Why? For the first time since the health reform law went into effect back in 2010, the DOL has begun auditing health plans to make sure they’re complying with the law.

Even if the High Court does strike down the entire law, employment law attorneys expect the feds to hold firms responsible for any violations that were made while the law was still on the books.

That means it’s in employers’ best interest to take a business-as-usual approach to complying with the law now.

Of course, it doesn’t hurt employers to look for aspects of their plans they may want to change if the law is struck down – and talk to their providers about how to make that happen (Supreme Court is expected to rule by June).

In the meantime, a breakdown of what the DOL will be looking for from employers when it comes to healthcare reform compliance can be found right here.

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California and Louisiana recently became the 12th and 13th states, respectively, to sign a memorandum of understanding with the DOL.

The memorandum – which is part of the DOL’s Misclassification Initiative – allows the agency and participating states to share info and coordinate enforcement efforts with each other.

The information sharing is supposed to make it easier for the DOL to prevent employee misclassification.

In addition to California and Louisiana, CO, CT, HI, IL, MD, MA, MN, MO, MT, UT and WA have also signed memorandums of understanding with the DOL.

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The VCSP is an IRS initiative that was created to help organizations who are dealing with tax problems stemming from misclassification issues.

Under the program, employers can reclassify full-time employees they mistakenly classified as independent contractors – and potentially save a significant amount on back taxes.

However, many employers are afraid that signing up for the program would set them up for other problems down the road.

Example: What’s to stop the IRS from sharing info about a company’s misclassification issues with agencies like the DOL? And what’s to stop those agencies from imposing harsh penalties on the company?

To reassure firms this wasn’t the case, the IRS stated on its FAQ page that:

• It will not share info about VCSP applicants with the DOL or state agencies
• Signing the VCSP closing agreement is not an admission of any liability or wrongdoing for prior years, and
• A rejection of a VCSP application will not automatically trigger a federal audit.

To view the complete FAQ, click.

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There are three main fee categories. While there are an array of different 401(k) fees, the DOL has broken down the fee types into these three categories for the purposes of the disclosure requirements:

• Plan-level (administration) fees. These are the fees associated with the day-to-day workings of a 401(k) plan, such as recordkeeping, accounting and legal services. They can also include services like access to a customer-service reps and electronic access to 401(k) plan info.
• Investment fees. The bulk of a plan’s fees are spent in this area. These fees are generally made up of a percentage of the assets invested – and are deducted directly from an investment’s return.
• Individual service fees. These are fees that may be charged separately to employees who take advantage of specific features their plan offers. Example: Fees for taking out a 401(k) loan.

There will be surprises. Many companies currently use a bundled service provider (one vendor for all of the firm’s 401(k) needs) to avoid being hit with higher fees. But experts believe that the fee disclosure statements will show employers that hasn’t necessarily been the case.

You can get a good idea of how your plan stacks up against others by using sites like this: BrightScope.com.

Employees will want some answers from you. Chance are, some workers won’t even read their fee-disclosure statements.

But you can bet the ones who do will have some pointed questions about why they’re paying so much of their money toward plan fees. So it’s important for employers to be prepared to explain – in simple terms – all of the major expenses associated with their 401(k) plan.

The post New 401(k) fee regs: Are you aware of these 3 key components? appeared first on CFO Daily News.

The DOL had been planning changes to the FLSA (known as the “Right to Know” rule) that would require employers to perform a written classification analysis for every exempt employee – and share that info with all affected workers.

Companies would also be required to retain the analysis documents in the event of a DOL investigation.

However, after being pushed back several times last year, the DOL changed the classification of the Right to Know rules from the “Proposed Rules Stage” to “Long-Term Actions.”

The agency defines its Long-Term Actions as “items under development but for which the agency does not expect to have a regulatory action within the 12 months …”

The employment law blog Wage & Hour Insights has more details about the announcement, which you can read right here.

The post Employee classification analysis not likely in 2012 appeared first on CFO Daily News.

In a letter to the DOL, the American Society of Pension Professionals and Actuaries (ASPPA) and the Council of Independent 401(k) Recordkeepers (CIKR) asked the agency to push back the effective date for the new regs.

The organizations said they support the DOL’s efforts to improve fee-transparency.

However, because the agency hasn’t released its final rule on fee disclosure yet, complying with the regs in “three short months” doesn’t give organizations enough time to prepare, the groups said.

To read the full letter by the ASPPA and the CIKR, click.

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But according to the DOL, that’s not what happened here.

DS3 Computing Solutions, Inc., and its owner, Davis Sylvester, allegedly failed to forward some workers’ contributions to the company’s 401(k) plan in a timely manner – and others weren’t remitted at all. Both actions violate the Employee Retirement Investment Security Act (ERISA), according to the DOL.

In the end, DS3 and Davis agreed to restore $4,120, which includes all losses and interest, to the plan. They’ve also been barred from serving as fiduciaries or service providers to any ERISA-governed plan in the future – and must pay a penalty to the federal government.

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Previously, the DOL had issued proposed regs on the Summary of Benefits and Coverage (SBC) that included an effective date of March 23, 2012.

However, in its latest FAQ, the agency decided to delay the effective date of the SBC rule “until a date to be determined in the final rule.”

Under the SBC reform provision, health plans are required to provide enrolled employees with a summary of their benefits and coverage, as well as a glossary of commonly used terms — such as deductible and co-pay.

In addition, if a plan change takes place during the year, that health plan must provide notice to all enrolled employees at least 60 days before those changes kick in.

The SBCs can’t be longer than four double-sided pages (8 pages total) in a 12-point font. The feds have provided a template to help health plans create their SBC, which can be found here.

The post Feds delay major health reform law change appeared first on CFO Daily News.

According to a DOL investigation, the CEO and CFO of USA Star Healthcare Group failed to remit $400K-plus in contributions and loan payments that had been withheld from workers’ checks – and instead held onto those funds and added them to other hospital accounts.

The execs also failed to forward workers’ contributions to the plan in a timely manner, which results in deposits being up to 301 days late, according to the DOL.

In the end, the execs were ordered to repay $600,692 plus interest to the plan. Also, they must pay a 20% penalty and are barred from servicing as service providers or fiduciaries to any ERISA-covered retirement plan in the future.

The post Execs ordered to repay more than $600K to retirement plan appeared first on CFO Daily News.

The DOL’s Employee Benefits Security Administration (EBSA) just issued its final rule on investment advice for defined-contribution plan participants.

It goes into effect on December 27, 2011.

The final rule spells out scenarios in which investment advice can be provided to 401(k) participants without violating the prohibited transaction rules that are part of the Pension Protection Act of 2006.

Essentially, it states that 401(k) plans can offer advice to plan participants in two ways:

• from a third-party (as long as the third party receives a level – or flat – fee that doesn’t change based on investment choices), and
• from a computer model that is certified as an unbiased independent expert.

Whether a plan-sponsor uses a third-party or computer model, the organization, computer model or persons providing the advice must use generally accepted investment theories that are based on historical risks and the performance of different asset classes over a defined time frame.

The DOL’s final rule also listed a number of criteria the entity providing investment advice must ask 401(k) participants about and take into account.

This includes the participants’:

• age
• life expectancy
• retirement age
• risk tolerance and investment preferences
• current investments, and
• other assets and sources of income.

You can view the official DOL rule right here.

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