Category: Benefits

I had heard that the Treasury and IRS were poised and ready to act quickly once the Pension Funding Equity Act of 2004 was signed into law. Evidently they were, as the Act was only just signed by President Bush on Saturday, and the Treasury and IRS have already issued the interest rate change for pension plan funding as stated in this press release: “Treasury and IRS Issue New Pension Interest Rate For Defined Benefit Plans.” See also Notice 2004-34 and Announcement 2004-38. More on this later . . .

From Reuters via Forbes.com, “Bush signs bill giving pension aid to US companies“:

President Bush signed into law Saturday a measure aimed at saving U.S. companies more than $80 billion in pension contributions over two years, days before many firms make quarterly payments.

From the AP via the Seattle Post-Intelligencer, “Pension bill split Senate Democrats“:

To unionized machinists, autoworkers and airline pilots, an $80 billion pension relief bill making its way through Congress offered badly needed help. To construction unions and the Teamsters, it was a loser. To the quiet satisfaction of Republicans, that left unhappy Senate Democrats in the middle, forced to make a politically painful choice between reliable election-year allies on one side and those on the other.

From Yahoo! News.com, “With Tax Clock Ticking, Congress Clears Pension Plan Funding Relief.”

From CCH, the “CCH Tax Briefing on the Pension Funding Equity Act of 2004.”

Benefitslink.com now has the link to the “Text of IRS General Information Letter to Mark Iwry on Automatic Compensation Reduction Elections (PDF)” (via the American Benefits Council) referred to in this article and mentioned in a previous post.

For those who won’t make the deadline this week for filing their tax returns, RothCPA.com has some helpful info here on filing an extension, including a link to IRS Form 4868.

From CFO.com, “Malfeasance Insurance: How plan sponsors are coping with the mutual fund scandals“:

Of course, discussions about the mutual-fund scandal are occurring at plenty of companies unaffected by any revelations to date. As the scandal expands, says Jean Blackwell, CFO of Cummins Inc. and chairperson of its benefits-policy committee, “people are taking their fiduciary responsibilities much more seriously.” Blackwell—who in the past has served as the Columbus, Indiana, engine maker’s general counsel and as its vice president of HR—has observed that committee members these days “will push back and disagree,” where in the past they were more inclined to go along with the recommendations of the benefits staff.

From the New York Times, “Speaking Out Could Get Investors Sued“:

Annual meetings have long been considered an open forum where company shareholders could speak out and hope to be heard — and not worry about being sued for what they say. Until now. Just as investors are trying to step up their influence over corporate dealings in the wake of all the scandals, a recent lawsuit is raising concerns that they could face litigation when they voice ideas that companies don’t like.

For those interested in the development of the blogosphere, “A crush note to the blogosphere: Newest mode of journalism has tenacity and transparency that major media lacks.”

For those interested in the development of the blogosphere, this is a wonderful article–“A crush note to the blogosphere: Newest mode of journalism has tenacity and transparency that major media lacks“–by Arianna Huffington at WorkingforChange.com. Here’s what she has to say about blogs:

The problem isn’t that the stories I care about aren’t being covered; it’s that they aren’t being covered in the obsessive way that breaks through the din of our 500-channel universe. Because those 500 channels don’t mean we get 500 times the examination and investigation of worthy news stories. It means we get the same narrow conventional-wisdom wrap-ups repeated 500 times. . . Bloggers are armed with a far more effective piece of access than a White House press credential: passion.

She goes on to say that she loves “the open nature of the form — the links, the research made visible, the democratic back and forth, the open archives, the big professorial messiness of it all” stating further:

It reminds me of my schoolgirl days when providing the right answer wasn’t enough for our teachers — they demanded that we “show our work.” Bloggers definitely show their work. It’s why you don’t just read blogs — you experience them.

All of which has made the blogosphere such a vital news source in our country — and has made me besotted with blogs. It’s a crush that I’m betting will quickly progress to going steady.

Law firm articles and newsletters recently published:

Cooley Godward LLP: “Update Regarding Stock Option Accounting: What the Proposed New Rules mean to you and what you can do about it.”

Faegre & Benson LLP: “IRS Issues Additional Guidance on Health Savings Accounts.”

Gardner Carton & Douglas: “Retirement Plan Update.”

Groom Law Group: “IRS Provides Preventive Care Safe Harbor and Helpful Transition Relief for HSAs.”

Hodgson Russ LLP: “Employee Benefits Developments 3/8 to 3/19 2004.”

Ice Miller LLP: “New Health Savings Account Guidance Issued.”

Kilpatrick Stockton LLP: “Health Savings Account Fever: A Blistering Pace for HSA Guidance Continues.”

Kirkpatrick & Lockhart LLP: “Department of Labor Proposes Regulations and Prohibited Transaction Class Exemption Regarding Automatic IRA Rollovers for Cashout Distributions.”

McDermott, Will & Emery: “A Primer on Health Savings Accounts and Recent Guidance.”

Morgan Lewis & Bockius LLP: “IRS Regulations on Retroactive Payment of Pension Benefits.”

Nixon Peabody LLP: “Fiduciaries under attack — An Enron antidote [PDF File].”

Pepper Hamilton LLP: “Withdrawal Liability in Multiemployer Plans: It’s Baaack!”

Seyfarth Shaw LLP: “Additional Guidance on Health Savings Accounts: A Beginning.”

From Reuters, “Congress Gives Companies Pension Break“:

Legislation expected to save U.S. companies over $80 billion in pension contributions over two years was passed on Thursday by the U.S. Congress and now goes to President Bush for his expected signature into law. Final action came with approval by the Senate, 78 to 19.

The Department of Labor has issued Field Assistance Bulletin 2004-1 (“FAB”), providing some important guidance pertaining to the application of Title I of ERISA to health savings accounts (“HSAs”). Here is what the DOL had to say in the FAB:

Congress, in enacting the Medicare Modernization Act, recognized that HSAs would be established in conjunction with employment-based health plans and specifically provided for employer contributions. However, neither the Medicare Modernization Act nor section 223 of the Code specifically address the application of Title I of ERISA to HSAs. Based on our review of Title I, and taking into account the provisions of the Code as amended by the Medicare Modernization Act, we believe that HSAs generally will not constitute employee welfare benefit plans established or maintained by an employer where employer involvement with the HSA is limited, whether or not the employee’s HDHP [High Deductible Health Plan] is sponsored by an employer or obtained as individual coverage.

Again, the issue is employer involvement (as discussed in a previous post) and whether the particular benefit offered meets the exception under 29 C.F.R. § 2510.3-1(j)(1)-(4). Here is how the DOL decided to define employer involvement with respect to HSAs, as noted in their FAB:

Specifically, HSAs meeting the conditions of the safe harbor for group or group-type insurance programs at 29 C.F.R. § 2510.3-1(j)(1)-(4) would not be employee welfare benefit plans within the meaning of section 3(1) of ERISA. . . [W]e would not find that employer contributions to HSAs give rise to an ERISA-covered plan where the establishment of the HSAs is completely voluntary on the part of the employees and the employer does not: (i) limit the ability of eligible individuals to move their funds to another HSA beyond restrictions imposed by the Code; (ii) impose conditions on utilization of HSA funds beyond those permitted under the Code; (iii) make or influence the investment decisions with respect to funds contributed to an HSA; (iv) represent that the HSAs are an employee welfare benefit plan established or maintained by the employer; or (v) receive any payment or compensation in connection with an HSA.

This just in from Forbes.com–“US Senate’s Daschle won’t block pension bill vote“:

The leader of U.S. Senate Democrats said on Wednesday he would not try to stop a vote on a massive pension relief bill this week, although he opposed the measure. . .

Also, from Quicken.com–“Pension Bill Filibuster Threat Dropped In US Senate“:

The chief opponent of the measure, Sen. Edward Kennedy, D-Mass., had said last week he could stop the bill from passing the Senate. But a lopsided 336-to-69 vote for the bill in the House and mounting pressure from businesses has made that assertion hard to sustain.

The IRS is reporting “IRS, Justice Department Note Increase in Tax Enforcement: Civil and Criminal Enforcement against Tax Cheats On the Rise.” According to the press release, in 2003 the IRS used civil injunctions to stop the following illegal tax schemes:

• Using an employee-leasing company to evade employment taxes;
• Using a ?warehouse bank? to commingle and conceal assets;
• Establishing a ?corporation sole? whereby customers ?donate? assets and income to a sham corporation, then fraudulently claim charitable donations;
• Using abusive trusts to shift assets out of a taxpayer?s name but retain control;
• Claiming personal housing and living expenses as business expenses;
• Claiming non-existent tax credits, such as reparations;
• Failing to withhold, report and pay payroll and income taxes;
• Filing tax returns reporting ?zero income?;
• Claiming that only income from foreign sources is taxable.

Also, this article from the WashingtonPost.com–“IRS, Justice Dept. Promise Vigilance in Tax Enforcement“–notes that, in addition to stepping up prosecutions and seeking a budget increase, the IRS is “[s]tudying a sample of 46,000 returns to upgrade its understanding of which taxpayers are more likely to cheat and how they go about it.”

Also, this from The Hill.com–“In Pig Book, lawmakers go hog wild“:

Amid cries from politicians of all stripes that too much or too little money went to tax cuts, education, the military and other priorities, Congress earmarked more pork-barrel spending in appropriations bills passed last year than ever before. . . CAGW notes that pork projects in the 13 spending bills passed in 2003 for spending this year exceeded previous levels in both number and cost.

From Forbes.com, “Dissidents to sue to get Disney voting results“:

Dissident Walt Disney Co. shareholders Roy Disney and Stanley Gold said on Wednesday they would sue the company to get results for the March 3 shareholder vote on Chief Executive Michael Eisner’s reelection to the board. . . The company did not immediately comment on the latest letter from Roy Disney and Stanley Gold’s attorney accusing it of trying to “delay and obfuscate” the release of voting results, particularly the employees’ pension plan, which Disney and Gold see as a proxy for employee support of Eisner.” (View the letter here.)

From the WashingtonPost.com, “Rolling Out Automatic 401(k) Enrollments“:

In a guidance letter requested by J. Mark Iwry, a former Treasury official now associated with the Brookings Institution, the IRS says that employers may, if they wish, adopt plans that enroll new employees at an automatic contribution level higher than 3 percent. Or, they may begin with a modest rate that rises in regular increments for a period of time.