- Extension of Amortization Periods for Multiemployer Plans
- EBSA Semi-Annual Regulatory Agenda for 2011
- FAQ Released on Affordable Care Act and Mental Health Parity
- Fee Disclosure Rules for Defined Contribution Plans
- ACA’s Small Business Tax Credit Available to Employers Contributing to Certain Multiemployer Plans
Extension of Amortization Periods for Multiemployer Plans
Revenue Procedure 2010-52 describes how a multiemployer plan sponsor may request an extension under Code §431(d) of its plan’s unfunded liability amortization period. Plan sponsors may request an extension under Code §§431(b)(2)(B) or (b)(4) either as an:
- automatic extension – by including an actuarial certification and requesting an extension of no more than 5 years; or
- alternate extension – requesting an extension of no more than 10 years minus the amount of any automatic extension.
Revenue Procedure 2010-52:
- updates Revenue Procedure 2008-67 by describing the special amortization rule under Code §431(b)(8)(A);
- details the information a plan sponsor must include in an automatic and alternate extension application;
- adds the Pension Benefit Guaranty Corporation to the list of affected parties who must receive notice of the application;
- includes a Model Notice of Application for Amortization Extension, with a “Plain Language” section;
- extends the time that plan sponsors have to submit an application until the 15th day of the third calendar month following the last day of the first plan year for which the extension is intended to take effect;
changes the interim effect of the amortization extension application.
Revenue Procedure 2010-52 is generally effective for extension applications submitted on or after Jan. 1, 2011. However, if the IRS has not yet ruled on a plan’s application for an automatic 5-year extension and the actuary certified prior to Jan. 1, 2011, the actuary may under certain conditions treat the application as approved and use the extended amortization period. Read Revenue Procedure 2010-52.
EBSA Semi-Annual Regulatory Agenda for 2011
The U.S. Employee Benefits Security Administration (EBSA) announces its semi-annual regulatory agenda for 2011. Highlights of the agenda include fee transparency, welfare plans, and “lifetime income.” The EBSA hosted a Web chat on Jan. 4, 2011 to discuss the EBSA's regulatory agenda and covered a variety of questions related to the regulations governing retirement plans and health plans. The transcript of the chat and the regulatory agenda are posted online.
FAQ Released on Affordable Care Act and Mental Health Parity
A set of frequently asked questions jointly released by the Departments of Health and Human Services, Labor and Treasury provides insight into reforms under the Patient Protection and Affordable Care Act and the implementation of the Mental Health Parity and Addiction Equity Act of 2008. The FAQ covers value-based insurance design, automatic enrollment, dependent coverage, preexisting condition exclusions, grandfathered plans, mental-health parity and nondiscrimination issues. View FAQ.
Fee Disclosure Rules for Defined Contribution Plans
The Department of Labor (DOL) has issued final rules with regard to the disclosure of fees and other information to participants in defined contribution (DC) plans that provide for participant direction of investments ("participant-directed" plans). This is the third piece of guidance on fee disclosure issued by the DOL in the last several years. Prior rules required disclosure on the 5500 and plan service providers to disclose information about fees, expenses and potential conflicts of interest to contracting plans as a prerequisite for the service contract to be considered "reasonable." The new rules require disclosure of fee, expense and investment performance information to participants and beneficiaries in participant-directed DC plans that are covered under the Employee Retirement Income Security Act (ERISA). The regulations were published in the Oct. 20, 2010 Federal Register.
ACA’s Small Business Tax Credit Available to Employers Contributing to Certain Multiemployer Plans
The Internal Revenue Service has clarified, in Notice 2010-82, that employers contributing to multiemployer plans may claim the small business tax credit under the Affordable Care Act (“ACA”) provided the multiemployer plan provides insured health coverage and the small employer otherwise meets the eligibility requirements for the credit. The credit is not available if the plan is self-insured.
The guidance allows employers to use the percentage of the plan’s total cost for health insurance benefits for the year to be used to determine how much of the employer’s contributions will be considered paid for health insurance for purposes of the ACA small business tax credit. If no employee contributions are accepted, then 100% of the contribution is eligible for the tax credit. Employees need not have been eligible for coverage in order for the contributions to be covered by the tax credit.
Health and welfare plans that are fully insured may anticipate that employers will ask about the portion of their contributions applied toward the purchase of health insurance. In some cases, health and welfare plans may want to make their contributing employers aware of the credit and/or routinely send out the information regarding the percentage of premium used to purchase health insurance. Rather than advising individual employers about their eligibility or specifics for making a tax credit determination, plans will likely want to refer the employer to the IRS website where detailed instructions are available.
A copy of Notice 2010-82 is available here.