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March 1, 2007
Investment Advice Guidance
The Department of Labor (DOL) has issued Field Assistance Bulletin (FAB) 2007-1 relating to the new investment advice provisions of the Pension Protection Act of 2006 (“PPA”). A FAB provides guidance to the DOL’s field offices about how to administer provisions of the law.
February 1, 2007
Health Care on the Front Burner
Health care reform is hot, both on the Federal and State agendas. Whether anything substantial comes out of these simmering pots, remains to be seen.
More PPA Guidance
The IRS recently issued Notice 2007-7. This guidance addresses a potpourri of Pension Protection Act of 2006 (PPA) matters. The majority of the Notice relates to distribution issues, and also includes some guidance on the vesting requirements of defined contribution plans. Following is a brief summary of the guidance.
January 4, 2007
DOL Offers Guidance on Benefit Statement Distribution
The Pension Protection Act (PPA) requires that plans provide benefit statements on a more regular basis than previously required (see Notice Requirements from the September, 2006 edition of the Benefit Beat). Specifically, defined contribution plans must provide benefit statements quarterly, as long as the plan allows individual direction. Defined contribution plans that do not allow individual direction must provide benefit statements annually. Defined benefit plans must provide benefit statements every three years, unless the plan elects to comply with an alternative notice requirement.
Substantiation of Medical Expenses via Debit Cards
Transition relief has been provided in IRS Notice 2007-2 relating to substantiation of employer-provided medical expenses made through debit cards that are used in conjunction with flexible spending accounts or health reimbursement arrangements. Certain items purchased with a debit card may not be identified as qualifying medical expenses under a plan if the vendor or entity does not utilize a merchant category code (MCC) system. Thus, this guidance provides some relief to supermarkets, grocery stores, discount stores, and wholesale clubs that do not have such system in place. The Notice requires these entities to implement a MCC system by January 1, 2008.
Group Health Plan Compliance Audit
The Department of Labor is making an effort to ensure that all group health plans subject to ERISA are complying with its requirements, specifically Title 7 of ERISA. This section of ERISA includes provisions relating to the HIPAA portability rules, the Mental Health Parity Act, the Newborns’ and Mothers’ Health Protection Act, and the Women’s Health and Cancer Rights Act.
December 5, 2006
Smartcards and Debit Cards Allowed for Qualified Transportation Expenses
The IRS and Treasury Department issued Revenue Ruling 2006-57, explaining when a smartcard or debit card can be used to purchase qualified transportation benefits. Specifically, the Revenue Ruling provides several examples of what would constitute a permitted card. If a card with an embedded chip is purchased from a mass transit vendor with no more than the maximum $105 for 2006 ($110 for 2007) embedded in the card, the card could be used for mass transit without further substantiation.
2007 Cost-of-Living Adjustments for HSAs, MSAs and Other Benefits
In Rev Proc 2006-53, the IRS released several cost of living adjustments for various benefits. Following are amounts applicable to tax years beginning in 2007:
Important: New Notice Requirements for Defined Contribution Plans
Notice of Automatic Enrollment
November 1, 2006
Interactive Website for Compliance Assistance
The DOL has launched a compliance assistance website to help employers understand their responsibilities and obligations with regard to health benefit plans that they may sponsor. The website, known as the Health Benefits Advisor (http://www.dol.gov/elaws/ebsa/health), is set up as an interactive tool, and provides information about: