The Internal Revenue Service (IRS) has said applicants requesting determination letters for their defined benefit (DB) plans should identify whether the plan has lump-sum risk transfer language in either the cover letter to their application or an attachment.
For plans that do, they must also identify the appropriate plan section and whether the plan satisfies one of the conditions in Notice 2015-49. In Notice 2015-49, the IRS announced its intent “to amend the required minimum distribution regulations under § 401(a)(9) of the Internal Revenue Code to address the use of lump-sum payments to replace annuity payments being paid by a qualified defined benefit pension plan.” Effective July 9, 2015, DB plan sponsors may no longer offer a lump-sum window to participants who have begun receiving installments.
On its website, the IRS says if the plan sponsor advises that the plan has risk transfer language and satisfies one of the four conditions in Notice 2015-49, the agency will review the plan document to verify that it satisfies the qualification requirements of the Code. The plan’s determination letter will contain a favorable caveat providing reliance on the risk transfer language.
Plans with risk transfer language that do not meet one of the conditions in Notice 2015-49 won’t receive a determination letter unless the risk transfer language is removed.
For all other DB plans, the determination letter will contain a caveat that the plan has no reliance that any risk transfer language satisfies the requirements of the Code. This approach will be used if the plan sponsor:
Doesn’t include the information on a cover letter or attachment;
Doesn’t respond to the request; or
Responds that the plan doesn’t have risk transfer provisions.
For DB plan determination letter applications the IRS has already received, it will request the plan sponsor provide this information.
The O.C. Tanner Institute 2015 Health and Well-Being Study shows that improved well-being has a large impact on employees, the way they work, and ultimately on the company’s bottom-line. Employees who are holistically well deliver a difference for their teams and departments.
In a white paper, O.C. Tanner explains that well-being is not the same as wellness. Traditionally, wellness programs focus on physical attributes and provide employees with gym memberships, meal plans, and healthy snacks. However, well-being is much more than a measure of physical wellness. It is a measure of a person’s perception of how her life is going—whether it is fulfilling and satisfying, whether she feels her best every day, and where her life is headed in the future. Understanding employee well-being as a holistic life experience reveals a much broader definition of the term—one in which physical wellness, though necessary and important, is only part of the overall well-being story.
For the study, employee well-being is measured and defined through a set of questions modified from leading academic research on human well-being. The study asks employees to describe their current life situation on a 10-point scale both inside and outside of work. In the context of well-being, employees rate their life at work today lower than their life at home and future life. On average, employees rate their life inside work today at 5.24 on the 10-point scale, and rate their life outside work at 6.36. These scores generally move in the same direction—as an employee’s life at work improves, so does their life outside of work and vice versa.
NEXT: Three dimensions of well-being
The study found that an employee’s well-being is largely affected by three dimensions of wellness—physical wellness, mental wellness, and social wellness.
In order to measure physical wellness, a physical wellness index was created using 19 different elements of physical wellness and includes both positive health habits such as seeing a doctor and losing weight and negative health habits such as smoking. Combining these survey questions yields a physical health index with a maximum score of 16 and a minimum score of -1. Overall, the average for the physical wellness index is 6.09. As employees progress from poor physical wellness through to good physical wellness, overall employee well-being scores also improves from a low of 5.22, on average, to a high of 6.66.
Having good social wellness is grounded in work-life balance and the presence of quality, positive interactions with others both at work and at home. From the survey, 16 questions were used to derive an overall social wellness index. Combing these questions yields a social wellness index score between 0 and 6. The distribution of social wellness scores has a range of 5.25 with a low score of 0.75 and a high score of 6. The mean social wellness score from the sample is 3.86. Employees with excellent social wellness had overall well-being scores of 7.21, more than two points higher than those with poor social wellness.
For the study, having good mental wellness is defined by combining 15 survey questions into a mental wellness index. Combining these survey questions yields a mental wellness score between 0 and 6. The distribution of mental wellness scores has a range of 5.47 with a low score of 0.53 and a high score of 6. The mean social wellness score from the sample is 3.89.
The study found that good mental wellness has the largest impact of any individual wellness dimension on overall well-being. The data shows that employees with excellent mental wellness have an overall well-being index score of 7.76, while employees with excellent physical and social wellness lag behind with overall well-being scores of 6.66 and 7.21, respectively. Additionally, the increase in overall well-being between poor mental wellness and excellent mental wellness is 2.26 (more than a 20% increase on the overall well-being scale).
NEXT: Benefits/perks that impact well-being
Those with poor well-being self-reported, on average, that they are only working at 64% of their maximum output. Additionally, those with a poor well-being viewed their immediate work teams more negatively and assessed that their team was only producing, on average, 61% of their maximum output. Those with excellent well-being rate their personal work output as 19% higher (83%) and the work productivity of their immediate team 20% higher (81%).
The study also asked employees about perks and benefits currently offered at the company they worked. Seven benefits impacted overall well-being the most: fair base salary/pay, family emergency leave/family care leave, paid vacation time, maternity leave, open work spaces where teams can meet and collaborate on projects, paid sick leave, and above and beyond employee recognition. These seven benefits saw the largest difference in average well-being between employees who have the perk/benefit at their company compared to employees who do not have the perk/benefit at their company.
Of the seven benefits/perks that most impact well-being, five are traditional benefits: fair base salary/pay, family emergency leave/family care leave, paid vacation time, maternity leave, and paid sick leave. However, O.C. Tanner found employee recognition and open work spaces are of particular interest because they are the only two environmental benefits to have a large impact on well-being. This finding reveals that company culture is just as important to employee well-being as traditional benefits.
The paper suggests that encouraging employees to appreciate one another, educating them on how and when to recognize one another, and empowering them with intuitive recognition tools, are excellent steps to improving employee well-being. When employees feel appreciated, and report being appreciated often, they have higher overall well-being both inside and outside of work at work. In a separate question, O.C. Tanner asked more specific questions about the recognition culture at employees’ companies, and found employees who felt appreciated over the past month had well-being scores 13% higher, on average, than employees who didn’t feel appreciated.