United States: Benefits Counselor April 2017

General Plan Developments

EBSA Issues Temporary Enforcement Policy Regarding Fiduciary Rule

On March 10, 2017, the Department of Labor's ("DOL") Employee Benefits Security Administration ("EBSA") issued a temporary enforcement policy regarding the 60-day extension of the applicability date of the fiduciary rule and related prohibited transaction exemptions ("PTEs") from April 10 to June 9, 2017. In response to concerns from the financial services industry, EBSA issued Field Assistance Bulletin 2017-01 containing the following temporary enforcement policy:

  • In the event the DOL issues a final rule after April 10 implementing a delay in the applicability date of the fiduciary duty rule and related PTEs, the DOL will not initiate an enforcement action because an adviser or financial institution did not satisfy conditions of the fiduciary rule or the PTEs during the "gap" period in which the rule becomes applicable before a delay is implemented, including a failure to provide retirement investors with disclosures or other documents intended to comply with provisions of the fiduciary rule or the related PTEs.
  • In the event the DOL decides not to issue a delay in the fiduciary duty rule and related PTEs, the DOL will not initiate an enforcement action because an adviser or financial institution, as of the April 10 applicability date, failed to satisfy conditions of the fiduciary rule or the PTEs; provided that the adviser or financial institution satisfies the applicable conditions of the fiduciary rule or PTEs, including sending out required disclosures or other documents to retirement investors, within a "reasonable period" after the publication of a decision not to delay the April 10 applicability date.

EBSA did not define what may constitute a "reasonable period" of time.

IRS Announces Non-Applicability of Prohibited Transaction Excise Taxes to Conform with DOL Temporary Enforcement Policy on Fiduciary Rule

Following the issuance of the temporary enforcement policy (Field Assistance Bulletin 2017-01) described above, stakeholders raised concerns about the potential application of excise taxes under the Internal Revenue Code ("Code") section 4975 and related reporting obligations in cases covered by the temporary enforcement policy.

In response to the concerns, on March 28, the Internal Revenue Service ("IRS") published Announcement 2017-4 providing that the IRS will not apply Code section 4975 and related reporting obligations with respect to any transaction or agreement to which the DOL's temporary enforcement policy, or other subsequent related enforcement guidance, would apply.

Retirement Plan Developments

Sixth Circuit Holds Exhaustion of Administrative Remedies Not Required for Statutory Violation Claims Involving Plan's Illegal Actions

On March 14, 2017, in Hitchcock v. Cumberland University 403(b) DC Plan, the Sixth Circuit joined the majority of circuit courts of appeal in holding that a plan participant need not exhaust a plan's administrative remedies before bringing an action challenging the legality of a plan's actions.

Plaintiffs were former employees of Cumberland University (the "University") and were participants in a defined contribution pension plan (the "Plan") sponsored by the University for its employees. In 2009, the University adopted a 5% matching contribution, whereby the University would match an employee's contributions to the Plan up to 5% of the employee's salary. On October 9, 2014, the University amended the Plan to replace the 5% match with a discretionary match, whereby the University would determine the amount of the employer's matching contribution on a yearly basis. The University made the amendment retroactive effective January 1, 2013, and announced that the employer matching contribution for the 2013-2014 year and the 2014-2015 year would be 0%.

On November 12, 2015, the participants filed a class action complaint against the University alleging the following: (1) wrongful denial of benefits; (2) violation of ERISA's anti-cutback provisions; (3) failure to provide notice to participants and beneficiaries; and (4) breach of fiduciary duty.

The Middle District of Tennessee dismissed the first, second and fourth claims for failure to exhaust administrative remedies and dismissed the third claim for failure to state a claim upon which relief could be granted. The participants then appealed to the Sixth Circuit.

The Sixth Circuit reversed and remanded, ruling that the district court erred by ordering the participants to pursue a "futile" administrative process before bringing their suit in court. The Sixth Circuit stated that the exhaustion requirement includes an exception for circumstances when resorting to the administrative remedies would be futile or inadequate. The court noted that a challenge to the "legality" of a plan's amendment, rather than a challenge to the interpretation of an amendment, is futile because if plaintiffs were to resort to the administrative process, the plan administrator would merely recalculate their benefits and reach the same result. In this case, the court stated that the participants were challenging the legality of the amendment retroactively reducing the employer match from 5% to a discretionary amount, rather than challenging the calculation of their benefits.

Health and Welfare Plan Developments

House Republicans Withdraw Health Care Bill

On March 24, 2017, Republicans in the House of Representatives, short of support from their own party, withdrew the proposed health care bill, titled the American Health Care Act ("AHCA"). The AHCA would have repealed parts of the Affordable Care Act ("ACA"), including the individual and employer mandates and various taxes, and would have modified the federal Medicaid program. However, after withdrawing the bill, House Speaker Paul Ryan said that the ACA is "the law of the land" and will remain so "for the foreseeable future."

HHS Encourages States to Apply for ACA State Innovation Waivers

On March 13, 2017, the Department of Health and Human Services ("HHS") sent a letter to state governors encouraging states to apply for State Innovation Waivers under ACA section 1332, as a way to "help foster healthcare innovation" and improve market stability. To receive approval, the state must demonstrate that a proposed waiver:

  • will provide access to quality health care that is at least as comprehensive and affordable as would be provided without the waiver;
  • will provide coverage to at least a comparable number of residents of the state as would be provided coverage without a waiver; and
  • will not increase the federal deficit.

In particular, HHS encourages states to pursue approval of waiver proposals that include high-risk pool/state-operated reinsurance programs because implementing such programs may be an opportunity for states to lower premiums for consumers, improve market stability, and increase consumer choice. HHS notes Alaska as an example of a state that has applied for a section 1332 waiver, part of which would implement a high-risk pool/state-operated reinsurance program for 2018 and future years. The letter also emphasizes that if a state's waiver proposal is approved, pass-through funding may be available to help offset a portion of the costs for the high-risk pool/state-operated reinsurance program.

In the coming weeks, HHS plans to provide a checklist with further information to help states apply for a waiver.

A Program of Administrative Services Is Not a Welfare Plan Subject to ERISA or MEWA

In DOL's Advisory Opinion 2017-01A, the DOL concluded that an association's program of administrative services for its members' employee benefit plans is not an "employee welfare benefit plan" within the meaning of ERISA section 3(1) or a "multiple employer welfare arrangement" ("MEWA") within the meaning of ERISA section 3(40).

The Health Transformation Alliance ("HTA") is an association of large employers that sponsor self-insured benefit plans through administrative-services-only agreements with various insurance companies. HTA intends to develop and give its members access to cost, quality and access standards for medical networks based on improved analysis of its members' individual and collective healthcare spending and utilization. HTA also acts as a negotiating agent on behalf of its members in order to leverage their combined purchasing power to get favorable terms and conditions from health care and pharmacy benefit providers on packages of benefits and services.

In the Advisory Opinion, the DOL stated that the program of administrative services created by HTA is not an employee welfare benefit plan because it has employers rather than employee participants and does not provide covered benefits to employees or their dependents. The DOL also stated that the program is not a MEWA under ERISA section 3(40) because no component of the program "offers or provides" any welfare benefit described in ERISA section 3(1) to the employees of its member-employers. In addition, no component of the program (1) underwrites or guarantees welfare benefits, (2) provides welfare benefits through group insurance contracts covering more than one employer, (3) pools welfare benefit risk among participating employers, or (4) provides similar insurance or risk spreading functions.

Upcoming Compliance Deadlines and Reminders

Upcoming Health Plan Compliance Deadlines and Reminders

  1. New Summary of Benefits and Coverage ("SBC") Template. Plans that maintain an open enrollment period must use the new SBC template on the first day of the first open enrollment period that begins on or after April 1, 2017. Plans that do not use an open enrollment period must use the new template on the first day of the first plan year that begins on or after April 1, 2017.

Upcoming Retirement Plan Compliance Deadlines and Reminders

  1. 2016 IRA Contributions. The IRS issued a reminder (IR-2017-60) that IRA contributions must be made by April 18, 2017.
  2. Annual Funding Notice. Calendar year defined benefit plans with over 100 participants must provide the annual funding notice to required recipients by April 30, 2017 (i.e., within 120 days of the end of the plan year). Small plans (plans with 100 or fewer participants) generally have until the Form 5500 filing deadline to provide the annual funding notice.
  3. Change in Due Date for FBAR Filing for Certain Foreign Investments. In prior years, persons who have a financial interest in, or signature or other authority over, foreign financial accounts were generally required to report on the Treasury Department Form TD F 90 22.1 (the "FBAR") by June 30 of each year. As a result of a recent law change, beginning in the 2017 calendar year, the annual due date for filing FBAR reports was moved from June 30 to April 15. However, the U.S. Department of the Treasury recently granted an automatic extension for filing the FBAR to October 15 (specific requests for this extension are not required).While investments in most foreign hedge funds and private equity funds are not required to be reported on the FBAR, other accounts in foreign jurisdictions might be. Plan sponsors should consult with tax and legal counsel to determine if any FBAR filing is required to be filed by the October 15, 2017 deadline.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.