2013 Standard Mileage Rates Announced

December 4, 2012

The Internal Revenue Service (IRS) has released the 2013 Standard Mileage Rates. 

Notice 2012-72 has the optional 2013 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. It also includes the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate (FAVR) plan.

Under the Notice the applicable standard mileage rates for 2013 are as follows:

  • The standard mileage rate for transportation or travel expenses is 56.5 cents per mile for all miles of business use (business standard mileage rate). 
  • The standard mileage rate is 14 cents per mile for use of an automobile in rendering gratuitous services to a charitable organization under § 170. 
  • The standard mileage rate is 24 cents per mile for use of an automobile (1) for medical care described in § 213, or (2) as part of a move for which the expenses are deductible under § 217.

For automobiles a taxpayer uses for business purposes, the Notice sets the portion of the business standard mileage rate treated as depreciation as 23 cents per mile for 2013.

For purposes of computing the allowance under a FAVR plan, the Notice provides the standard automobile cost may not exceed $28,100 for automobiles (excluding trucks and vans) or $29,900 for trucks and vans.

The 2013 rates set forth in the Notice are effective for (1) deductible transportation expenses paid or incurred on or after January 1, 2013, and (2) mileage allowances or reimbursements paid to an employee or to a charitable volunteer (a) on or after January 1, 2013, and (b) for transportation expenses the employee or charitable volunteer pays or incurs on or after January 1, 2013.

Taxpayers, employers and others using these rates for income and deduction purposes are cautioned to keep appropriate records of mileage and to verify that they are using the proper rates when claiming mileage.

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices to respond to emerging health plan regulations, monitoring or commenting on these rules, defending your health plan or its administration, or other health or employee benefit, human resources or risk management concerns, please contact the author of this update, Cynthia Marcotte Stamer.

About Ms. Stamer

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to watch and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals.  A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations.   She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications.   You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns  see here or contact Ms. Stamer via telephone at 469.767.8872 or via e-mail to  cstamer@solutionslawyer.net.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources at www.solutionslawpress.com including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here or e-mailing this information here.

©2012 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.


IRS Shares Rules Allowing Government Plans To Switch Remedial Amendment Cycles

December 4, 2012

The Internal Revenue Service (IRS) has modified its determination letter procedures for individually designed “governmental plans” within the meaning of § 414(d) (governmental plan).   Rev. Proc. 2012-50 modifies the determination letter procedures in Rev. Proc. 2007-44, 2007-2 C.B. 54, to provide that the sponsor of an individually designed governmental plan  may elect Cycle E (instead of Cycle C) as the second remedial amendment cycle for the plan by filing a determination letter application for the plan during the one-year submission period for the second Cycle E (February 1, 2015 through January 31, 2016) instead of the second Cycle C (February 1, 2013 through January 31, 2014). This modification applies only to the second remedial amendment cycle.  

The IRS has established a system of staggered, cyclical remedial amendment periods under § 401(b). Under this system, every individually designed plan has a five-year remedial amendment period or cycle, and every pre-approved plan (that is, a master and prototype or volume submitter plan) has a six-year remedial amendment period or cycle. In general, Rev. Proc. 2007-44 extends the remedial amendment period for any disqualifying provision to the end of a plan’s remedial amendment cycle that includes the date on which the remedial amendment period with respect to the provision would otherwise end under § 1.401(b)-1. 

The five-year remedial amendment cycle applicable to an individually designed plan is generally based on the sponsoring employer’s taxpayer identification number. However, the applicable cycle for all individually designed governmental plans under Rev. Proc. 2007-44 is Cycle C. The six-year remedial amendment cycle for pre-approved plans, including governmental plans that are pre-approved, is contained in section 18 of Rev. Proc. 2007-44. 

Rev. Proc. 2009-36, 2009-35 I.R.B. 304, modified Rev. Proc. 2007-44 to provide that the sponsor of an individually designed governmental plan could elect Cycle E (instead of Cycle C) as the initial remedial amendment cycle for the plan by submitting a determination letter application for the plan during the initial Cycle E submission period (instead of the initial Cycle C submission period).

Under Rev. Proc. 2007-44, the second Cycle C submission period begins February 1, 2013, and ends January 31, 2014. The second Cycle E submission period begins February 1, 2015, and ends January 31, 2016. 

the new guidance allowing governmental plans to switch their remedial amendment period is intended to allow governmental plans greater flexibility to various unique issues in the process of securing approval for amendments from the governing body with authority to consider plan amendments during legislative sessions.  To take advantage of this option governmental plans must elect to make the change by filing a determination letter application for the plan during the one-year submission period for the second Cycle E (February 1, 2015 through January 31, 2016). No election form or notice to the Service is required. 

 If the sponsor of an individually designed governmental plan elects to file a determination letter application for the plan during the Cycle E submission period, all requirements for an individually designed plan submitted for a determination letter during the Cycle E submission period are applicable to the sponsor’s plan, including the requirement to amend the plan for all applicable items on the Cycle E Cumulative List and the requirement to timely adopt any interim amendments that are required for a governmental plan during Cycle C and Cycle D. 

A sponsor’s election of Cycle E, instead of Cycle C, as the second remedial amendment cycle for an individually designed governmental plan applies only to that plan and only to that cycle. For any subsequent remedial amendment cycle, the plan’s cycle will revert to Cycle C. Therefore, if a sponsor of a governmental plan files a determination letter application for the plan during the second Cycle E submission period ending on January 31, 2016, the determination letter that is issued will expire at the end of the third Cycle C submission period (January 31, 2019).

 determination letter issued to a sponsor of an individually designed governmental plan for the initial remedial amendment cycle ordinarily expires at the end of the second Cycle C (January 31, 2014), regardless of whether the sponsor elected Cycle E as the plan’s initial cycle in accordance with Rev. Proc. 2009-36.  The Rev. Proc. extends this date to  the end of the second Cycle E (January 31, 2016) if the sponsor elects Cycle E as the plan’s second remedial amendment cycle in accordance with this revenue procedure. 

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices to respond to emerging health plan regulations, monitoring or commenting on these rules, defending your health plan or its administration, or other health or employee benefit, human resources or risk management concerns, please contact the author of this update, Cynthia Marcotte Stamer.

About Ms. Stamer

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to watch and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals.  A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations.   She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications.   You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns  see here or contact Ms. Stamer via telephone at 469.767.8872 or via e-mail to  cstamer@solutionslawyer.net.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources at www.solutionslawpress.com including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here or e-mailing this information here.

©2012 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.


Reminder To Amend Health FSA Plan Terms To Include ACA $2500 Contribution Before 2013 Plan Year Begins

December 4, 2012

Employers and other health plan sponsors, insurers, and their administrators and service providers are reminded that the $2500 limit on pre-tax contributions to health flexible spending account plans under Internal Revenue Code section 125(i) takes effect on the first day of the 2013 plan year.   Notice 2012-40 makes clear that the IRS requires that this limitation be included in the plan document before the first day of the plan year for the plan to remain qualified under Code section 125.  Employers making this amendment likely wll want to draft this provision to preserve the option to adjust the limit as adjusted in the Code for post-2013 plan years.  Code section 125(i) provides for inflation adjustments the $2500.00 limit after 2013.

Most health flexible spending account plans already cap the annual contribution that employees can contribute to limit exposure to the “at-risk” requirements of current IRS regulations.   The at risk rule is a requirement imposed by IRS regulations that mandates that a health flexble spending account plan must make the full amount of the annual contribution of an employee available to the employee beginning with the first day of the plan year.  This provision has been highly contested as there is no express Code language authorizing or mandating this at risk requirement.  Along with providing guidance about the Code section 125(i) limit Notice 2012-40 also indicates that the IRS is reconsidering the need for and future of the at-risk requirement.

Health FSA Limit Change Just Tip of Iceberg

The new Code section 125(i) limit is only one of a plethora of statutory and regulatory changes impacting health benefit arrangements enacted by health care reform.  The effective date of these requirements spans from 2009 to 2017.  As implementation of these changes moves forward health plan design and administration requirements are changing rapidly as the Departments of Health and Human Services IRS, Department of Labor and state insurance agencies finalize arrangements and guidance governing the implementation and enforcement of the ACA health care reforms scheduled to take effect and to tweek guidance on provisions already effective under the law.  Employers and insurers now must get cracking to update their programs and cost estimates to comply with both existing and new guidance while keeping a close eye out for potential changes to ACA or other federal or state health coverage laws as the new Congress is expected to continue to discuss refinements or other changes when the new Congress begins work in January 2013.

What Should Employers Do To Cope With These & Other Health Plan Mandates?

Facing the operational and financial challenges of meeting these mandates, many business leaders continue report significant concern about what they should do to respond to these requirements.  For some practical steps that businesses confronting these issues should take to cope with ACA and other health plan responsibilities, check out the “12 Steps Every Employer With A Health Plan Should Do Now” article by Cynthia Marcotte Stamer in the October 26, 2012 online edition of Texas CEO Magazine. To read the full article, see here.

Clearly in light of the new guidance, employers, insurers, health plan fiduciaries and their service providers need to act quickly to familiarize themselves with the guidance and make any need adjustments to their plans, communications, practices and budgets warranted by the new guidance and remain vigilent for and prepared to do the same with other guidance and reform proposals as it is released.

Beyond responding to the new guidance and other future developments, most health plan sponsors, insurers, administrators and other fiduciaries, and their vendors also should consider conducting this specific analysis and update of their health benefit programs in the context of a broader strategy.

In her 12-Steps Article, Ms. Stamer writes, “While most employers and insurers of employment-based group health plans view with great concern radically expanded health plan responsibilities taking effect in 2014, many are failing to take steps critical to manage exposures and costs already arising from the Affordable Care Act (ACA) and other federal health plan regulations.”

In the article, Ms Stamer discusses the following 12 steps that she suggests most businesses consider to help catch up with current responsibilities and to help their business manage future costs and responsibilities:

  1. Know The Cast Of Characters & What Hat(s) They Wear
  2. Know What Rules Apply, and How They Affect a Group Health Plan
  3. Review and Update Health Plan Documents to Meet Requirements and Manage Exposure
  4. Update the Plan For Changing Compliance Requirements and Enhanced Defensibility
  5. Consistency Matters: Build Good Plan Design, Documentation and Processes, and Follow Them
  6. Ensure the Correct Party Carefully Communicates About Coverage and Claims in a Compliant, Timely, Prudent, Provable Manner
  7. Prepare For ACA’s Expanded Data Gathering and Reporting Requirements
  8. Select, Contract and Manage Vendors With Care
  9. Help Plan Members Build Their Health Care Coping Skills With Training and Supportive Tools
  10. Pack The Parachute and Locate The Nearest Exit Doors
  11. Get Moving On Compliance and Risk Management Issues
  12. Provide Input On Affordable Care Act Rules

For Help or More Information

If you need help reviewing and updating, administering or defending your group health or other employee benefit, human resources, insurance, health care matters or related documents or practices to respond to emerging health plan regulations, monitoring or commenting on these rules, defending your health plan or its administration, or other health or employee benefit, human resources or risk management concerns, please contact the author of this update, Cynthia Marcotte Stamer.

About Ms. Stamer

A Fellow in the American College of Employee Benefit Council, immediate past Chair of the American Bar Association (ABA) RPTE Employee Benefits & Other Compensation Group and current Co-Chair of its Welfare Benefit Committee, Vice-Chair of the ABA TIPS Employee Benefits Committee, a council member of the ABA Joint Committee on Employee Benefits, and past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, Ms. Stamer is recognized, internationally, nationally and locally for her more than 24 years of work, advocacy, education and publications on cutting edge health and managed care, employee benefit, human resources and related workforce, insurance and financial services, and health care matters.

A board certified labor and employment attorney widely known for her extensive and creative knowledge and experienced with these and other employment, employee benefit and compensation matters, Ms. Stamer continuously advises and assists employers, employee benefit plans, their sponsoring employers, fiduciaries, insurers, administrators, service providers, insurers and others to watch and respond to evolving legal and operational requirements and to design, administer, document and defend medical and other welfare benefit, qualified and non-qualified deferred compensation and retirement, severance and other employee benefit, compensation, and human resources, management and other programs and practices tailored to the client’s human resources, employee benefits or other management goals.  A primary drafter of the Bolivian Social Security pension privatization law, Ms. Stamer also works extensively with management, service provider and other clients to monitor legislative and regulatory developments and to deal with Congressional and state legislators, regulators, and enforcement officials about regulatory, investigatory or enforcement concerns.

Recognized in Who’s Who In American Professionals and both an American Bar Association (ABA) and a State Bar of Texas Fellow, Ms. Stamer serves on the Editorial Advisory Board of Employee Benefits News, the editor and publisher of Solutions Law Press HR & Benefits Update and other Solutions Law Press Publications, and active in a multitude of other employee benefits, human resources and other professional and civic organizations.   She also is a widely published author and highly regarded speaker on these matters. Her insights on these and other matters appear in the Bureau of National Affairs, Spencer Publications, the Wall Street Journal, the Dallas Business Journal, the Houston Business Journal, Modern and many other national and local publications.   You can learn more about Ms. Stamer and her experience, review some of her other training, speaking, publications and other resources, and register to receive future updates about developments on these and other concerns  see here or contact Ms. Stamer via telephone at 469.767.8872 or via e-mail to  cstamer@solutionslawyer.net.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources at www.solutionslawpress.com including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here or e-mailing this information here.

©2012 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.