There are approximately 1,400 multiemployer pension plans and nearly 10 percent are projected to become insolvent within the next 15 years. Plan insolvency will trigger a termination and the assessment of withdrawal liability. Collectively, these plans have over $30 billion in unfunded liabilities. These plans are now being designated as in “critical and declining status” and have the authority to reduce benefits under the changes to the law made in 2014. While those benefit cuts, which require regulatory approval, may forestall insolvency for a while, they are not going to reduce any withdrawal liability over the next 10 years.
Articles about the Employee Retirement Income Security Act (ERISA) and other issues relating to employee benefit topics
IRS Prohibits Future Annuity-to-Lump Sum Conversions for Defined Benefit Plan Retirees Currently Receiving Benefits
On July 9, 2015, the IRS released Notice 2015-49 (the βNoticeβ) informing taxpayers that the Service and the Treasury intend to amend the required minimum distribution regulations to eliminate the recent defined benefit (βDBβ) plan risk management strategy of offering lump sum payments to replace annuity payments to retirees currently receiving joint and survivor, single life, or other life annuity benefit payments.
Reducing Employee Hours to Avoid ACA Obligations to Offer Coverage Violates ERISA Β§ 510, Class Action Suit Alleges
One strategy for minimizing exposure to the employer shared responsibility penalties under the Affordable Care Act (ACA) is to minimize the number of βfull-time employeesβ β that is, the number of employers working 30 or more hours per week on average.
Health Care Reform Stands & Employers Must Now Take Action
After months of anticipation and speculation, the U.S. Supreme Court has upheld the massive health care reform law, the Patient Protection and Affordable Care Act (ACA). Surprising many who predicted the demise of the law’s individual mandate and, perhaps, the rest of the ACA with it, the Court concluded that Congress had the constitutional authority under its taxing power to require most Americans to obtain health insurance in 2014 or pay a penalty. By a 5-4 margin β Chief Justice Roberts cast the deciding vote β the Court voted in favor of upholding the individual mandate as a taxβdespite its label as a penaltyβalthough the Chief Justice, along with Justices Scalia, Kennedy, Thomas, and Alito, rejected the Obama administration’s primary argument that the individual mandate fell within Congress’s power to regulate interstate commerce. The Court also concluded that the government cannot penalize states for not expanding their Medicaid programs by taking away existing Medicaid funding.
Employers: Adapt to Obergefell
Employers must adapt to Obergefell v. Hodges. Prior to the Supreme Courtβs June 26, 2015 decision, many states did not require employers to recognize and provide benefits for married same-sex couples. Only 36 states and Washington D.C. legalized same-sex marriage. Now, the Supreme Court determined that the 14th Amendment requires states to license same-sex marriages and to recognize lawfully licensed same-sex marriages performed out-of-state. In light of this holding, employers must ensure that their policies, procedures and the benefits comport with federal law.
King v. Burwell: The Supreme Court Rules in Favor of the Administration and the Affordable Care Act Survives
The U.S. Supreme Court has once again ruled in favor of the Affordable Care Act (ACA). At issue in King. v. Burwell was whether the landmark legislation allows federal subsidies to be given to low-income consumers residing in the 34 states that did not set up their own health insurance Exchange. In a 6-3 decision, the Court answered in the affirmative, preserving subsidies for millions of Americans who purchased their health insurance through a Federal Exchange. Affirming the decision of the U.S. Court of Appeals for the Fourth Circuit, the Supreme Court opined that the tax credits are, indeed, available to individuals in states that use a Federal Exchange. The majority decision was written by Chief Justice Roberts, and joined by Justices Kennedy, Ginsberg, Breyer, Sotomayor, and Kagan, while Justices Scalia, Thomas and Alito dissented.
Supreme Court Upholds Affordable Care Act Subsidies for Coverage Purchased on Federally Facilitated State Health Care Exchanges
King v. Burwell challenges the implementation of federal insurance marketplaces under the Affordable Care Act.
Impact on Employers After Supreme Court’s Ruling to Uphold Key Provision of Affordable Care Act
In a 6-3 decision issued today, the United States Supreme Court once again upheld President Obamaβs signature legislation, the Patient Protection and Affordable Care Act, keeping the employer mandate in effect for all states β even those without their own health insurance exchange.
Supreme Court Upholds Affordable Care Act Subsidies
In the 6-3 opinion, the Supreme Court held subsidies available to Exchange enrollees under the Affordable Care Act (βACAβ) are available regardless of whether coverage is purchased through state-based or federal Exchanges. This means that individuals who get their health insurance through an Exchange established by the federal government still are eligible for tax subsidies.
Federal Agencies Issue Regulations Governing Benefit Reductions and Partitions for Underfunded Multiemployer Pension Plans
On June 17, 2015, the Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC) released several regulatory measures implementing the multiemployer pension plan amendments that were enacted in December, 2014.
Calendar Year Plans Need to File Form 5500 by July 31, 2015
Executive Summary: The Form 5500 and Form 5500-EZ are annual reports that must be filed for every employee benefit plan that covers 100 or more participants. For calendar year plans, these forms must be filed by July 31, 2015.
Supreme Court Rules Plan Fiduciaries Owe a Fiduciary Duty to Periodically Review Plan Investments
In a unanimous decision, the U.S. Supreme Court in Tibble v. Edison International held that plan fiduciaries owe an ongoing duty to review plan investments periodically to ensure compliance with their obligations under the Employee Retirement Income Security Act (ERISA). In doing so, the Court reversed the Ninth Circuit’s holding that the statute of limitations for challenges to the continued offering of an investment option begins running only at the time the investment option is selected by an ERISA plan fiduciary (absent a change in circumstances), but stopped short of defining any specific obligations apart from a “continuing duty to monitor investments and remove imprudent ones.”1 The decision reinforces the importance of maintaining and documenting a formal program for review of all investment options under an individual account plan.
Bill Seeks to Repeal Excise Tax on “Cadillac” Health Plans
An important provision of the Affordable Care Act (ACA) is a new target for repeal. On April 28, 2015, Rep. Joe Courtney (D-CT) introduced legislation (H.R. 2050) to eliminate the 40% excise tax on high-premium “Cadillac” health insurance plans. Set to take effect in 2018, the tax will apply to plans costing more than $10,200 for individual-only coverage, and more than $27,500 for family coverage. Although referred to as a tax on “Cadillac” plans, its impact is far broader and would likely implicate many employer-sponsored plans.
Department of Labor Issues Sweeping Fiduciary Rule Proposal
On April 14, 2015, the Department of Labor (DOL) released a proposal to re-define who is rendered a “fiduciary” of an employee benefit plan under the Employee Retirement Income Security Act (ERISA) by providing investment advice to a plan or its participants or beneficiaries. In a press release, Labor Secretary Thomas Perez described the sweeping proposal as follows: “This boils down to a very simple concept: if someone is paid to give you retirement investment advice, that person should be working in your best interest.” Yet, the more than 120-page proposed rule is far from simple. Its requirements and impact on access to advice about retirement savings accounts are far from certain.
Labor Department Proposes Fiduciary Conflict of Interest Rules β Again
On April 14, 2015, the U.S. Department of Labor (DOL) reissued the long-awaited re-proposal of its regulation expanding the definition of “fiduciary” under the Employee Retirement Security Act of 1974, as amended (ERISA), and prescribing stricter conflict-of-interest rules that will apply to relationships between such fiduciaries and their customers (mainly retirement plans and IRAs). Along with the proposed regulation, the DOL proposed two related Prohibited Transaction Class Exemptions (PTCE) and amendments to six existing PTCEs that will also apply to relationships between fiduciaries and their retirement plan customers (the proposed regulation and the PTCE’s together, the “Proposal”).