American Benefits Council
Benefits Byte


December 4, 2015

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

Click here to read past issues on the Benefits Byte Archive page.

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Council Voices Support for Workplace Retirement Plan Bill Reintroduced in House

Lawmakers in the U.S. House of Representatives have reintroduced the Small Businesses Add Value for Employees (SAVE) Act (H.R. 4067), a bill to expand and streamline employee access to workplace retirement plans, particularly for small business workers.

The measure is sponsored by Representatives Ron Kind (D-WI) and Dave Reichert (R-WA), who introduced the bill in 2013 as H.R. 5875. The Council has expressed its support for the SAVE Act in letters to the sponsors and advocated for many of its provisions in A 2020 Vision, our long-term public policy strategic plan.

The Council wrote a letter to Kind and Reichert in support of the bill, noting that H.R. 4067
“would take major steps forward in addressing retirement security for small businesses and the individuals who work for them.” In particular, the measure would likely “substantially increase the use of automatic enrollment through the establishment of an alternative safe harbor with key incentives to adopt it.”

Specifically, the SAVE Act would:

  • Allow “open” multiple employer plans (MEPs), in which unrelated employers would be permitted to band together to share administrative costs. Each employer would have to have fewer than 500 employees and each employer would have to be identified in the MEP annual report, clarifying each employer’s fiduciary responsibilities.
  • Create a new 401(k) plan automatic enrollment and escalation safe harbor, allowing higher default rates and permitting employers to escalate employee contributions beyond the current 10 percent cap. A tax credit would be available to small employers for the first five years of participation.
  • Create a new “automatic deferral IRA” arrangement allowing employers to automatically enroll employees making at least $5,000 per year into a payroll deduction IRA. The arrangement would not be subject to ERISA but does incorporate certain administrative and notice requirements.
  • Add a new SIMPLE 401(k) deferral-only safe harbor for small employers, requiring automatic enrollment of participants and allowing elective deferrals up to $10,000 (with no catch-up contributions). Plan loans would not be permitted and hardship distributions would be strictly limited.
  • Make additional reforms related to SIMPLE IRA plans, including elimination of current restrictions on rollovers, allowing mid-year terminations, eliminating the higher tax penalty on early SIMPLE IRA distributions and increasing contribution limits to typical 401(k) levels. 
  • Provide for disclosure of the “lifetime income stream equivalent of the total benefits accrued” (without attaching fiduciary liability to the plan sponsor) and create a safe harbor for qualified plans to encourage lifetime income options in retirement.
  • Permit the limited rollover of unused flexible spending account (FSA) balances to a qualified retirement plan.
  • Allow an employee’s prior year compensation to be taken into account when determining the retirement savings deduction.
  • Direct the Department of the Treasury Office of Financial Education, in consultation with the Department of Labor, to develop educational material and recommendations for small businesses in order to improve retirement plan administration and outcomes.

The bill has been referred to the House Committee on Ways and Means, of which Kind and Reichert are members, and the House Education and the Workforce Committee. For more information, contact Diann Howland, vice president, legislative affairs, at (202) 289-6700.

EEOC Extends Comment Period for Proposed GINA Rule

The Equal Employment Opportunity Commission has extended the comment period for its proposed regulations governing Title II of the Genetic Information Nondiscrimination Act (GINA) and its application to employer wellness programs. Comments will now be accepted through January 28, 2016. (The original deadline was December 29, 2015.)

Title II of GINA restricts how employers may collect and disclose genetic information and prohibits employers from using genetic information in employment decisions. As we reported in the October 29 Benefits Byte, the proposed regulations address how and when employers may request, require, or purchase genetic information (such as through a health risk assessment) from an employee and the employee’s family as part of health or genetic services.

The Council hosted a Benefits Briefing webinar on November 16 to discuss the new rules and we are currently preparing a comment letter to EEOC. For more information, or to provide input for the Council’s comments, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

Obama Administration Releases Advance Copies of 2015 Form 5500 Annual Return/Report, Supplemental Compliance Reporting Delayed

The U.S. Department of Labor's (DOL) Employee Benefits Security Administration (EBSA), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) have released advance informational copies of the 2015 Form 5500 annual return/report and related instructions. Most notably, the new IRS compliance questions will be optional for the 2015 plan year, as recommended by the Council.

The Form 5500 series is used to satisfy annual reporting requirements under ERISA and the Internal Revenue Code. As we reported in the November 18 Benefits Byte, in a notice and request for comment released in late 2014, the IRS revealed that a new supplemental form, the 5500-SUP, would solicit additional compliance information. The 5500-SUP has not yet been released, but the Council has learned that the transition relief will apply to that form as well.

In a November 17 letter to the IRS and the Office of Management and Budget (OMB), and in discussions with IRS, the Council urged the issuance of transition guidance and relief with regard to the filing of the Form 5500 Annual Return/Report of Employee Benefit Plans.

As the Council’s letter notes, many of the changes described in the notice and draft forms involve new or significantly changed questions, many of which are ambiguous. “This ambiguity will require additional guidance before companies can implement the changes. Changes of this nature will need significant systems changes so it will be very difficult to implement them properly if required for the 2015 plan year.”

For more information, contact Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

Notice: the information contained herein is general in nature. It is not, and should not be construed as, accounting, consulting, legal or tax advice or opinion provided by the American Benefits Council or any of its employees. As required by the IRS, we inform you that any information contained herein was not intended or written to be used or referred to, and cannot be used or referred to (i) for the purpose of avoiding penalties under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party any transaction or matter addressed herein (and any attachment).