Regulatory Update – What Should Plan Sponsors Expect in 2015? Presented by: Jim Haubrock and Lance Drummond

Upcoming Presentations

ACA Update: Know your Reporting Responsibilities Wednesday, August 12, 2015 Noon to 1 p.m. EST Speakers: Jim Haubrock and Fred Francis Caught in the Act: Fraud Case Studies Wednesday, September 23, 2015 Noon to 1 p.m. EST Speakers: Jim Haubrock and Glenn Roberts

Agenda

• Current DOL focus areas • EBSA audit quality study and enforcement

initiatives • Recent legislative developments • Important upcoming dates and deadlines • Fiduciary roles and responsibilities • Q & A session

Current DOL Focus Areas

• Health and Welfare plans – Proper plan documents and employee notices – Proper and timely filing of required forms

• Form 5500 • Form 720 PCORI • Transitional Reinsurance Fee (TRP fee $27 2016) • Form 1094-C and 1095-C

– Employer payment plans for small employers • Notice 2013-54: ER pymt plans are group plans • Exclude payments from taxable income?

– Sure, but penalty of $100/day per employee!

Current DOL Focus Areas

• ESOPS – Continued focus on Valuations and Fairness opinions – Reasonableness of financial projections – Companies ability to service debt – Review of distribution policies and affects on

sponsor’s repurchase obligation – Detailed documentation

• Multi-Employer Plans – Proper plan documentation – Timely deposit of participant contributions from all

participating employers (payroll audits) – Funding deficiencies (Defined Benefit plans) – Proper compliance and non-discrimination testing

Current DOL Focus Areas • Non- Qualified Arrangements both Top Hat and

Non-Top Hat – Violation of contingent benefit rule (cannot condition

participation or contribution level into the NQ plan upon the employee’s participation or non-participation in a qualified plan)

– Timing of FICA and FUTA tax withholding – Reporting and Recordkeeping Focus:

• Form W-2 reporting in box 1 and box 11 • Current year distributions excluded from FICA wages

taken into account in a prior year • Schedule M adjustments to Form 1120 for expensed

deferred comp matches employer’s books • Appropriate Schedule M adjustments made in prior

years for amounts distributed and the employer is taking a current year deduction

EBSA Audit Quality Study & Enforcement

• Study Overview & Purpose – 6 strata based on size of EBP practice

• Findings Summary – Deficiency rates high in small practices (over 75%

deficient in the smallest strata) – Direct correlation between size of practice and

deficiency rate – EBPAQC member firms had lower deficiency rate than

non-member firms – No meaningful correlation between audit fees and

quality of work – Audit is often of lesser quality where firms have less

expertise – Problematic audit areas remain unchanged

EBSA Audit Quality Study & Enforcement

• Current areas of focus include: – High Risk Audit Engagements

• Health and Welfare Plans • ESOPS • Hard to value plan assets

– Re-inspections of CPA firms • Compliance with state peer review licensing • Was an acceptable peer review performed? • Is CPA firm properly licensed where they practice?

– Continued outreach to EBP stakeholders

EBSA Audit Quality Study & Enforcement

• Current areas of enforcement: – Reporting of Fidelity Bond coverage status – Missing audit reports / attachments – Compliance with Small Pension Plan Audit Waiver – DFVCP compliance – Plan asset accountability – Stop filers (cooperative initiative with IRS) – Health & welfare plan non-filers

Recent Legislative Developments

• Obergefell v Hodges – Domestic Partner Benefits

– Same-Sex Domestic Partners – Opposite-Sex Domestic Partners – Obergefell ruling does NOT require employers to offer

health coverage to spouses – Fully insured health plan impact – Self-funded health plan impact – Discrimination issues – No impact on qualified retirement plans

Recent Legislative Developments

• King v. Burwell – Premium Subsides – States establish exchange or marketplace or federal

government steps in – 36 states failed to establish exchange / marketplace – Subsidies for low to moderate income individuals

covered under the exchange – Statute worded that subsidies only available to those

coverage by exchange established by a state – IRS issued regs stating everybody was eligible – Several lawsuits filed claiming IRS had no authority – Supreme Court ruling: Subsidies available to all

qualifying individuals covered by state or federal government exchange / marketplace

Upcoming Dates and Deadlines

• Form 5500 – July 31 (Retirement and Health and Welfare plans)

• Form 8955-SSA – July 31 (new electronic filing requirement)

• Form 720 – July 31 (Self-funded Health Plans and HRA plans)

• Reinsurance Fee – November 15; January 15 – Second installment of $10.50 due Nov 15 for those

paying in installments for 2014 – 2015 Fee due January 15 ($33 installment; $44 total) – Form 1095-C – February 1, 2016 – Large Employers must complete for every full-time

employee – Self-funded required to report additional information

for all covered employees (name, social security number or date of birth)

Fiduciary Roles and Responsibilities

• Meet filing deadlines – Review all benefit programs for compliance – ACA compliance

• Review HR policies and practices • Modify your FMLA policy for same-sex married

couples (not necessarily unmarried domestic partners)

• Make sure you’re properly overseeing your investment options (IPS)

• Uptick in the use of self-directed brokerage accounts

• Make sure you don’t have any prohibited transactions

Emerging Issues

• Efast 3 • Form 5500 changes • ACA compliance/enforcement • Fiduciary regulations • Audit quality study (ERISA changes) • New products and services

Questions?

Jim Haubrock Chair, EBPA Group (937) 496-4403 jhaubrock@cshco.com Lance Drummond Principal, QPAC Group (513) 424-7945 ldrummond@cshco.com