December 17, 2014
- Senate Approves Tax "Extenders" Package
- DOL Letter Clarifies Treatment of myRA Programs
- DOL Announces New 2015 ERISA Advisory Council Members
Senate Approves Tax "Extenders" Package
On December 16, the U.S. Senate passed the Tax Increase Prevention Act (H.R. 5771) by a vote of 76 to 16. H.R. 5771 provides a short-term extension of more than 50 expiring tax breaks, including provisions for individuals, families and employers. President Obama is expected to sign the measure into law shortly.
H.R. 5771 also includes a number of expiring tax provisions that affect employee benefit plans, including renewal of equal tax treatment for mass transit and parking benefits and allowing distributions from individual retirement plans for charitable purposes (see the December 3 Benefits Byte for more details).
For more information, contact Diann Howland, vice president, legislative affairs, at (202) 289-6700.
DOL Letter Clarifies Treatment of myRA Programs
In a December 15 letter to the U.S. Department of the Treasury, the U.S. Department of Labor (DOL) concluded that an employer permitting its employees to contribute to a myRA through payroll deduction does not constitute sponsoring “an employee pension benefit plan” subject to ERISA.
The myRA program is an executive branch program similar to Individual Retirement Accounts (IRAs) and is intended to expand workplace retirement savings. Announced by President Obama earlier this year, myRAs are provided through employers and are targeted at individuals who do not already have access to an employer plan, although they can be offered in conjunction with an existing employer plan (see the January 29 Benefits Byte for more details).
The DOL letter responded to an inquiry from Treasury asking whether myRAs would be covered under Title I of ERISA. The letter assumes several facts, stating that “Treasury does not at this stage intend for employers to implement automatic contribution arrangements.” The letter also assumes no employer contributions to employees’ myRAs. However, the letter notes that some employers may want to “encourage employees to participate” in myRAs (such as through computer and technical support and through employee meetings).
In the letter, the DOL relies primarily on the government sponsorship of myRAs as the basis of the exemption from ERISA, rather than relying on the existing exception for payroll deduction IRAs. The letter states “[W]e do not believe Congress intended in enacting ERISA that a federal government retirement savings program created and operated by the U.S. Department of the Treasury would be subject to the extensive reporting, disclosure, fiduciary duty or other requirements of ERISA, which were established to ensure against the possibility that employees’ expectation of a promised benefit would be defeated through poor management by the plan sponsor and other plan fiduciaries.”
The letter further asserts that an employer would not be establishing or maintaining an “employee pension benefit plan” – within the meaning of ERISA Section 3(2) – if it institutes a myRA program where employees participate through payroll withholding contributions and where the employer distributes information, facilitates employee enrollment and otherwise encourages employees to make deposits to myRA accounts owned and controlled by employees. This position is supported by the voluntary nature of the program, the establishment, sponsorship and administration by the federal government and the absence of any employer funding or role in the administration or design of the myRA program.
The DOL’s decision to not rely more directly on the existing exemption for payroll deduction IRAs and instead create an exemption for federal government-run programs raises some potential questions about what expansions of the myRA program would trigger ERISA, as well as the application of ERISA to state-run retirement arrangements for those without access to employer-sponsored retirement plans.
DOL Announces New 2015 ERISA Advisory Council Members
The U.S. Department of Labor (DOL) has announced five new members appointed to the 2015 ERISA Advisory Council (EAC). The EAC is a group of benefits experts established by Congress and appointed by the DOL to identify emerging benefits issues and advise the Secretary of Labor on health and retirement policy.
The chair and vice chair, respectively, of the EAC for the 2015 term will be Paul M. Secunda, professor of law and director, Labor and Employment Law Program at Marquette University Law School and Mark E. Schmidtke, shareholder of Ogletree, Deakins, Nash, Smoak & Stewart.
The new appointees to the EAC are:
- Deborah A. Tully, senior director of compensation and benefits finance and accounting analysis at Raytheon Co., representing employers. Tully is a member of the American Benefits Council’s Policy Board of Directors.
- Jennifer Kamp Tretheway, recently retired managing director of investment program solutions with Northern Trust Asset Management, representing corporate trust.
- Rennie Worsfold, vice president at Financial Engines, Inc., representing investment management.
- Elizabeth Ysla Leight, director of government relations and legal affairs at the Society of Professional Benefit Administrators, representing the general public.
- Jeffrey G. Stein, general counsel to 22 Taft-Hartley funds and related organizations serving 1199SEIU United Health Care Workers East, representing employer organizations.
Other EAC members who are associated with organizations that our members of the American Benefits Council are:
- Josh Cohen, head of institutional defined contribution, Russell Investment Group, representing investment counseling.
- Christina R. Cutlip, managing director and head of plan sponsor services, TIAA-CREF, representing employers.
- Kevin T. Hanney, director of pension investments for United Technologies Corporation, representing employers.
The working group topics for 2015 will be released in the spring. The 2014 topics included pharmacy benefit manager (PBM) compensation and fee disclosure, as well as outsourcing employee benefit plan services. The 2014 EAC gave final recommendations to U.S. Secretary of Labor Thomas Perez and Assistant Secretary Phyllis Borzi of the Employee Benefits Security Administration (EBSA) on November 4 (see the November 10 Benefits Byte).