Five Top Tips for Benefit Plan Communications
The Employee Retirement Income Security Act (ERISA) is a federal law establishing minimum standards for employee health benefit and retirement plans. While an employer is not required to establish a plan, ERISA does require those who establish and administer plans to meet certain standards. For example, plan administrators must provide participants written disclosures, such as a summary plan description (SPD) in a clear and easy to understand format about the company’s employee benefit plans.
Supreme Court Rules SPD Statements not Subject To ERISA
In a recent court ruling, the US Supreme Court unanimously ruled that inaccurate or misleading SPD statements were not subject to ERISA enforcement penalties or remedies. Regardless, employers should consider these five areas regarding benefit plan communications:
- Summary Plan Descriptions
- Communications Officer
- Regular Reviews
- Transparency in Changes
- Non-Summary Plan Descriptions
Learn More About the Five Top Tips for Benefit Plan Communications
To find get more details about each of the five top tips for benefit plan communications, be sure to read the featured article by the HR pros at MyHRSupportCenter, Five Top Tips for Benefit Plan Communications. If you’re not yet signed up or would like a free trial of MyHRSupportCenter, contact Vision Payroll today.
Phyllis Borzi, Assistant Secretary of Labor of EBSA
The
Employee Benefits Security Administration (EBSA)has given notice that it will hold a hearing to consider issues relating to the disclosure of fee, conflict of interest and other information by service providers to group health, disability, severance and other employee welfare benefit plans under §408(b)(2) of the Employee Retirement Income Security Act (ERISA).
Hearing to Be Held in Washington, DC
The hearing will be held on December 7, 2010, beginning at 9 am, EST, at the US Department of Labor, Room S-4215 (A-C), 200 Constitution Avenue, NW, Washington, DC 20210.
Meeting Agenda Has Been Released
The agenda for the hearing on disclosure of fees and expenses to welfare plan fiduciaries has been released and is available for download from the Vision Payroll website.
The Internal Revenue Service (IRS) recently released Notice 2009-66, Automatic Enrollment in SIMPLE IRAs. Notice 2009-66, in question-and-answer format, provides rules for employers that maintain SIMPLE IRA plans. It confirms that SIMPLE IRAs may do the following:
- Include an automatic contribution arrangement;
- Provide that default salary reduction contributions made under an automatic contribution arrangement are made only for employees who are first eligible under the SIMPLE IRA plan on or after the effective date of the automatic contribution arrangement and who do not make an affirmative election;
- Provide that the percentage of compensation at which default salary reduction contributions under an automatic contribution arrangement are made for an employee increases based on the number of years or portions of years for which default salary reduction contributions have been made for the employee.
Notice 2009-66 also reviews the changes in notice requirements for SIMPLE IRAs that include an automatic contribution arrangement, explains the transfer rights that employees must receive during their 60-day election period, and confirms that if the requirements of the regulations under §404(c)(5) of the Employee Retirement Income Security Act of 1974 (“ERISA”) are met, fiduciary relief will apply with respect to the investment of default salary reduction contributions in default investments.
Contact Vision Payroll if you have any further questions on Notice 2009-66.
On January 21, 2009, the US Department of Labor (DOL) published at 74 FR 3822 “final rules under the Employee Retirement Income Security Act, and parallel provisions in the Internal Revenue Code of 1986, relating to the provision of investment advice by a fiduciary adviser to participants and beneficiaries in participant-directed individual account plans, such as 401(k) plans, and beneficiaries of individual retirement accounts (and certain similar plans). These rules [affected] sponsors, fiduciaries, participants and beneficiaries of participant-directed individual account plans, as well as providers of investment and investment advice related services to such plans.”
On January 20, 2009 Rahm Emanuel, Assistant to the President and Chief of Staff, had “directed Agency Heads to consider extending for 60 days the effective date of regulations that have been published in the Federal Register but not yet taken effect.” Pursuant to that memo, the [DOL] announced recently that it was delaying the effective date of those rules from March 23, 2009 to May 22, 2009. This will give the DOL “time to review legal and policy issues raised by many of the 26 public comment letters [it] received.”
Contact Vision Payroll if you have any questions on this delay.
Comments Off on Department of Labor Extends Effective Date of Rules on 401(k) and IRA Investment Advice
The US Department of Labor proposed a rule change that would require participants in 401(k) plans to receive “investment-related information in a comparative chart or similar format.” The chart could be based on a model chart designed by the Department of Labor or a plan fiduciary could design a different chart or use a comparative format to relay the information. On a regular basis, participants would receive “basic information about the plan and its investment options, such as what options are available under the plan, how to give investment instructions, investment returns and fees and expenses, and how to obtain more detailed information.” The proposed regulation would be effective for plan years beginning after December 31, 2008.
Comments Off on 401(k) Participants to Receive Improved Disclosure of Fees and Expenses
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