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Archive for the ‘Benefit News’ Category

U.S. Supreme Court rules in favor of same-sex marriages and the Affordable Care Act subsidies

July 3rd, 2015 No comments

The U.S. Supreme Court has handed down decisions on two significant cases that have direct or indirect implications for employer-sponsored retirement and healthcare benefit plans. This Client Action Bulletin summarizes these cases of interest for employers that sponsor such plans.

Regulatory roundup

June 29th, 2015 No comments

More retirement-related regulatory news for plan sponsors, including links to detailed information.

Supreme Court rules state bans on same-sex marriage are unconstitutional
The U.S. Supreme Court held that the 14th Amendment requires a state to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when a marriage was lawfully licensed and performed out of state.

To read the court’s opinion paper, click here.

Census releases quarterly survey of public pension funds
The U.S. Census released the 2015 1st Quarter Survey of Public Pension Funds. The 100 largest U.S. public employee retirement systems had $3.398 trillion in assets as of March 31, a 1.6% increase from three months earlier, according to the survey. The increase was due primarily to $80.2 billion in earnings on investments and $34.3 billion in contributions, partially offset by $61.8 billion in benefit payments in the first quarter.

To read the entire survey, click here.

SEC establishing retirement project
The U.S. Securities and Exchange Commission (SEC) Office of Compliance Inspections and Examinations (OCIE) is launching a multiyear Retirement-Targeted Industry Reviews and Examinations (ReTIRE) Initiative.

OCIE, through the National Examination Program (NEP), will conduct examinations of SEC-registered investment advisers and broker-dealers (collectively, registrants) under the ReTIRE Initiative that will focus on certain higher-risk areas of registrants’ sales, investment, and oversight processes, with particular emphasis on select areas where retail investors saving for retirement may be harmed.

For more information, click here.

Regulatory roundup

June 23rd, 2015 No comments

More retirement-related regulatory news for plan sponsors, including links to detailed information.

IRS releases temporary and proposed regulations on suspension of MPRA benefits
The Internal Revenue Service (IRS) has released temporary regulations on suspension of benefits under the Multiemployer Pension Reform Act (MPRA). These temporary regulations affect multiemployer pension plans that are projected to have insufficient funds, at some point in the future, to pay the full benefits to which individuals will be entitled under the plans (referred to as plans in “critical and declining status”).

To read the temporary regulations, click here.
To read the proposed regulations, click here.

IRS releases procedures for multiemployer pension plans in critical and declining status
The IRS has released Revenue Procedure 2015-34, which describes procedures for a multiemployer defined benefit plan in critical and declining status to apply for approval of a proposed suspension of benefits under § 432(e)(9).

The revenue procedure provides that the U.S. Department of the Treasury will accept applications beginning June 19, 2015. The revenue procedure is being issued in conjunction with temporary and proposed regulations providing guidance on benefit suspensions. Section 432(e)(9) was amended by Section 201 of the Multiemployer Pension Reform Act of 2014, Division O of the Consolidated and Further Continuing Appropriations Act, 2015, Public Law 113-235 (128 Stat. 2130 [2014]).

To read Revenue Procedure 2015-34, click here.

PBGC releases interim final rule on partitions of eligible multiemployer plans
The Pension Benefit Guaranty Corporation (PBGC) has issued an interim final rule prescribing the application process and notice requirements for partitions of eligible multiemployer plans under Title IV of ERISA, as amended by the Multiemployer Pension Reform Act of 2014 (MPRA).

The interim final rule is published pursuant to Section 122 of MPRA in order to carry out the provisions of Section 4233 of ERISA. PBGC is soliciting public comments on the interim final regulation.

To learn more about the interim final rule, click here.

FASB issues technical corrections and improvements
The Financial Accounting Standards Board (FASB) released Accounting Standards Update (ASU) No. 2015-10, Technical Corrections and Improvements. The amendments contained in this ASU include items raised to the Board through the codification’s feedback mechanism.

Regarding employee benefits, the ASU contains:

• Amendments to Subtopic 715-30, Compensation—Retirement Benefits—Defined Benefit Plans—Pension (p. 25)
• Amendments to Subtopic 715-80, Compensation—Retirement Benefits—Multiemployer Plans Disclosure (p.26)
• Amendments to Subtopic 718-40, Compensation—Stock Compensation—Employee Stock Ownership Plans (p. 27-33)

To read the entire ASU, click here.

IASB proposed narrow-scope amendments to pension accounting standards
The International Accounting Standards Board (IASB) proposed narrow-scope amendments to pension accounting standards. The proposed changes are included in an exposure draft entitled “Remeasurement on a plan amendment, curtailment or settlement/availability of a refund from a defined benefit plan.”

When a defined benefit plan is amended, curtailed, or settled during a reporting period, the entity needs to update the assumptions about its obligation and fair value of its plan assets to calculate costs related to these changes. The proposed amendments to IAS 19 Employee Benefits specify that the entity is required to use the updated information to determine current service cost and net interest for the period followed by these changes.

To read the entire exposure draft, click here.

Regulatory roundup

June 15th, 2015 No comments

More retirement-related regulatory news for plan sponsors, including links to detailed information.

IRS issues guidance expanding preapproved determination letter program
The Internal Revenue Service (IRS) has issued Revenue Procedure 2015-36, which expands the scope of the preapproved program to include defined benefit plans containing cash balance features and defined contribution plans containing employee stock ownership plan (ESOP) features and extends the deadline for submitting on-cycle applications for opinion and advisory letters for preapproved defined benefit plans to October 30, 2015.

In addition, this revenue procedure updates Rev. Proc. 2011-49 to reflect changes made to the determination letter program in 2012. Rev. Proc. 2011-49 is superseded.

Revenue Procedure 2015-36 will appear in IRB 2015-25 dated June 22, 2015.

To read the entire Revenue Procedure, click here.

SSA issues final rule on 60-month period of employment requirement for government pension offset exemption
The Social Security Administration (SSA) has issued a final rule that adopts, with clarifying changes, the proposed rule previously published in the Federal Register on August 3, 2007. This final rule revises the SSA’s Government Pension Offset (GPO) regulations to reflect changes to the Social Security Act (Act) made by section 9007 of the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987) and Section 418 of the Social Security Protection Act of 2004 (SSPA). These regulations explain how and when the SSA will reduce the Social Security spouse’s benefit for some people who receive federal, state, or local government pensions if Social Security did not cover their government work.

To read the entire final rule, click here.

IRS updates listing of required modifications for cash balance and employee stock ownership plans
The IRS has published a collection of information packages designed to assist sponsors who are drafting or redrafting plans to conform with applicable law and regulations related to cash balance and employee stock ownership plans.

Document release: ERISA Form 8955-SSA, 2-D Barcode Standards
This document covers only the 2D barcode on ERISA Form 8955-SSA, valid for plan years 2009 to 2011. The 2D barcode is intended to represent the information on the paper form. Barcodes for this form are generated from two sources:

  • The IRS Form 8955-SSA Fill-able PDF produces a barcode after printing the form in Adobe.
  • The approved software vendors for Form 8955-SSA produce a barcode when printing their forms from their software packages.

To read the entire document, click here.

IRS explanation, worksheet (alert guidelines), and deficiency check sheets
The IRS has issued three explanations, worksheets (alert guidelines), and deficiency check sheets:

IRS posts nonqualified deferred compensation audit techniques guide
The IRS has posted a guide on nonqualified deferred compensation audit techniques. The guide provides:

  • An overview
  • Audit potential
  • Compliance focus
  • General audit steps

To access the guide, click here.

IRS issues latest Employee Plans News
The IRS has issued the June 10, 2015, edition of its newsletter Employee Plans News. The latest edition contains the following content:

  • Preapproved plan program expanded to include cash balance plans and ESOPs
  • Sample plan language (listings of required modifications) for ESOPs, and cash balance and 403(b) plans
  • Guidance for permanent program for late 5500EZ filers
  • IRS Nationwide Tax Forums begin in July
  • Changes to Forms 5500 for 2014
  • IRS names seven new members to Advisory Committee on Tax Exempt and Government Entities (ACT) panel
  • Updated Voluntary Correction Program fee chart

To read the newsletter, click here.

IRS updates 403(b) fix-it guide
The IRS has updated its 403(b) Plan Fix-It Guide. The document contains charts and explanations that address potential issues in plan administration. It includes how to find, fix, and avoid common plan errors, with hypertext links to online forms and guidance.

To access the fix-it guide, click here.

Regulatory roundup

June 8th, 2015 No comments

More retirement-related regulatory news for plan sponsors, including links to detailed information.

PBGC releases data tables
The Pension Benefit Guaranty Corporation (PBGC) has released its annual update on pension data. The data tables cover information recently reported by pension plans and the PBGC, comparing them with values for prior years.

The data tables provide researchers, journalists, and others interested in the federal pension insurance program easily accessible, detailed statistics for the single-employer and multiemployer plans that PBGC insures. The tables include the numbers of people and plans that the PBGC protects, the number of people receiving or eligible to receive benefits from the PBGC as well as the benefits paid to them, claims against the PBGC, the funded status of PBGC-protected plans, and other statistics.

To read the latest PBGC data tables, click here.

BLS: Automatic enrollment, employer match rates, and employee compensation in 401(k) plans
The latest Monthly Labor Review article on the U.S. Bureau of Labor Statistics (BLS) website uses restricted-access employer-level micro data from the National Compensation Survey to examine the relationship between automatic enrollment and employee compensation in 401(k) plans.

To read the entire article, click here.

GAO report: Most households approaching retirement have low savings
The U.S. Government Accountability Office (GAO) recently released the report “Most households approaching retirement have low savings” (GAO-15-419). According to this report, many retirees and workers approaching retirement have limited financial resources. About half of households age 55 and older have no retirement savings, such as in a 401(k) plan or IRA. Additionally, many older households without retirement savings have few other resources, such as a defined benefit (DB) plan or nonretirement savings, to draw on in retirement.

To read the entire report, click here.

SEC memo addresses pay ratio disclosure
The Division of Economic and Risk Analysis of the Securities and Exchange Commission (SEC) released a memorandum to assist the SEC in developing final rules regarding pay ratio disclosure. The division analyzed the potential effects on the pay ratio calculation of the exclusion of different percentages of employees. The memorandum states that excluding some employees from the determination of median employee compensation, which some commenters suggested, can affect the calculation of that median and thus change the ratio of the annual total compensation of the principal executive officer (PEO) to the median of the annual total compensation of employees (“pay ratio”).

To read the entire memo, click here.

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U.S. Supreme Court ruling calls attention to the fiduciary duty to monitor 401(k) plan investments

June 3rd, 2015 No comments

The U.S. Supreme Court unanimously held that, although the initial selection of plan investments occurred beyond ERISA’s six-year statute of limitations, a lawsuit by participants in a 401(k) savings plan may proceed on whether the plan fiduciaries breached their continuing duty to monitor and remove imprudent trust investments (Tibble v. Edison Int’l [No. 13-550, 5/18/2015]). In so ruling, the Court found that a lawsuit against plan fiduciaries is filed in timely fashion if the participants’ claim alleging a breach of the continuing duty to monitor occurred within six years. The Court’s ruling may spur lawsuits by participants over plan fees. This Client Action Bulletin provides more perspective.

Regulatory roundup

May 26th, 2015 No comments

More retirement-related regulatory news for plan sponsors, including links to detailed information.

Supreme Court allows suits challenging fiduciary actions beyond ERISA’s 6-year claim filing period
The U.S. Supreme Court unanimously ruled that 401(k) plan participants may file a suit challenging actions of a retirement plan’s fiduciary that took place before the six-year statute of limitations period allowed by ERISA for filing a claim (Tibble v. Edison Int’l, U.S., No. 13-550, 5/18/15). In so ruling, the Court rejected three appellate courts’ views on the timing for filing lawsuits challenging plan fees.

According to the decision, courts cannot dismiss these types of challenges without considering whether plan fiduciaries have fulfilled their duties to monitor those investments during the relevant six-year window.

To read the court’s opinion paper, click here.

PBGC clarifies requirements of proposed rule on multiemployer plans
The Pension Benefit Guaranty Corporation (PBGC) has received inquiries on whether its proposed rule on mandatory e-filing for certain multiemployer notices would affect notices to participants. The proposed rule only affects notices to PBGC. As stated in the preamble, the proposed rule would require the following notices to be filed electronically with PBGC: notices of termination under part 4041A, notices of insolvency and of insolvency benefit level under parts 4245 and 4281, and applications for financial assistance under part 4281 (see page 18172, middle column). Further, the proposed rule does not involve the Multiemployer Pension Reform Act of 2014 (MPRA). Comments on the proposed rule are due June 2, 2015.

PBGC launches pilot program for smaller asset managers
The PBGC issued a press release announcing a “Smaller Asset Managers Pilot Program” to reduce barriers to competition faced by such firms while maintaining rigorous investment risk and control standards.

To read the entire press release, click here.

DOL provides flexibility in timing of annual defined contribution plan disclosures

May 15th, 2015 No comments

Sponsors of 401(k) and other participant-directed defined contribution retirement plans will have more flexibility in the timing of providing annual plan and investment disclosures to participants, under a direct final rule from the U.S. Department of Labor (DOL). Instead of disclosing the required information “at least annually,” which the agency had interpreted to mean no more than 365 days after the sponsor provided the prior annual disclosure, sponsors will have up to 14 months to do so. The modification will require disclosures to be made “at least once in any 14-month period, without regard to whether the plan operates on a calendar year or fiscal year basis.”

The change to the timing requirement will ease the administrative burdens faced by many plan sponsors and administrators.

The flexibility provided by the direct final rule is slated to be effective June 17, 2015, and will apply to disclosures made on or after that date, unless the DOL withdraws the rule before then, which would be due to adverse comments received.

The DOL’s direct final rule also announces an immediate, temporary enforcement policy (until June 17), so that plan sponsors and administrators may take advantage of the two-month grace period before the June 17 effective date, as long as they reasonably determine that doing so will benefit participants and beneficiaries. The relief granted by the enforcement policy is in addition to the one-time, 18-month “re-set” opportunity provided by the DOL’s Field Assistance Bulletin 2013-02.

For more information about the DOL’s direct final rule or a related proposed rule, please contact your Milliman consultant.

DOL proposes new “conflict of interest” fiduciary rule

May 11th, 2015 No comments

The U.S. Department of Labor (DOL) has proposed a definition of “fiduciary” that covers individuals who provide investment advice or recommendations for a fee to ERISA-covered and non-ERISA plans and participants (and IRA owners). The proposed rule aims to reduce conflicts of interest that may arise when investment advisers make recommendations that favor their own financial well-being over a client’s best interest. The proposal is the DOL’s second attempt at addressing this concern, having withdrawn a 2010 proposed rule that came under heavy criticism.

This Client Action Bulletin provides an overview of the DOL’s proposed rule and related proposed prohibited transaction exemptions (PTEs) as they apply to plan sponsors and participants (and does not cover the requirements relating to advice given to IRA owners). Although the proposed rule focuses on the defined contribution retirement plan arena, it also has implications for defined benefit plan sponsors and their advisers. In addition, the proposed rule affects a broad range of individual account plans (e.g., 403[b] arrangements), including, potentially, non-retirement programs such as health savings accounts.

Regulatory roundup

May 11th, 2015 No comments

More retirement-related regulatory news for plan sponsors, including links to detailed information.

PBGC updates premium payment addresses
The Pension Benefit Guaranty Corporation (PBGC) has updated addresses for pension plan premium payments made by electronic funds transfer outside of the agency’s electronic filing and payment system.

For more information, click here.

FASB releases accounting standards update on fair value measurement
The Financial Accounting Standards Board (FASB) has issued Accounting Standards Update 2015-07 on fair value measurement (Topic 820) disclosures for investments in certain entities that calculate net asset value per share (or its equivalent).

To read the entire FASB update, click here.

IRS: New issue of employee plans newsletter
The latest edition of the Internal Revenue Service (IRS) newsletter, Employee Plans News, provides information on changes to the employee plans (EP) determination letter application processing, new revenue procedure updates related to the Employee Plans Compliance Resolution System (EPCRS), and more.

To read the entire newsletter, click here.

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