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Older News | July 26, 2014
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Dispelling the Myth: Is a 3(16) Fiduciary Really Necessary?
Retirement Management Services More items by Retirement Management Services
7/25/2014

"Very few firms offering 3(16) services will actually go as far as being named the 'Plan Administrator' in the plan document, which means that they are limited to taking on 3(16) responsibility only for the areas that are indicated in their contracts, and the Employer as Plan Administrator retains responsibility for administering all other plan functions, plus monitoring the prudence of the 3(16) selection.... [It] is easy for a 3(16) provider to contractually limit its own liability for services when the 3(16) provider does not control the payroll or human resource functions for the Employer."
Designation of Obesity as a Disease: Implications for Health Plan Sponsors
Sibson Consulting More items by Sibson Consulting
7/25/2014

"To some extent, the designation of obesity as a disease will increase plans' immediate costs. However, over the long term, covering obesity treatments is likely to save plans money by avoiding serious and costly chronic diseases and conditions for which obesity is a major risk factor.... Ultimately, prudent plan sponsors will get ahead of this issue and structure benefit coverage to support effective weight-reduction and management programs in a manner that reduces wasteful spending and holds providers and patients accountable for taking action to best manage this disease."
Redesigning Your DC Plan to Help Employees' Retirement Income Last a Lifetime
Sibson Consulting More items by Sibson Consulting
7/25/2014

"There are ... several ways employees can use their DC plan assets to maximize guaranteed lifetime income. Employers need to be familiar with these strategies and, if necessary, redesign the distribution options in their DC plans to help their employees take advantage of them. They should also communicate these strategies to employees who are approaching retirement, to educate them about their options."
What to Outsource in Defined Contribution Plans
Russell Investments More items by Russell Investments
7/25/2014

"In all defined contribution (DC) plans, some functions are delegated to outside service providers, if only record keeping and some investment management. Before undertaking a formal program of outsourcing fiduciary responsibility, however, a sponsor will want to engage in an explicit decision-making process to determine which functions to outsource and which to retain control over. Generally, the outsourcing decision will begin with an inventory of the relevant plan responsibilities, functions, and a determination of the sponsor's plan objectives and resources. This paper explores how DC plan sponsors should think about what functions to outsource and provides a client case study[.]"
Maximizing Your Investment in DC Advisor Value-Added Programs (PDF)
Chatham Partners More items by Chatham Partners
7/25/2014

"[1] There is a strong correlation between being a DC Advisors' preferred provider and offering strong value-added programs. [2] One size does not fit all, programs have varying appeal that is often dependent upon the type of advisor, channel, or, even, target market segment. [3] Value-added programs open doors or break ties. [4] Winning firms have adopted best practices around creating and managing their value-added programs for both DC Advisors and their Broker/Dealer and Advisory firm home offices."
Forms: Draft Versions of IRS Forms for Health Coverage Information Reporting by Employers and Insurers
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

"On July 24, 2014, the IRS released draft forms that employers will use to report on health coverage that they offer to their employees. In accordance with the IRS' normal process, these draft forms are being provided to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them. We anticipate that draft instructions relating to the forms will be posted to IRS.gov in August." Here are the forms: [1] Form 1094-B: Transmittal of Health Coverage Information Returns; [2] Form 1095-B: Health Coverage; [3] Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Return; and [4] Form 1095-C: Employer Provided Health Insurance Offer and Coverage. (With a tip of our hat to the American Benefits Council for posting these online.)
How the IRS Harassed the Administration's Political Opponents and Saved its Healthcare Law
The Wall Street Journal; subscription may be required More items by The Wall Street Journal; subscription may be required
7/25/2014 [Opinion]

"The evidence shows that career officials at the IRS did indeed do as Treasury Department and Health and Human Services Department officials told them.... We know this thanks to a largely overlooked joint investigation and February report by the House Oversight and Ways and Means committees into the history of the IRS subsidy rule. We know that in the late summer of 2010, after ObamaCare was signed into law, the IRS assembled a working group -- made up of career IRS and Treasury employees -- to develop regulations around ObamaCare subsidies. And we know that this working group initially decided to follow the text of the law. An early draft of its rule about subsidies explained that they were for 'Exchanges established by the State.'"
Law Firm's Amicus Brief Attempts to Bring Broader View of Retiree Health Care
SCOTUSblog More items by SCOTUSblog
7/25/2014

"By discussing the key provisions in [100 collective bargaining] agreements and tracing patterns in a larger sample size, the [amicus brief filed by Goldstein & Russell] offers a broader view of retiree healthcare in the United States. The study found that 60% of the sampled CBAs (70% in the private sector and 50% in the public sector) include at least one clause that is generally understood to preclude vesting. By contrast, 26% of the agreements (30% private; 22% public) contain at least one clause suggesting that benefits do vest. 14% of the sampled CBAs (6% private; 22% public) include language that is considered ambiguous, and 16% (14% private; 18% public) are completely silent on the question of vesting. There was overlap across the categories." [M&G Polymers USA, LLC v. Tackett, No. 13-1010 (on appeal from 6th Cir., cert. granted May 5, 2014)]
Transcript of IRS Phone Forum on Related Employers, May 22, 2014 (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014

17 pages. Excerpt: "We're talking today about related employers, and for employee benefit purposes, there are two types of employers that are of importance. One are controlled groups, and usually when you're dealing with controlled groups, you're looking at a collection of employers that are linked together because they have some type of common owner attributes. We're also going to talk about affiliated services groups. They also have this linkage of common ownership attributes, but usually that common ownership percentage is far less than it would be to get to a controlled group. But as a substitute for that lesser ownership percentage, you've got some degree of related service, either between the two entities, or the two entities are performing that service together to the public."
IRS Says Uninsured Will Face Maximum Fine of Nearly $2,500
The Hill More items by The Hill
7/25/2014

"[I]ndividuals who fail to get health insurance this year will be fined a maximum of $2,448 and families with five or more members can be fined up to $12,240. The maximum penalty would hit individuals without insurance whose income is above $244,800. For families of five or more, the maximum penalty would affect people making a combined yearly income of $1.2 million."
BLS Report of Employee Benefits in the United States, March 2014 (PDF)
U.S. Bureau of Labor Statistics [BLS] More items by U.S. Bureau of Labor Statistics [BLS]
7/25/2014

"Employer-provided medical care was available to 86 percent of full-time private industry workers in the United States in March 2014 ... By contrast, only 23 percent of part-time workers had medical care benefits available.... Retirement benefits followed a similar pattern as medical care benefits. In private industry, 74 percent of full-time workers had access to a retirement plan, significantly higher than 37 percent of part-time workers."
Fees Dropping for 401(k) Mutual Fund Investors
Investor's Business Daily More items by Investor's Business Daily
7/25/2014

"The average 401(k) stock fund investor was charged 0.58% of assets to cover expenses at year-end 2013 vs. the industry retail average expense ratio of 0.74% ... The 401(k) average expense ratio on stock funds was 0.83% in 2003. On average, the industry charged an expense ratio of 1% of assets from 2000 through 2003."
Text of IRS Comment Request for Form 8717 and Form 8717-A (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

"There are changes being made to the forms at this time, because the user fees were updated by Rev. Proc. 2014-8 ... and are effective for applications filed on or after February 1, 2014. Form 8717 has been renamed, User Fee for Employee Plan Determination Letter Request. Information previously on Form 8717 relating to opinion or advisory letter requests for Volume Submitter and Master or Prototype plans has been deleted. This information may now be found on new Form 8717-A, User Fee for Employee Plan Opinion or Advisory Letter Request,"
Text of OPM Proposed Regs: Federal Employees Health Benefits Program Expansion of Eligibility to Certain Employees on Temporary Appointments and Certain Employees on Seasonal and Intermittent Schedules
U.S. Office of Personnel Management [OPM] More items by U.S. Office of Personnel Management [OPM]
7/25/2014 [Official Guidance]

"Under this proposed regulation, employees on temporary appointments, employees on seasonal schedules who will be working less than six months per year, and employees working intermittent schedules would be eligible to enroll in a [Federal Employees Health Benefits (FEHB)] health plan if the employee is expected to work a full-time schedule of 130 or more hours in a calendar month ... The change in eligibility for coverage set forth in this proposed regulation is intended to ensure, to the greatest extent practicable, that full-time employees, within the meaning of section 4980H of the IRC ... are eligible to enroll in FEHB."
Dear Employers: We Have to Stop Sticking It to Pregnant Moms and Expectant Dads
FMLA Insights More items by FMLA Insights
7/25/2014

"[A] few employers apparently have made some rather foolish decisions lately when terminating the employment of an expectant parent, and it's making the rest of us look like we don't care much for moms and dads or, for that matter, the next generation.... The Timing of a Termination Decision is Important no matter what you think the courts say... When you terminate an employee shortly after they make a request for FMLA leave, please make sure you can back it up! ... Be mindful of the new EEOC guidance regarding pregnancy discrimination.... Moms and Dads make for sympathetic plaintiffs." [Rice v. Kellermeyer Company, No. 13-263 (N.D. Ohio July 15, 2014)]
A Big Hole in the Heart of Obamacare
Ilya Shapiro, for CNN More items by Ilya Shapiro, for CNN
7/25/2014 [Opinion]

"After-the-fact rationalizations notwithstanding, the concession that Obamacare's designers didn't anticipate so many state vetoes doesn't retroactively rewrite the plain language of the law. The fault lies squarely with those drafters, not the lawyers who point out the IRS abuse or the judges who strike it down."
Split Subsidy Decisions No Excuse to Delay Preparation for ACA
Ice Miller LLP More items by Ice Miller LLP
7/25/2014

"Large employers should continue to prepare for the January 1, 2015 effective date for the employer penalties.... Employers who wish to avoid ACA employer penalties should continue to develop systems for tracking hours to determine the full-time employees to whom health coverage should be offered.... [E]mployers with calendar year plans who wish to avoid penalties should make an offer of affordable, minimum value health coverage to full-time employees and their dependent children by January 1, 2015."
Handout for IRS Phone Forum: 403(b) Plans Update and Latest Developments, July 28, 2014 (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Guidance Overview]

28 slides. "Scope of Presentation: [1] Background and Overview of Pre-Approved Plan Program; [2] Changes to the Pre-Approved Plan Program -- Rev. Proc. 2014-28; [3] Effect of Windsor Decision; and [4] Additional Resources."
SEC Approves Amendments to Rules Governing Money Market Funds
Dechert LLP More items by Dechert LLP
7/25/2014 [Guidance Overview]

"In addition to the Amendments, the SEC proposed exemptive relief from Rule 10b-10 of the Securities Exchange of Act 1934. The proposed relief would exempt broker-dealers from the written notification requirements of Rule 10b-10(a), with respect to transactions effected in shares of floating NAV money market funds. The SEC also re-proposed amendments to Rule 2a-7 in order to eliminate the use of credit ratings in Rule 2a-7."
20-Year-Old Presumption of Prudence Rejected by Supreme Court
Warner Norcross & Judd LLP More items by Warner Norcross & Judd LLP
7/25/2014

"At first glance the elimination of the presumption of prudence would appear to be a negative change for all ESOPs, but a review of litigation from 1995-2013 found no decisions involving closely held companies and the presumption of prudence. And although the new standard articulated by the Supreme Court is undoubtedly helpful for fiduciaries of publicly traded companies who invest in employer stock in their retirement plans, it provides little helpful guidance for ESOP fiduciaries in closely held companies." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)]
Puerto Rico Tax Code Amendments Offer Window to Pay Reduced Tax on Retirement Funds (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
7/25/2014 [Guidance Overview]

"It is expected that lump sum distributions taken from a qualified plan following separation from service during the 'window' period will be treated as capital gains taxed at the 8% rate. It is far less certain whether the rate applicable to prepayments before separation from service from qualified plans will be 8% or 15%.... [O]ne possible approach to avail oneself of the 8% rate for qualified plan funds would be to roll over a lump sum distribution to a Puerto Rico IRA and then take advantage of the 8% preferential tax rate on IRA prepayments[.]"
FAQ by Agencies Addresses Disclosure Requirements for Reduction or Elimination of Contraceptive Services (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
7/25/2014 [Guidance Overview]

"Between the time the plan adopts and provides notice of the amendment, the unamended version of the plan will likely remain enforceable for participants and beneficiaries who incurred contraceptive coverage-related expenses in reliance on that version of the plan.... [A] plan that gives notice 60 days prior to the change will comply with the required SPD disclosure as well as the SBC rules for notice of material modifications."
Tips for Managing Executive Compensation in a Global Economy
Towers Watson More items by Towers Watson
7/25/2014

"[E]xecutive compensation themes and practices migrate from one region or country to another.... [L]egislative requirements like say on pay and corporate governance trends, such as the separation of the chairman and chief executive roles, originated in certain countries before spreading to others.... The United Kingdom also has a longstanding practice of companies engaging with shareholders, a trend that is taking off in the United States. So it's important for professionals in the executive compensation field to stay attuned to global trends and emerging best practices."
Update on IRS Rulings on Pension De-Risking
October Three Consulting More items by October Three Consulting
7/25/2014

"[W]hile there may be a small number of these rulings still 'in the pipeline' that may be completed, after that the IRS is unlikely to consider issuing any more. The normal procedure -- where, as in the case of de-risking, there is ongoing demand for more rulings -- is for IRS to issue a Revenue Ruling similar to the previous Private Letter Rulings... The current controversy over de-risking, however, makes it unlikely that IRS will issue such a Revenue Ruling in this case. In at least two states, Connecticut and New York, legislation has been introduced that, if adopted, would significantly restrict de-risking transactions."
Arbitration of ERISA Benefit Claims In Lieu of Judicial Review
Seyfarth Shaw LLP More items by Seyfarth Shaw LLP
7/25/2014

"What would the Court do with an arbitration provision precluding judicial review of ERISA claim and appeal denials? ... ERISA is silent on mandatory arbitration in lieu of judicial review under Section 502(a) of ERISA (although a DOL regulation arguably prohibits it in the non-collective bargaining context). The recent Supreme Court decisions suggest, however, that plan sponsors may condition benefits on an agreement to arbitrate a final claim denial."
Appellate Courts Split on Validity of Key ACA Regulation
Foley & Lardner LLP More items by Foley & Lardner LLP
7/25/2014

"[Some] states, like Massachusetts, that have been considering migrating from a state exchange to a federal exchange for technical convenience should evaluate whether specific state legislation would be helpful. Some may take steps to establish their own state-operated exchanges, which would qualify them for subsidies even if the plaintiffs prevail."
IRS Issues Guidance on In-Plan Roth Rollovers and Latest Cumulative List (PDF)
Groom Law Group, via Journal of Pension Benefits More items by Groom Law Group, via Journal of Pension Benefits
7/25/2014 [Guidance Overview]

"Notice 2013-74 ... provides the ground rules for implementing in-plan Roth rollovers (IRRs), clarifying, in Q&A format, both the rules for existing IRRs that have been available since 2010 ... and the expanded IRRs that have been available since January 2013 ... [A chart in this article] reviews each of the Q&As therein, and describes the impact on both types of IRRs. Second, the IRS issued Notice 2013-84, which opens the determination letter program for Cycle D filers beginning February 1, 2014 (and ending with the January 31, 2015, filing deadline), and provides a list of Internal Revenue Code provisions that will be the subject of IRS review."
Employers Should Heed IRS Notice 2014-35 Providing Late Filers of Form 5500 Relief from Penalties (PDF)
Alston & Bird, LLP More items by Alston & Bird, LLP
7/25/2014 [Guidance Overview]

"The Form 8955-SSA must be filed with the IRS in hard copy by the later of 30 calendar days after the filer completes the DFVC filing or by December 1, 2014. This requirement applies to any DFVC filing submitted through EFAST2 (which includes most DFVC filings from December 31, 2009, to present), regardless of whether the DFVC filing was submitted before the IRS issued this notice regarding the Form 8955-S."
Addressing the Needs of Victims of Domestic Abuse and Spousal Abandonment under the ACA
U.S. Department of the Treasury More items by U.S. Department of the Treasury
7/25/2014 [Guidance Overview]

"Treasury and the Internal Revenue Service (IRS) [have] issued regulations to allow married victims of domestic abuse or spousal abandonment to claim a premium tax credit without filing a joint return for up to three consecutive years. An individual can access this relief by filing with the status of married filing separately, and indicating that he or she is living apart from a spouse and is unable to file a joint return due to domestic abuse, or because a spouse cannot be located after a reasonable effort."
Text of IRS Final and Temporary Regs: Health Insurance Premium Tax Credit and Deduction for Health Insurance Costs for Self-Employed Individuals (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

43 pages. These regs address: "[1] Circumstances in which a Married Taxpayer May Claim a Premium Tax Credit on a Separate Return ... [2] Indexing ... [3] Allocations for Reconciliation of Advance Credit Payments and the Premium Tax Credit ... [4] Reconciliation for Divorced and Separated Taxpayers ... [5] Reconciliation for Married Taxpayers Who File Separately ... [6] Deduction for Health Insurance Costs of Self-employed Individuals."
HHS Is Crowing About How Much Money Has Been Returned to Consumers Because of MLR
National Center for Policy Analysis Health Policy Blog More items by National Center for Policy Analysis Health Policy Blog
7/25/2014 [Opinion]

"Insurers are free to overcharge people, collect the money, earn interest on it during the course of a year, and rebate the overcharge 18 months later. So consumers in effect are simply giving the insurers an interest free loan for a year. That is why there has been $9 billion in rebates."
Hobby Lobby Decision Poses New Questions for Litigation
Bloomberg BNA More items by Bloomberg BNA
7/25/2014

"[B]ecause the court's decision in Hobby Lobby seems to impute a burden that is placed by the ACA on the plan to the plan sponsor, the effect of the holding could be to reverse that effect for suits against the plan. 'If the requirement on the plan burdens the religious beliefs of the plan's sponsor and owner, then what does that say about the independence of the plan and the ability to pierce the corporate veil,' [said Teresa Renaker, a shareholder at Lewis Feinberg Lee Renaker & Jackson P.C.]"
Obamacare Loophole Has Insurers Worried Customers Will Skip December Premium Payments
Vox Media Inc. More items by Vox Media Inc.
7/25/2014

"[CMS Bulletin 10] says that if an Obamacare shopper goes online and re-enrolls in a new insurance plan, any payments towards that new, 2015 plan cannot be applied to outstanding debt on the old, 2014 plan. This ... could make December a bit of a no-man's land for insurers looking to get paid. Somebody could theoretically refuse to pay up in December 2014 and then rejoin their plan -- or buy a new one -- in January or February of 2015. The health plan they had in December can't terminate their coverage or use their new premiums to to cover the outstanding debt."
Money Fund Industry Embraces New SEC Rules
Treasury & Risk More items by Treasury & Risk
7/25/2014

"The threat of regulation by the Financial Stability Oversight Council ... encouraged fund companies to negotiate with the [SEC] on new rules for money-market mutual funds ... The strongest provisions affect funds that hold about one-third of the industry's assets, while those catering to retail investors and holding U.S. government securities were exempted."
The New Rules for Money Market Funds: Broader Than You Think
Morningstar More items by Morningstar
7/25/2014 [Guidance Overview]

"The mutual fund industry liked money market funds just fine the way they were, banks wanted them gutted, and SEC staffers and politicians were caught in the middle. It took many iterations to arrive at [this] barely acceptable compromise, which passed by the minimum margin of 3 to 2.... Several reports seem to suggest, as does the SEC's press release, that the rules apply only to institutional funds. Not so -- the most notable modification, requiring some money funds to float their net asset values rather than fix the price at a constant $1.00, is indeed for institutional funds only. But provisions for liquidity fees and redemption gates apply to all funds, both institutional and retail."
Avoiding Pitfalls in Handling Retirement Plan Forfeitures
Vanguard More items by Vanguard
7/25/2014

7 pages. Excerpt: "Plan sponsors have great flexibility in using forfeited amounts in the administration of their plan. The rules surrounding forfeitures may be less straightforward than expected -- and some plans have received increased IRS scrutiny for their forfeiture practices."
ERIC Joins Letter in Support of 'Auto Enroll Repeal Act'
The ERISA Industry Committee [ERIC] More items by The ERISA Industry Committee [ERIC]
7/25/2014 [Opinion]

"ERIC, along with approximately 170 other businesses and trade organizations, on July 22 wrote to Senator Johnny Isakson (R-GA) expressing support for his legislation, the Auto Enroll Repeal Act (S. 2546). The bill would repeal the requirement under the Affordable Care Act that employers with more than 200 full-time employees that offer enrollment in one or more health benefits plans enroll automatically all new full-time employees in one of those plans."
An Obamacare-Sized Prescription for a Retirement Crisis Misdiagnosis
Ray Harmon, for American Society of Pension Professionals & Actuaries [ASPPA] More items by Ray Harmon, for American Society of Pension Professionals & Actuaries [ASPPA]
7/25/2014 [Opinion]

"Gene B. Sperling, former Director of the Economic Council under the Office of White House Policy for President Obama, put on a white lab coat and diagnosed the tax incentive system for private retirement savings with a serious illness by cherrypicking data points to paint his desired picture. It's no surprise that during Sperling's time working for Obama, the President borrowed his favorite line and called the system 'upside-down.' I criticized the President then for that misdiagnosis and I'll criticize 'Doctor' Sperling now for it too."
Text of IRS Rev. Proc. 2014-46: 2014 Monthly National Average Premium for Bronze-Level Qualified Health Plans (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

"For purposes of Section 5000A(c)(1)(B) and Section 1.5000A-4, the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through Exchanges in 2014 is $204 per individual.... [and] the monthly national average premium for qualified health plans that have a bronze level of coverage and are offered through Exchanges in 2014 is $1,020 for a shared responsibility family with five or more members."
Text of IRS Rev. Proc 2014-37: Methodology for Determining Applicable Percentages for Individual Premium Assistance Credits, Affordable Employer-Sponsored Coverage, and Exemption from Individual Shared Responsibility Payments (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

6 pages. Excerpt: "This revenue procedure ... updates the Applicable Percentage Table ... used to calculate an individual's premium tax credit for taxable years beginning after calendar year 2014.... [It] also updates the required contribution percentage ... used to determine whether an individual is eligible for affordable employer-sponsored minimum essential coverage under Section 36B for plan years beginning after calendar year 2014. Additionally, this revenue procedure cross-references the required contribution percentage ... used to determine whether an individual is eligible for an exemption from the individual shared responsibility payment because of a lack of affordable minimum essential coverage."
Text of IRS Rev. Proc. 2014-41: Premium Tax Credits and Deduction of Health Insurance Costs for Self-Employed Individuals (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/25/2014 [Official Guidance]

15 pages. Excerpt: "This revenue procedure is intended to provide taxpayers with calculation methods that resolve the circular relationship between the Section 162(l) deduction and the Section 36B tax credit and that satisfy the requirements of applicable tax law. Using the calculations in this revenue procedure is optional. A taxpayer may determine amounts of the Section 162(l) deduction and the Section 36B tax credit using any method, provided that the amounts claimed satisfy the requirements of applicable tax law[.]"
Text of District Court Opinion: ERISA Does Not Preempt State Law Estoppel Claim Based on Employer Misrepresentation of Continued Coverage (PDF)
U.S. District Court for the District of Massachusetts More items by U.S. District Court for the District of Massachusetts
7/25/2014

"Relying on [his employer's] assurances, [plaintiff Russell Toomajanian] decided to forgo paying for extended insurance coverage through COBRA or another insurance vehicle.... Toomajanian is not looking to recover benefits allegedly due him under the [group health] ERISA Plan (nor could he as his losses were incurred after his being ejected by his employer from the Plan). The financial harm suffered by Toomajanian -- his out-of-pocket medical bills -- are neither defined by, nor limited to, the benefits he would have been entitled to under the Plan had he remained an employee. Rather, the losses of a victim of misrepresentation are measured under the relevant Massachusetts tort law by the financial harm caused by his reliance on the underlying misrepresentation." [Toomajanian v. Insight Global, Inc., No. 14-12603-RGS (D. Mass. July 24, 2014)]
Future of ACA Could Be in Jeopardy in Many States
Dinsmore More items by Dinsmore
7/25/2014

"The [D.C. Circuit] sided with the Appellants' argument that a plain reading of Section 36B did not permit the extension of the tax subsidies to federally-facilitated Exchanges, as they were not established by the State.... [But the Fourth Circuit] concluded that Congress did not speak directly to the question at issue, and therefore, it left the IRS with the ability to interpret the provision. Since the IRS' interpretation of the statute was based on the implementation of the ACA's stated policy of increasing the number of Americans covered by health insurance and decreasing the cost of such insurance, the Court determined that the IRS's regulation was a permissible construction of the statutory language."
IRS Provides Guidance on Expanded In-Plan Roth Rollover Feature (PDF)
Prudential More items by Prudential
7/24/2014 [Guidance Overview]

"A primary concern for plan sponsors should be any source/fund limits imposed by the plan's recordkeeping system. Since rollovers of non-distributable amount require the preservation of protected benefits and payment restrictions, all contribution sources available for these rollovers will have to be duplicated, at a minimum. To track the five-year recapture period, it may be necessary to create new sources annually.... Plan sponsors should also consider how a proliferation of source/fund combinations could complicate reporting on participant statements."
Senate Committee Advances ERISA Amendments Impacting PBGC
PLANSPONSOR More items by PLANSPONSOR
7/24/2014

"[T]he bill would make technical amendments to Subsection (e) of Section 4062 of ERISA by inserting language to further define what constitutes a 'substantial cessation of operations.' The bill would also clarify when ... the [PBGC] should step in to assist stressed pension funds. Committee members say the steps are necessary to prevent unnecessary intervention by the PBGC while also ensuring protections for participants will be available when they're truly needed."
New Actuarial Mortality Tables May Be 'Nail in the Coffin' for DB Plans
Pensions & Investments More items by Pensions & Investments
7/24/2014

"The measured value of liabilities for most defined benefit plans will increase between 3% and 8% with the adoption of new mortality tables ... For women ages 25 to 85, the liability increase ranges from 5.5% to 10.5%. For males in that age group, the increase ranges from 2.5% to 17.4%."
Employee Benefits: Yesterday, Today and Tomorrow
Employee Benefit Research Institute [EBRI] More items by Employee Benefit Research Institute [EBRI]
7/24/2014

"This Issue Brief summarizes the presentations and discussions at EBRI's 73rd policy forum held in Washington, DC, on Dec. 12, 2013.... [T]he symposium offered expert perspectives on not only the workplace and work force of the past, but the challenges of today's multi-generational workplace, and the difficulties and opportunities that lie ahead. Following a review of the benefits landscape by EBRI's research team, panels discussed: [1] 1978 to 2013: The Changing Role of Employers in Employee Benefits; [2] Employee Benefits from 2013 to 2048: The Road to Tomorrow; [3] 2013 to 2048: Work Force Trends and Preferences, Today and Tomorrow."
Fifth Circuit Holds Deferred Comp Plan Was Governed by ERISA
Morgan Lewis More items by Morgan Lewis
7/24/2014

"The court explained that the [plan] was not a 'bonus program' but rather was a self-described 'deferred compensation plan,' and, thus, the DOL regulation was inapplicable. The court did not address the undisputed fact that the [plan] was the exclusive vehicle through which RBC paid financial advisors annual performance bonuses.... [This] decision has important implications for employers -- particularly in the financial services industry -- that use deferred compensation arrangements with an understanding that the particular arrangement does not constitute an ERISA-governed pension plan. The decision also indicates that the DOL's 'bonus program' regulation does not apply to plans that provide bonuses alongside other forms of deferred compensation." [Tolbert v. RBC Capital Markets Corporation, No. 13-20213 (5th Cir. July 14, 2014)]
Text of HHS Report on Medical Loss Ratio Reimbursements for 2013 Health Insurance Premiums (PDF)
Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS] More items by Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS]
7/24/2014

"In the first three years of the MLR program, individual and employer plan enrollees received or will receive over $1.9 billion in refunds. In this year alone, 6.8 million consumers across all states and markets will receive over $330 million in refunds, with an average refund value of $80 per family. Health insurance companies are required to provide the 2013 refunds by August 1, 2014 in one of the following ways: as a check in the mail; a reimbursement to the account that was used to pay the premium; a direct reduction in their future premiums; or, if the consumer bought insurance through their employer, the employer must provide the refund in one of these three ways or apply the refund in a manner that benefits its employees."
SEC Adopts Amendments to Money Market Fund Rules
Drinker Biddle More items by Drinker Biddle
7/24/2014 [Guidance Overview]

"[T]he SEC voted 3-2 (with Commissioners Kara Stein and Michael Piwowar dissenting) to adopt amendments to SEC rules that significantly affect the structure and operations of money market funds and are designed to lessen money market funds' susceptibility to heavy redemptions, improve the ability of money market funds to manage and mitigate potential contagion from high levels of redemptions, and increase for investors the transparency of risks associated with money market funds. At the same time, the SEC sought to preserve the benefits of money market funds."
UnitedHealthcare Ups the Ante on Price, Provider Shopping
Healthcare Payer News More items by Healthcare Payer News
7/24/2014

"The nation's largest health insurer is making its free mobile app available to everyone, in a bid to move the needle on price transparency. Anyone, not members, can now use UnitedHealthcare's free and recently-updated mobile application, Health4Me. The mobile app, available in iTunes and Android and downloaded by more than 900,000 members, offers individuals the ability to locate nearby hospitals, emergency rooms and urgent care facilities and review average local prices for 520 services across 290 episodes of care, with a cost estimator based on tests and treatments."
U.S. Health Insurers to Pay $330 Million in Premium Rebates
Reuters More items by Reuters
7/24/2014

"The rebates will go to about 6.8 million people and have a value of about $80 per family. They are to be sent by Aug. 1 either directly to consumers or to the employer providing the health coverage, who is required to pass the savings onto employees ... The total rebate figure is less than last year, when the insurers were told to send out $500 million under the law. The decline is a trend that the government said shows that more insurers are charging lower premiums than they would have if the law was not passed."
Text of IRS Proposed Regs: Method of Accounting for Gains and Losses on Shares in Certain Money Market Funds; Broker Returns with Respect to Sales of Shares in Money Market Funds (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
7/24/2014 [Official Guidance]

"[These proposed regs] provide a simplified method of accounting for gains and losses on shares in money market funds (MMFs) that distribute, redeem, and repurchase their shares at prices that reflect market-based valuation of the MMFs' portfolios and more precise rounding than has been required previously (floating net asset value MMFs, or floating-NAV MMFs) ... [and] provide guidance regarding information reporting requirements for shares in MMFs. The proposed regulations respond to [SEC] rules that change how certain MMF shares are priced. The proposed regulations affect floating-NAV MMFs and their shareholders. This document also contains requests for comments and provides notice of a public hearing on these proposed regulations."
Text of SEC Proposed Rule: Removal of Certain References to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule (PDF)
U.S. Securities and Exchange Commission [SEC] More items by U.S. Securities and Exchange Commission [SEC]
7/24/2014 [Official Guidance]

"The [SEC] is re-proposing certain amendments, initially proposed in March 2011, related to the removal of credit rating references in rule 2a-7, the principal rule that governs money market funds, and Form N-MFP, the form that money market funds use to report information to the Commission each month about their portfolio holdings ... The re-proposed amendments would implement provisions of the [Dodd-Frank Act].... In addition, we are proposing to amend rule 2a-7's issuer diversification provisions to eliminate an exclusion from these provisions that is currently available for securities subject to a guarantee issued by a non-controlled person."
A Tale of Two Decisions: Circuit Courts Divided on ACA Tax Credits
Vorys, Sater, Seymour and Pease LLP More items by Vorys, Sater, Seymour and Pease LLP
7/24/2014

"Employer pay or play penalties are triggered by one or more full-time employees receiving a subsidy for the purchase of insurance in a Marketplace. Therefore, the negation of subsidies in states with federally-facilitated Marketplaces would greatly diminish employers' exposure to pay or play penalties. However, employers should continue to prepare for exposure to pay or play penalties in all states in which they have employees (including those states with federally-facilitated Marketplaces) while continuing to monitor developments."
QLACs Offer New Retirement Planning Options, Advisors Must Do Their Due Diligence
fi360 More items by fi360
7/24/2014 [Guidance Overview]

"[P]art of the suitability obligation of an advisor to a retail client would be comparing the cost of a deeply deferred annuity to a traditional fixed annuity or alternative investments used under RMD rules. One observer estimated the return of premium benefit would add 5 to 10 percent to the QLAC premium.... Investment fiduciaries also should carefully consider whether it is preferable to purchase a QLAC through an eligible defined contribution plan or IRA, if both options are available. A spokeswoman for the Pension Rights Center ... stated that IRA mortality tables are gender-neutral, which would treat women unfairly since they generally live longer than men."
Actuaries Raise Questions About Proposed RP-2014 Mortality Tables
October Three Consulting More items by October Three Consulting
7/24/2014

"The new tables significantly increase life expectancy assumptions and, if adopted by regulators and DB plan actuaries, will significantly increase DB plan liability valuations for purposes of disclosure, funding and de-risking.... [T]he Society of Actuaries is advocating the use of mortality tables that recognize significantly increased life expectancy. The Academy of Actuaries is raising questions about that and, by implication, questioning whether the proposed tables might not overstate life expectancy."
Stupid Investment Tricks: Interesting, Risky, or Downright Dumb Retirement Plan Investments (PDF)
Pete Swisher, in Journal of Pension Benefits More items by Pete Swisher, in Journal of Pension Benefits
7/24/2014

"Most retirement plans today follow a rational investment process and keep it simple ... But for every rule, there is an exception, and what follows is a sampling of the exceptions -- interesting, risky, or downright stupid investments that illustrate useful lessons in retirement plans.... Morals of these stories for plan sponsors: [1] Stick to a 'safe' profile.... [2] If you offer a self-directed brokerage option, do it the smart way.... [3] Before investing in anything that sounds cool instead of boring, get expert advice."
D.C., Fourth Circuit Courts Disagree on Exchange Subsidies, Set Stage for Potential Supreme Court Review
HighRoads More items by HighRoads
7/24/2014

"The [Halbig v. Burwell ruling potentially] affects three groups: [1] 4.7 million individuals in the 36 states with federally run exchanges could potentially lose their subsidies.... [2] Employers could potentially have reduced exposure when the 'employer mandate' takes effect in 2015.... [3] Payers participating in public exchanges, who could possibly lose out on payments from the government, lose customers and be forced to increase rates."
Living on a Prayer? Recent Challenges to the Church Plan Exemption from ERISA Coverage (PDF)
Alston & Bird, LLP via Benefits Law Journal More items by Alston & Bird, LLP via Benefits Law Journal
7/24/2014

"Within the last year, at least five lawsuits have been filed challenging the application of the exemption to pension plans sponsored by nonprofit hospital systems affiliated with the Roman Catholic Church. This article addresses the issues raised by those five lawsuits, recent decisions in those cases, and the potential impact of these lawsuits on the controversial church plan exemption."
Supreme Court Shuts Down 'Moensch'-Kin Land -- Whither Employer Stock Drop Litigation?
ERISA Fiduciary Administrators LLC More items by ERISA Fiduciary Administrators LLC
7/24/2014

"With thinly veiled, almost Kingsfield-like, sarcasm, Justice Breyer tossed the 'Moensch Presumption' into the dustbin of judicial history based on a review of the text of ERISA as it has existed since enactment in 1974. Unanimously telling the lower courts that followed Moensch that they had been improvidently granting motions to dismiss for up to 20 years, while they marched up a yellow brick road to 'presumptive prudence,' because they didn't read the statute with sufficient care, is about as shrill as the Court gets in admonishing them about mushy thinking." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)]
Business Groups, Consumer Advocates Draw Lines in the Sand Over Essential Benefits
Kaiser Health News More items by Kaiser Health News
7/24/2014

"The essential health benefits (EHBs) countdown is on for 2016. That's when this provision of the [ACA], which sets out 10 specific health services that must be covered by plans sold on the exchanges, will likely be reviewed by [HHS]. Business interests and consumer advocates are already making their positions clear -- the former pushing for greater consciousness of premium costs and the latter looking to safeguard consumers' coverage."
CalPERS Pulls Back from Hedge Funds
The Wall Street Journal; subscription may be required More items by The Wall Street Journal; subscription may be required
7/24/2014

"Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns. Those having second thoughts include officials at the largest public pension fund in the U.S., [CalPERS]. Its hedge-fund investment is expected to drop this year by 40%, to $3 billion, amid a review of that part of the portfolio[.]"
Three Things to Check on a Beneficiary Form -- Besides the Beneficiaries
The Slott Report More items by The Slott Report
7/24/2014

"[1] Does the beneficiary form work on a per stripes or per capita basis? ... [2] Are there any restrictions on whom you can name as a beneficiary? ... Some beneficiary forms ... may not allow a trust to be named as a beneficiary. Others may limit the number of primary or contingent beneficiaries you can name.... [3] Does the beneficiary form allow the stretch? ... [A] retirement account may require that any beneficiary -- designated or not -- empty an inherited account within 5 years."
The 3-2 Verdict: SEC Approves Money Market Fund Reform
Association for Financial Professionals [AFP] More items by Association for Financial Professionals [AFP]
7/24/2014

"In a 3-2 vote [on July 23, the SEC] passed a rule that will force institutional prime money market funds to move from a stable $1 per share net asset value (NAV) to a floating NAV. Additionally, the new rule also allows fund boards to impose two safeguards to stave off runs: liquidity fees of up to 2 percent on redemptions, and temporary suspensions of redemptions, or 'gates.' ... The new rules do not apply to retail and government funds, as they have shown to be less susceptible to redemption runs during times of stress than their prime counterparts."
Appeals Courts Issue Conflicting Rulings on ACA Premium Subsidies (PDF)
Mehlman Vogel Castagnetti, for Employers Council on Flexible Compensation [ECFC] More items by Mehlman Vogel Castagnetti, for Employers Council on Flexible Compensation [ECFC]
7/24/2014

"In addition to [the Halbig and King decisions], two other federal District Court cases are pending: Pruitt v. Sebelius in Oklahoma City, OK. [and] Indiana v. IRS in Indianapolis, IN. Ultimately, the issue of whether premium subsidies are available through federally facilitated may not be resolved until after the open enrollment period for 2015 (November 15, 2014 - February 15, 2015), which could mean considerable uncertainty for prospective enrollees relying on the availability of premium tax credits to pay for Exchange plan coverage."
Preparing for -- and Surviving -- a 401(k) Plan Audit (PDF)
Millennium Trust Company More items by Millennium Trust Company
7/24/2014

35 presentation slides. Topics include: [1] Identify Your Plan Fiduciaries; [2] Fiduciary Standards of Conduct; [3] Establish Internal Controls; [4] Audit Flags: Where do they begin? How do they decide? What catches their attention? [5] Self-Audit: Plan Document Review and Plan Operations Review; [6] IRS Examination Steps; and [7] Being Successful in an Audit.
Health Reform and Changes in Health Insurance Coverage in 2014
New England Journal of Medicine More items by New England Journal of Medicine
7/24/2014

"The uninsured rate was 21.0% in September 2013, right before the beginning of the open-enrollment period, and it fell to 16.3% in April 2014.... As compared with the baseline trend, the uninsured rate declined by 5.2 percentage points by the second quarter of 2014, a 26% relative decline from the 2012-2013 period.... [T]his corresponds to 10.3 million adults gaining coverage, although depending on the model and confidence intervals, our sensitivity analyses imply a wide range from 7.3 to 17.2 million adults."
SEC Adopts Money Market Fund Reform Rules to Address Run Risks in Money Market Funds
U.S. Securities and Exchange Commission [SEC] More items by U.S. Securities and Exchange Commission [SEC]
7/24/2014 [Guidance Overview]

"The new rules require a floating net asset value (NAV) for institutional prime money market funds, which allows the daily share prices of these funds to fluctuate along with changes in the market-based value of fund assets and provide non-government money market fund boards new tools -- liquidity fees and redemption gates -- to address runs.... The final rules provide a two-year transition period to enable both funds and investors time to fully adjust their systems, operations and investing practices."
Text of SEC Final Rule: Money Market Fund Reform (PDF)
U.S. Securities and Exchange Commission [SEC] More items by U.S. Securities and Exchange Commission [SEC]
7/24/2014 [Official Guidance]

869 pages in pre-publication format (!) -- Excerpt: "The SEC is removing the valuation exemption that permitted institutional non-government money market funds ... to maintain a stable net asset value per share (NAV), and is requiring those funds to sell and redeem shares based on the current market-based value of the securities in their underlying portfolios ... The SEC also ... will require all non-government money market funds to impose a liquidity fee if the fund's weekly liquidity level falls below a designated threshold .... [T]he SEC is adopting amendments designed to make money market funds more resilient by increasing the diversification of their portfolios, enhancing their stress testing, and improving transparency by requiring money market funds to report additional information to the SEC and to investors."
SEC Rules Preserve Integrity of Money Funds for Individuals
Vanguard More items by Vanguard
7/24/2014 [Guidance Overview]

"Shifting to a floating net asset value (NAV), as the rule requires for institutional funds, will likely change the way institutional investors use money market funds. However, the compliance date for the floating NAV and fees and gates is two years after the date of publication of the release in the Federal Register, giving investors in those funds time to adapt to the new regime."

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