Communication and disclosure to participants |
[Guidance Overview] Must a Disability Benefit Denial Letter Inform Claimant of Time Period to File Legal Action?
"Here's a great new case on the topic: Heimeshoff v. Hartford Life & Accident Ins. Co. and Wal-Mart . . . . [Benefit denial letter not required to specify time limitations for suit because the ERISA regulation language 'suggests that the DOL did not intend to require such a time limit notification in the benefit determination.']." (JD SUPRA)
[Guidance Overview] Compliance Deadlines Loom for Fee and Other Disclosures
"One set of rules requires each plan service provider to make certain disclosures to a responsible plan fiduciary (plan sponsor fiduciary/plan administrator with authority to contract with the service provider) and the other set of rules requires each plan administrator to make certain disclosures to plan participants." (jackson Lewis)
[Guidance Overview] Deadline Finally Set for New 408(b)(2) Fee Disclosure Rule Compliance
"[What To Do After The Deadline.] Be sure to: Go through the process again for each new arrangement, for any extension or renewal of an existing arrangement, and for any changes; If a disclosure failure is discovered, follow the steps in the prohibited transaction exemption that is part of the final regulations, to include notifying the DOL if appropriate, reporting the failure on Form 5500, and deciding whether to terminate the arrangement with the covered service provider." (Chang, Ruthenberg & Long PC)
ERISA Investment Disclosures to Participants Will Satisfy NASD Rules
"The FINRA relief is similar to that issued earlier by the SEC. In an October 2011 No-Action letter, the SEC agreed to treat information provided by a plan administrator to participants that is 'required by and complies with' the ERISA ? 404(a) disclosure requirements as satisfying the requirements of Rule 482 under the 1933 Act. The ERISA ? 404(a) regulations include an optional Model Comparative Chart for making the required financial disclosures to plan participants." (Deloitte via BenefitsLink.com)
[Guidance Overview] EBSA's Long-Anticipated Final Rules on Retirement Plan Fee Disclosure
"The rules will be effective July 1 for both existing and new contracts between [ERISA] plans and their service providers." (Bloomberg BNA)
Less than Half of Employers Ready to Distribute Health Care Reform Summary of Benefits & Coverage Materials
"Key findings show that while 81% of employers plan to update their SPDs for plan design and Affordable Care Act (ACA) changes this year, they continue to wrestle with cost containment and resource strain for the implementation and review process required to execute SPD changes." (HighRoads)
[Guidance Overview] DOL Issues Final, Final Service Provider Fee Regulations
"Previously, the DOL had issued interim final regulations. The newly released 'final final' regulations reconfirm many things we knew from the interim final regulations but there are a number of significant changes. [This discussion] focuses on the changes and clarifications in the preamble." (SunGard Relius)
Another 12 Basic Retirement Plan Concepts that Every Financial Advisor Should Understand
"[Financial advisors] should be aware of some very basic concepts on how the industry works in order to stand out among their competition as well as augmenting their client's overall retirement plan experience." (JD SUPRA)
[Guidance Overview] Fiduciary-Level 401(k) Fee Disclosure Deadlines Extended Three Months; Indirectly Extends Participant-Level Fee Disclosure Deadlines
"The three-month extension of the plan-level fee disclosure rule triggers an equal extension of the participant-level fee disclosure rules under ERISA Section 404(a)(2). Technically plan sponsors (employers) must make these disclosures to plan participants, but for practical purposes institutional investment providers will provide most of the content. The deadline to distribute the initial written disclosure has moved from May 31, 2012 to August 30, 2012, and the deadline to distribute the first quarterly statement under the rule has moved from August 14, 2012 to November 14, 2012." (E is for ERISA)
[Guidance Overview] EBSA Issues Final Regulations on Required Fee Disclosure to Plan Fiduciaries (PDF)
"Under the final rule, a plan fiduciary seeking relief under the class exemption must determine whether to terminate or continue its service arrangement with a CSP if the plan fiduciary has requested information andthat information is not disclosed within 90 days of written request. If the request relates to future services and the CSP fails to disclose promptly after the 90-day period, the fiduciary must terminate the service arrangement 'as expeditiously as possible.' The EBSA believes the change highlights the importance of prompt decisionmaking by a plan fiduciary regarding the termination of a contract with a CSP when disclosure failures have occurred." (Ascensus, Inc.)
[Guidance Overview] 408(b)(2) Disclosure Regulations Delayed to July 1, 2012
"The rule, was previously slated to go into effect on April 1, 2012, requires service providers to disclose to plan sponsors information about:(1) the services to be performed; and (2) the fees and compensation to be received for performing those services." (Cambridge Investment Research, Inc.)
[Guidance Overview] DOL's Final Fiduciary Disclosure Regulations and Extension of Effective Date
"The [DOL] has published the highly anticipated, and slightly overdue, final regulation imposing new obligations for fiduciaries of retirement plans subject to [ERISA]. The obligations pertain to the collection and evaluation of disclosure information from plan service providers and include several minor modifications." (Ballard Spahr LLP)
[Guidance Overview] Deadline for New 401(k) Plan Disclosures Postponed to August 30 (PDF)
"The new effective date is a direct result of the Department's issuance of revised regulations under ERISA Section 408(b)(2) requiring service providers to provide more detailed disclosures concerning their fees to qualified retirement plans . . . ." (Seyfarth Shaw LLP)
Lowe's Sued over Cancelling Health Plan Participants' Coverage
"A lawsuit was filed on behalf of all participants in Lowe's Companies' Group Medical Plan who had their health coverage terminated and were denied medical benefits by Lowe's for part or all of the 2011 calendar year." (PLANSPONSOR.COM)
Industry Players Mostly Pleased with Final Rule on 408(b)(2)
"Larry Goldbrum, general counsel for the SPARK Institute, told PLANSPONSOR that given the delay in the release, he thinks most recordkeepers already moved forward in January with their planned compliance approach and must adjust it now. 'I think service providers still need to evaluate if they'll be able to adjust their compliance plans in time for [the July 1] deadline,' he said." (PLANSPONSOR.COM)
[Guidance Overview] Final Service Provider Fee Disclosure Regulation: The 408(b)(2) Regulation (PDF)
"[The most important changes include the following:] The extension of the compliance date from April 1, 2012 to July 1, 2012; The fact that service providers are not required to provide a summary of the disclosures, though the DOL provided a sample 'guide' that is not mandatory; The addition of the requirement to describe the arrangement between the service provider and the payer of indirect compensation; Limited relief for disclosures for brokerage accounts and similar arrangements." (Drinker Biddle & Reath LLP)
[Guidance Overview] Be Ever Vigilant Regarding 409A and Include 409A Interpretive Provisions!
"Although the IRS has issued correction programs for both operational (IRS Notice 2008-113) and document (IRS Notice 2010-6) failures, not all 409A issues are included in such correction programs. Even corrections within the programs can cause employees to incur additional tax, tax reporting complications and different-than-desired payment timing so ongoing 409A compliance is important." (The Bureau of National Affairs, Inc.)
[Guidance Overview] DOL and IRS Retirement Security Measures, Including Final Fiduciary-Level Fee Disclosure Regs and Proposed Guidance on Lifetime Income
"In a coordinated effort, the DOL and IRS have announced agency actions that are intended to enhance retirement security. The DOL has announced the release of final fiduciary-level fee disclosure regulations, with an extended effective date of July 1, 2012." (Thomson Reuters/EBIA)
[Guidance Overview] Estoppel in ERISA: Simple Mistakes Can Lead to Costly Litigation
"Even if the participant ultimately fails in proving the elements of estoppel, defending against such claims is costly and time-consuming. Accordingly, employers and plan administrators should take the following steps to protect themselves from these types of claims: . . . ." (Employee Benefits Law Report)
[Guidance Overview] Agencies Outline Plans for Issuing Rules Under Affordable Care Act
"[An] imminent final rule will establish the requirements of the Summary of Benefits and Coverage (SBC) disclosure that health insurers and group health plans must provide to consumers to enable them to better compare benefits and coverage. The CMS issued a proposed rule on this topic in August 2011. A final rule, which will also 'set standards for the definitions of terms used in health insurance coverage, including specific terms' provided in the Affordable Care Act, is expected to be issued shortly." (Employee Benefits Counsel Blog)
The Making of The 403(b) Model Disclosure Form
"These [403(b)] plan participants are not fiduciaries, and often do not have anyone to be able to collect and compare data on their behalf. They are sold investment products directly. So it really becomes a very simple issue for that school teacher or administrator: how much sales commissions is my investment generating; what services am I getting in return; is there a way for me to compare it all; and how can I reasonably access comparative data on the investments themselves?" (Business of Benefits, Robert J. Toth Jr.)
[Guidance Overview] Slide Presentation: Form W-2 Reporting Requirements for Employer-Sponsored Group Health Coverage (PDF)
"Overview: Informational nature of reporting requirement; Effective date; Special transition relief for small employers; Employers subject to the new rules; Plans that must be reported; Determination of the aggregate cost; [and] Open issues" (Crowell Moring via American Benefits Council)
Unraveling The Mystery of 401(k) Disclosures
"Sponsors will be required to present information about the investment options in the retirement plan in a chart that allows plan participants to compare fees and expenses . . . . Plan sponsors can use a model chart developed by the Labor Department or they can develop their own." (MarketWatch)
New Fee Disclosure Solution Released By NEA, NTSAA & ASPPA Joint 403(b) Taskforce
"Partners of the 403(b) Transparency Taskforce including the National Education Association (NEA), the National Tax Sheltered Accounts Association (NTSAA) and The American Society of Pension Professionals & Actuaries (ASPPA) today launched the 403(b) Model Disclosure Form -- the first ever transparency standards for disclosure of fees and services in the public school 403(b) marketplace." (American Society of Pension Professionals & Actuaries)
403(b) Model Disclosure Form (Jan. 2012)
"This form is designed to provide [you, a 403(b) plan participant,] with the ability to easily compare detailed information regarding the investment options available to you. It is designed to provide you with a snapshot of the critical information needed when selecting an investment, including the services to be provided to the participant, the fees to be charged to the participant, investment information, the commissions payable to the persons who provide services to the plan, and other payments to third parties." (ASBO, NEA & NTSAA Joint 403(b) Taskforce)
Guide to the 404a5 Opportunity for Retirement Advisors, Part I: Counseling Plan Participants
"Mark down May 31, 2012 in your calendar. That's the date by which 483,000 U.S. retirement plans must send to their participants the initial disclosures required by new Department of Labor rules under Section 404a5 of ERISA. . . . DOL estimates that the rule will affect 72 million active participants who hold $3 trillion of plan assets. . . . It is your job, and opportunity, to help them anticipate, interpret and act on information contained in 404a5 disclosures." (Benefits Pro)
[Guidance Overview] D.C. Requires Employers to Withhold D.C. Tax on Retirement Plan and IRA Distributions to D.C. Residents (PDF)
"Unlike withholding in some other jurisdictions, the D.C. legislation requires withholding from distributions from IRAs, as well as pension, profit sharing and tax sheltered annuities (403(b) plans); withholding is mandatory, not voluntary." (Saul Ewing LLP)
[Guidance Overview] Reminder of ISO and ESPP Reporting Deadlines
"This is a reminder to companies issuing incentive stock options and sponsoring employee stock purchase plans about the January 31 deadline to report certain information to participants and the February 28 deadline to file returns with the IRS." (McKenna Long & Aldridge LLP)
401(k) Plans Step into the Sunshine with New DOL Rules Requiring Fee Disclosures
"Analysts and companies in the industry say the increased disclosure will allow companies to negotiate better deals and employees to request more cost-efficient plans. Already, the prospect 'is putting downward pressure on fees,' said [the] leader of consulting firm Callan Associates Inc.'s defined-contribution practice." (The Wall Street Journal)
[Guidance Overview] Effective Date of DOL's Fee Disclosure Regulations Near: Plan Sponsors Should Not Procrastinate
"Plan sponsors should ensure that service providers are complying with their regulatory disclosure requirements. The steps to follow are (in some respects) similar to the participant fee disclosure steps . . . ." (Ice Miller LLP)
[Guidance Overview] Significant Compensation and Benefit Due Dates for 2012 (PDF)
"This Compliance Calendar assumes a plan administered on a calendar year basis by an employer with a calendar fiscal year." (Aon Hewitt)
How to Take Advantage of New 401(k) Fee Disclosures
"With this new information about the 401(k) fees you are paying, you will have an opportunity to reduce the costs of your retirement investments." (U.S. News & World Report LP)
Low-Cost Entries Shake Up Small Retirement Plan Market
"If you own a small business, the time to comparison-shop for 401k plans has never been better. Low-cost plans are cropping up, as new federal regulations kicking in this year call for greater disclosure of feeinformation to plan participants and sponsors." (Thomson Reuters)
It Pays to Understand Your 401(k) Plan Fees
"[T]his year, plans are scheduled to be required to begin issuing annual and quarterly statements with performance and fee information. You'll get a chart that lists each investment available in your 401(k), with a description of what it is." (Chicago Tribune)
[Guidance Overview] A Look at Case Law for Important Plan Documentation Reminders
"Two important cases provide good reminders to plan fiduciaries about (1) the importance of documentation of fiduciary processes, and (2) accurate communication of plan design changes to participants and beneficiaries." (Ice Miller LLP)
[Guidance Overview] 2012 Deadlines Approach to Furnish Incentive Stock Option and Employee Stock Purchase Plan Information Statements and Returns
"In addition to the employee information statements, corporations must file returns with the Internal Revenue Service on Forms 3921 and 3922 no later than February 28, 2012, if filed on paper, or April 2, 2012, if filed electronically." (DLA Piper)
[Guidance Overview] Fee Disclosure: A Detailed Overview for Plan Sponsors and Their Advisors (PDF)
"[This article] is a summary of the provisions of the new regulations and how plan sponsors and participants will be affected." (Sentinel Benefits & Financial Group)
[Guidance Overview] DOL's Proposed New Rules that Will Affect Multiple Employer Welfare Arrangements (PDF)
"The two areas of concern are: (1) the Secretary of Labor's ability to issue a cease and desist order or a summary seizure order; and (2) the reporting and disclosure requirements for MEWAs. The DOL has also proposed revisions to the Form 5500 and the Form M-1 for MEWAs." (Conrad Siegel Actuaries)
6 Critical Trends for Retirement Plans in 2012
"The six megatrends Lincoln Trust sees in 2012: New 401(k) Fee Disclosure Rules by DOL . . . 'C Suite' Sticker Shock' . . . A Refined Fiduciary Standard . . . Models vs. Target-Date Funds . . . The Rise of 401(k) Evaluation Services . . . A Call for Investment Expense Transparency." (AdvisorOne)
New Fee Disclosure Rules Help Make Costs More Transparent
"The regulations for calendar-year plans take effect 60 days after April 1, 2012, so most participants won't start receiving the new information until May 31, 2012. The DOL will now require your employer and any other provider to the plan (such as the plan's financial adviser and recordkeeper) to ensure the distribution of the following information to you: . . ." (The Smarter Investor (usnews.com))
[Guidance Overview] Labor Department Offers Guidance on Electronic Disclosure But Not Much Relief
"The Release provides little relief to plan administrators who want to satisfy the disclosure requirements of the Regulation electronically but are stymied by the cumbersome requirements of the Safe Harbor as to Group 2 participants. Inexplicably, however, Method 2 in the Release is more difficult to implement than the consent procedures in the Safe Harbor for Group 2 participants." (McGuireWoods LLP)
The Case for Re-Enrollment
"When TDFs are added to a plan's investment lineup, adoption rates as a percentage of plan assets range from 1% to 5%2 (incremental to assets mapped). With re-enrollment as the strategy? TDFs jump to a 40% to 60%2 adoption rate. For sponsors interested in better asset allocation for their participants, but unsure how to drive TDF adoption in the face of participant inertia, effective implementation is key." (JPMorgan Chase & Co)
[Opinion] The Case Against Basis Point Fees for All Services
"How does a plan fiduciary respond to participants who question the fees; particularly if it is a long-term employee that has likely taken a beating on returns over the past couple of years? Now they find out later that they are paying four times the amount that the plan deems reasonable for the services being provided. It could get ugly." (Smart401k)
[Guidance Overview] 2012 Reporting & Disclosure Calendar for Multiemployer Plans (PDF)
"The [calendar] summarizes compliance requirements for multiemployer plans." (The Segal Group, Inc.)
[Guidance Overview] New FAQ about Form 8955-SSA Clarifies Requirements for Answering 'Yes' to Question 8
"For those plan administrators who have not filed their Form 8955-SSA for the 2009 and 2010 plan years, this new FAQ . . . provides helpful clarification of the requirements for answering 'yes' to question 8 on the form, although it may come too late to allow some plan administrators to withhold information that is clearly no longer required." (Thomson Reuters/EBIA)
[Guidance Overview] Tax Reporting Deadline Rapidly Approaching for Incentive Stock Options and Employee Stock Purchase Rights
"While these filings are required only once per year, please note that each Form 3921/3922 may report only one transaction. As a result, employers may need to prepare multiple forms for a single employee." (Jones Day)
Five Areas 401k Plan Sponsors Must Address to Reduce Fiduciary Liability
"5. Trustee and Employee Education ? A well rounded plan with the perfect array of investment choices will die on the vine if the plan sponsor fails to provide adequate education for employees." (Fiduciary News)
The Impact of 408(b)(2) Disclosure Regulations on TPAs
"TPAs typically receive compensation for administrative services, often including a base fee and a per-participant fee, as well as fees for processing transactions (e.g., loans, QDROs, and distributions). Many TPAs also provide consulting services, for which they typically receive hourly fees. If the TPA doesn't receive any other compensation (such as revenue sharing or payments from other service providers), they may not have to do any additional disclosure in order to comply." (BenefitsPro)
[Guidance Overview] Notifying Terminated Participants of Deferred Retirement Benefits Reported on Form 8955-SSA
"The information may be included in a benefit statement or distribution package; a separate statement isn't required." (Mercer LLC)
[Guidance Overview] Sample Compliance Calendar for Retirement Plans (PDF)
"This calendar provides general key retirement plan compliance requirements common to most calendar year plans." (ERISAdiagnostics Inc.)
[Guidance Overview] Health & Welfare Plan Reporting and Disclosure Checklist (PDF)
"There are numerous reporting and disclosure requirements for Health & Welfare Plans. We have expanded and replace our previous chart containing only disclosure requirements to include reporting requirements." (ERISAdiagnostics, Inc.)
Scriveners' Errors, Drafting Errors, Operational Failures, Retroactive Amendments, Reformations, ERISA, and the Tax Qualification of Pension Plan Trusts
"There are often discrepancies between a pension plan's governing documents and the plan's operations . . . . Such a discrepancy if not corrected pursuant to the terms of the governing documents, is described as an operational failure . . . . This article offers suggestions by which the [IRS] may lessen the burden on itself and conscientious plan sponsors, while improving compliance with (1) the tax-qualification rules of Section 401(a) of the [IRC] and (2) the similar provisions of [ERISA]." (Social Science Research Network)
Best Practices for 403(b)s Subject to Fee Disclosure Rules
"[T]he NTSAA Fee Transparency Task Force is in the final stages of the development of a fee disclosure document patterned after the DoL model comparative fee chart. The document will be available for non‐ERISA employer plans in the belief that employers and participants will benefit from total transparency as they exercise their freedom to choose their own investment options, and financial advisers. It is expected that the Task Force will launch the new document in the first quarter of 2012." (PLANSPONSOR.COM)
Albert Feuer on Tax Qualification of Pension Plan Trusts
"According to Al: 'The article analyzes the significance of operational failures, i.e., cases in which the terms of a plan's governing documents are violated. The article offers suggestions how the [IRS] may lessen the burden on itself and conscientious plan sponsors and administrators, while improving compliance with (1) the Code's tax-qualification rules, and (2) the similar provisions of ERISA.'" (Workplace Prof Blog)
Collective Investment Trusts: An Investment Vehicle for 401(k) Plans?
"With the new [fee] transparency, some plan sponsors will probably start looking for lower-cost investment options, and CITs may fit the bill." (U.S. News & World Report LP)
[Guidance Overview] Update on Fiscal Year Health FSAs and the $2,500 Limit
"On January 10, 2011 I posted about how employers with health FSAs that follow a fiscal year might comply with the $2,500 deferral dollar limit going into effect on January 1, 2013. This post updates and corrects the earlier post as follows: Notice 2012-9, which provides updated guidance on Form W-2 reporting of the value of group health care, exempts most health FSAs from the reporting requirement. The specific exemption applies to health FSAs that are exempt from HIPAA because they are funded entirely by employee salary deferrals, or because any employer contribution is $500 or less." (E is for ERISA)
[Guidance Overview] IRS Clarification of Previous Guidance on Form W-2 Informational Reporting Requirement
"Employers should continue to work with payroll administrators to determine their level of preparedness to administer this new reporting requirement. Employers should determine which of their benefit arrangements must be reported so as to accurately capture the correct benefit values for the 2012 Forms W-2." (Proskauer Rose LLP)
[Guidance Overview] Updated Guidance on Form W-2 Reporting of Health Care Coverage
"Employers should review their benefit plans to determine which plans meet the definition of 'applicable employer-sponsored coverage.' For example, employers should consider whether their EAPs, wellness programs, or on-site medical clinics would be considered group health plans and, further, whether they should report such coverage (consideration also should be made as to whether COBRA should be offered for such programs)." (Morgan, Lewis & Bockius LLP)
[Guidance Overview] IRS Clarification of Form W-2 Reporting Obligations for Employer-Provided Health Coverage
"Although mandatory reporting on Form W-2 is a year away, the time for action is now. Employers should now (or very soon) begin discussions with their payroll departments (or outside payroll service providers) and create a schedule of what information is needed, who will provide it, and who will take the lead in overseeing all tasks, so that compliance with the reporting requirement does not slide to the end of the year, and become an overwhelming endeavor." (Davis Wright Tremaine LLP)
[Guidance Overview] Two New Cafeteria Plan Requirements Begin Affecting Plans in 2013
"Two new requirements apply to cafeteria plans in 2013 but plan administrators may need to start planning for these changes this year. The first is likely the most well-known: a new annual limit on employee contributions to health FSAs. The second may be more surprising: W-2 reporting of employer contributions to Health FSAs." (Wolters Kluwer Law & Business / ftwilliam.com)
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