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Will They or Won’t They…Proposal of a New Definition of Fiduciary Under ERISA

February 20, 2014

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For some time now, there have been rumblings of imminent issuance of guidance to amend the definition of fiduciary under ERISA.

This saga first began in October of 2010 when  the Department of Labor’s EBSA proposed a new rule that would broaden the current definition of the term fiduciary under ERISA and extend such status to “any person who provides investment advice to plans for a fee or other compensation.”

Although the proposed rule mirrored the current definition of a fiduciary as stated in Section 3(21)(A)(ii) of ERISA in many regards, the prior DOL regulations limit the meaning of the term “investment advice” with a five-part test; all elements of which must be met before a person will be considered a fiduciary. The specificity of this regulation eliminates investment advisers from being considered fiduciaries under ERISA if they do not meet all the elements of the test.

Ways and Means Releases Two Bills that Would Limit the Reach of the Employer Mandate

On February 4, 2014, the Committee on Ways and Means sent two bills to the House that, if enacted, would affect the requirement that employers share responsibility for health coverage costs by narrowing the definition of “full-time employee” for purposes of the employer mandate provisions of the Affordable Care Act (“ACA”).

The ACA includes employer shared responsibility provisions that are applicable to employers with 50 or more full-time employees.  According to these “employer mandate” or “play or pay” provisions of the ACA, such employers must either provide adequate health insurance coverage for their full-time employees or pay a penalty.  Currently, the ACA generally provides that a full-time employee is one who performs at least 30 hours of service per week in any given month.

The first bill (H.R. 2575, Save American Workers Act of 2014) working its way through Congress was drafted in response to concerns

The Final “Play or Pay” Regulations Have Arrived!

The Final “Play or Pay” Regulations Have Arrived!

February 18, 2014

Authored by: Denise Erwin and Lisa Van Fleet

The long awaited final regulations regarding the employer shared responsibility provisions of the Affordable Care Act were released on February 10, 2014.  They offer new transition relief and provide much needed guidance in several areas including how to determine which employees are “full-time” for purposes of the mandate.  Although the 59 pages of regulations will surely provide ample fodder for numerous future posts, we’ll start with a rundown of some of the most notable provisions:

New Transition Relief

Employers with 50-99 full time employees have an additional year to comply

    The new compliance date for these employers is January 1, 2016 (or the first day of new plan year beginning in 2016 for non-calendar year plans).  In order to avail themselves of the transition relief, these employers must certify  that they satisfy the following eligibility conditions:

AOL, ACA, & 401(k)

AOL, ACA, & 401(k)

February 13, 2014

Authored by: Chris Rylands

As was widely reported last week, and subsequently reversed on Friday, America Online’s CEO announced that, due to a $7.1 million cost increase resulting from the Affordable Care Act, AOL was going to change how it made its 401(k) matching contribution in order to offset costs.  In short, AOL would have imposed a requirement that employees be employed on the last day of the plan year to receive the match.  For employees who leave during the year, the match would be $0.  After an employee uproar, AOL reversed course.

AOL was (predictably) being criticized by ACA supporters for blaming the ACA and was (predictably) applauded by ACA opponents as providing further evidence that the ACA is harmful to the economy.  The fact is, AOL is not the first employer to suggest that ACA is increasing costs.  A study done by Deloitte, and reported here, showed

Harkin-ing Back to Pensions

Harkin-ing Back to Pensions

February 12, 2014

Authored by: Chris Rylands

Senator Tom Harkin (D-IA) recently proposed legislative language for his USA Retirement Funds that we initially wrote about last year.  The new proposed legislation would establish these USA Retirement Funds, which would be privately run by non-profits, employer associations, employee organizations, financial institutions and other organizations approved by the DOL.  The Funds incorporate some defined contribution and some defined benefit plan features.

Like a pension plan:

  • The funds would be independently managed, rather than participant-directed.
  • The benefits would be paid over a person’s life with survivor benefits and certain spousal protections (although some DC plans do offer these features as well).

Like a defined contribution plan:

  • It would have employee payroll deduction contributions, more like the current 401(k) plan system, and individuals would be automatically enrolled.
  • Employee contributions would be capped at $10,000/year.
  • Employer contributions would be optional and capped at $5,000/year (indexed

Health Insurance Marketplace Update… State Grants to Assist in Progress

The Director of the White House’s Office of Health Reform, Jeanne Lambrew, reportedly announced recently at a health services and policy research conference that the Obama administration hopes to “ratchet up” grants for the State Innovation Models Initiative in 2014 to aid in development of the marketplace throughout this year.

As described on CMS’s website, all states with the exception of Alaska have applied for and received differing level of grants to establish a Health Insurance Marketplace.  Grant levels are impacted by the pace at which states are progressing and, as reported by CMS, “[s]tates that are moving ahead on a faster pace can apply for multi-year funding, known as level two establishment grants. States that are making progress in establishing a Marketplace through a step-by-step approach can apply for funding for each project year, known as level one establishment grants.”  The Kaiser Family Foundation is tracking the

Changing the Savings Culture by Executive Fiat – The New myRA

Changing the Savings Culture by Executive Fiat – The New myRA

February 4, 2014

Authored by: benefitsbclp

Americans are notoriously poor savers.  Research shows that unless a savings program like a 401(k) plan is offered at the workplace, Americans do not save regularly.  As the retirement savings model has moved away from a guaranteed income model found in defined benefit plans to the requisite self-sufficiency of savings through a defined contribution arrangement, pressure has been placed on the retirement system to make certain that American workers have sufficient assets for a dignified retirement.

In an effort to change the non-saving culture, the Treasury Department, as ordered by the President without the need for Congressional approval, is developing the myRA (my Retirement Account) to give people the opportunity to save in what should be a simple and straightforward manner.  The myRA (and note, Treasury says it is not pronounced “Myra”) is intended to supplement Social Security and other possible savings.  It is not

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