With its “employer mandate”—i.e., the requirement that applicable large employers make an offer of group health coverage to substantially all full-time employees or face the prospect of a penalty—the Affordable Care Act (ACA) opened a fault line in the previously monolithic market for group health insurance. There is large cohort of American workers who, before the ACA, were not offered major medical coverage under an employer-sponsored group health plan. These employees are sometimes referred to as the “contingent” workforce. They include part-time, seasonal and temporary employees, as well as employees whose work schedules are generally irregular or intermittent. Found predominantly though not exclusively in industries such as staffing, restaurants, media and advertising, transportation and hospitality, among others, these workers tend to be on the lower end of the pay scale. They also often have significant “deferred” health issues (a euphemism for undiagnosed conditions owing to lack of previous access to health care). The ACA provided “applicable large employers” (those with 50 or more full-time and full-time equivalent employees) with an incentive to cover these workers.
As of this writing, it has been over 850 days since the UConn women’s basketball team has lost a game. When the Huskies last tasted defeat (in an overtime thriller to Stanford on November 17, 2014), football players at Northwestern University were pursuing their rights to collectively bargain after a ruling by the NLRB regional director in Chicago held they were statutory employees. While the undefeated nature of women’s basketball in Storrs, CT has been a constant, the NLRB changed the game for Northwestern football players by declining to assert jurisdiction. However, there remains a feeling in certain quarters of college sports that some form of pay to student-athletes is inevitable.
Uber, Lyft, and their competitors, offering handy apps, responsive drivers and competitive prices, are fast becoming a favored commuter option. Many employers either subsidize employee commuter expenses or allow employees to pay for commuter expenses through payroll deductions. Under current law (Internal Revenue Code Section 132(f)) and regulation, these expenses can be tax-free (up to certain dollar limits) if they are incurred through qualifying commuter highway vehicles, van pools, transit passes, parking, and bicycles. Many employers and employees are asking: can Uber and Lyft commutes be provided tax-free?
On July 25, 2016, the IRS finalized regulations under Section 83 of the tax code that removes a procedural step in the process of filing an 83(b) election.
This post continues our examination of the Department of Labor’s suite of final fiduciary and conflict of interest regulations. Our previous posts discussed the newly expanded definition of “investment advice fiduciary”; the “best interest contract” (or BIC) exemption; and the new class exemption for principal transactions. Collectively, these rules vastly expand the definition of an “investment advice fiduciary” while at the same time providing new prohibited transaction class exemptions intended to preserve many of the commission-based compensation arrangements that would otherwise be imperiled under the new fiduciary standard. In this and the next three posts, we will examine how the Department has amended certain existing Prohibited Transaction Exemptions to come into alignment with its new fiduciary and conflict of interest standards.
This post explains the changes to Prohibited Transaction Exemption (PTE) 84-24 relating to insurance agents and brokers.
Continue Reading The Department of Labor’s 2016 Final Fiduciary and Conflict of Interest Regulations: Amendments to Prohibited Transaction Exemption 84-24 for Transactions Involving Insurance Agents and Brokers (and Others)
This post continues our examination of the Department of Labor’s suite of final fiduciary and conflict of interest regulations. Our prior posts discussed the newly expanded definition of “investment advice fiduciary” and the “best interest contract” (or BIC) exemption. In this post we explain the suite’s second new prohibited transaction class exemption entitled: “Class Exemption for Principal Transactions in Certain Assets between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs”. This exemption generally permits the trading of debt instruments in principal and riskless principal transactions involving Employee Retirement Income Security Act (ERISA)-regulated retirement plans and Individual Retirement Accounts (IRAs).
Last month the U.S. Department of Labor published a suite of final regulations governing the fiduciary status of, and prescribing conflict of interest rules that apply to, persons who provide investment advice to ERISA-covered retirement plans and Individual Retirement Accounts (IRAs). (For a list of, and links to, these final regulations, please see our April 11, 2016 post). As we explained previously, the final regulations will have important and far reaching consequences for financial advisors of all stripes (e.g., broker-dealers/registered representatives, Registered Investment Advisors (RIAs), and insurance agents and brokers, among others) who advise retirement plans and IRA investors.
In an earlier post we examined the new and greatly expanded definition of an “investment advice fiduciary,” which is of central importance to the Department’s new regulatory scheme. In this post, we explain the “Best Interest Contract” (or “BIC”) exemption, which allows advisors to receive commission-based compensation that would be barred under the new fiduciary standard, subject to strict new rules intended to protect investors.
With this post, we begin our substantive explanation of the Department of Labor’s suite of final fiduciary and conflict of interest regulations. For the financial services industry, and for the retirement plans and IRAs, there are game-changing rules. This post covers the definition of what constitutes and “investment advice fiduciary.” Future posts will examine the remaining regulations (dealing principally with conflicts of interest) and their impact on stakeholders.
Even though the Affordable Care Act’s employer mandate is in effect and fully phased-in, it has been our experience that few employers have bothered to review their employee handbooks to reflect the ACA. Below we discuss how employers may bolster their ACA compliance (and avoid ACA penalties) through an ACA-focused employee handbook review.
After six years in the hopper, the Department of Labor finally issued final fiduciary regulations late last week that will greatly impact a wide variety of stakeholders. The Employee Retirement Income Security Act (ERISA) governs fiduciary conduct and establishes rules that bar certain transactions, referred to as “prohibited transactions.” While ERISA’s fiduciary standards and prohibited transaction rules apply principally to retirement plans, ERISA also amended the Internal Revenue Code to impose nearly identical prohibited transaction, but not fiduciary, rules on IRAs, Health Savings Accounts, Archer Medical Savings Accounts and Coverdell Education Savings Accounts. The Department of Labor is charged with interpreting the ERISA and Code provisions relating to fiduciary status and prohibited transactions, and its much anticipated suite of final regulations:
- Makes sweeping changes to the definition of the term “fiduciary” under ERISA;
- Imposes strict, new conflict of interest provisions on persons who provide investment advice to ERISA-covered retirement plans and Individual Retirement Accounts; and
- Modifies a handful of existing prohibited transaction class exemptions.
The purpose of this post is to alert readers to the publication of these new fiduciary and prohibited transaction rules and provide links to the original source materials. In the coming weeks and months we will delve into the particulars of each of the components of the new rules. We will then turn our attention to the impact of these rules on various stakeholders—including large and small retirement plans, the financial services industry (including broker-dealers and registered investment advisors) and other issuers of financial products and providers of financial services.