Everything You Need to Know About Required 401(k) and IRA Withdrawals

via Wall Street Journal

If you miss a required withdrawal, the IRS can be surprisingly forgiving (if you file the right form).
 

If you are one of the millions of Americans with a retirement-savings account, three of the most important letters in your financial life might be these: RMD.

They stand for required minimum distribution, which is something that the nation’s baby boomers now need to grapple with for the first time. It refers to an annual payout that savers must take from their retirement kitty at a certain point, as required by law.

The first of the boomers (people born mid-1946 through 1964) are just now hitting the age of 70½, when most will be required to pull money out of their 401(k)s and IRAs, but there are a dizzying array of exceptions and deadlines regarding these payouts. For example, some people who are still working at age 70½ don’t have to start taking RMDs from a 401(k).

“I was surprised at how complicated the process was for me—and I’m an expert,” says Natalie Choate, a lawyer with Nutter, McClennen & Fish in Boston who turned 70½ last year.

Read the full article here

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Some Rare Good News for Small Businesses Paying Employee Health Costs

via Wall Street Journal

Small businesses can once again use pretax funds to reimburse workers for health-care costs, especially premiums for individual and family coverage.

In a little noticed move, Congress late last year reauthorized Health Reimbursement Arrangements for businesses with fewer than 50 employees. As a result, these firms won’t risk large penalties on payments they provide to workers who purchase their own health insurance. Many of these firms don’t offer group-health plans, and this law enables them still to offer a health-care benefit.

These HRAs are different from commonly used Health Savings Accounts, which must be combined with a high-deductible health plan. Reinstating HRAs will cost the government about $235 million in lost revenue over five years, according to estimates by the Joint Committee on Taxation.

HRAs were widely used until the Affordable Care Act, commonly called Obamacare, threatened companies with penalties as high as $36,500 per employee, a year, if the arrangements didn’t conform to ACA requirements—and often they didn’t.

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What Happens When Doctors Only Take Cash

via Time

When Art Villa found out, after one too many boating accidents, that he needed a total knee replacement, he began asking around to see how much it would cost. The hospital near his home in Helena, Mont., would charge $40,000 for the procedure, he says. But that didn’t include the anesthesiologist’s fee, physical therapy or a stay at a rehabilitation center afterward. A 2015 Blue Cross Blue Shield study found that one hospital in Dallas billed $16,772 for a knee replacement while another in the same area charged $61,585.

It was in the midst of this confounding research that Villa, who’s 68, heard about the Surgery Center of Oklahoma, whose business model is different from that of most hospitals. There, the all-inclusive price for every operation is listed on the website. A rotator-cuff repair for the shoulder costs $8,260. A surgical procedure for carpal tunnel syndrome is $2,750. Setting and casting a basic broken leg: $1,925.

The catch is that the whole facility is cash-based. It doesn’t take insurance of any kind. Not Aetna. Not Cigna. Not Medicare or Medicaid. Patients or their employers pay whatever price is listed online, period. There are no negotiated rates, no third-party reimbursements and almost no paperwork. “We say, ‘Here’s the price. Here’s what you’re getting. Here’s your bill,'” says Keith Smith, who co-founded the Surgery Center in 1997 with fellow anesthesiologist Steven Lantier. “It’s as simple as that.”

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Federal Judge Blocks Aetna-Humana Merger on Antitrust Grounds

via Wall Street Journal

WASHINGTON—A federal judge Monday blocked the proposed merger of health insurers Aetna Inc. and Humana Inc. on antitrust grounds, a potentially fatal blow to the $34 billion deal and a capstone victory for Justice Department antitrust officials under former President Barack Obama.

U.S. District Judge John D. Bates ruled the Justice Department had proven its case that the merger would unlawfully threaten competition. harming seniors who buy private Medicare coverage as well as some consumers who purchase health plans through an Affordable Care Act insurance exchange.

The government’s challenge to the merger was among the last major law-enforcement actions taken by Obama administration antitrust officials. The administration also challenged Anthem Inc.’s proposed acquisition of Cigna Corp., and a ruling in that case is expected any day. Together the deals could have transformed an industry already facing uncertainty from Republican plans to dismantle the Affordable Care Act and replace it with another health-care plan.

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Federal Judge Blocks Aetna-Humana Merger on Antitrust Grounds

via Wall Street Journal

WASHINGTON—A federal judge Monday blocked the proposed merger of health insurers Aetna Inc. and Humana Inc. on antitrust grounds, a potentially fatal blow to the $34 billion deal and a capstone victory for Justice Department antitrust officials under former President Barack Obama.

U.S. District Judge John D. Bates ruled the Justice Department had proven its case that the merger would unlawfully threaten competition. harming seniors who buy private Medicare coverage as well as some consumers who purchase health plans through an Affordable Care Act insurance exchange.

The government’s challenge to the merger was among the last major law-enforcement actions taken by Obama administration antitrust officials. The administration also challenged Anthem Inc.’s proposed acquisition of Cigna Corp., and a ruling in that case is expected any day. Together the deals could have transformed an industry already facing uncertainty from Republican plans to dismantle the Affordable Care Act and replace it with another health-care plan.

Read the full article here

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Trump Nominees Take Aim at Tax Reform and the Fiduciary Rule

via Lockton Beacon

As a new administration takes office, the retirement plan community scratches their collective heads about what to expect. Donald Trump assumes the presidency with no prior public service, presenting very few tea leaves for us to read. The future lies largely in the hands of the nominee for Secretary of Labor, Andrew Puzder, and the Treasury Secretary nominee, Steven Mnuchin.

The appointment of Puzder to head the Department of Labor (DOL) clearly signals the Trump administration’s plans to deregulate the private sector. Puzder is a successful labor attorney and the CEO of the restaurant group that owns Hardees and Carl’s Jr. He has been outspoken against a raise in the minimum wage, the Affordable Care Act, and the DOL’s overtime regulations. He is a strong critic of government regulation, preferring market solutions to government intervention. While the Obama administration pushed a decidedly pro-labor agenda, we expect the Trump administration to roll back as much of that agenda as possible without overdrawing its political capital amongst members of Congress. We expect employers to find themselves in a much friendlier business environment.

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UnitedHealth’s Revenue, Profit Tops Forecasts

via WSJ

The largest U.S. health care insurer and the first to report earnings, UnitedHealth is typically viewed as a bellwether for the industry.

UnitedHealth Group Inc. reported a 56% increase in profit in the latest quarter, with results fueled by growth in its core insurance unit and its Optum health-services arm, as well as reduced impact from its money-losing Affordable Care Act business.

The Minnetonka, Minn., company reported net income of $1.90 billion, or $1.96 a share, compared with $1.22 billion, or $1.26, in the year-ago quarter. Excluding items, UnitedHealth earned $2.11 a share, compared with $1.40 a year ago. Analysts surveyed by Thomson Reuters anticipated $2.07 a share. In research notes, several analysts attributed the better-than-expected profit partly to strong investment income.

Revenue rose 9% to $47.52 billion in the fourth quarter of 2016, compared with $47.26 billion projected by analysts.

The large year-over-year gain in net income was tied partly to UnitedHealth’s move in the fourth quarter of 2015 to set aside a reserve against expected losses on its ACA exchange business, which pressured the year-ago results. The company said its enrollment in individual plans dropped sequentially in the fourth quarter of 2016, and it is largely exiting the ACA marketplaces this year, improving its outlook.

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