Outlook on Employee Benefits
(Posted on April 24, 2017 by )

Carol V. Calhoun spoke at the 2017 Stable Value Investment Association (SVIA) Spring Seminar on “Outlook on Employee Benefits.” The Meeting Booklet, and outlines of each of the topics covered, are below:


Copy of the meeting booklet


A Trump Presidency: What Does It Mean for Employee Benefits?”


  • Issue: protecting plan participants and retirement investors from receiving advice that is in the interest of the adviser rather than the participant
  • Monitoring of formal advice programs has been in place before the fiduciary rule. See DOL Advisory Opinion Letter 2007-01A, which said, “If Subsidiary B is a fiduciary by virtue of rendering investment advice within the meaning of 29 CFR 2510.3-21(c), the provision of such investment advice involving self-dealing will subject the fiduciary adviser to liability under section 406(b) of ERISA.”
  • The DOL issued proposed regulations in 2010 and 2015. Each iteration of the rules has attempted to balance more carefully a desire to promote participant education with a desire to prohibit advisors from operating in their own self-interest.
  • New rule covers more ground, including rollover distribution conversations and retirement readiness tools.
  • Plan sponsors will need to be aware of circumstances in which there has been a “recommendation” made regarding the investment, distribution or account management of a retirement account.


  • Determine the structure of the committee including appropriate size, membership, designated responsibilities, and frequency of meetings.
  • Clear appointment process (name or function, but not both)
  • Both selection and training designed to ensure expertise
  • Ongoing monitoring, e.g., regular reports to the company’s board of directors
  • Document all committee actions and decisions.


  • Affordable Care Act
    • MacArthur Amendment
      • Would generally preserve ban on preexisting conditions exclusions, coverage up to age 26, and essential health benefits
      • Would increase age-related spread on premiums from 3:1 to 5:1.
      • Would allow applications for waivers from essential health benefits and from community rating rules (except gender). Waiver of health status rules would need to be accompanied by participation in federal or state high risk pools.
    • Alternative: Try to get the ACA to implode by not appropriating funds to cover cost-sharing reductions.
      • For people less than 250% of the federal poverty line, insurance companies may not charge deductibles, but are supposed to be reimbursed by the federal government
      • Not clear whether this is to be funded by special appropriation (which Congress has failed to pass).
      • Obama administration funded it out of general appropriation, was sued by the House.
  • Changes to HSAs
    • Ryan would like to increase the HSA limit to the maximum out-of-pocket cost.
    • Can act almost as a retirement account, but targeted to medical costs.
    • Downside is that they are available only with a high deductible health plan.
  • Hostility to socially responsible investing/economically targeted investments
    • Interpretive Bulletin 94-01, 29 C.F.R. 2509.94–1: “if the above requirements are met, the selection of an ETI, or the engaging in an investment course of action intended to result in the selection of ETIs, will not violate section 404(a)(1)(A) and (B) and the exclusive purpose requirements of section 403.”
    • Interpretive Bulletin 08-01, 29 C.F.R. 2509.08-1: “In light of the rigorous requirements established by ERISA, the Department believes that fiduciaries who rely on factors outside the economic interests of the plan in making investment choices and subsequently find their decision challenged will rarely be able to demonstrate compliance with ERISA absent a written record demonstrating that a contemporaneous economic analysis showed that the investment alternatives were of equal value.”
    • Interpretive Bulletin 2015-01 withdrew Interpretive Bulletin 08-01, and returned to the guidance of Interpretive Bulletin 94-01.
    • Will we go back to Interpretive Bulletin 08-01?
  • Diminished enforcement of protections for LGBT employees.
    • Federal employment
      • Retained Executive Order 13672, which prohibited contractors from discriminating on the basis of sexual orientation or gender identity.
      • Eliminated Executive Order 13673, which required companies wishing to contract with the federal government to show that they had complied with various federal laws and other executive orders.
    • Other employment
      • EEOC’s Strategic Enforcement Plan (SEP): treat discrimination based on sexual orientation or gender identity as sex discrimination under Title VII
      • Several cases won, mostly on transgender issues
      • In U.S. EEOC v. Scott Medical Health Center, District Court for the Western District of Pennsylvania denied a motion to dismiss case on discrimination against a gay employee.
      • Will this administration continue this policy? And if not, what is the prospect for participant lawsuits?


  • Executive Order of April 21: Secretary of the Treasury to identify in an interim report to the President all significant tax regulations issued by the Department of the Treasury on or after January 1, 2016 that:
    • impose an undue financial burden on United States taxpayers;
    • add undue complexity to the Federal tax laws; or
    • exceed the statutory authority of the Internal Revenue Service.
    • Identification within 60 days, report on mitigation within 150 days.

  • Decline in both regulations and agency staffing means that plan sponsors and participants will be looking less to the federal government for guidance.
  • States likely to become more involved, meaning you need to look at 50 state laws instead of one federal law. See, e.g., state proposals to require employer participation in IRAs.
  • Lack of regulations means fewer defenses to participant lawsuits.

A Trump Presidency: What Does It Mean for Employee Benefits?
(Posted on November 29, 2016 by )

White HouseBased on both campaign promises and Donald Trump’s plans for his first 100 days, a Trump presidency is likely to make major changes in employee benefits law. The most significant ones are likely to be:

  1. Major changes in the Affordable Care Act (although the timing and extent of such changes are unclear), combined with expansion of health savings accounts.
  2. Postponement or elimination of the recently issued Department of Labor fiduciary regulations.
  3. Loosening of executive compensation rules.
  4. Further cutbacks in IRS guidance and audit activity.
  5. Increased hostility to consideration of noneconomic factors in selecting retirement plan investments.
  6. Diminished enforcement of protections for LGBT employees.
  7. Increased activity at the state level, including establishment of state-sponsored retirement plans for private employers.

These issues, and others of less general concern, are discussed below. Read more.

Proposed Regulations: Normal Retirement Age for Governmental Plans
(Posted on January 27, 2016 by )

irsOn January 27, 2016, the IRS issued proposed regulations governing the extent to which governmental pension plans must comply with the rules governing normal retirement ages. In general, the rules are a positive step from the perspective of governmental plan sponsors, but they contain a few potential pitfalls.


The qualification rules of the Internal Revenue Code (“Code”) provide for several rules that are based on a plan’s normal retirement age. For example, a pension plan cannot pay in-service benefits before the earlier of age 62 or normal retirement age. Benefits must be fully vested at normal retirement age. Benefits under the plan must be definitely determinable (i.e., subject to calculation, rather than at an employer’s discretion) as of normal retirement age. Read more.

IRS determination letters after 2016; what are the options?
(Posted on July 28, 2015 by )

Internal Revenue ServiceAs previously discussed, faced with substantial budget cuts, the Internal Revenue Service (“IRS”) has announced that it is eliminating most determination letters (letters concerning the qualified status of retirement plans, which gives rise to numerous tax benefits), effective December 31, 2016. (Announcement 2015-19.) In the past, individually designed retirement plans were able to obtain a determination letter once every five years, during a cycle provided by the IRS. The most likely new regime will involve making determination letters on individually designed plans available only when a plan is first adopted, or when it is terminated. Between those dates, the only way to ensure qualification other than filing a declaratory judgment action with the Tax Court is likely to be to adopt annual updates put out by the IRS that will include model wording for amendments.

For entities that maintain a retirement plan, the new regime may mean that they discover qualification issues only on audit, when it is too late to fix the issue. And the potential penalties on audit (for the employer, the trust under the plan, and the employees) are, as set forth in a prior article, huge. What steps should a plan administrator take to ensure the qualification of a plan after that point? Read more.

Governmental Plan Determination Letters: Last Chance?
(Posted on July 21, 2015 by )

irsOn July 21, 2015, the Internal Revenue Service (“IRS”) issued Announcement 2015-19, in which it announced that it would be making substantial changes to the determination letter program intended to allow retirement plan sponsors to ensure that their plans are qualified (eligible for tax benefits). This announcement will affect all retirement plans intended to be qualified, but will create particular issues for plans maintained by governmental employers (“governmental plans”). Read more.

Final IRS Regulations Clarify Maximum Limits for Governmental Qualified Plans
(Posted on April 5, 2007 by )

On April 5, 2007, the IRS proposed new regulations under section 415 of the Internal Revenue Code (IRC), as amended. Section 415 limits the benefits that may be paid by defined benefit plans and contributions that may be made to defined contribution plans. While some of the provisions may be a restatement of the current rules or a codification of guidance issued over the years since the current regulations were adopted, other provisions may represent new interpretations that need to be studied carefully. Read more