American Benefits Council
Benefits Byte

2014-033

April 21, 2014

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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Social Security Administration Follows IRS' Lead, Discontinues Letter Forwarding Program

In a move with implications for retirement plan administrators, the U.S. Social Security Administration (SSA) has announced that it will formally discontinue its letter forwarding program, effective May 19. The SSA announcement follows Revenue Procedure 2012-35, issued in 2012, in which the Internal Revenue Service (IRS) ended its own letter forwarding program. The SSA and IRS programs had been the only two listed in the current safe harbor for locating missing participants. Plan administrators may now need to rely on commercial locator services instead.

Such programs are commonly used by retirement plans to locate “lost” participants or beneficiaries, thereby resolving situations in which the payment of additional benefits is required under the Employee Plans Compliance Resolution System (EPCRS). Just as IRS Revenue Procedure 94-22 expressly permitted plan administrators to make a written request of IRS to use its letter forwarding program, several pieces of regulatory guidance (such as U.S. Department of Labor Field Assistance Bulletin 2004-02) specifically reference the SSA program as a method to be considered for this purpose.

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



Though Tax Reform Unlikely in 2014, Council Continues Advocacy of Benefit Plan Incentives

Despite the low likelihood that Congress will consider comprehensive tax reform in 2014, lawmakers continue to float policy proposals that would alter the long-standing tax incentives supporting employer sponsorship of health and retirement benefit plans. These proposals include:

In addition, President Obama’s Fiscal Year 2015 budget proposal (see the March 5 Benefits Byte for details) includes a number of provisions that would substantially affect employer-sponsored benefit plans, including a reduction in the value of itemized deductions and other tax preferences (including employer-sponsored health insurance and employee retirement contributions).

New statistics have been released to accompany the President’s budget proposal in the form the White House Office of Management and Budget’s (OMB) annual Analytical Perspectives document, which provides a detailed discussion of certain budget concepts and Administration policies including a list of the largest projected federal "tax expenditures" over the next five years. As in recent years, the tax incentives for employer-sponsored benefits dominate the list although, notably, the five year projected tax revenue loss for Fiscal Years 2015-2019 are somewhat lower than last year’s projection for Fiscal Years 2014-2018. The chart below shows the estimates for some of the leading “tax expenditures”:

Selected Tax Expenditures

Billions of dollars, 2015-2019

Billions of dollars, (2014-2018)

Exclusion of employer contributions for medical insurance premiums and medical care

$1,151

$1,206

Exclusion of employer-sponsored pension plan contributions and earnings (combined defined benefit and defined contribution plans)

$649

$786

Deductibility of mortgage interest on owner-occupied homes

$456

$640

Deductibility of charitable contributions (including health and education)

$339

$319

Deductibility of nonbusiness state and local taxes

$291

$292

Individual Retirement Accounts

$98

$105

These tax expenditures constitute foregone revenue the government estimates it does not collect.   The Council has consistently argued in our advocacy that such estimates (1) undervalue the tax revenue realized from retirement assets when benefits are paid, and (2) ignore the reduced government spending attributable to lesser reliance on government health and retirement systems and other social safety net programs.

To supplement our Capitol Hill advocacy and media outreach, the Council has developed a series of papers and talking points describing the importance of benefit plan tax incentives and the potential hazards of their disruption or elimination.

With regard to retirement policy, the Council has featured:

On the subject of health policy, the Council has prepared a series of detailed talking points:

As we continue to engage policymakers on tax reform and the potential ramifications of dramatic changes in the health and retirement plan tax incentives, we welcome your participation and input. For more information, contact Diann Howland, vice president, legislative affairs, at (202) 289-6700.



NCR Chairman Bill Nuti,  Retirement Security Champion, Honored by Atlantic Legal Foundation

Bill Nuti, Chairman, Chief Executive Officer and President of NCR, has been honored by the Atlantic Legal Foundation's Annual Award for 2013 in recognition of his “strategic vision, integrity and demonstrated leadership in bringing innovation to the global marketplace.” Since 1988, the Atlantic Legal Foundation has annually honored the person who best exemplifies the ideals and principles of public service and private enterprise.

Nuti’s commitment to public service is exemplified by his leadership in many areas, including as an articulate spokesman for sound pension policy.   Over several years, Nuti has worked closely with the American Benefits Council and has been a tireless advocate on Capitol Hill.   He has accompanied Council staff on numerous meetings with Congressional leaders including Speaker of the House John Boehner (R-OH), Ways and Means Committee Chairman Dave Camp (R-MI), and Education and Workforce Committee Chairman John Kline (R-MN), to advocate for pension funding stabilization proposals.

Most notably, Nuti testified on behalf of the Council in 2009 in support of legislation to help defined benefit plans cope with the extreme volatility in pension funding obligations.  Nuti’s personal engagement was instrumental in the enactment of funding stabilization legislation in 2010 as part of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act and later in the enactment of further funding stabilization provisions as part of the Moving Ahead for Progress in the 21st Century (MAP-21) Act in 2012.

The Council congratulates NCR and Bill Nuti on this well-deserved award, which serves as a model of CEO engagement on important employee benefits policy issues.



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).