New Roth Conversion Provisions in 401(k) Retirement Plans

The legislation to avoid the “Fiscal Cliff” did not spawn widespread retirement plan changes as many had feared. However, there is a minor change related to Roth conversions in eligible retirement plans. 401(k) plans that allowed for Roth 401(k) contributions also allowed for the conversion of participant accounts to Roth accounts, but only if the participant had a distributable event. Such events are typically termination of employment, reaching normal retirement age, reaching early retirement age, permanent disability, death, or attainment of age 59 ½. Under the new legislation, participants can Continue reading »

Affordable Care Act (ACA) Guidance Has Finally Begun

On November 20, 2012, Affordable Care Act guidance was issued in the form of over 300 pages of proposed regulations. The guidance is broken into three parts: 1) requirements for essential health benefits, actuarial value, and other exchange related requirements; 2) various market reform initiatives; and 3) regulations related to employee wellness programs.

At this time, the proposed regulations related to the exchange requirements, as well as the market reform initiatives, will be more meaningful to industry practitioners. The proposed regulations related to wellness programs will be of greatest interest to employers.

In general, as of January 1, 2014, health plans will not be able to underwrite based on health status. Wellness programs have been granted a limited exemption. The maximum allowable reward under a wellness program as part of a group health plan has increased from twenty to Continue reading »

Form 5500 Filing Relief for Plan Sponsors Impacted by Hurricane Sandy

The IRS announced it is granting relief to benefit plan sponsors affected by Hurricane Sandy. This relief also includes plan providers whose services impact the filing of Form 5500. In general, plans in the affected areas will have until November 7, 2012 to file returns that otherwise would have been due October 31, 2012.

Relief is automatic, with no action required by plan sponsors. In the event a notice for delinquent filing is received, then the impact of Hurricane Sandy should be referenced in the plan sponsor’s reasonable cause statement.  As additional details emerge regarding the storm’s impact, additional filing relief Continue reading »

Employers’ 2012 Affordable Care Act To Do List

As a result of the Supreme Court upholding the Affordable Care Act (ACA), employers must continue to satisfy its requirements. In general, employer-sponsored group health plans that provide applicable employer-sponsored coverage are subject to ACA. There are a few limited exceptions, but most fully insured and self-insured group health plans are covered. If an employer determines their health benefits are covered, then they have several action items to address Continue reading »

Even Simplified Employee Pensions Aren’t Always So Simple

Retirement plan sponsors and vendors alike will all tell you that nothing in the world of retirement plans is truly simple. This was supported by the findings of the Employee Plans Compliance Unit’s recent SEP Plan Compliance Check project. The project revealed an abundance of errors by both SEP plan sponsors and financial institutions.

A SEP is designed to allow small employers to provide retirement benefits to its employees without getting bogged down in all of the rules associated with the more complex qualified plans like 401(k) plans and the like.  SEPs are not subject to the Employee Retirement Income Securities Act of 1974 (ERISA), do not have a 5500 filing requirement with the DOL and their assets are invested in individual retirement accounts (IRAs). While these differences make them far less complex and expensive to administer, contributions to the participants’ account still receive Continue reading »

Don’t Get Caught Sleeping on the New Participant Fee Disclosure Requirements…

After much regulatory noise over the past few years, participant fee disclosure looks to finally become a reality later this summer. While most people are currently planning their vacations, retirement plan sponsors and industry practitioners are strategizing on how to meet the new fee disclosure requirements.

Retirement plans subject to ERISA that allow for participant investment direction, including 401(k) and 403(b) plans, must provide participant fee disclosures for the first time later this year. There are two types of disclosures that must be provided to plan participants. Note that these disclosures are directly to plan participants and any financial statement disclosures are unaffected. For calendar year plans, the initial annual notice is due August 30, 2012 and the initial quarterly notice is due November 15, 2012. The annual notice must include general information on the plan’s operation and investments. Some of the required information includes plan level fees and expenses, available investments and associated costs, and fund performance compared to a benchmark. The quarterly fee disclosure must include information related to fees being paid directly by the participant.

The vast majority of retirement plan vendors have been preparing for these disclosures for the last few years and should be well prepared to assist their clients. Plan sponsors should have a game plan in place as to how and when they will be communicating with their plan participants. If not, then they should engage their plan providers as soon as possible to gain an understanding of what information they will be providing and determine if additional information is needed.

The Department of Labor and industry as a whole believes these new disclosures are very important and will have a significant impact on fee transparency. Failure to adhere to the content requirements and meet the deadlines may result in an unwanted visit from the DOL and potential penalties.

#benefitplan #participantdisclosure #erisa

Guidance on Reporting Health Plan Coverage on Form W-2

The IRS has posted a table that helps determine what employer-sponsored group health plan coverage should be included on form W-2 for years 2012 and beyond.

Determining whether or not to include some of the particulars and quirks of different medical plans as a component of wages can be tricky. This should help. For the full table click here.

What You Need to Know About 457 Plans

Does your organization have a 457 eligible deferred compensation plan?  Are you recognizing unrealized gains and loss for the change in fair value? Well, you should be. According to code section 457, the plan assets shall remain solely the property and rights of the employer subject to the claims of general creditors, therefore the plan assets should be adjusted for fair value and unrealized gains and losses should be recognized according to FASB Codification 958-320-35. FASB Codification 958-320-35-1, states that “Investments in equity securities with readily determinable fair values and all investments in debt securities shall be measured at fair value in the statement of financial position”. Because the plans assets are the sole property of the employer changes is fair value should be recognized until the assets are transferred to and become the property of the participant. The unrealized gain or loss will have a corresponding increase or decrease in a salary related expense and should be recorded in the period adjusted. According to FASB codification 710-10-25-9, the costs associated with an individual year of the employee’s service should be recognized in that year.

New Filing Requirement for Retirement Plan Administrators…Well Sort Of

Would you believe that a fairly large number of employees lose track of the retirement plan benefits that they are entitled to from their former employer? It occurs more often than you would think for a variety of reasons, from not knowing they had any benefits to moving and not giving their former employer a forwarding address. Often times these “forgotten” benefits end up with state governments as unclaimed property.

In the past, the regulatory agencies in-charge of overseeing retirement plans have helped the Social Security Administration “SSA” keep track of these benefits once an employee leaves their employer. Most retirement plan sponsors likely had no idea this reporting process was taking place, likely because it was routinely occurring as part of the Plan’s annual Form 5500 tax filing process.  As part of the Form 5500 filing, former employees with unpaid retirement benefits were reported to the SSA, identified by their social security number, via the Schedule SSA.

The 2009 Form 5500 process was modified such that all filings have to be filed electronically and subsequently posted on-line for public inspection. The resulting public inspection caused the Department of Labor to suspend the filing of the Schedule SSA with the Form 5500. Recently, the IRS formally announced that a new separate filing would be required to replace the obsolete Schedule SSA. In Announcement 2011-21, the IRS details the new process and identifies the form as 8955-SSA.

Plan sponsors should be aware that the 2009 and 2010 8955-SSA is due August 1, 2011. Subsequent year’s filings will follow the same deadline guidelines associated with the Form 5500.

If you have any questions regarding this new filing process, please contact Mark Flanagan of Aronson LLC at 301-231-6257.

403(b) Plan Sponsors Finally Focused on New Requirements

Nonprofit organizations and the practicing community have been diligently working on the changes that represent the new world of 403(b) plans. Plan document requirements, rules clarifications, fiduciary considerations and reporting enhancements are all part this new environment.

Aronson & Company has been working to educate its clients and associates in an effort to make this transition as smooth as possible. We have developed the “403(b) Plan Resources Page” at http://www.aronsoncompany.com/EBP/403b.asp for this purpose.

If you should have any questions or need additional information, please contact Mark Flanagan of the Benefit Plan Services Group at 301-231-6257.