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Benefits in the News

Older News | September 1, 2014
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Upcoming IRS Webinar: Retirement Plan Hot Topics, September 11, 2014
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
8/29/2014 [Guidance Overview]

Learn about the myRA program, IRA tax-free rollovers, the Windsor Supreme Court ruling, invalid Social Security numbers, Form 5500-EP filing pitfalls and relief program, and tips for self-employed plan sponsors. Takes place on September 11, 2014 at 2:00 p.m. Eastern time. Register at link.
Earthquake in the Independent Contractor Misclassification Field: Changed Landscape Following Serious Legal Blow to FedEx by Ninth Circuit
Pepper Hamilton LLP More items by Pepper Hamilton LLP
8/29/2014

"The impact of these new Ninth Circuit decisions is likely to reinvigorate the crackdown against companies using an [independent contractor (IC)] business model that is not structured, documented, or implemented in a manner that demonstrates compliance with state or federal IC laws. As noted below, those companies that have enhanced their IC compliance consistent with the thrust of the Ninth Circuit decisions and applicable state and federal laws will have a far lesser risk for IC misclassification liability than those companies that use ICs but knowingly or unwittingly fail to do so in a compliant manner." [Alexander v. FedEx Ground Package System, Inc., No. 12-17458 (9th Cir. Aug. 27, 2014) and Slayman v. FedEx Ground Package System, Inc., No. 12-35525 (9th Cir. Aug. 27, 2014)]
Would've, Could've, Should've: RJR Nabisco Fiduciaries at Disadvantage for Failure to Follow Procedural Prudence
Benefits Bryan Cave More items by Benefits Bryan Cave
8/29/2014

"The majority and dissent's sharply conflicting views regarding the standard for whether a fiduciary decision is objectively prudent provide great material for theoretical discussion among lawyers. Plan fiduciaries should assure, however, that they never become part of the debate. Had the RJR fiduciaries simply (i) performed a thorough investigation of the alternatives, (ii) made a reasoned decision based on their investigation, and (iii) documented the basis for their decision, no breach of duty would have occurred in the first place even though, with hindsight, the decision may have been different." [Tatum v. RJR Pension Investment Committee, No. 13-1360 (4th Cir. Aug. 4, 2014)]
California Repeals 60-Day Waiting Period Limitation (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
8/29/2014 [Guidance Overview]

"The confusion between the California 60-day limit and the ACA's 90-day limit was exacerbated by regulations that the Departments of Treasury, Labor, and Health & Human Services recently issued permitting an 'orientation period' of no longer than one calendar month as a permissible condition of substantive eligibility for plan coverage. Sponsors of insured plans that provide benefits to California residents must still follow the California 60-day waiting period limitation through the end of 2014. However, starting in 2015, only the ACA's 90-day limit on eligibility waiting periods will apply."
Trouble Ahead for Public Marketplace Auto-Enrollment?
HighRoads More items by HighRoads
8/29/2014

"The idea behind the auto-enrollment proposal was to allow consumers to avoid going through the HealthCare.gov enrollment process again and to ensure that the insured don't lose coverage. Here's the problem ... The APTC amount won't change, but premiums almost certainly will. Last year's subsidy amounts were pegged to the second-lowest-cost silver plan in the market. Based on proposed 2015 rates for nine markets, the benchmark plan would change in eight of them ... Moreover, no 834 information will flow from the federal exchange for members who wind up being auto-enrolled for 2015 unless the subscriber intentionally goes through the eligibility process again."
Understanding ADP and ACP Testing
Retirement Management Services More items by Retirement Management Services
8/29/2014

"Changing family relationships related to divorce or adoption, ownership details like stock options, and the correct application of the top-paid 20% group can all pose challenges when making the determination of HCEs for any given year.... The interaction of the ADP/ACP testing with other required nondiscrimination tests means that all of the plan's testing must be performed in a specific order and excess amounts refunded or forfeited because of failure from one test must be coordinated in performing the other tests. In the event of test failure, the calculation of the returns can be complicated, depending on how many HCEs are affected and whether or not the affected HCEs have already contributed the maximum 'catch-up' amount allowed for participants over age 50."
ACA May Benefit More Small Businesses in the Fall
Kaiser Health News More items by Kaiser Health News
8/29/2014

"[I]nsurance companies encouraged business owners to renew their plans before the October 2013 deadline to avoid having to sign up for a new policy during the first year of the controversial ACA rollout.... As a result, not as many businesses needed to look for new policies for their employees as was originally projected. To be successful, SHOP exchanges must attract a large pool of businesses that can exert market pressure on insurance carriers and ultimately bring down prices. Whether that will happen remains to be seen."
Foreign Corrupt Practices Act (FCPA) and Institutional Investors
Good Risk Governance Pays More items by Good Risk Governance Pays
8/29/2014

"[I]nstitutional investors likewise have a need to know whether a company in which they plan to invest or have already invested is exposed to potentially expensive FCPA liabilities that could destroy shareholder value.... This section addresses the core elements of the FCPA and offers action steps for any organization that does business outside the United States."
Age of Decision: Pension Savings Withdrawal and Consumption and Debt Response
Sumit Agarwal, Jessica Pan, and Wenlan Qian via SSRN More items by Sumit Agarwal, Jessica Pan, and Wenlan Qian via SSRN
8/29/2014

"This paper uses a unique panel of consumer financial transactions to examine how aging consumers respond to the option to cash out retirement savings.... We find a large and highly significant increase in bank account balances when an individual turns 55, suggesting that the average consumer in our sample withdraws a large portion of their eligible retirement savings.... We do not find any evidence that the average consumer responds by excessively increasing present consumption at the expense of future financial security. Nevertheless, consumers leave a sizeable portion of their withdrawn savings in low-interest accruing bank accounts for at least a year after withdrawal."
District Court Denies Plaintiff's Attorney Fees: Filing of Lawsuit Was Not Reason Why Benefits Were Granted
Lane Powell PC More items by Lane Powell PC
8/29/2014

"'[T]he facts do not demonstrate that the suit was [a catalyst] or linked to the decision to approve plaintiff's benefits....Plaintiff's counsel was informed that benefits would be paid before the litigation was initiated.'" [Koloff v. Metropolitan Life Ins. Co., No. 1:13-cv-02060 (E.D. Cal. July 14, 2014)]
Healthcare Reform in the U.S. Territories; Prepayment of Taxes for Puerto Rico Retirement Plans
Ogletree Deakins More items by Ogletree Deakins
8/29/2014

"[1] [M]any mandates of the ACA may still apply to issuers and employers [in the U.S. Territories]. The recent letter from HHS has no impact on: [a] the requirements of the ACA that were incorporated into the Internal Revenue Code and [ERISA], or [b] the requirements of ... the ACA that apply to non-federal governmental plans.... [2] As a practical matter, retirement plans that are dual-qualified (i.e., qualified not only under the Puerto Rico Internal Revenue Code but also under the U.S. Internal Revenue Code) cannot permit prepayment of taxes through distribution from the plan because prepayment of Puerto Rican taxes is not a distributable event under the U.S. Code."
Cost of Pension Withdrawal Liability Might Drop, Based on Recent District Court Ruling (PDF)
Alston & Bird, LLP More items by Alston & Bird, LLP
8/29/2014

"[This case] is a departure from how withdrawal liability has been calculated since the PPA, and it may open the door for new challenges that could reduce the amounts owed by withdrawing employers.... However, employers seeking to reduce their withdrawal liability based on the arguments presented in this case must still be careful to heed ERISA's strict timing and notice requirements for disputing the multiemployer plan's calculation of the amount of withdrawal liability." [Board of Trustees of the IBT Local 863 Pension Fund v. C&S Wholesale Grocers Inc./Woodbridge Logistics LLC, No. 12-7823 (D.N.J. Mar. 19, 2014)]
Same-Gender Spouses and 401(k) and Pension Plans: Does Your Plan Need to Be Amended by December 31, 2014?
Baker Botts LLP More items by Baker Botts LLP
8/29/2014 [Guidance Overview]

"First, the plan sponsor should confirm that it has operationally complied with the requirements of the Windsor decision and the IRS rulings addressing [same-gender] spouses since June 26, 2013 (or, where appropriate and applicable, the Delayed Effective Date). Second, to the extent it hasn't done so already, the plan sponsor should review its qualified plans to determine whether any of the plans have a definition of spouse that is inconsistent with Windsor and the IRS rulings. If so, the plan will need to be amended by December 31, 2014 ... Third, when drafting the plan amendment, the plan sponsor will need to determine whether the plan relied upon the Delayed Effective Date[.]"
Are Health Care Costs in Retirement Really So High?
On Wall Street More items by On Wall Street
8/29/2014

"[A] typical couple currently 65 years old could expect health care costs over their lifetimes, excluding long-term care, to run about $191,000 (with a 5% chance of exceeding $311,000). Adding in the cost of long-term nursing care, the average figure for a couple aged 65 rises to $260,000 (with a 5% chance of exceeding $570,000). To be sure, those are still high numbers, but assuming the two people combined have average life expectancies of 80, that works out to about $12,750 a year for the couple, well below a $10,000 annual, per-person cost. Why are the numbers at such odds?"
Planning for a Comfortable Retirement
Charles Schwab More items by Charles Schwab
8/29/2014

"After you've completed the planning stage, your next step should be to determine your portfolio allocation. This step is all about choosing the right mix of investments once your plan is in place. Here's a guide for how to approach portfolio allocation in retirement. [1] Set aside one year of cash ... [2] Create a short-term reserve ... [3] Invest the rest of your portfolio ... [4] Adapt your strategy over time."
How SHOP Exchanges Could Be So Much Better This Year
Wolters Kluwer Law & Business More items by Wolters Kluwer Law & Business
8/29/2014

"[T]he biggest barrier to enrollment in this past year, the first for the SHOP, was the fact that many states focused most of their Marketplace resources and volunteer time on coverage for individuals.... Other factors discouraging enrollment for small businesses ... included the limited reach of tax credits, the low number of brokers and agents steering their clients to SHOP plans, and technological problems.... The study also showed a surprising lack of awareness of even the most basic features of the SHOP in the small-employer community."
Phased Retirement: Case Studies
Government Executive More items by Government Executive
8/29/2014

"With all the news lately about the upcoming phased retirement option for federal employees, many people are considering whether it makes sense for them. To help clarify the issues at stake, let's look at a couple of case studies, one for an employee under the Federal Employees Retirement System and another for someone covered by the Civil Service Retirement System."
Text of IRS Notice and Request for Comment: Form 1094-B, Transmittal of Health Coverage Information Returns and Form 1095-B, Health Coverage
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
8/29/2014 [Official Guidance]

"The IRS developed Form 1094-B and Form 1095-B under the authority of IRC section 6055, added by [the ACA] ... Section 6055(a) requires every health insurance issuer, sponsor of a self-insured health plan, government agency that administers government-sponsored health insurance programs and other entity that provides minimum essential coverage to file annual returns reporting information for each individual for whom minimum essential coverage is provided. Form 1094-B, serves as a transmittal for Form 1095-B, Health Coverage."
Text of IRS Notice and Request for Comment: Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and 1095-C, Employer-Provided Health Insurance Offer and Coverage
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
8/29/2014 [Official Guidance]

"The IRS developed Forms 1094-C and 1095-C under the authority of IRC section 6056, added by [the ACA] ... Section 6056 requires large employers, within the meaning of IRC section 4980H(c)(2), to file with the IRS returns reporting certain information about the health care coverage the employer offered with respect to each full-time employee, and to furnish to each full-time employee a related statement. Form 1094-C serves as a transmittal for Form 1095-C, Employer-Provided Health Insurance Offer and Coverage."
Text of IRS Notice and Request for Comment: Form 1095-A, Health Insurance Marketplace Statement
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
8/29/2014 [Official Guidance]

"The IRS developed Form 1095-A ... for individuals to compute the amount of premium tax credit to which they are entitled under the [ACA] and file an accurate tax return. Marketplaces also must report certain information monthly to the IRS about individuals who receive from the Marketplace a certificate of exemption from the individual shared responsibility provision."
Revised User Fee Forms for IRS Determination, Opinion and Advisory Letters
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
8/29/2014 [Official Guidance]

"The user fee forms for requesting a retirement plan determination, opinion or advisory letter have been updated to reflect new user fees that were effective February 1, 2014. Please use these revised forms with your submission: Form 8717 (Rev. 8-2014), User Fee for Employee Plan Determination Letter Request; Form 8717-A (Rev. 8-2014), User Fee for Employee Plan Opinion or Advisory Letter Request."
DOL Opens the Door to the Questioning of Brokerage Windows Under 401(k) Plans
Dechert LLP More items by Dechert LLP
8/28/2014 [Guidance Overview]

"Possible DOL rulemaking or other guidance on brokerage windows could have a wide-ranging effect. Among those potentially affected could be plan sponsors, recordkeepers who promote or liaise with brokers in making brokerage windows available to plan sponsors, brokers who offer or facilitate the use of brokerage windows, sponsors of funds that are offered through brokerage windows and privately offered or other alternative investments that plan participants might be able to access only through a brokerage window."
The Power of the 'All-In' 401(k) Fee
Employee Fiduciary More items by Employee Fiduciary
8/28/2014

"When fees aren't clear or comparable, it can be difficult to impossible for plan sponsors to determine the reasonableness of fees.... Under an all-in fee approach, all administrative, recordkeeping and investment expenses are summed into a single, total amount. This approach 'normalizes' the numerous fee arrangements used by 401k service providers, including compensation paid to providers from plan investments, making it easier for the sponsor to compare fees provider by provider."
Can an Employer Persuade an Employee to Work Instead of Taking FMLA Leave Because Her Job Is Really Important?
FMLA Insights More items by FMLA Insights
8/28/2014

"[1] Don't Make an Employee Perform Substantive Work while on FMLA Leave. Not ever. Never.... [2] Don't Abandon Your Obligation to Return the Employee to the Same or Equivalent Position.... [Be] exceedingly careful when returning an employee to a different position upon their return from FMLA leave. Think virtually identical skills, effort responsibility and authority."
New York Court Upholds Executive Pay Caps as State Updates EO 38 Guidance (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
8/28/2014

"On July 29, Suffolk County Supreme Court Justice Emily Pines ruled in Concerned Home Care Providers, Inc. v. New York State Department of Health [DOH] that the DOH has authority 'to regulate the financial assistance provided by the State in connection with public health care activities.' Upholding the DOH regulations, the court emphasized that the regulations do not cap the executive compensation or administrative expenses of entities that receive state funds or state-authorized payments, but only limit the amount of money coming from state sources that can be used for those purposes.... [On August 13], an Albany Supreme Court justice delivered a setback to the state in a third case questioning the legality of EO 38. In Leading Age New York et al. v. Shah, Judge George B. Ceresia Jr. denied the state's motion to dismiss a challenge to EO 38 by several statewide associations of health care providers, allowing the case to continue."
Developments Impacting Benefits for Same-Sex Spouses
McDermott Will & Emery More items by McDermott Will & Emery
8/28/2014 [Guidance Overview]

"Employers should continue to review their benefit plans and policies with respect to benefits extended to employees' same-sex spouses. Year-end amendments may be required for qualified retirement plans to comply with the IRS guidance on Windsor. The recent DOL guidance may require employers to change their policies with respect to FMLA-protected leave to care for a same-sex spouse with a serious medical condition. In addition, employers with self-insured plans may want to consider whether to extend spousal coverage to same-sex spouses in light of [Roe v. Empire Blue Cross Blue Shield] and other challenges that will likely follow."
Considering a Phased Retirement Option: Reasons to Go Slowly
Benefits Bryan Cave More items by Benefits Bryan Cave
8/28/2014

"This recent Reuters article paints a rosy picture of the phased retirement offering that the federal government is extending to its employees. It sounds like a great win-win. The government saves money; employees get to continue to save for retirement, but also get to cut back on hours. However, the article goes on to lament the 'slow' employer response ... What the article fails to discuss is that tax code nondiscrimination rules make phased retirement a hard sell for many employers."
DOL Pronouncements Regarding Missing Participants and Brokerage Windows (PDF)
Groom Law Group More items by Groom Law Group
8/28/2014 [Guidance Overview]

"[The authors] suggest that plan fiduciaries review their plan policies for missing participants, and amend them if needed to conform to the DOL's most recent guidance. [They] also encourage plan administrators to thoroughly document the steps taken to locate and make distributions on behalf of each missing participant.... DOL [may] use the public record generated by the RFI to amend, alter or broaden the application of a number of ERISA statutory and regulatory requirements. The most obvious and likely most significant change would be the application of the fiduciary rules to investments purchased through a [self-directed brokerage account]. DOL may also use the information provided to alter the Form 5500 reporting requirements, impose new benefit statement content requirements, and add additional disclosure obligations under the service provider and participant disclosure regulations."
Generation X Workers: Retirement Reality Bites Unless Answers Are Implemented (PDF)
Transamerica Center for Retirement Studies More items by Transamerica Center for Retirement Studies
8/28/2014

54 pages. "Sixty-one percent of Generation X workers are confident that they will be able to someday fully retire with a comfortable lifestyle; however, among them, only 14 percent are 'very confident.' ... Thirty-four percent of Generation X workers expect their standard of living to decrease when they retire. Eighty-three percent of Generation X workers are concerned that Social Security will not be there for them when they are ready to retire. The majority of Generation X workers (54 percent) plan to work past age 65 or do not plan to retire. Most Generation X workers (62 percent) envision a phased transition into retirement[.]" [5-page 'Fact Sheet' is also available.]
PBGC Celebrates 40 Years of Protecting Pension Benefits of the Nation's Workers and Retirees: A Look at the 1980s
Pension Benefit Guaranty Corporation [PBGC] More items by Pension Benefit Guaranty Corporation [PBGC]
8/28/2014

"The decade started with 35.9 million private-sector workers (46 percent of all private-sector workers) being covered by a pension plan. As of Sept. 30, 1980, we were responsible for about 50,000 people. That decade saw our assets grow along with our responsibilities. We went from being responsible for about 50,000 people to more than 250,000 people. Our assets exceeded $1 billion for the first time."
Are Public Pensions Basically Ponzi Schemes?
Fiduciary News More items by Fiduciary News
8/28/2014 [Opinion]

"The conflicts-of-interest within the public employee plan structure and the longevity liability have, in some states, created very obvious looming crises.... Given the hard-to-avoid temptation to turn public employee pensions in a pay-to-play re-election bonanza, does it make sense to ban them? ... We already have working models on how to handle the conflict-of-interest problem. Implementing these requires no contract negotiations and, in some cases, executive rather than legislative action.... Worse than incompetence, however, is the proven record of fiduciary failure. Politicians just cannot avoid the temptation of conflicts-of-interest"
New DOL Guidance on 'Missing Participants'
Seyfarth Shaw LLP More items by Seyfarth Shaw LLP
8/28/2014 [Guidance Overview]

"While this guidance applies to terminated defined contribution plans ... [b]est practices would suggest that the initial four steps should also be taken if a fiduciary decides to canvass eligible participants.... [It] is arguably equally appropriate for the four steps in locating missing participants to be used by defined benefit plans, at least prior to plan termination. Finally, it should be noted that the DOL guidance is quite clear that these decisions regarding steps to take and distribution methods are fiduciary decisions and not mere administrative decisions."
Section 457A Is Bad, But Proposed Section 409B Would Spell Doom for Deferred Compensation and Stock Options
Winston & Strawn LLP More items by Winston & Strawn LLP
8/28/2014

"[If] it became law, new [Internal Revenue Code] Section 409B would effectively eliminate deferred compensation and stock options for all U.S. taxpayers. Yes, that's right, stock options (and SARs) too. Unlike 409A or 457A, proposed Section 409B defines deferred compensation to include 'any plan that provides a right to compensation based on the appreciation in value of a specified number of equity units of the service recipient or stock options,' extending its intended reach to stock options, SARs, and potentially, certain other stock-based compensation awards."
San Francisco Bay Area Employers Face September 30 Deadline on Commuter Benefits Program
Davis Wright Tremaine LLP More items by Davis Wright Tremaine LLP
8/28/2014 [Guidance Overview]

"Employers with 50 or more employees in any combination of nine San Francisco Bay Area counties have until Sept. 30, 2014, to come into compliance with the Bay Area Commuter Benefits Program (CBP).... [T]he CBP requires covered employers to select at least one of four commuter benefit options, notify employees of the selected benefit and how to take advantage of it, and register the selection with the Bay Area Air Quality Management District (Air District). A covered employer that already is complying with a pre-existing commuter benefit ordinance in one of four local jurisdictions ... still must register for the CBP and indicate which option is being provided."
Take Advantage of Section 457(b) Catch-Up Contributions
Belfint Lyons & Shuman, CPAs More items by Belfint Lyons & Shuman, CPAs
8/28/2014 [Guidance Overview]

"The maximum special catch-up amount is the LESSER of [1] Twice the current year's maximum, or $35,000 for 2013 or [2] The underutilized maximum amounts for prior years. Determining the underutilized limitation can be quite a challenge. The computation requires an analysis dating back to years beginning after December 31, 1978. From that initial year through years in effect prior to 2002, amounts contributed to ALL employers for whom a participant has performed services must be taken into account[.]"
The Shift from Defined Benefit Plans to Defined Contribution Plans
Practical Law Company More items by Practical Law Company
8/28/2014

"There are several reasons for this shift, but the consequences are clear. The typical elderly age-65 employee in the United States is not prepared to retire with adequate retirement income. This problem has some urgency due to: Changing demographics. Increasing health care costs. The long-term health of the Social Security system. The aftermath of the financial crisis and housing markets."
CMS Webinar Slides: FF-SHOP Bank Account Creation (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]
8/28/2014

29 slides, presented on August 26, 2014. "Purpose: [1] To provide FF-SHOP issuers with an update on Exchange Assigned IDs. [2] To provide FF-SHOP issuers with an overview of the Vendor Management process in order to facilitate premium remittance payments to issuers for the 2015 plan year."
Post-Hobby Lobby: Changes to Rules for Contraceptive Coverage Issued
Wolters Kluwer Law & Business More items by Wolters Kluwer Law & Business
8/28/2014

"The government is proposing for comment two possible approaches to defining a qualifying closely held for-profit entity, although the comments are invited on other approaches as well. Under the first proposed approach, a qualifying closely held for-profit entity would be an entity where none of the ownership interests in the entity is publicly traded and where the entity has fewer than a specified number of shareholders or owners. Under a second, alternative approach, a qualifying closely held entity would be a for-profit entity in which the ownership interests are not publicly traded, and in which a specified fraction of the ownership interest is concentrated in a limited and specified number of owners."
ACA Raises Taxes on Insurers with Big Pay Packages
Kaiser Health News More items by Kaiser Health News
8/28/2014

"On average, the insurers owed $1.3 million more in taxes per executive. So-called 'performance pay,' which is no longer deductible for health insurers, accounted for more than $204 million of the compensation awarded. Executive pay rose to an average of $5.4 million per person in 2013, up from $5.1 million in 2012."
Who's Minding Public Pensions?
Steven Malanga, in the Los Angeles Times More items by Steven Malanga, in the Los Angeles Times
8/28/2014 [Opinion]

"Nearly 60% of government pension funds surveyed in 2010 by [NASRA] were controlled by boards in which beneficiaries of the pension system -- that is, active government workers and retirees -- held at least half of all seats. In addition, pension boards often include elected officials who depend heavily on public-sector unions for campaign funds. Is it any wonder, then, that the boards have produced some disastrous results?"
California City Looks to Quit CalPERS But Fears It Can't Afford To
Reuters More items by Reuters
8/28/2014

"Officials in Villa Park are considering pulling the tiny California city from CalPERS, saying the monthly costs of the state's giant public pension system are crippling the municipal budget. But Villa Park fears that pulling out of its contract with [CalPERS] could be prohibitively expensive because of a termination fee that could exceed the city's annual budget.... 'Getting out of Calpers is like getting out of jail,' said Rick Barnett, mayor of Villa Park, population 5,800."
Women Showing Greater Commitment to Retirement Savings
MassMutual More items by MassMutual
8/28/2014

"[T]he average retirement savings balance for women was up 17 percent from a year ago and 71 percent from 2009. The gap between the average balance between women and men narrowed to 37.8 percent in the second quarter from 40.5 percent in 2010.... [T]he average salary deferral rate for women continues to trail men, 5.37 percent to 5.70 percent of compensation, respectively. However, the deferral rates for women have remained fairly steady since 2010 while the rates for men have declined."
Warranties and Guarantees Come to the 401(k) Game: Can Insurance Really Put the Client First?
RIABiz More items by RIABiz
8/28/2014

"[I]nsurance on 401(k) plans has long been seen as yet another layer of fees, obfuscation and dubious value in a defined-contribution-plan industry rich in murkiness and the opportunism it provokes. But the get-to-the-point means of outsourcing the legal liability associated with fiduciary care is on the rise because investment management firms -- alive to new legal perils inspired by a re-energized Labor Department -- have begun to offload more of their fiduciary status[.]"
Text of Letter from American Academy of Actuaries to IRS Requesting Guidance on the Highway and Transportation Funding Act of 2014 (HATFA) (PDF)
American Academy of Actuaries More items by American Academy of Actuaries
8/28/2014 [Opinion]

"With respect to 2014 plan years, we urge that Notice 2012-61 be reissued with 2013 and 2014 replacing 2011 and 2012. The situation with respect to 2014 and HATFA is analogous to the situation with respect to 2012 and implementation of the MAP-21 provisions. The guidance in this Notice was timely, practical and flexible and we see no reason to deviate from this on virtually identical issues.... At a minimum, guidance should permit application of the new law for Section 436 on a prospective only basis. Not permitting this would create substantial compliance and/or administrative issues for sponsors with benefit restrictions currently in place."
Text of First Circuit Opinion: No Fiduciary Breach When Insurer Paid Death Benefit Into Retained Asset Account (PDF)
U.S. Court of Appeals for the First Circuit More items by U.S. Court of Appeals for the First Circuit
8/28/2014

"[H]ere, unlike in [Merrimon v. Unum], the Plan did not state in haec verba that benefits would be paid by means of [a retained asset account (RAA)].... We do not believe that a legally significant difference exists where, as here, the Plan documents, instead of singling out RAAs as the exclusive method of payment, allowed the insurer to pay other than by a lump sum. ERISA section 404(a) does not require a fiduciary to don the commercial equivalent of sackcloth and ashes. What it does require is that the fiduciary not place its own interests ahead of those of the Plan beneficiary." [Vander Luitgaren v. Sun Life Assurance Co. of Canada, No. 13-2090 (1st Cir. Aug. 26, 2014)]
Tax Problems Sometimes Arise When Giving Employees Choice of Benefits
Focus on Public Benefits More items by Focus on Public Benefits
8/28/2014

"If the employee gives up the right to receive additional 457(b) distributions in the future in exchange for an additional current health insurance subsidy, the IRS views this as an assignment of income and has stated on several occasions that such a choice would result in current taxable income to the employees who elect the additional health insurance subsidy -- even though they are not now receiving any cash and have elected to receive what appears to be a nontaxable benefit."
How ERISA, Tax, ACA and Federal Labor Laws Apply to Welfare Benefit Plans (PDF)
Ice Miller, for American Benefits Council More items by Ice Miller, for American Benefits Council
8/28/2014 [Guidance Overview]

69 slides, presented on August 28, 2014. Topics: The Legal Overlay: [1]The Internal Revenue Code; [2] The Employee Retirement Income Security Act; [3] The Patient Protection and Affordable Care Act; and [4] The Labor Laws: USERRA, ADEA, FMLA, and ADA.
Insurers Shoving 'Advanced Illness Counselors' on Us
Physicians for a National Health Program [PNHP] More items by Physicians for a National Health Program [PNHP]
8/28/2014 [Opinion]

"After an introductory letter that is routinely ignored, the counselors cold-call to try to convince you to accept their end-of-life counseling. Of course, this is 'at no cost to you' since your insurer pays for this service. The services are provided over the phone from offices in New Jersey -- a definition of personal care that only the insurers can understand. The clients of Vital Decisions are the private insurers, not the patients, nor the physicians, nor any other members of the health care team."
Health Plan Service-Provider Calls Terminally Ill Patients to Discuss End-of-Life Issues
Kaiser Health News More items by Kaiser Health News
8/28/2014

"The hope of this program ... is to build a relationship over the phone, so [the individual] might be comfortable discussing his situation and his goals. Then he'll be empowered to communicate those things with others, including his family and his doctors.... It's paid for by insurers and federal privacy rules permit this for business purposes.... And when these conversations do happen, there's can be another byproduct: reduced costs. Research is finding that when patients fully understand aggressive care, many choose less of it."
Hobby Lobby Fallout, Part 2 -- with an Expanded Non-Profit Twist
Benefits Bryan Cave More items by Benefits Bryan Cave
8/27/2014 [Guidance Overview]

"[Once notified of an employer's objection, the] government can then turn around and tell the insurer/TPA to provide the coverage for the contraceptives.... This creates many potential questions. For example, who is responsible for monitoring this 'plan administrator?' If the 'plan administrator' breaches a fiduciary duty, is the eligible organization potentially responsible for co-fiduciary liability (certainly, the government would not be)? Do insurers/TPAs need to make sure that they have fidelity bonds since the plan benefits are not paid from the general assets of the employer? Do they need to establish trusts for these benefits? It's likely that the DOL will come out with FAQs that answers the last three questions in the negative. However, the ERISA fiduciary implications of such an appointment are unclear."
ERISA at 40: ERISA, COBRA and the ACA (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
8/27/2014

"With the marketplace still a relatively new and unfamiliar option, Congressional action to repeal or modify COBRA is unlikely in the near future. Additionally, the fact that marketplace coverage is available only on a prospective (i.e., first of the month following plan selection) basis secures the present status of COBRA as a critical tool for avoiding coverage gaps. That said, if marketplace special enrollment rules allow an individual to enroll in coverage effective retroactive to the date of the loss of job-based coverage, marketplace coverage could obviate the need for COBRA coverage -- at least from a timing perspective."
Target Date Funds Decoded
planadviser More items by planadviser
8/27/2014

"[T]here are many drawbacks that must be taken into consideration when investing in target-date funds: The concept of 'set and forget' is naive and can mislead investors. This investment structure does not guarantee that a defined contribution (DC) plan participant will achieve certain asset levels for retirement. Depending on factors such as asset allocation, age and financial markets the participant may never accumulate enough money to fund their retirement. Proprietary funds under the guidance of the TDF manager can pose a conflict."
EEOC Sick Over Wellness Programs
Mazursky Constantine, LLC More items by Mazursky Constantine, LLC
8/27/2014

"The facts of this case are unusual since the employee's termination rather than the employer's wellness plan design, appears to be the likely force behind the EEOC's complaint. Further, the amount of the reward under the employer's program (100% of employee premiums), although arguably permitted under the HIPAA rules, is not typical of the modest incentives offered under most employer's wellness programs. Accordingly, it seems unlikely that this case represents the EEOC's opening salvo in a war against all reasonably designed wellness programs."
Judge Denies Claims by Retirement Plan Participants for Plan Investments Tied to Madoff
The Wall Street Journal; subscription may be required More items by The Wall Street Journal; subscription may be required
8/27/2014

"Hundreds of people whose employers invested their retirement funds with Bernard Madoff cannot recover money from the liquidation of Mr. Madoff's firm because they weren't direct customers of the imprisoned Ponzi scheme operator, a bankruptcy judge has ruled.... Investors in the plans, however, still have a shot at recovering money, because the plans themselves have brought claims against Mr. Madoff's firm. [Irving Picard, the court-appointed trustee winding down Mr. Madoff's investment firm,] has denied the claim of at least one of the four plans, court papers show." [Securities Investor Protection Corporation v. Bernard L. Madoff Investment Securities LLC, No. 09-11 (Bankr. S.D.N.Y. Aug. 22, 2014)]
Targeting Self-Insured Populations
HealthLeaders Media More items by HealthLeaders Media
8/27/2014

"Delivering value is paramount to any healthcare executive who is fighting for his or her organization's place in the industry going forward. But the devil is in the details, and how you get there is dependent on a wide variety of factors. Two organizations -- one that has already made the transition and one in the early stages of it -- show that any executive who is hanging on to what currently works in healthcare (still largely volume-based fee-for-service reimbursement) is in a very dangerous situation."
Insurers Pay More Tax on Executive Compensation Under Obamacare
Reuters More items by Reuters
8/27/2014

"When Washington eliminated corporate tax deductions on health insurance executive compensation above $500,000 under President Barack Obama's healthcare reform law in 2013, it generated more than $72 million in additional tax revenue for the U.S. government ... The report said that if all corporations were to be taxed this way, it would raise $50 billion more in revenue for the U.S. government."
Handout for Upcoming IRS Webinar: Correcting Retirement Plan Mistakes Using IRS Correction Programs, September 4, 2014 (PDF)
Internal Revenue Service [IRS] More items by Internal Revenue Service [IRS]
8/27/2014 [Guidance Overview]

29 slides. "Agenda: [1] The correction programs available under the Employee Plans Compliance Resolution System (EPCRS); [2] Common failures and approaches to addressing them; [3] Procedural tips to facilitate VCP submissions processing; [4] The Voluntary Closing Agreement Program (VCAP) for issues that cannot be addressed under EPCRS; [5] Q&As -- Responses to selected questions submitted in advance of the presentation."
Five Items That Impact the Amount Your 401(k) Participants Need to Retire
Lawton Retirement Plan Consultants More items by Lawton Retirement Plan Consultants
8/27/2014

"How much do your 401(k) plan participants need to accumulate in their accounts in order to retire without making significant lifestyle adjustments? Here are some estimates from the experts: 8 times final pay at age 67 -- Fidelity ... 11 times final pay at age 65 -- Aon Hewitt ... 18 times final pay -- EBRI ... 25 times final pay -- to ensure an annual withdrawal rate of 4%. With such a wide range of opinions, it can be hard for participants to know what to aim for."
The Golden Goose Lays an Egg: Fiduciary Issues with Public Pensions
Fiduciary News More items by Fiduciary News
8/27/2014

"[F]or all the eulogies we've heard pertaining to the corporate pension plan, public pension plans continue to thrive. Do they possess some immunity gene not found in their private sector brethren? ... The leverage of a voting constituency often makes it easier to sustain public employee pensions.... However, this 'positive' calls into question the very viability of the seemingly bottomless pit of a funding source.... Private sector organizations avoided this day of reckoning because to ignore the looming funding problems meant financial ruin, bankruptcy, and, eventually, oblivion."
Using Adjusted Financial Data in Incentive Plans (PDF)
Meridian Compensation Partners, LLC More items by Meridian Compensation Partners, LLC
8/27/2014

"The only time these adjustments should be controversial or inappropriate would be if goals were set using one definition and results were measured using another (to the executive's benefit). Generally, however, adjusted definitions are approved by compensation committees at the beginning of the performance period. Goals are set and performance is measured based on this consistent definition and understanding. This article explores the reasons behind common adjustments and makes the case for their appropriate use."
Final SEC Rules to Usher in Floating NAV, Fees, and Gates for Money Market Plan Investments (PDF)
Buck Consultants at Xerox More items by Buck Consultants at Xerox
8/27/2014

"Since money market funds haven't had to distinguish between shareholders who are 'natural persons' and other types of shareholders before, [the authors] anticipate that existing money market funds that wish to maintain a stable share price will reorganize into two funds -- one with a stable share price for their retail shareholders (who meet the definition of 'natural persons' -- including participant-directed defined contribution plans) and the other with a floating share price for their institutional shareholders. The additional reorganizational expenses may pose a challenge for money market fund sponsors[.]"
DC Plan Sponsors Hesitant to Make Distribution Recommendations
PLANSPONSOR More items by PLANSPONSOR
8/27/2014

"All but 16% of plan sponsors polled for the LIMRA Secure Retirement Institute (SRI) 'DC Plan Sponsor Perspectives' study indicated someone meets with retiring employees to discuss their distribution options.... Only three in 10 plan sponsors that meet with retirees -- or arrange for such meetings with plan provider representatives or plan advisers -- recommend a particular course of action."
Retired and Rehired: ACA Penalties Can be Avoided if Employer Adopts the Look Back Measurement Method Safe Harbor
Liebert Cassidy Whitmore More items by Liebert Cassidy Whitmore
8/27/2014 [Guidance Overview]

"The ACA does not carve out an exception for retirees who return to work. They are considered employees and, if they meet the definition of 'full time' under the ACA's employer mandate, they could potentially trigger a penalty to an employer. However, in order for a full-time employee to trigger a penalty, that employee must purchase coverage through [an exchange] and receive a government subsidy. If a retiree is eligible for Medicare, he or she will not qualify for a subsidy and therefore will not trigger a penalty."
Highway Funding Bill of 2014: What Does It Mean for Asset Allocation and Liability-Driven Investing?
Towers Watson More items by Towers Watson
8/27/2014

"The highway funding bill includes a provision now commonly called 'pension smoothing,' which extends the interest rate smoothing initiated in the MAP-21 law of 2012. Interest rate smoothing introduced into the pension funding process via these laws could result in a shift away from liability-hedging assets and liability-driven investing in general. The continuation of the trend toward providing pension funding relief may lead to a reevaluation of the importance of risk when setting pension investment policies."

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