Ask the Experts August 9, 2016

(b)lines Ask the Experts – Are Governmental Plans Free From ERISA-Like Regulations?

“I was surprised to learn in your recent Ask the Experts column that governmental plans are always exempt from the rules of the Employee Retirement Income Security Act (ERISA).
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“To me, ERISA is an important regulatory framework for corporate and other plan sponsors to follow that mandates that such sponsors be prudent in administering such plans. Are governmental plans free from ERISA-like prudence requirements?” 

Michael A. Webb, vice president, Cammack Retirement Group, answers:  

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Interesting question!  Just because governmental plans are not subject to ERISA that does not mean they lack regulation that provides ERISA-like requirements. Governmental plans are subject to both the Internal Revenue Code as well as applicable state laws. Given that ERISA was derived from the state law of trusts, many of these state laws have provisions that mirror (or, coming full circle, adopt parts of) ERISA. In addition, some governmental plans have decided to follow at least some ERISA-like practices, as indicated in a 2014 Ask the Experts column about the subject.

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.  

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to rmoore@assetinternational.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.
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Products August 8, 2016

MassMutual Offers New Group Insurance Coverages

The company says the benefits can protect employees from dipping into retirement savings.
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Massachusetts Mutual Life Insurance Co. introduced new insurance coverages to help working Americans protect their finances and savings against critical illnesses and accidents.

The critical illness and accident group insurance policies are available through employers, either directly or through MassMutual’s BeneClick! integrated benefits exchange. The coverage is voluntary, meaning employees pay the full cost of the coverage offered through their workplace, or it can be made available on an employer-paid basis. The policies cover employees and, where available, spouses and children as well.

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MassMutual notes that often, workers who find themselves in a financial pinch resort to taking loans from their 401(k)s or other retirement savings accounts. Many of those loans are never repaid, resulting in $6 billion in lost retirement savings a year, according to the Pension Research Council (PRC) at the Wharton School, University of Pennsylvania.

Critical illness coverage provides a lump-sum benefit, paid directly to the employee, to help cover medical costs, mortgage payments, childcare, or even groceries. The coverage is also portable, which means employees can take the coverage with them and remain protected if they are diagnosed with a critical illness, even if they change jobs.

MassMutual’s accident insurance provides a temporary replacement for the insured’s salary should he or she be unable to work due to an accident, helping cover medical insurance deductibles and co-pays, down time from work and other expenses.

Critical illness and accident group policies are part of a portfolio of protection products offered at the workplace by MassMutual. The policies complement MassMutual@Work Whole Life and Group Universal Life policies, as well as executive life and disability coverages.

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