IRS Releases Retirement Plan Contribution Limits for 2014

The Internal Revenue Service (IRS) has recently released the contribution limits on Qualified Retirement Plans for 2014. HANYS Benefit Services created the attached chart that details these contribution limit increases.

If you have any questions about the COLA Limits, or would like to speak with an advisor about reviewing or establishing a plan, please contact us at (800) 388-1963 or via e-mail at hbs@hanys.org.

New Report Offers Tips for Improving Retirement Plan Participant Outcomes

Defined contribution plans are and will continue to be a mainstay in the market. But, are they working?

Improving Participant Outcomes: An Action Plan for Plan Sponsors looks at some of the factors that plan sponsors should consider when assessing the value of the retirement plan offered to their employees. It also considers steps they can take to provide greater assurance that employees will be able to generate sufficient income on which to retire.

IRS Initiates Compliance Check of 457(b) Top Hat Plans

Earlier this year, the Internal Revenue Service (IRS) announced that its Employee Plans Compliance Unit (EPCU) would begin a compliance check of certain 457(b) plans maintained by non-governmental, tax-exempt entities. These plans, commonly referred to as “Top Hat” plans, are frequently offered by tax-exempt organizations in addition to other qualified retirement plans.

The good news is that the extent of the compliance check is fairly limited. Letters and a questionnaire will be sent to 200 tax-exempt organizations in fiscal year 2013, and another 200 will be sent in fiscal year 2014. Employers will be selected for review based on information contained on 2011 Form W-2 and Form 990.

Avoiding Fiduciary Liability - A Common Sense Approach

The Employee Retirement Income Security Act of 1974 (ERISA) sets the minimum standards for pension plans in the private industry. ERISA also requires accountability of plan fiduciaries which generally would include plan trustees, plan administrators, and members of the plan’s investment committee. The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.

Target Date Retirement Funds - TIPS for ERISA Plan Fiduciaries

The Plan Sponsor Council of America (PSCA) recently released the 2013 403(b) Plan Survey. The survey showed that 73.6% of plans offer target date funds (TDF) as an investment option. Similar findings were noted for 401(k) plans. Additionally, many plan sponsors have identified TDFs as their plan’s qualified default investment alternative (QDIA). Target date funds can be an attractive investment option for employees who do not want to actively manage their retirement portfolio. The inflow of monies into TDFs in recent years reflects the growing popularity of these types of investments.

HSA Questions and Answers

This article  sets out Questions and Answers regarding Health Savings Accounts (HSAs), as provided by the Internal Revenue Service (IRS) in Notice 2008-59. The Notice addresses the following topics related to HSAs:

• Important definitions
• Distributions from HSAs
• Eligible individuals
• Prohibited transactions
• High deductible health plans (HDHPs)
• Establishing an HSA
• Contributions to HSAs
• Administrative fees

Please read below for more information.

Metal Levels for Qualified Health Plans

Beginning in 2014, the Affordable Care Act (ACA) requires health plans offered through an Exchange, or qualified health plans (QHPs), to meet certain levels of actuarial value. ACA’s required actuarial value levels are referred to as “metal levels”—bronze, silver, gold and platinum.

Employer Mandate Penalties Delayed Until 2015

The Obama Administration has postponed the Affordable Care Act (ACA) employer mandate penalties for one year, until 2015. The Department of the Treasury announced the delay on July 2, 2013, along with a similar delay for information reporting by employers, health insurance issuers and self-funded plan sponsors.

The delay does not affect any other provision of the ACA, including individuals’ access to premium tax credits for coverage through an Exchange. The Treasury plans to issue more formal information about the delay within a week.

2014 Compliance Checklist

The Affordable Care Act (ACA), which was signed into law in March 2010, put in place comprehensive health coverage reform, with effective dates spread out over a period of four years and beyond. Some of ACA’s reform initiatives are already in effect for employers and their group health plans, such as the Form W-2 reporting requirement for large employers and the requirement for non-grandfathered health plans to cover certain preventive care services without cost-sharing.

Many of ACA’s key reform initiatives will become effective in 2014. Key ACA reforms that will affect employers in 2014 include health plan design changes, increased wellness program incentives, a new reinsurance fee, the employer “pay or play” mandate, and additional reporting requirements. To prepare for this next phase of ACA reform, employers should review upcoming requirements and make sure they have a compliance strategy in place.

This Legislative Brief provides a health care reform compliance checklist for 2014. Please contact HANYS Benefit Services for assistance or if you have questions about changes that were required in previous years.

DOL Issues Model Exchange Notice and Sets Compliance Deadline

Beginning January 1, 2014, individuals and employees of small businesses will have access to insurance coverage through the Affordable Care Act’s (ACA) health insurance exchanges (Exchanges). Open enrollment under the Exchanges will begin October 1, 2013.  ACA requires employers to provide all new hires and current employees with a written notice about ACA’s Exchanges.  This requirement is found in Section 18B of the Fair Labor Standards Act (FLSA).

Additional FAQs Released on Summary of Benefits and Coverage

The Affordable Care Act (ACA) requires health plans and health insurance issuers to provide a summary of benefits and coverage (SBC) to applicants and enrollees. The SBC is intended to be a short, simple explanation about the health plan’s benefits and coverage than can help consumers more easily compare plan options. 

On April 23, 2013, the U.S. Department of Labor (DOL), Department of Health and Human Services (HHS), and the U.S. Treasury (the Departments) issued Frequently Asked Questions (FAQs Part XIV) on the SBC requirement for the second year of its applicability. This guidance was provided in addition to the final regulations issued on February 14, 2012 and three prior sets of FAQs related to the SBC rules (FAQs Parts VIII, IX and X).

Proposed Rule Released on Minimum Value and Affordability

On May 3, 2013, the Internal Revenue Service (IRS) released a proposed rule on the minimum value and affordability rules under the Affordable Care Act (ACA).  In this proposed rule, IRS provides guidance on determining whether health coverage under an employer-sponsored plan is affordable and provides minimum value for purposes of determining the employer “pay or play” penalties.  In particular, the proposed regulation:

• explains how to calculate minimum value (MV);
• outlines special rules for determining how health reimbursement arrangements (HRAs), health savings accounts (HSAs) and wellness program incentives are counted in determining MV and affordability; and
• provides new safe harbors for determining MV.

This proposed rule would apply for tax years ending after December 31, 2013.

Final Rule Issued on HIPAA Privacy and Security Protections

The Health Insurance Portability and Accountability Act (HIPAA) of 1996 is a broad federal law regarding health coverage. It contains provisions related to administrative simplification, including:

• privacy and security of personally identifiable health information (privacy and security rules);
• enforcement of HIPAA requirements, including investigations, hearings, and penalties for violations (enforcement rule); and
• reporting requirements for breaches of unsecured protected health information (breach notification rule).

DOL Releases Final FMLA Regulations

On February 6, 2013, the U.S. Department of Labor (DOL) marked the 20th anniversary of the signing of the Family and Medical Leave Act (FMLA) by releasing a set of final FMLA regulations. The final regulations, which become effective on March 8, 2013, implement two statutory expansions of FMLA leave protections. According to DOL:

• The first expansion provides families of eligible veterans with the same job-protected FMLA leave currently available to families of military service members, and it enables more military families to take leave for activities that arise when a service member is deployed. 
• The second expansion modifies existing rules so that airline personnel and flight crews are better able to make use of FMLA protections. 

Exchange Notice Requirements Delayed

The Affordable Care Act (ACA) requires employers to provide all new hires and current employees with a written notice about ACA’s Health Insurance Exchanges, effective March 1, 2013.

On January 24, 2013, the U.S. Department of Labor (DOL) announced that employers will not be held to the March 1, 2013 deadline. They will not have to comply until final regulations are issued and a final effective date is specified.

This HANYS Benefit Services Legislative Brief details the expected timeline for the Exchange notice requirements.

What Fiscal Cliff Tax Changes Will Mean for Non-Profit Executives and Senior Management

As part of the agreement stemming from the "fiscal cliff" negotiations, Congress adopted tax changes in 2013 that could bring challenges for non-profit organizations and their senior executives and management staff. Executive compensation has always been a complex issue, and these new tax increases may present a greater need for executives and management staff to reduce their includable compensation to offset some of the anticipated tax increases.

Tax changes taking effect this year that will likely affect highly compensated individuals include:

• an increase in the highest, marginal tax bracket to 39.6%, up from 35%;
• significantly reducing the impact of deductions for mortgage interest, state and local income taxes, property taxes, and charitable contributions; and
• an increase in the long-term capital gains and dividend taxes.

Most individuals with enough income to make them subject to these tax increases will likely be eligible for a non-profit organization’s 457(b) retirement plan. This could afford them an opportunity to save, with pre-tax dollars, up to an additional $17,500 each year.

If you sponsor a 457(b) plan, now would be a great time to promote its usage, expand its availability, or make your senior management aware of the potential value of this plan.

For more information on 457(b) plans or 2013 tax changes, contact Jim Kelley at (518) 431-7737 or at jkelley@hanys.org