Every quarter, I prepare a recap of developments in the benefits and compensation areas for Institutional Investment Consulting. Although many of the items have been reported in previous blog entries, I do a deeper dive for the IIC report. Below is a copy of the most recent report, covering April through June.
The week before The 4th was the Supreme Court's last week and I posted several times about the big decisions issued as the Court ended its session. Then, radio silence.
A lot of what has happened in the interim didn't seem to have enough "wow" to follow the most recent entries. While Fidelity settled fiduciary litigation against it for $12 million, the immediate impact would appear to be important only for plan sponsors that include proprietary funds in their plans--which doesn't cover many companies. And, the Senate's imminent launch of a bill that would overturn Hobby Lobby is newsworthy, but it doesn't seem very likely that the House and Senate will agree on very much about ACA (particularly as the House prepares to sue President Obama for extending the ACA deadlines), so I wouldn't expect anything to get through Congress [updated July 17--the proposal didn't even get through the Senate].
But, there are a few items that are important enough to be covered in detail:
In the Quarterly Report that we prepared for IIC (which is contained in another blog entry), we reported on the ongoing challenge to church plans maintained by church-affiliated organizations. The issue in those cases (there are six pending or recently decided) is that the affiliate (a church-sponsored health care organization) isn't a "church" for these purposes and, therefore, does not qualify for ERISA's church plan exemption. If the challenges are successful, the plans become noncompliant because they do not comply with ERISA's vesting rules and, for defined benefit plans, ERISA's funding rules, among other rules. While the first two cases to rule agreed with the challengers that a plan maintained by a church affiliate is not a church plan, a ruling last week went the other way. A Federal Court in Missouri, in Overall v. Ascension, concluded that the health system's plans were church plans because Ascension was controlled by the Roman Catholic Church. The Court recognized that other courts had recently ruled to the contrary, but was persuaded by the long-standing interpretation of the issue by the IRS.
Even though this question only affects a small portion of plan sponsors, it is important enough within that sector to be reported. We'll continue to monitor developments.
Each calendar quarter, I prepare a discussion the most important employee benefits and executive compensation developments (it comes out about a month after the quarter ends) for Institutional Investment Consulting, an excellent and highly regarded consulting firm in the qualified and nonqualified retirement plan space. You can get their info at www.iic-usa.com. Here is the full QI 2014 Report.