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Showing posts from September, 2013

Avoiding Fiduciary Liability - A Common Sense Approach

The Employee Retirement Income Security Act of 1974 (ERISA) sets the minimum standards for pension plans in the private industry. ERISA also requires accountability of plan fiduciaries which generally would include plan trustees, plan administrators, and members of the plan’s investment committee. The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan’s investments in order to avoid large losses. Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Recent court cases, most notably Tibble v Edison and Tussey v ABB, Inc. have made clear that plan fiduciaries will be held liable when they fail to meet their fiduciary responsibilities. In the Tussey case the plan

Target Date Retirement Funds - TIPS for ERISA Plan Fiduciaries

The Plan Sponsor Council of America (PSCA) recently released the 2013 403(b) Plan Survey. The survey showed that 73.6% of plans offer target date funds (TDF) as an investment option. Similar findings were noted for 401(k) plans. Additionally, many plan sponsors have identified TDFs as their plan’s qualified default investment alternative (QDIA). Target date funds can be an attractive investment option for employees who do not want to actively manage their retirement portfolio. The inflow of monies into TDFs in recent years reflects the growing popularity of these types of investments. Employers and plan fiduciaries have an obligation to prudently select and monitor the investments  offered in their retirement plan . Although all TDFs have similar characteristics, regardless of the investment provider, there are several differences that can significantly affect the way a TDF performs. It is important that fiduciaries understand these differences when deciding which TDF is appropriate fo

HSA Questions and Answers

This article  sets out Questions and Answers regarding Health Savings Accounts (HSAs), as provided by the Internal Revenue Service (IRS) in Notice 2008-59 . The Notice addresses the following topics related to HSAs: Important definitions Distributions from HSAs Eligible individuals Prohibited transactions High deductible health plans (HDHPs) Establishing an HSA Contributions to HSAs Administrative fees Please read below for more information. Note : For 2014, the HSA annual contribution limit is $3,300 (up from $3,250 for 2013) for self-only HDHP coverage or $6,550 (up from $6,450 for 2013) for family HDHP coverage. To qualify as an HDHP for 2014, the annual deductible must be at least $1,250 for self-only coverage or $2,500 for family coverage, the same annual deductible as for 2013. For 2014, the maximum annual out-of-pocket expenses for HDHP coverage may not exceed $6,350 (up from $6,250 for 2013) for self-only coverage or $12,700 (up from $12,500 for 2013) for family coverage. DEFIN

Metal Levels for Qualified Health Plans

Beginning in 2014, the Affordable Care Act (ACA) requires health plans offered through an Exchange, or qualified health plans (QHPs), to meet certain levels of actuarial value. ACA’s required actuarial value levels are referred to as “ metal levels ”—bronze, silver, gold and platinum. ACA’s metal levels are intended to allow consumers to compare plans with similar levels of coverage in order to help them make informed decisions about their health insurance coverage. Since coverage will be similar for all plans in a metal tier (for example, all silver plans), consumers can focus on other plan factors, such as the premium and network of providers, when selecting a health plan. QHP issuers must offer at least one plan in the silver level and one plan in the gold level through the Exchanges. Outside of the Exchanges, non-grandfathered plans in the individual and small group markets must offer coverage that matches up to the metal levels. Actuarial Value Actuarial value is calculated as the