An important Information Letter from the DOL discusses the issue of whether or not an “affiliated service group” within the meaning of section 414(m) of the Internal Revenue Code is a “single employer” for purposes of the MEWA rules of section 3(40) of ERISA. Conclusion: “‘[A]ffiliated service group’ status under section 414(m) of the Code would not, in and of itself, support a conclusion that a group of two or more trades or businesses would be a single employer for purposes of section 3(40) of ERISA.”
Revenue Ruling 2004-57 (via Benefitslink.com) and Announcement 2004-52 (also via Benefitslink.com) focus on this issue: Does a plan fail to be an eligible governmental plan under section 457(b) of the Internal Revenue Code solely because the plan is offered and administered by a labor union for the benefit of those State employees who are union members? Answer: No, if certain conditions are met:
[A]n eligible governmental employer may adopt, for its collectively-bargained employees, a plan created by the union for employees of the governmental employer and offered and administered by the union, provided that the plan is “established and maintained by” the governmental employer. . . If the governmental employer has adopted the plan in a manner that reflects the employer as having established and maintained the plan, a plan does not fail to be an “eligible governmental section 457(b) plan” merely because the plan is created, offered and administered by a union even if it is in addition to another plan that is offered and administered by the governmental employer.
Read the guidance for more details . . .
Dechert LLP has an article here on a case that is making waves in Pennsylvania: Ignatz v. Commonwealth of Pennsylvania. An excerpt from the article:
In a surprising and troubling decision, the Commonwealth Court of Pennsylvania recently decided in Ignatz v. Commonwealth of Pennsylvania that amounts deferred by an employee under an unfunded, non-qualified plan of deferred compensation are subject to personal income tax in the year earned. Notwithstanding clear federal law to the contrary, in a question of first impression for Pennsylvania, the Commonwealth Court determined that such deferred compensation is constructively received when earned.