NewsDash – February 5, 2014

February 5th, 2014

Second Opinions

SECOND OPINIONS: ACA Employer Reporting Requirements

In this column and a later column, experts from Groom Law Group answer some of the frequently asked questions received about the large employer, employer mandate reporting obligations under Code section 6056. Code section 6056, as enacted by the Patient Protection and Affordable Care Act (ACA), requires “applicable large employers” subject to the employer “shared responsibility” mandate (Code section 4980H) to report to the Internal Revenue Service (IRS) information about their compliance with the mandate and any health care coverage offered to employees. Section 6056 also requires those employers to furnish related statements to employees so that the employees may use the statements to help determine eligibility for the ACA premium tax credit.

Benefit Briefs

Thinking “Small” About Plan Design

For smaller plan sponsors, there’s a range of plans to consider. From the employer’s perspective, says Andrew Oliphant, vice president of Retirement Services at The Newport Group, the type of industry they are in (professional services, or a more technical business) and the makeup of the workforce are primary drivers in choosing a retirement plan. Next, what is the sponsor trying to accomplish with a retirement plan? Is the plan merely a savings vehicle, or is it part of a benefit package that is being used for retention and recruitment?

Investment management firm Vanguard reports that the average account balances for 401(k) plan participants reached a record high of $101,650 at year-end 2013. That figure is 18% higher than 2012 and the highest average balance recorded since Vanguard began tracking such figures in 1999. Preliminary data from Vanguard shows several key trends for 2013 in its 401(k) and other defined contribution retirement plans.

How Are 403(b)s Ahead in the Game?

403(b) plan sponsors are often told to take lessons from their 401(k) plan counterparts. But, in some ways, 403(b)s are ahead in the game. According to the 2013 PLANSPONSOR Defined Contribution (DC) Survey, 61.4% of 403(b) plans offer income-oriented products and services to plan participants. Only 19.8% of DC plan sponsors of all types, including 403(b)s, do so.

Members of Generation X, those born between the early 1960s and the mid-1980s, have seen their retirement readiness degrade since the start of the Great Recession. Members of Generation X across all income levels have seen earnings slip since peak years in the early and mid-2000s, according to new research from the Insured Retirement Institute (IRI). Income loss is most pronounced at the lowest end of the scale, where incomes have fallen nearly 16% for workers earning wages near the poverty line.

Economic Events

New orders for manufactured goods in December 2013, down two of the last three months, decreased $7.2 billion or 1.5% to $489.2 billion, the U.S. Census Bureau reported. This followed a 1.5% November increase. Excluding transportation, new orders increased 0.2%.

Market Mirror

Tuesday, the Dow was up 72.44 points (0.47%) at 15,445.24, the NASDAQ increased 34.56 points (0.86%) to 4,031.52, and the S&P 500 closed 13.31 points (0.76%) higher at 1,755.20. The Russell 2000 gained 8.29 points (0.76%) to finish at 1,102.86, and the Wilshire 5000 rose 142.10 points (0.76%) to 18,785.20. On the NYSE, 3.2 billion shares traded, with advancing issues outnumbering declining issues more than 2 to 1. On the NASDAQ, 2.7 billion shares changed hands, with 1.6 advancers for every decliner. The price of the 10-year Treasury note declined 13/32, bringing its yield up to 2.626%. The price of the 30-year Treasury bond fell 1 4/32, increasing its yield to 3.594%.

The Feeling’s Mutual

Funding levels of pension plans sponsored by S&P 1500 companies fell 6% in January, according to data from Mercer. This resulted in a funded ratio (assets divided by liabilities) of 89% at the end of the month. The collective deficit of $232 billion as of January 31, 2014, is up $129 billion from the estimated deficit of $103 billion as of December 31, 2013.

The funded status of U.S. corporate pension plans fell 4.2% during January to reach 91%, according to the BNY Mellon Investment Strategy & Solutions Group (ISSG).

Rules & Regulators

Lawsuit Doesn’t Free Employers from ACA Mandate

A federal court has decided an argument which could have possibly exempted employers in certain states from federally mandated employee health insurance coverage. Under the Patient Protection and Affordable Care Act (ACA), large employers who do not offer affordable health insurance coverage to their full-time employees are subject to an “assessable payment” or tax under 26 U.S.C. Section 4980H. Imposition of the Section 4980H assessment is triggered when a full-time employee purchases subsidized coverage on an exchange. A lawsuit filed by a group of individuals and employers residing in states that have declined to establish state-run exchanges—lead plaintiff is Jacqueline Halbig, who was a senior policy adviser to the Department of Health and Human Services under George W. Bush—attempted to invalidate the provision of subsidies in states that chose not to establish a state-run health insurance exchange.

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Small Talk

Employees Feel Pressed to Work When Sick

Nearly 90% of office workers come to work even when they know they are sick, according to the fourth annual Flu Season Survey from Staples. This is up from 80% in last year’s survey and 60% in the 2011 survey. The survey indicates workers have a better understanding of flu contagion, even though more are showing up sick.

ON THIS DATE: In 1883, the Southern Pacific Railroad completed its transcontinental “Sunset Route” from New Orleans to California, consolidating its dominance over rail traffic to the Pacific. In 1917, with more than a two-thirds majority, Congress overrode President Woodrow Wilson’s veto of the previous week and passed the Immigration Act. The law required a literacy test for immigrants and barred Asiatic laborers, except for those from countries with special treaties or agreements with the United States, such as the Philippines. In 1919, Charlie Chaplin, Mary Pickford, Douglas Fairbanks and D.W. Griffith joined forces to create their own film studio, which they called the United Artists Corporation. In 1994, white supremacist Byron De La Beckwith was convicted in the murder of African-American civil rights leader Medgar Evers, more than 30 years after the crime occurred. WEDNESDAY WISDOM: “The way to get things done is not to mind who gets the credit for doing them.”—Benjamin Jowett, English theologian Share the good news with a friend! Pass the Dash along – and tell your friends/associates they can sign up for their own copy at