required Plan Document to Participant Costs Plan Sponsor $41,000

"This wrongdoing in this case continued when the plan participant, after discovering her claims would not be paid, requested a copy of the plan documents. She wanted to be able to review the documents to determine how to appeal and what rights she had under the plan. The plan sponsor failed to provide plan documents. In order to remedy the situation, the plan participant chose to sue her employer in order to cover her medical costs. During discovery, the requested plan documents were finally provided, several years late." [Kinsinger v. SmartCore, LLC, No. 17-643 (W.D.N.C. Aug. 27, 2019)]   MORE >>

Text of IRS Notice 2020-6: Financial Institutions Can Issue Corrected Statements by April 15 to IRA Owners Turning 70-1/2 in 2020 (PDF)

Under pre-amended law, by January 31, 2020, financial institutions acting as IRA trustees, custodians or issuers were required to provide a statement to IRA owners who will turn 70-1/2 in 2020 notifying them about the required minimum distribution (RMD) which would have been needed by April 1, 2021. Under the SECURE Act, the new required beginning date for an IRA owner is April 1 of the calendar year following the calendar year in which the individual attains age 72, not 70-1/2.

Hence Notice 2020-6 clarifies that such a statement is no longer due by January 31, 2020 to persons who will attain age 70-1/2 in 2020. In recognition of the short amount of time after the enactment of the SECURE Act that financial institutions have had to change their systems for furnishing the RMD statement, Notice 2020-6 provides that if an RMD statement is (or already has been) provided for 2020 to an IRA owner who will attain age 70-1/2 in 2020, the IRS will not consider such statement to be incorrect, if the financial institution notifies the IRA owner no later than April 15, 2020, that no RMD is due for 2020.

The guidance notes that the SECURE Act did not change the required beginning date for IRA owners who attained age 70-1/2 prior to January 1, 2020 and encourages (but does not require) these financial institutions to remind IRA owners who attained age 70-1/2 in 2019, and have not yet taken their 2019 RMDs, that they are still required to take those distributions by April 1, 2020.

(Additional guidance is being considered with respect to the SECURE Act, including guidance for plan administrators, payors, and distributees if a distribution to a plan participant or IRA owner who will attain age 70-1/2 in 2020 was treated as an RMD.)  MORE >>

Proposed Mental Health Parity Guidance Would Impose Significant Disclosure Requirements

"[T]he Agencies' proposed rule [would] require plan administrators to distribute hard copy health care provider lists when the ERISA electronic disclosure standards cannot be met. This proposed requirement deviates from the standard practice of directing plan participants to network administrator websites for provider lists and would be sure to significantly increase administration costs."

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Text of IRS Notice 2015-68: Information Reporting on Minimum Essential Coverage (PDF)

11 pages. "This notice advises taxpayers that the Treasury Department and the [IRS] intend to propose regulations under [Code section] 6055 ... [1] providing that health insurance issuers must report coverage in catastrophic health insurance plans described in section 1302(e) of the [ACA] enrolled in through an Affordable Insurance Exchange ..., [2] allowing electronic delivery of statements reporting coverage under expatriate health plans unless the recipient explicitly refuses consent or requests a paper statement, [3] allowing filers reporting on insured group health plans to use a truncated taxpayer identification number (TTIN) to identify the employer on the statement furnished to a taxpayer, and [4] specifying when a provider of minimum essential coverage is not required to report coverage of an individual who has other minimum essential coverage. This notice also invites comments on issues relating to solicitation of taxpayer identification numbers (TINs) of covered individuals; advises that the governments of United States possessions or territories, namely American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands, are not required to report coverage under Medicaid and the Children's Health Insurance Program (CHIP); and provides that the state government agency sponsoring coverage under the Basic Health Program is required to report Basic Health Program coverage."

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Text of HHS Press Release: Administration Increases Transparency for Consumers Shopping for Health Insurance Coverage

"The rules enhance the consumer shopping experience in a number of ways. For example, health insurance issuers must provide online access to a copy of the individual coverage policy for each plan or group certificate of coverage. And these documents must be made publicly available to all potential consumers prior to when a consumer applies, so they are clearly informed about what a plan will and will not offer. The final rules make few changes to the rules proposed in December 2014. In continuing the goal of providing clear and straightforward information to consumers about health plans available in their area, health insurance issuers and group health plans must still provide a brief SBC that includes coverage examples and a uniform glossary to consumers."  MORE >>

Eighth Annual Study of Employee Benefits Today and Beyond: Delivering the Benefits Message (PDF)

"Overall, usage of both traditional and emerging communications methods has increased.... Employers are thinking about additional ways carriers can communicate with their employees outside of the annual enrollment period.... Employees' preference for digital communications is strong but not exclusive.... Brokers' use of mobile devices has increased significantly across all activities"  MORE >>

GAO Report: Revised Electronic Disclosure Rules Could Clarify Use and Better Protect Participant Choice

46 pages. "GAO: [1] examined the extent to which law and regulations permit electronic disclosure to participants; [2] explored the reported advantages and disadvantages associated with electronic delivery; and [3] evaluated the weaknesses identified, if any, in the agencies' electronic delivery requirements.... GAO recommends that Labor and Treasury consider clarifying regulatory requirements and expanding participants' ability to opt out of electronic delivery." [GAO-13-594, published Sept. 13, 2013, released Nov. 5, 2013]

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Year-End Checklist for Plan Sponsors of Retirement and Group Health Plans

"Over the next few months, employers and plan sponsors will probably focus most of their attention on the changes mandated by the [ACA], for health plans, and the effect of U.S. v. Windsor on both retirement and group health plans. With all the planning, there will hardly be time to keep up with all the normal plan maintenance issues. This article will help ease the transition by serving as a to-do list for plan sponsors in meeting its annual notice obligations and any additional actions that may be required or need to be assessed in the wake of ACA and/or the Windsor decision."

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Coming Soon from a 401(k) Plan Sponsor Near You: A New and Improved Focus on Participant Education

"At the 2013 Annual Meeting of the American Society of Pension Professionals and Actuaries, Rick Rodgers and Susan Simoneaux offered their thoughts on how to create a new and improved emphasis on 401k participant education.... It all begins with the premise that the 401k industry is shifting away from emphasizing investments and back towards emphasizing savings.... 'The primary focus of most participant education is dedicated to the accumulation of assets. When a demographic analysis reveals a large or growing number of participants over age 55, I think it makes sense to include a pre-retirement workshop' [said Rogers]."

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Ninth Circuit Reaffirms That Incorporation of SEC Filings by Reference in SPDs Is Fiduciary Act

"On October 23, 2013, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit reissued its opinion in Harris v. Amgen, adding that the incorporation of SEC filings by reference in a summary plan description (SPD) qualifies as an act performed in a fiduciary capacity under ERISA." [Harris v. Amgen, Inc., No. 10-56014 (9th Cir. Oct. 23, 2013)]  MORE >>

DOL Technical Release No. 2013-04: ERISA Definition of Marriage Includes Same-Sex Persons Validly Married in State Where Marriage Was Celebrated

"In general, where the Secretary of Labor has authority to issue regulations, rulings, opinions, and exemptions in title I of ERISA and the Internal Revenue Code, as well as in the Department's regulations at chapter XXV of Title 29 of the Code of Federal Regulations, the term 'spouse' will be read to refer to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages. Similarly, the term 'marriage' will be read to include a same-sex marriage that is legally recognized as a marriage under any state law.... The terms 'spouse' and 'marriage,' however, do not include individuals in a formal relationship recognized by a state that is not denominated a marriage under state law, such as a domestic partnership or a civil union, regardless of whether the individuals who are in these relationships have the same rights and responsibilities as those individuals who are married under state law."

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EBSA Press Release: Labor Department Permits 401(k) Plans to Reschedule Annual Disclosures to Employees (PDF)

"Under the enforcement policy contained in Field Assistance Bulletin 2013-02, plan administrators may reset the deadline one time, for either the 2013 or the 2014 comparative chart, if the responsible plan fiduciary determines that doing so will benefit the plan's participants and beneficiaries and provided that no more than 18 months may pass before participants receive their next comparative chart.... Plans operating on a calendar year had to furnish their first chart no later than August 30, 2012, and their second chart is due no later than August 30, 2013 [subject to the one-time reset permitted under the terms of the Field Assistance Bulletin]. Many other plan disclosures, however, such as pension benefit statements, are disclosed later in the calendar year. Permitting a one-time 'reset' of the deadline will allow plan administrators to align the comparative chart with other participant disclosures."

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DOL Field Assistance Bulletin No. 2013-02: Extension of Aug. 30 Deadline for Comparative Chart of Investment Alternatives

"A plan administrator may furnish the '2013 comparative chart' no later than 18 months after the prior comparative chart was furnished as described below. The '2013 comparative chart' is the comparative chart that is due, according to the terms of the final regulation, 'at least annually' after the first comparative chart that was furnished in compliance with the regulation. For example, if a plan administrator furnished the first comparative chart on August 25, 2012, the '2013 comparative chart' would be due no later than August 25, 2013. In accordance with this Bulletin, however, the Department will take no enforcement action based on timeliness if the plan administrator furnishes the '2013 comparative chart' by February 25, 2014."

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Supreme Court Rules Part of DOMA Unconstitutional; Employer Action Steps Suggested

"[T]here are at least five steps that any affected employer should now be considering: [1] Stop imputing income for federal income and FICA tax purposes on health plan coverage provided for a same-sex spouse, but continue imputing income for state income tax purposes if the employee resides in a non-recognizing state; [2] Communicate the Supreme Court's decision to employees, and request that any employees in same-sex marriages that may not be known to the employer identify themselves; [3] Offer a mid-2013 enrollment right under welfare plans for same-sex spouses not previously eligible; [4] Identify all employee plan provisions that may be affected by a changed definition of the term 'spouse'; [and] [5] Identify all past and present employees who are in a same-sex marriage."

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Treatment of ACA Whistleblower Complaints (PDF)

"[T]he relationship between the employee's receipt of a subsidy and the potential tax penalty imposed (section 4980H) on an applicable Large Employer could create an incentive for the employer to retaliate against an employee.... [Therefore,] Applicable Large Employers may consider taking the following actions early to minimize or avoid the likelihood of causing retaliatory complaints by employees:"

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DOL Regulatory Agenda Released (PDF)

The U.S. Department of Labor has published the Fall 2012 issue of its regulatory agenda, which lists the regulations under active consideration for publication, proposal or review during the next 12 months.

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U.S. Department of Labor Issues Compliance Guidance for Employee Benefit Plans in Wake of Hurricane Sandy

"The guidance provided in this statement applies to employee benefit plans, plan sponsors, as well as service providers to such employers, located on October 26, 2012 in one of the counties or Tribal Nations that have been identified as covered disaster areas because of the devastation caused by Hurricane Sandy.... The Department recognizes that some employers and service providers acting on employers' behalf, such as payroll processing services, located in designated affected areas will not be able to forward participant payments and withholdings to employee pension benefit plans within the prescribed timeframe. In such instances, the Department will not, solely on the basis of a failure attributable to Hurricane Sandy, seek to enforce the provisions of title I with respect to a temporary delay in the forwarding of such payments or contributions to an employee pension benefit plan to the extent that affected employers, and service providers, act reasonably, prudently and in the interest of employees to comply as soon as practicable under the circumstances."

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Election Brings Increased Clarity to HR Agenda

"For employers, President Obama's victory hopefully brought clarity in several key areas, especially issues surrounding healthcare reform and workplace issues involving National Labor Relations Board, Equal Employment Opportunity Commission and Americans with Disabilities Act regulations, among others.... [A]mong the major changes set for 2014 is the requirement that employers of more than 50 people provide health insurance or pay a tax penalty."

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Sixth Circuit Finds ERISA Section 510 Does Not Protect Unsolicited Internal Complaint (PDF)

"The question in this case is whether [ERISA section] 510 extends its protections to an employee's unsolicited, internal complaint to his employer that it has violated ERISA.... The Sixth Circuit has not yet had occasion to address the issue.... [T]he Court concludes that in this case Section 510 does not protect the plaintiff's unsolicited, internal complaint -- an email to his employer threatening to report its ERISA violations to state and federal authorities -- because it was unconnected to any 'inquiry or proceeding'.... A fuller explanation is that 'an employee's grievance is within Section 510's scope whether or not the employer solicited information,' provided that the employee himself solicited information. Without the asking for information, there is no 'inquiry'." [Sexton v. Panel Processing, Inc., No. 12-10946 (6th Cir. Oct. 30, 2012)]

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Before It's Too Late: A Retirement Security Update From Assistant Secretary Phyllis C. Borzi

The Assistant Secretary's Newsletter for Oct. 22 promotes National Save for Retirement Week -- which is this week, Oct. 21 through 28 -- and suggests: "First -- if you work for an employer offering a 401(k) plan, are you signed up for it? In addition to the tax benefits, many employers also offer a matching contribution. If you are already enrolled, how much are you contributing? For individuals younger than 50 years old, the 2012 maximum 401(k) annual contribution limit is $17,000. If you are over 50, you can contribute an additional $5,500 in catch-up contributions. Even if you can't afford to max out to your 401(k), you should at least make sure you are putting in enough to meet your employer's match. Don't leave free money on the table! Second, take 15 minutes to review those retirement plan fee disclosures that have been sitting in your mail pile! Open the envelope and take a look at how much you are paying in fees for your retirement accounts."

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Reinhart Employee Benefits Update, August 2012 (PDF)

Articles include: HHS Releases Additional FAQs on Medical Loss Ratio Requirements; HHS Issues Audit Protocol for HIPAA Compliance as Mandated by HITECH Act; DOL Revises Mailing Address and Electronic Filing Method for Plan Fiduciaries to Report Disclosure Failures by Covered Service Providers; IRS Issues FAQs on Notice Requirements for Benefit Restrictions for Single-Employer Defined Benefit Plans; DOL Issues Revised Guidance Regarding Participant-Level Fee Disclosures.

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Text of Written Statements to ERISA Advisory Council on Current Challenges and Best Practices Concerning Beneficiary Designations in Retirement and Life Insurance Plans

Links to text of written statements by invited witnesses: Robert Richter (SunGard on behalf of ASPPA), Kathy Callaghan (MetLife), Thomas Hohl (Fidelity), Nancy Maitland (T. Rowe Price), Petros Koumantaros (Spectrum Pension Consultants, Inc.) and Susan Diehl (PenServ Plan Services, Inc.).

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IRS Explains Participant Notice Requirements for Funding-Based Pension Restrictions (PDF)

"When Section 436 requires all future benefit accruals to cease, the notice must be provided to any participant who would otherwise be benefiting under the plan on the date the restriction first applies to the plan. Accordingly, a notice would have to be provided to every active participant but not to former employees or beneficiaries.... [S]ituations that will benefit from this limit on the notice requirement include plans with multiple benefit structures due to mergers and amendments where prohibited forms of payment are only available for grandfathered benefits because of anticutback protections."

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Reinhart Employee Benefits Update, July 2012 (PDF)

Articles Include: IRS Eliminates Signature for Extending the Form 8955-SSA Filing Deadline; Highway Act Includes PBGC Premium Increases and Pension Liability Stabilization Provisions; IRS Audits Defined Benefit Pension Plans for PPA Compliance; Accounting Standards Board Approves Financial Statement Changes for Governmental Defined Benefit Plans; Supreme Court Agrees to Review U.S. Airways v. McCutchen Reimbursement Case; HHS Issues Proposed Regulations on Data Collection for Essential Health Benefits and Accreditation of Qualified Health Plans; The Departments Provide a Cost-Sharing Calculator for Coverage Examples on SBC; IRS Provides Sample Language for Code Section 83(b) Election to Include Property in Income.

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Participant Fee Disclosure: Top 10 Issues to Consider

"The Q&As [in this article] describe 10 things you should consider as you comply with the new rules. [Items include:] Q: Can I rely on the disclosures given to me by my vendors? A: No.... Q: What if the disclosures have gone out to my plan participants already? A: Some vendors have already sent out the participant-level disclosures directly to participants, without waiting for affirmative approval from plan sponsors.... Q: What should I do if the 'benchmark' for a particular investment option that vendors are using for the participant fee disclosures is different from the benchmark used for that option in my plan's Investment Guidelines?... Q: What should I do with the plan-sponsor-level disclosures I received from my 401(k) plan vendors?"

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