PLANSPONSOR - June/July 2019 - 9

permit workers to use 529 college savings
accounts to pay tuition for K - 12 schools.
Originally, the SECURE Act would have
permitted parents to use 529 college
savings accounts to cover K - 12 tuition at
public, private, religious or home schools.
There was also some politically
charged debate about the fact that the
SECURE Act fixes an error programmed
into the recent tax cuts, which unintentionally
increased the tax burdens of
Americans collecting benefits in connection
with family members dying in the
line of military duty, and the tax burdens
of inheritors of wealth in certain Native
American groups.
What's in the SECURE Act?
At a high level, lawmakers say, the
SECURE Act contains many popular
measures to help Americans.
Besides making it easier for
employers to offer lifetime income products
in defined contribution (DC) plans,
the act includes provisions to remove
restrictions on small employers' ability
to band together in an open multiple
employer plan (MEP).
Related technical changes to the tax
code will ensure the portability of lifetime
income products, and another provision,
requiring lifetime monthly income estimates
on benefit statements, will help
savers make more-informed decisions
regarding their finances.
The SECURE Act also would
increase opportunities for workers to
save by enhancing automatic enrollment
and escalation features, for example by
removing the auto-enrollment safe harbor
cap and increasing the cap for auto-escalation
of employee deferrals. Further, the act
includes measures to require employers
to allow long-term part-time workers to
participate in their workplace 401(k) plan
and a measure that would increase the
current required minimum distribution
(RMD) age limit to 72. -John Manganaro
From Washington
And the Courts
HRA Final Rule
The U.S. departments of Health and
Human Services, Labor and the Treasury
on June 1 issued a final regulation that will
expand the use of health reimbursement
arrangements (HRAs). Under the rule,
starting January 1, 2020, employers will
be able to use what are referred to as individual
coverage HRAs to give their workers
tax-preferred funds to purchase their own
health insurance in the individual market,
subject to certain conditions.
The HRA rule also creates an excepted
benefit HRA. In general, this part of the
rule lets employers that offer a traditional
group health plan also provide an excepted
benefit HRA, wherein they may contribute
up to $1,800 per worker per year-
indexed to inflation after 2020-even if
the worker was not enrolled in the group
plan. Employers may also reimburse an
employee for qualified medical expenses
such as premiums for vision, dental and
short-term, limited-duration insurance.
The new regulation permits an HRA
to be " integrated " with certain qualifying
individual health plan coverage, to
satisfy the regulation's market reforms.
To be integrated in his way, the individual
coverage HRAs (ICHRAs) must meet
several conditions:
* Any individual covered by the
ICHRA must be enrolled in health insurance
purchased in the individual market
and must substantiate and verify that he
has such coverage;
* The employer may not offer both
an ICHRA and a traditional group health
plan to the same class of individuals;
* The employer must offer the
ICHRA on the same terms to all
employees in any given class;
* Employees must have the ability to
opt out of receiving the ICHRA; and
* Employers must provide a detailed
notice to employees.
Supreme Court
Takes on Intel Case
The U.S. Supreme Court has granted a
petition for writ of certiorari, filed by the
Intel Corp. investment policy committee,
asking the court to determine whether
the provision of plan documents, in itself,
gives participants " actual knowledge "
of an alleged fiduciary breach under the
Employee Retirement Income Security
Act (ERISA).
The lawsuit says Intel invested participant
assets in custom-built target-date
funds (TDFs) that included inappropriate
alternative investments, including hedge
funds, and have underperformed peer
funds by approximately 400 basis points
(bps) annually.
In April 2017, a federal district court
judge found that claims against Intel
Corp.'s investment policy committee were
time-barred under ERISA's three-year
statute of limitations. The U.S. magistrate
judge of the district court noted that
actual knowledge exists when a plaintiff
knows of the transaction constituting
the alleged violation. He found that the
plaintiff had had actual knowledge of
the facts underlying his claims because
financial disclosures sent to participants
over the years had provided information
about plan asset allocation and an overview
of the logic behind the investment
strategy. However, the 9th U.S. Circuit
Court of Appeals overturned the decision
this past December and remanded
it back to the district court, having found
that the lower court had used an errant
interpretation of " actual knowledge. "
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