Regulatory roundup

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

IRS provides more guidance on health flexible spending account reform
The Internal Revenue Service (IRS) has issued Notice 2012-40 providing guidance on the effective date of the $2,500 limit, as indexed for inflation, on salary reduction contributions to health flexible spending arrangements (health FSAs) under Section 125(i) of the Internal Revenue Code (the $2,500 limit) and on the deadline for amending plans to comply with that limit.

This notice also provides relief for certain contributions that mistakenly exceed the $2,500 limit and that are corrected in a timely manner. Finally, the notice requests comments on whether to modify the use-or-lose rule that is currently set forth in the proposed regulations with respect to health FSAs.

Notice 2012-40 will be in Internal Revenue Bulletin 2012-25, dated June 18, 2012. Download a copy of Notice 2012-40 at

DOL issued three advisory opinions
The Department of Labor (DOL) released three new advisory opinions:

2012-02A – 403(b) Plan Safe Harbor
The letter found that a tax-sheltered annuity plan under tax code Section 403(b) does not lose its safe harbor status under ERISA if the plan sponsor maintains a separate qualified tax code Section 401(a) plan.

2012-03A – Abandoned Plans
The letter found that, based on the facts and materials submitted, a retirement plan proposed by National Retirement Plan, Inc. is not an employee benefit pension plan as defined under ERISA Section 3(2).

2012-04A – Multiple Employer Plans
This regards whether a retirement savings program marketed by 401(k) Advantage LLC (Advantage) as a multiple-employer plan would be a single “employee benefit plan” within the meaning of ERISA section 3(2).

The letter found that the 401(k) plan maintained for employees of a limited-purpose corporation designed to operate the plan and for the employees of unrelated employers is not a single multiple-employer plan.

GAO finds more mental health and substance abuse exclusions in employers’ health plans
In a new report, the Government Accountability Office (GAO) found more mental health and substance abuse exclusions in employers’ 2010 and 2011 health plans in comparison to their 2008 plan years.

However, given the low overall response rate of 24% from surveyed employers, GAO Director John Dicken wrote “…Our survey results are not generalizable,” in a letter to Rep. George Miller, ranking member of the House Education and the Workforce Committee.

A summary and copy of the full report can be read here.

Steve Melek’s Behavioral Health Advisor series includes insight into a wide variety of mental health parity issues. His examination of mental health parity and quantitative treatment limits can be read here.

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