House passes Pension Protection Act of 2006

From the House Committee on Ways and Means, "Comprehensive Pension Bill Clears the House Bill to Bolster Retirement Security Now Moves to the Senate": Today, the U.S. House of Representatives approved H.R. 4, the Pension Protection Act of 2006, by…

From the House Committee on Ways and Means, “Comprehensive Pension Bill Clears the House Bill to Bolster Retirement Security Now Moves to the Senate“:

Today, the U.S. House of Representatives approved H.R. 4, the Pension Protection Act of 2006, by a vote of 279-131. This critical piece of legislation reflects months of negotiations between the House and Senate. . .

More links here.

See also this recent article from CCH: “House passes comprehensive pension reform bill.”

UPDATE: A good summary of the legislation is here.

Article: Changes to Nonqualified Deferred Compensation Rules Applicable to Tax-Exempt Employers

I have added the following article to the 409A section in the sidebar on the right (scroll down): "Changes to Nonqualified Deferred Compensation Rules Applicable to Tax-Exempt Employers" by Gregory L. Needles and Kimberly A. Butlak, Morgan, Lewis & Bockius,…

I have added the following article to the 409A section in the sidebar on the right (scroll down): “Changes to Nonqualified Deferred Compensation Rules Applicable to Tax-Exempt Employers” by Gregory L. Needles and Kimberly A. Butlak, Morgan, Lewis & Bockius, LLP.

DOL’s FAQs for Reservists Being Called To Active Duty

The DOL has posted a number of benefits-related questions and answers pertaining to reservists being called to active duty. You can access the FAQs here….

The DOL has posted a number of benefits-related questions and answers pertaining to reservists being called to active duty. You can access the FAQs here.

District Court Opines That ERISA Preempts Maryland’s Fair Share Health Care Fund Act: Notable Quotes

The Retail Industry Leaders Association won a victory last week when a federal district court ruled that Maryland's Fair Share Health Care Fund Act was preempted by ERISA. Access the opinion here: Retail Industry Leaders Association v. James D. Fielder,…

The Retail Industry Leaders Association won a victory last week when a federal district court ruled that Maryland’s Fair Share Health Care Fund Act was preempted by ERISA. Access the opinion here: Retail Industry Leaders Association v. James D. Fielder, Jr., Maryland Secretary of Labor, Licensing, and Regulation.

Notable quotes from the opinion written by Federal District Judge J. Frederick Motz:

1. “The fact that two local jurisdictions, New York City and Suffolk County, have enacted “fair share” legislation of their own highlights the uniformity problem. Unless such legislation is deemed to be preempted, nationwide employers potentially will face not only fifty different requirements imposed by the States, but also a virtually limitless number of requirements that local subdivisions in each State may enact.” (From footnote 13).

2. “My finding that the Act is preempted is in accordance with long established Supreme Court law that state laws which impose employee health or welfare mandates on employers are invalid under ERISA. See, e.g., Greater Washington Bd. of Trade, 506 U.S. 125; Shaw, 463 U.S. 85. The Secretary contends, however, that these authorities are not controlling because a trilogy of cases, Travelers, 514 U.S. 645, Dillingham, 519 U.S. 316, and DeBuono v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806 (1997), have “changed the landscape of ERISA preemption analysis.” The short answer to this contention, of course, is that this court has no authority to disregard Supreme Court precedent on the basis of the prediction that the Court would overrule its decisions. . . Moreover, the Secretary over-reads the cases upon which he relies.”

3. “Although, as the Fourth Circuit noted in Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1466-67, 1468 (4th Cir. 1996), the Supreme Court in Travelers “narrow[ed]” its “interpretation of the scope of ERISA preemption” and “adopted a pragmatic approach” to determining whether a state law “relate[s] to” an employee benefit plan, nothing in Travelers or its progeny suggests that the Court would now uphold a state statute or local ordinance mandating that an employer provide a certain type or monetary level of welfare benefits in an ERISA plan.”

4. “Of course, I am expressing no opinion on whether legislative approaches taken by other States to the problems of health care delivery and its attendant costs would be preempted by ERISA. For example, the Commonwealth of Massachusetts has recently enacted legislation that addresses health care issues comprehensively and in a manner that arguably has only incidental effects upon ERISA plans. In light of what is generally perceived as a national health care crisis, it would seem that to the extent ERISA allows, it is strongly in the public interest to permit states to perform their traditional role of serving as laboratories for experiment in controlling the costs and increasing the quality of health care for all citizens.” (From footnote 15)

4. “The Secretary’s third argument is that the Act by its terms does not require an employer to spend a certain amount on health care costs but rather simply provides that if the employer does not do so, it shall pay to the Secretary an amount equal to the difference between its actual health care expenditures and the required amount. Again, while this is theoretically true, it does not even approximate reality. If employers are faced with the choice of paying a sum of money to the State or offering an equal sum of money to their employees in the form of health care, no rational employer would choose to pay the State. While repeatedly emphasizing that employers have a “choice,” the Secretary does not offer a single reason why an employer would pay the State rather than generate good will with its work force by increasing its employees’ benefits. The “choice” here is a Hobson’s choice. See Travelers, 514 U.S. at 664 (noting that a Hobson’s choice “would be treated as imposing a substantive mandate”).”

5. “Second, the Secretary contends that an employee could comply with the Act by spending an amount equal to the requisite percentage of its payroll on first aid facilities. This contention is based upon 29 C.F.R. §2510.3-1(c)(2), which excepts from the definition of ERISA plans “[t]he maintenance on the premises of an employer of facilities for the treatment of minor injuries or illness or rendering first aid in case of accidents occurring during working hours.” While the Secretary’s argument may evidence the active imagination of his lawyers, it is utterly out of line with reality.”

Previous posts on the legislation are here and here. See also Professor Paul Secunda’s thoughtful post on the opinion here.

UPDATE: Excerpt from an article from Law.com–“Federal Judge Overturns Wal-Mart Health Care Spending Law“:

Kevin Enright, a spokesman for the Maryland attorney general’s office, said the state would appeal to the 4th U.S. Circuit Court of Appeals in Richmond, Va.

Enright said the state disagreed with Motz on several counts, particularly in finding that the law is pre-empted by ERISA.

“Supreme Court precedent makes it clear that this law does not impermissibly impact health benefit plans,” Enright said. “Employers may choose to pay the tax or avoid paying the tax in several ways.”

KaiserNetwork.org has more reaction to the opinion here.

District Court Opines That ERISA Preempts Maryland Fair Share Health Care Fund Act: Notable Quotes

The Retail Industry Leaders Association won a victory last week when a federal district court ruled that Maryland's Fair Share Health Care Fund Act was preempted by ERISA. Access the opinion here: Retail Industry Leaders Association v. James D. Fielder,…

The Retail Industry Leaders Association won a victory last week when a federal district court ruled that Maryland’s Fair Share Health Care Fund Act was preempted by ERISA. Access the opinion here: Retail Industry Leaders Association v. James D. Fielder, Jr., Maryland Secretary of Labor, Licensing, and Regulation.

Notable quotes from the opinion written by Federal District Judge J. Frederick Motz:

1. “The fact that two local jurisdictions, New York City and Suffolk County, have enacted “fair share” legislation of their own highlights the uniformity problem. Unless such legislation is deemed to be preempted, nationwide employers potentially will face not only fifty different requirements imposed by the States, but also a virtually limitless number of requirements that local subdivisions in each State may enact.” (From footnote 13).

2. “My finding that the Act is preempted is in accordance with long established Supreme Court law that state laws which impose employee health or welfare mandates on employers are invalid under ERISA. See, e.g., Greater Washington Bd. of Trade, 506 U.S. 125; Shaw, 463 U.S. 85. The Secretary contends, however, that these authorities are not controlling because a trilogy of cases, Travelers, 514 U.S. 645, Dillingham, 519 U.S. 316, and DeBuono v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806 (1997), have “changed the landscape of ERISA preemption analysis.” The short answer to this contention, of course, is that this court has no authority to disregard Supreme Court precedent on the basis of the prediction that the Court would overrule its decisions. . . Moreover, the Secretary over-reads the cases upon which he relies.”

3. “Although, as the Fourth Circuit noted in Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1466-67, 1468 (4th Cir. 1996), the Supreme Court in Travelers “narrow[ed]” its “interpretation of the scope of ERISA preemption” and “adopted a pragmatic approach” to determining whether a state law “relate[s] to” an employee benefit plan, nothing in Travelers or its progeny suggests that the Court would now uphold a state statute or local ordinance mandating that an employer provide a certain type or monetary level of welfare benefits in an ERISA plan.”

4. “Of course, I am expressing no opinion on whether legislative approaches taken by other States to the problems of health care delivery and its attendant costs would be preempted by ERISA. For example, the Commonwealth of Massachusetts has recently enacted legislation that addresses health care issues comprehensively and in a manner that arguably has only incidental effects upon ERISA plans. In light of what is generally perceived as a national health care crisis, it would seem that to the extent ERISA allows, it is strongly in the public interest to permit states to perform their traditional role of serving as laboratories for experiment in controlling the costs and increasing the quality of health care for all citizens.” (From footnote 15)

4. “The Secretary’s third argument is that the Act by its terms does not require an employer to spend a certain amount on health care costs but rather simply provides that if the employer does not do so, it shall pay to the Secretary an amount equal to the difference between its actual health care expenditures and the required amount. Again, while this is theoretically true, it does not even approximate reality. If employers are faced with the choice of paying a sum of money to the State or offering an equal sum of money to their employees in the form of health care, no rational employer would choose to pay the State. While repeatedly emphasizing that employers have a “choice,” the Secretary does not offer a single reason why an employer would pay the State rather than generate good will with its work force by increasing its employees’ benefits. The “choice” here is a Hobson’s choice. See Travelers, 514 U.S. at 664 (noting that a Hobson’s choice “would be treated as imposing a substantive mandate”).”

5. “Second, the Secretary contends that an employee could comply with the Act by spending an amount equal to the requisite percentage of its payroll on first aid facilities. This contention is based upon 29 C.F.R. §2510.3-1(c)(2), which excepts from the definition of ERISA plans “[t]he maintenance on the premises of an employer of facilities for the treatment of minor injuries or illness or rendering first aid in case of accidents occurring during working hours.” While the Secretary’s argument may evidence the active imagination of his lawyers, it is utterly out of line with reality.”

Previous posts on the legislation are here and here. See also Professor Paul Secunda’s thoughtful post on the opinion here.

409A Article from Tax Analysts

As part of the 409A section in the sidebar, I am adding a link to this article from Tax Analysts: "Vesting of Deferred Compensation: When Words Are More Taxing Than Deeds."…

As part of the 409A section in the sidebar, I am adding a link to this article from Tax Analysts: “Vesting of Deferred Compensation: When Words Are More Taxing Than Deeds.”

SEC to Conduct Seniors Summit

The SEC will be conducting the first-ever Seniors Summit on July 17, 2006, to examine how regulators and others can better coordinate efforts to protect older Americans from investment fraud and abusive sales practices. See also this related article from…

The SEC will be conducting the first-ever Seniors Summit on July 17, 2006, to examine how regulators and others can better coordinate efforts to protect older Americans from investment fraud and abusive sales practices.

See also this related article from MSNBC: “SEC steps up campaign against pension scams.”

More Guidance on Debit/Credit Cards for FSAs/HRAs

The IRS has issued Notice 2006-69 providing guidance addressing these topics: (1) the use of debit cards, credit cards, and stored value cards to reimburse participants in flexible spending accounts and health reimbursement arrangements, (2) the substantiation requirements that apply…

The IRS has issued Notice 2006-69 providing guidance addressing these topics: (1) the use of debit cards, credit cards, and stored value cards to reimburse participants in flexible spending accounts and health reimbursement arrangements, (2) the substantiation requirements that apply to all medical reimbursement plans whether or not a card is used, and (3) the use of cards to reimburse participants in dependent care assistance programs, including dependent care flexible spending arrangements. The Notice builds on the previous guidance issued in Rev. Rul. 2003-43 which you can read about in a number of previous posts here.

JCEB 2006 Q & As Have Been Posted

Each year, the ABA's Joint Committee on Employee Benefits ("JCEB") meets with officials of federal agencies to discuss issues of interest to employee benefits practitioners. The JCEB then posts the question and answer transcripts on its website. The Q &…

Each year, the ABA’s Joint Committee on Employee Benefits (“JCEB”) meets with officials of federal agencies to discuss issues of interest to employee benefits practitioners. The JCEB then posts the question and answer transcripts on its website. The Q & A’s have now been posted for 2006. You can access them here.

There is some really interesting info in these new Q & As. See Q & As 32 and 33 of the IRS session for some Q & As on section 409A. Also, Q & A 34 for the IRS session discusses the recent Quality Assurance Bulletin mentioned in this previous post here and anwers a question regarding exclusion of “on call,” “per diem,” and “temporary” employees from qualified plans.

Please note that the JCEB website provides the following disclaimer:

The questions are submitted by ABA members and the responses are given at a meeting of JCEB and government representatives. The responses reflect the unofficial, individual views of the government participants as of the time of the discussion, and do not necessarily represent agency policy.

Access previous JCEB Q & As here.

More on the Outlook for Retiree Medical Benefits . . .

A recent study by Watson Wyatt-Retiree Health Benefits: Time to Resuscitate?-contains data regarding the future of retiree medical benefits: Future retirees will shoulder substantially more ? if not all ? of the costs of their health care in retirement. Watson…

A recent study by Watson Wyatt–Retiree Health Benefits: Time to Resuscitate?–contains data regarding the future of retiree medical benefits:

Future retirees will shoulder substantially more ? if not all ? of the costs of their health care in retirement. Watson Wyatt estimates that the level of employer financial support will drop to less than 10 percent of total retiree medical expense by the year 2031, under plan provisions already adopted by many employers.

Also, a recent article on the topic from the National Law Journal: “Benefits as Burdens.” (At the end of the article, there is a quote from this author.)