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News & Notes – November 30, 2012

News & Notes – November 30, 2012

November 30, 2012

Authored by: Chris Rylands

Now that we’ve returned from Thanksgiving and have finished off the leftover pumpkin pie, we wanted to share a few more recent benefits-related(ish) stories and other links.

  • In case you didn’t see it, last week the DOL issued compliance guidance for employee benefit plans in wake of Hurricane Sandy.
  • This blog post lists four ways to internally market your benefits and compensation programs.
  • One way you might help participation in your wellness programs is develop an app, says this article.
  • Are you having trouble keeping track of all the lawsuits about the PPACA contraceptive mandate?  Fortunately for you, Politico has a good summary.
  • Some other countries provide

Another Pension Casualty – The Twinkie

November 27, 2012

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Another Pension Casualty – The Twinkie

November 27, 2012

Authored by: benefitsbclp

After failed court-ordered mediation, Hostess Brands, Inc. – makers of iconic bakery goods that include Twinkies, Ding Dongs, Ho Hos and Wonder Bread – received permission from a bankruptcy court to cease operations and liquidate last week.

So, what does the impending liquidation of Hostess have to do with employee benefits? Well, one of the largest issues facing Hostess has been crippling union pension contributions, which have been reported as high as $1 billion.

Members of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, which represents roughly 30% of the Hostess workforce, went on strike after rejecting the company’s latest contract offer which would have reduced the employees’ wages, pension contributions and health care benefits. Management at Hostess threatened that a failure to get the union members back to work would tie their hands and force them to close their doors.  Following the expiration of a deadline set

Recognition of Income on Roll Out of Split-Dollar Arrangement

Originally posted on TrustBryanCave.com by Kathy Sherby & Stephanie Moll

The Tax Court in Neff v. Commissioner, TC Memo 2012-244 (8/27/2012) recently ruled on the income tax consequences of the termination of a split dollar life insurance arrangement (“SDLIA”), in ruling that the payment of a discounted amount by the employees on the termination of the SDLIA resulted in the recognition of income to the employees to the extent of the difference between the amount owed to the corporation under the SDLIA and the amount the employees paid. The Tax Court did not address the issue of the extent the equity portion of a SDLIA may be subject to income taxation on the termination of the SDLIA as that issue was not raised by the Service nor addressed by the Tax Court.

This case involves a pre-final regulation SDLIA to which the final regulations

IRS Issues Relief to Assist Victims of Hurricane Sandy

IRS Issues Relief to Assist Victims of Hurricane Sandy

November 19, 2012

Authored by: benefitsbclp

On November 16, the IRS released guidance intended to assist individuals impacted by Hurricane Sandy by providing access to certain retirement funds.  Under the guidance, 401(k) plans and similar employer-sponsored retirement plans (including 403(b) plans and, in the case of plans maintained by governmental employers, 457(b) plans) can make loans and hardship distributions to victims of Hurricane Sandy and members of their families.

The Internal Revenue Code generally contains strict rules governing when and how a hardship distribution can be made.  Under the guidance released on Friday, the IRS has clarified that a distribution to a qualified participant (described below) to meet needs arising from Hurricane Sandy will not run afoul of those rules.  The guidance also relaxes the “red tape” typically involved in obtaining a plan loan or distribution from a plan.

Under the relaxed rules, a plan loan can be made by making a “good-faith diligent

News & Notes – November 16, 2012

News & Notes – November 16, 2012

November 16, 2012

Authored by: Chris Rylands

Just as we did last week, below, we share some recent benefits-related(ish) stories and other links.

  • Today would have been the deadline for states to submit their PPACA health insurance exchange blueprints, but HHS extended the deadline for the blueprints and then, a few days later, extended the deadline for states to tell HHS if they were starting an exchange.   As these reports from Kaiser show, some states are in and some states are out.  State Refor(u)m is keeping a list of state responses here.
  • The IRS released the latest edition of the Employee Plans News with some helpful information about plan administrative issues.

11th Circuit: Claimant’s Attorney’s Protest Letter Doesn’t Constitute Administrative Appeal for Exhaustion Purposes

The Eleventh Circuit Court of Appeals recently issued an opinion that provides guidance on what constitutes an appeal for purposes of exhausting administrative remedies under ERISA § 503.  In Florida Health Sciences Center, Inc. v. Total Plastics, Inc. (Nov. 6, 2012), the Court held that a participant’s written protest to the signing of a subrogation agreement did not constitute an administrative appeal of the plan administrator’s claim denial.  To read a copy of the Eleventh Circuit’s opinion, click here.

The case involves tragic facts.  Kristy Schwade’s infant son started to exhibit symptoms of “shaken baby syndrome” when he was five months old.  The cause of the condition was ultimately traced to a daycare provider, who later pled guilty to aggravated child abuse.  Doctors determined that the child had incurred catastrophic and permanent brain damage, which required hospitalization and continuous medical treatment.  The child later died at age four.

For

The Fiscal Cliff, The Taxation of Health Insurance, and The Retirement Crisis

Now that the election dust has settled, much of the news is about the looming fiscal cliff (as discussed on our sister blog, TrustBryanCave.com). As most of us recall, this is not a new issue, but one that our elected leaders have created for us. (This Forbes op-ed has a pretty good explanation, including mentioning the tax increases we’ve blogged about previously.)

In 2010, the National Commission on Fiscal Responsibility (commonly known as the Simpson-Bowles Commission) issued its report on how to solve the fiscal crisis. Among the features of its comprehensive plan were 2 benefits related items. Given that a combination of a lame duck Congress and a second term President are likely to address the fiscal cliff in some fashion, it is worth revisiting the report and

News & Notes – November 9, 2012

November 9, 2012

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News & Notes – November 9, 2012

November 9, 2012

Authored by: Chris Rylands

As a new feature here on benefitsbclp.com, we are going to regularly share some recent benefits-related(ish) stories and other links.

  • Get out your flotation devices because Politico is predicting a post-election flood of health care reform guidance.
  • Several states had PPACA measures on the ballot.  You can check out this list of the measures, and how they fared on election night.
  • Speaking of health care and elections, this Washington Post article says many employees are overwhelmed by open enrollment.
  • And just when you thought we were done

Executive Compensation – 2012 Year-End Compliance and 2013 Planning

It’s that time of year again!  Time to ensure year-end executive compensation deadlines are satisfied and time to plan ahead for 2013.  Below is a checklist of selected executive compensation topics designed to help employers with this process.

I.       2012 Year-End Compliance and Deadlines

□      Section 409A – Amendment Deadline for Payments Triggered by Date Employee Signs a Release

It is fairly common for an employer to condition eligibility for severance pay on the release of all employment claims by the employee.  Many of these arrangements include impermissible employee discretion in violation of Section 409A of the Internal Revenue Code because the employee can accelerate or delay the receipt of severance pay by deciding when to sign and submit the release.  IRS Notice 2010-6 (as modified by IRS Notice 2010-80), includes transition relief until December 31, 2012 to make corrective amendments to

ERISA 4062(e)asier?

ERISA 4062(e)asier?

November 7, 2012

Authored by: Chris Rylands

Last Friday, the Pension Benefit Guaranty Corporation officially announced a change in enforcement under ERISA § 4062(e) that had been encountered some time ago by practitioners.  This is the “Third Act” in the unfolding saga of 4062(e) enforcement.

In broad terms, 4062(e) gives the PBGC the authority to seek protection for a defined benefit pension plan by forcing an employer to fund, or post security to fund, a pension plan if there is a substantial cessation of operations at one or more facilities covered by the plan.  Essentially, if there was a 20% or greater reduction in headcount at a facility, the PBGC could force the employer to fund the pension plan with respect to the terminated employees.   This provision has been in the law since 1974, but

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