Category Archives: Benefit News

Federal spending compromise bill includes retirement and health benefit plan provisions

Congress has approved two bills to fund the federal government for the remainder of fiscal year (FY) 2020, which ends September 30, 2020. The president will sign the bills.

One of the bills, the “Further Consolidated Appropriations Act, 2020” (H.R.1865), cleared the House on December 17 by a vote of 297-140. It covers “domestic” spending items and includes provisions directly or indirectly affecting benefit programs sponsored by employers. The Senate approved the measure on December 19 by a vote of 71-23.

In the retirement arena, H.R.1865 includes provisions from the “Setting Every Community Up for Retirement Enhancement (SECURE) Act,” which cleared the House in May. The bill calls for:

  • Simplification of the 401(k) safe harbor rules
  • An increase, from age 70-1/2 to age 72, in the required beginning date for mandatory distributions
  • A requirement that 401(k) plans enable participation by part-time workers who satisfy a specified employment service rule
  • A requirement that defined contribution (DC) plan (and IRA) distributions generally be made to nonspouse beneficiaries within 10 years of the death of the account holder
  • Permission for DC plans, including 403(b) or governmental 457(b) plans, to make direct trustee-to-trustee transfers of lifetime income investments to another employer-sponsored retirement plan (or IRA)

The bill also includes provisions targeting specific retirement plan types, such as “open” multiple employer plans (MEPs) for unrelated employers; Pension Benefit Guaranty Corporation (PBGC) premiums paid by cooperative and small employer charity (CSEC) pensions; retirement account rules for church-controlled organizations; special rules for individuals when certain natural disasters strike; funding rules for community newspapers; and tax credits for small-employer plan start-up costs. In addition, the bill significantly increases the penalties for retirement plan filings and for employers failing to file withholding notices, and includes “administrative improvements” to plan adoption and filing dates, disclosures, and nondiscrimination requirements for “closed” pension plans.

In the health benefits area, the bill permanently repeals the 40% excise tax (the “Cadillac” tax) on “high-cost” employer-sponsored health plans and the annual health insurance tax (HIT) on health insurers. H.R.1865 extends the fee supporting the Patient-Centered Outcomes Research Institute (PCORI) through FY2029 and similarly extends the fees on health insurers and self-insured health plans of $2 per average number of lives covered.

The bill also includes one-year tax “extenders” (through 2020) for the tax credit for employers that provide certain paid family leave, the Work Opportunity Tax Credit for hiring individuals from targeted groups, and the Indian Employment tax credit for businesses that employ American Indians or their spouses. It also extends the credit for health insurance coverage for certain individuals receiving Trade Adjustment Assistance or pension benefits paid by the PBGC.

A forthcoming Client Action Bulletin will provide further details, including the effective dates of the various provisions in H.R.1865. For additional information about the bill’s provisions affecting employer-sponsored retirement or health benefit programs, contact your Milliman consultant.

PBGC annual report summary for Multiemployer Program

On November 18, 2019, the Pension Benefit Guaranty Corporation (PBGC) released its annual report for fiscal year 2019, which reviews the financial condition of the agency’s Multiemployer Program and Single-Employer Program. This Multiemployer Alert by Milliman’s Noah Llanda focuses on the PBGC annual report as it pertains to the PBGC Multiemployer Program.

2020 key administrative dates and deadlines for calendar-year DC retirement plans

Milliman’s 2020 key administrative dates and deadlines for calendar-year defined contribution (DC) retirement plans is now available. The annotated list includes relevant 2020 administrative dates encountered by most defined contribution plans (401[k], 403[b], profit sharing, etc.), with deadlines for quarterly benefit statements, participant disclosures, and safe harbor notices. The calendar also provides short descriptions of the actions required to meet each deadline.

To download the calendar, click here.

Required minimum distributions: IRS proposes updated tables

The Internal Revenue Service (IRS) has issued a proposed rule that would amend the life expectancy and distribution period tables used to calculate required minimum distributions (RMDs) from qualified retirement plans, profit-sharing and stock bonus plans, IRAs and annuities, 403(b) and 457 plans, and certain other tax-favored employer-provided retirement arrangements. The IRS proposes to apply the updated tables after it issues the rule in final form and no sooner than for distributions beginning on or after January 1, 2021. Therefore, RMDs for 2020 are generally not affected and cannot be calculated using the new proposed tables.

The proposed updated tables reflect longer life expectancies for males and females than under current tables, thereby resulting in smaller RMDs and longer payout periods.

For more perspective, read this Milliman Client Action Bulletin.

2020 key administrative dates and deadlines for calendar-year single-employer defined benefit retirement plans

Milliman’s 2020 key administrative dates and deadlines for calendar-year single-employer defined benefit retirement plans is now available. The calendar lists relevant 2020 administrative dates encountered by most single-employer defined benefit plans, including deadlines for quarterly contributions, determination letter applications, and funding notices. The calendar also provides a short description of the actions required to meet each deadline.

To download the calendar, click here.

DoL proposes new voluntary electronic disclosure rule for retirement plans

The U.S. Department of Labor (DoL) released a proposed rule that, if finalized, will provide an additional “safe harbor” for plan administrators to use electronic media to furnish retirement plan information to participants and beneficiaries. The proposed rule would allow for such disclosures via an internet posting for plan participants and beneficiaries with valid electronic addresses. However, participants and beneficiaries would to be able to request paper disclosures and entirely opt out of electronic delivery.

The proposed safe harbor does not apply to employee welfare benefit plans, such as disability or group health plans. The DoL intends to study the application of this new safe harbor to disclosures required for such plans. The proposed rule states that commenters should feel free to respond to the 21 questions contained in the proposed rule for both retirement and welfare benefit plans.

For more perspective, read this Milliman Client Action Bulletin.