Employee Benefit Plan Alert
The DOL, the IRS and HHS were active in the first two weeks of February. For example, HIGH PRIORITY: Final Fee Disclosure Regulations for Service Providers The DOL released its final fee disclosure regulations for service providers. There are teeth in these regulations which can bite a plan fiduciary as well as a service provider.
Please note that 1. The text of the final regulations can be found at http://www.dol.gov/ebsa/pdf/2012-02262-PI1.pdf.
2. The effective date for the final regulations is July 1, 2012.
3. The DOL also issued a fact sheet on the final regulations.
4. A plan fiduciary is subject to the prohibited transaction provisions of ERISA if a service provider fails to provide the required disclosures and the plan fiduciary fails to timely so notify the DOL. The DOL has posted a model notice for a plan fiduciary to use for this purpose.
5. The July 1, 2012 effective date for these final regulations means that the deadline for a plan fiduciary making the related participant fee disclosures will be August 30, 2012.
HIGH PRIORITY: Group Health Plan Disclosure Rules
The IRS, the DOL and HHS issued final group health plan disclosure rules under Obama Care which apply to self-insured as well as insured group health plans. These final rules are effective for plans years which begin on and after September 23, 2012. This effective date is intended to make the rules applicable to the up-coming open enrollment periods for 2013. The "plan sponsor" is responsible for compliance with these rules for a self-insured plan, and the insurance company is responsible for compliance for an insured plan. The related disclosure rules and guidance document can be found at www.ofr.gov.
LOWER PRIORITY: Obama Care FAQs
The IRS has published FAQs on auto-enrollment, employer shared responsibility and waiting periods under OBAMA Care. The priority factor here is based on the deadline for commenting on the FAQs, which is April 9, 2012. THE FAQs can be found at www.irs.gov/pub/irs-drop/n-12-17.pdf.
LOW PRIORITY: Longevity Annuity Contracts
Looking down the road the Treasury Department and the IRS published a package consisting of two revenue rulings and two proposed regulations which collective are intended to pave the way for participants in defined contribution plans to purchase annuity contracts, particularly what are called "longevity annuity contracts". A "longevity annuity contract" is an annuity contract under which payments start at an advanced age (say age 85, if the participant survives to that age), the purchase price for the participant is less than the price for a contract where payments start at retirement (say age 65) and which provide for payments for a participant's life after he or she reaches that advanced age (again, say age 85). This package already has sparked a debate over the appropriate disclosure for these kinds of insurance company products. The components of the package can be found at www.ofr.gov, www.irs.gov/pub/irs-drop/rr-12-03.pdf, and www.irs.gov/pub/irs-drop/rr-12-04.pdf.