December 14, 2017
Employer and other sponsors, fiduciaries, administrators and insurers of the Employee Retirement Income Security Act (ERISA)-covered employee benefit plans making disability-based benefit determinations should confirm that their plan documents, summary plan descriptions, procedures and claims and appeals notices are updated and ready to meet tightened new federal rules on disability-based benefit determinations applicable to all post December 31, 2017 claims under the restated Final Rule on Claims Procedure for Plans Providing Disability Benefits (“Disability Claims Rule”). Given the nature and scope of these new requirements, most covered plans will require specific action be taken before the new rules take effect to update plan documents, summary plan descriptions, notices, contracts, processes and procedures to meet the January 1, 2018 deadline.
The Disability Claims Rule published by the Department of Labor Employee Benefit Security Administration (“EBSA”) on December 19, 2016 generally require all ERISA-covered employee benefit plans making any disability benefit or other determination conditioned upon a finding of disability to comply with the new Disability Claims Rule for any claim received after December 31, 2017.
The new Final Disability Claims Rule will apply to all disability determinations made under any ERISA-covered plan after December 31, 2017, regardless of how the plan characterizes the benefit or whether the plan is a health or other welfare, pension, 401(k) plan or other savings plan.
Significant affirmative action is likely required to prepare covered plans to meet these requirements since most plans historically have not followed the detailed claims and appeals notification, independent and impartial decision-making, rescission, deemed exhaustion, “culturally and linguistically appropriate” and other procedural protections and safeguards based on EBSA’s previously adopted Patient Protection and Affordable Care Act (“ACA”) group health plan claims and appeals rules, which the Disability Claims Rules extend and make applicable to all ERISA-covered plans making benefit determinations based on disability. Covered plans making disability-based benefit or other covered determinations are likely to require updates to plan documents, insurance or administrative services contracts, summary plan descriptions and other plan communications, claims and appeals notices, and other related processes, procedures and documentation to meet these new requirements. Since certain requirements of the Disability Claims Rules like the summary plan description advance disclosure requirements are required to be provided before the claim is received, plans and their sponsors risk being accused of violating these requirements by waiting to update plans, their processes and materials until after claim involving a disability based determination arises.
Ensuring that impacted plans are updated before the January 1, 2018 deadline is important because the Disability Claims Rule, like the group health plan claims and appeals rules upon which it is based, also states that noncompliance with any of its requirements empowers a participant to immediately sue the plan for enforcement if his rights without further complying the the plan’s administrative procedures. Moreover, failing to comply with summary plan disclosure or claims or appeal adverse benefit determination notification requirements also may subject the plan administrator to administrative penalties under ERISA section 514(c). Consequently, employers and other plan sponsors, fiduciaries, administrators and insurers will want to act quickly to ensure that their plans, their summary plan descriptions and other communications, notices, processes, contracts and procedures are updated appropriately before January 1, 2018.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediatepast RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, BenefitsMagazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, 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, Inc.™ resources at SolutionsLawPress.com such as the following:
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here.
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
©2017 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.
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401(k), ACA, ADA, Affordable Care Act, Appeals, board of directors, Brokers, Cafeteria Plans, Claims, Claims Administration, compensation, compliance, Construction, Corporate Compliance, defined benefit plan, Defined Benefit Plans, defined contribution plan, Defined Contribution Plans, directors, Disability, Disability, Disability Plans, Drug & Alcohol, EBSA, employee, Employee Benefits, Employee Handbook, Employer, Employers, Employment, Employment Policies, ERISA, Executive Compensation, family leave, Fiduciary Responsibility, health benefit, Health Benefits, health insurance, Leave, Management, medical leave, Mental Health, Mental Health Parity, Obamacare, Patient Protection & Affordable Care Act, Pay, pension plan, Plan Admistrator, Professional Liability, third party administrators, Uncategorized, Union, Worker | Tagged: Appeals, Claims, defined benefit plan, Disability, Disability Insurance, Disability Plan, EBSA, Employee Retirement Income Security act, ERISA, Fiduciary Responsibility, pension plan | 
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Posted by Cynthia Marcotte Stamer
October 13, 2017
Qualified profit-sharing and pension plan sponsors, fiduciaries, administrators and service providers should check of this recent guidance on various qualified pension and profit sharing plan qualification:
Organizations and service providers involved in defined benefit plans should review their programs and make adjustments as warranted.
About The Author
Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
Well-known for her extensive work with health, insurance, financial services, technology, energy, manufacturing, retail, hospitality, governmental and other highly regulated employers, her nearly 30 years’ of experience encompasses domestic and international businesses of all types and sizes.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant, business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment;a member and policy technical adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.
Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, Insurance Thought Leaders, and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.
Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, 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, Inc.™ resources at SolutionsLawPress.com.
If you or someone else you know would like to receive future updates about developments on these and other concerns, please provide your current contact information and preferences including your preferred e-mail by creating or updating your profile here including:
NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and uhave no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
Circular 230 Compliance. The following disclaimer is included to ensure that we comply with U.S. Treasury Department Regulations. Any statements contained herein are not intended or written by the writer to be used, and nothing contained herein can be used by you or any other person, for the purpose of (1) avoiding penalties that may be imposed under federal tax law, or (2) promoting, marketing or recommending to another party any tax-related transaction or matter addressed herein.
©2017 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™ For information about republication, please contact the author directly. All other rights reserved.
Comments Off on IRS Updates Defined Benefit Plan Guidance | Bankruptcy, board of directors, Brokers, Corporate Compliance, corporate governance, defined benefit plan, Defined Benefit Plans, directors, employee, Employee Benefits, Employer, Employers, Employment Policies, Employment Tax, ERISA, Excise Tax, Form 5500, Government Contractors, government plan, HR, Human Resources, Insurance, Internal Revenue Code, IRC, Labor Management Relations, Management, retirement plan, Retirement Plans, Retirements, Tax, Tax Qualification, Uncategorized, Worker Classification | Tagged: defined benefit plan, Retirement Plans, tax qualification | Permalink
Posted by Cynthia Marcotte Stamer
August 20, 2017
Need to amend your qualified defined benefit plan plan document to offer bifurcated benefit distribution options to participants? Check out the new model amendments published by the Internal Revenue Service in Notice 2017-44 for a possible cost-effective option to add a bifurcated distribution option in accordance with final regulations issued under § 417(e) of the Internal Revenue Code.
About The Author
Recognized as “Legal Leader™ Texas Top Rated Lawyer” in both Health Care Law and Labor and Employment Law, a “Texas Top Lawyer,” and an “AV-Preeminent” and “Top Rated Lawyer” by Martindale-Hubble, singled out as among the “Best Lawyers In Dallas” in employee benefits by D Magazine; Cynthia Marcotte Stamer is a practicing attorney and management consultant, author, public policy advocate and lecturer widely recognized for her nearly 30 years’ of work and pragmatic thought leadership, publications and training on health coverage and health care, health plan and employee benefits, workforce and related regulatory and other compliance, performance management, risk management, product and process development, public policy, operations and other concerns.
Throughout her legal and consulting career, Ms. Stamer has drawn recognition for combining extensive knowledge and experience with her talents as an insightful innovator and problem solver when advising, representing and defending employer and other plan sponsors, insurers, fiduciaries, insurers, electronic and other technology, plan administrators and other service providers, governments and others about health coverage, benefit program design, funding, documentation, administration, data security and use, contracting, plan, public and regulatory reforms and enforcement, and other risk management and operations matters as well as for her work and thought leadership on a broad range of other health, employee benefits, human resources and other workforce, insurance, tax, compliance and other matters. Her experience encompasses leading and supporting the development and defense of innovative new programs, practices and solutions; advising and representing clients on routine plan establishment, plan documentation and contract drafting and review, administration, change and other compliance and operations crisis prevention and response, compliance and risk management audits and investigations, enforcement actions and other dealings with the US Congress, Departments of Labor, Treasury, Health & Human Services, Federal Trade Commission, Justice, state legislatures, attorneys general, insurance, labor, worker’s compensation, and other agencies and regulators, She also provides strategic and other supports clients in defending litigation as lead strategy counsel, special counsel and as an expert witness.
A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares shared her thought leadership, experience and advocacy on these and other concerns by her service in the leadership of a broad range of other professional and civic organization including her involvement as Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE; Coalition on Patient Empowerment, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, Past Group Chair, current Defined Contribution Plan Committee Co-Chair, former Welfare Committee Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative and current RPTE Representative to the ABA Health Law Coordinating Counsel, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, former member of the Board of Directors of the Southwest Benefits Association and others.
Ms. Stamer also is a highly popular lecturer, symposia chair and author, who publishes and speaks extensively on health and managed care industry, human resources, employment and other privacy, data security and other technology, regulatory and operational risk management for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, the Society of Professional Benefits Administrators, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients, serves on the faculty and planning committee of many workshops, seminars, and symposia, and on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications. For additional information about Ms. Stamer, see www.CynthiaStamer.com or contact Ms. Stamer via email to here or via telephone to (469) 767-8872.
About Solutions Law Press
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, 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, Inc.™ resources at www.SolutionsLawPress.com.
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Likewise, they do not establish an attorney-client relationship or other fiduciary, contractual or other relationship between Solutions Law Press, Inc. and/or any of its authors or contributors and any other party. They are not, and do not serve as a substitute for legal, accounting, tax or other advice. They don’t create or otherwise give rise to any duty, obligation, responsibility on behalf of Solutions Law Press, Inc™ or any provider or offeree of content, tools or services to any party.
Parties accessing or using any of Solutions Law Press, Inc.™ competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The publisher and the author expressly disclaim all liability for this content and any responsibility to provide any update or otherwise notify anyone of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.
©2017 Cynthia Marcotte Stamer. Non-Exclusive License To Republish Granted To Solutions Law Press. All rights reserved.
Comments Off on DB Plan Sponsors Check Out New Bifurcated Distribution Model Amendments | defined benefit plan, Defined Benefit Plans, Employer, Employers, Employment, ERISA, retirement plan, Retirement Plans, Tax, Tax Qualification | Tagged: Bifurcated Distributions, defined benefit plan, Distributions, Employer, Pension, Plan Amendment, plan sponsor, Qualiified Plan, Retirement Plans | Permalink
Posted by Cynthia Marcotte Stamer
October 13, 2016
Employers and other plan sponsors of tax-qualified 401(k) and other defined contribution or defined benefit plans (retirement plans) and others working to avoid plan disqualification by correcting plan documentation, administration or other problems that otherwise could disqualify their program for tax qualified treatment under the Internal Revenue Code (Code) under the Internal Revenue Service (IRS) Employee Plans Compliance Resolution System (EPCRS) or the Audit Closing Agreement Program (Audit CAP) modified rules beginning January 1, 2017, under changes announced by the IRS in Revenue Procedure 2016-51 on September 29, 2016.
The EPCRS and Audit CAP programs are two IRS correction programs commonly used to preserve the tax qualified status of a retirement plan affected by plan documentation, administration or other deficiencies that otherwise would result in the plan ceasing to qualify as a tax retirement plan under the Code. The EPCRS program generally is available to correct and resolve certain qualification concerns not eligible for self-correction that retirement plan sponsors or plans self-identify and disclose to the IRS in accordance with the EPCRS correction procedures, In contrast, the Audit CAP program provides an avenue that may provide a pathway for a plan sponsor of a retirement plan with significant problems in its compliance with the Code’s qualification requirements that are discovered by the IRS on audit or during the determination letter application process to preserve the tax benefits associated with maintaining a retirement plan in compliance with the Code’s tax qualification requirements by entering into a Closing Agreement pursuant to which the problems are corrected and paying a reasonable sanction to the IRS based directly on the amount of tax benefits preserved and the nature, extent and severity of the failure, taking into account the extent to which correction occurred before audit.
Key changes to the EPCRS correction procedures scheduled to take effect on January 1, 2017 under Revenue Procedure 2016-51 include the following:
- The IRS no longer will permit determination letter applications when applying the correction programs under EPCRS;
- The requirement for a plan sponsor to submit a determination letter application to the IRS when correcting qualification failures that include a plan amendment no longer will apply; and
- Fees associated with the Voluntary Correction Program (VCP) after December 31, 2017 will be user fees and no longer set forth in the EPCRS revenue procedure. For VCP submissions made in 2016, refer to Proc. 2016-8 and Rev. Proc. 2013-12 to determine the applicable user fee and after 2016, refer to the annual Employee Plans user fees revenue procedure to determine VCP user fees for that year. Availability of Self-Correction Program (SCP) for significant failures has been modified to provide that, for qualified individually designed plans, a determination letter need not be current to satisfy the Favorable Letter requirement
In addition to its announcements of changes to the EPCRS correction program Revenue Procedures 2016-51 also announces various modifications to the Audit CAP program, including:
- A revised approach to determining Audit CAP sanctions under which
- Sanctions, generally, will not be less than the fees associated with voluntary compliance under the EPCRS program;
- The required reasonable sanction will no longer be a negotiated percentage of the maximum payment amount (MPA). Instead, auditors will review facts and circumstances and the MPA amount is simply one factor to consider. In addition, there are revised, additional factors that IRS considers;
- New factors used in determining sanctions for late amender failures will apply;
- For late amender failures discovered by the IRS, while reviewing a determination letter application, a new approach to determining the applicable sanction will apply;
- The IRS will not provide partial refunds for certain Anonymous Submissions
Beyond specific modifications to the EPCRS and Audit CAP procedures, Revenue Procedures 2016-51 also:
- Updates citations and cross-references for several items previously contained in Rev. Proc. 2013-12; and
- Invites public comments on recovery of overpayments and on expanding EPCRS correction rules to provide additional guidance on the recovery or recoupment of overpayments.
Revenue Procedures 2016-51 is effective January 1, 2017. Plan sponsors may not elect to apply provisions before January 1, 2017. Rev. Proc. 2013-12, as modified by Rev. Proc. 2015-27 and Rev. Proc. 2015-28, are in effect for 2016. When Revenue Procedure 2016-51 takes effect on January 1, 2017:
- Proc. 2013-12 no longer applies as of January 1, 2017; and
- Provisions of Rev. Proc. 2015-27 and Rev. Proc. 2015-28 concerning EPCRS and other older revenue procedures will no longer apply.
About The Author
Cynthia Marcotte Stamer is a noted Texas-based management lawyer and consultant, author, lecture and policy advocate, recognized for her nearly 30-years of cutting edge management work as among the “Top Rated Labor & Employment Lawyers in Texas” by LexisNexis® Martindale-Hubbell® and as among the “Best Lawyers In Dallas” for her work in the field of “Labor & Employment,”“Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine.
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, a Fellow in the American College of Employee Benefit Counsel, past Group Chair and current Defined Contribution Plans Committee Co-Chair, Groups and Substantive Committee and Membership Committee Members, past Welfare Plans Committee Chair and Co-Chair, and former Fiduciary Responsibility Vice Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current ABA International Section Life Sciences Committee Vice Chair, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, former ABA Joint Committee on Employee Benefits Council Representative and Marketing Committee Chair and a prolific author and highly popular speaker and consultant, Ms. Stamer helps management manage.
Ms. Stamer’s legal and management consulting work throughout her nearly 30-year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.
Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.
For additional information about this topic or Ms. Stamer, see CynthiaStamer.com or contact Ms. Stamer via email here or via telephone to (469) 767-8872.
About Solutions Law Press, Inc.™
Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal control and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at http://www.Solutionslawpress.com.
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 here. ©2016 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™. All other rights reserved.
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Posted by Cynthia Marcotte Stamer
May 6, 2015
Monday, May 11, 2015 is the deadline to submit comments about proposed regulations which would address the conditions under which a State or local retirement system that covers employees of a public charter school will qualify as a “government plan” under Internal Revenue Code (Code) Section 414(d). The Department of Treasury and Internal Revenue invited the comments on its proposed regulation in Notice 2015-7. Interested organizations concerned about the treatment of such arrangements should review the proposed regulations and comment as soon as possible and by May 11.
For Advice, Representation, Training & Other Resources
If you need help responding to these new or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, help updating or defending your workforce or employee benefit policies or practices, or other related assistance, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
Recognized as a “Top” attorney in employee benefits, labor and employment and health care law, Ms. Stamer is a practicing attorney Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, author, pubic speaker,management policy advocate and thought leader with more than 25 years’ experience advising government contractors and other employers, their management, benefit plans and plan fiduciaries, vendors and service providers and others about OFCCP, EEOC, and other employment discrimination, government contracting compliance, and other workforce and operational performance, compliance, risk management, compensation, and benefits matters. As a part of this involvement, Ms. Stamer throughout her career specifically has advised and represented a broad range of employers across the U.S., their employee benefit plans and plan fiduciaries, insurers, health care providers and others about the implications of DOMA and other rules relating to rights and expectations of LBGT community members and others in federally protected classes under Federal and state employment, tax, discrimination, employee benefits, health care and other laws.
In addition to her extensive client work Ms. Stamer also is a widely published author, management policy advocate and thought leader, and management policy advocate on these and other workforce and related matters who shares her experience and leadership in a wide range of contexts. A current or former author and advisory board member of HR.com, Insurance Thought Leadership, SHRM, BNA and several other the prominent publications, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, former President of the Richardson Development Center Board of Directors, and the former Board Compliance Chair of the National Kidney Foundation of North Texas, An American College of Employee Benefit Counsel, American Bar Association (ABA) and State Bar of Texas Fellow, Martindale Hubble Premier AV Rated (the highest), Ms. Stamer publishes and speaks extensively on these and other staffing and human resources, compensation and benefits, technology, health care, privacy, public policy, and other operations and risk management concerns. Her publications and insights appear in the ABA and other professional publications, HR.com, SHRM, Insurance Thought Leadership, Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.
You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here. 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 www.cynthiastamer.com or by registering to participate in the distribution of these and other updates on our HR & Employee Benefits Update here including:
About Solutions Law Press
Solutions Law Press, Inc. 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.
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.
©2015 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press. All other rights reserved.
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Posted by Cynthia Marcotte Stamer
March 27, 2015
Revenue Procedure 2015-27 modifies Revenue Procedure 2013-12, 2013-4 I.R.B. 313 to make miscellaneous changes made to improve EPCRS, such as reducing VCP compliance fees relating to failures to meet the requirements of Internal Revenue Code § 72(p) with respect to participant loans, and clarifying that for certain overpayments, as defined in sections 5.01(3)(c) and 5.02(4) of Rev. Proc. 2013-12, a plan may use correction methods other than the correction methods set forth in section 6.06(3) and 6.06(4) of Rev. Proc. 2013-12. This revenue procedure also requests comments on recoupment of overpayments.
For Help or More Information
Cynthia Marcotte Stamer is recognized among the “Top Rated” Labor & Employment Lawyers in Texas in the 2014 LexisNexis® Martindale-Hubbell® list of Top Rated Lawyers. An AV® Preeminent™ (the highest Peer Review Rating available) rated lawyer, Ms. Stamer earned the “Top Rated” Distinction based on confidential Martindale-Hubbell Peer Review Ratings opinions about her skills and experience submitted by other AV® Preeminent™ lawyers and members with professional knowledge of her work.
A noted Texas-based management lawyer and consultant, author, lecturer and policy advocate, Ms. Stamer is nationally and internationally known for her innovative leadership and work helping businesses, governments, and communities manage workforce and other performance and other labor and employment, employee benefits and workforce related challenges
Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, and a Fellow in the American Bar Association, Texas Bar Association, and the American College of Employee Benefit Counsel, Ms. Stamer’s legal and management consulting work focuses on helping employers, insurers, employee benefit plans and their administrators, fiduciaries and advisors, community leaders and governments manage people, process and risk. Throughout her more than 26 year career,
Ms. Stamer has helped management deal with all aspects of human resources and workforce management, including employment and outsourcing contracting and performance management, reengineering and other change management, internal controls, compliance and risk management, compensation and employee benefits, communications, worker classification, tax, government relations, enforcement and litigation defense, and other related matters. Drawing upon her extensive knowledge base of knowledge and wealth of practical skills, Ms. Stamer helps businesses and their leaders manage their employees and other workers and service providers, their performance, compliance, compensation, benefits, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and operations crises large and small that arise in the course of operations.
In addition to her more traditional legal, internal controls and other management consulting work, Ms. Stamer also extensively works with a broad range of business and government clients on health care, pension, social security, workforce, insurance and many other related policy matters critical to their business success and liability management. She both only helps her clients anticipate, monitor and cope with emerging laws, regulations and enforcement and respond to and resolve government investigations and enforcement actions, she also helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally. A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American College of Employee Benefit Counsel, the American Bar Association (ABA) and the State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting. She also works as a policy advisor and advocate to many business, professional and civic organizations.
Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA,HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. She also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.
Beyond these involvements, Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves as Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Committee and its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its representative to the ABA Joint Committee on Employee Benefits; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division and as a faculty member, editorial advisory board member, speaker and author for numerous human resources, employee benefits, insurance, technology and data security and other professional associations, programs, and publications. She previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early retirement intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association.
You can review other recent human resources, employee benefits and internal controls publications and resources and additional information about the employment, employee benefits and other experience of the Cynthia Marcotte Stamer, PC here.
©2015 Cynthia Marcotte Stamer. Limited, non-exclusive right to republished granted to Solutions Law Press, Inc. All other rights reserved.
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Posted by Cynthia Marcotte Stamer
November 2, 2014
A $6.48 million judgment against Direct TV satellite television installer, Bruister and Associates Inc.(BAI) its sole owner, Herbert Bruister, and other trustees of two BAI-sponsored employee stock ownership plans shows plan sponsors and trustees involved in stock purchase transactions where employee stock ownership plans commonly referred to as “ESOPs” and other employee benefit plan buy or hold investments in the stock of plan sponsors or other related businesses the risks of failing to conduct the transactions to ensure that the transactions are prudently performed and otherwise conducted in compliance with the Employee Retirement Income Security Act (ERISA) fiduciary responsibility requirements.
BAI Lawsuit & Judgment Highlights
The BAI judgment stems from a Department of Labor lawsuit that charged BAI, along with BAI board members and plan trustees Bruister and Amy Smith, and plan trustee Jonda Henry engaged in prohibited transactions and breached other fiduciary duties under ERISA by causing the plans to purchase 100 percent of BAI’s shares for $24 million in three sales transactions conducted between December 2002 to December 2005.
According to court documents, Bruister, Smith and Henry, as plan fiduciaries, engaged in prohibited transactions by causing the plans to pay excessive prices for BAI stock purchased from Bruister. For each purchase, the Labor Department charged the fiduciaries used flawed valuations prepared by Matthew Donnelly and his firm, Business Appraisal Institute.
The court also found that the three fiduciaries breached their duty of loyalty from start to finish. Additionally, Bruister and his attorney David Johanson went so far as to fire the initial attorney representing the plans because that attorney was too thorough. Moreover, the court found that Bruister and Johanson exercised undue influence over Donnelly’s valuations, and that as a result, Donnelly was not sufficiently independent to provide valuations for the plans.
The court concluded that Bruister, Henry and Smith, in their role as plan fiduciaries, failed to properly represent plan participants’ interests, and that they unreasonably relied on an appraiser who so obviously lacked independence. The court reasoned, “An informed trustee would not have remained idle while the seller communicated directly with the employee stock ownership trust’s independent appraiser and financial advisor to elevate the price at the participants’ expense.”
Although Johanson was not a fiduciary, the court found his conduct worthy of comment because he both was the attorney for the seller and structured each sale. The court noted that Johanson attempted to influence the valuations in Bruister’s favor, and the testimony Johanson gave at trial did not support his denials. The court even noted that Johanson coached Donnelly during a break in his deposition to retract his testimony that Johanson represented Bruister individually. “History rebuts Johanson’s suggestion that he did not interfere with Donnelly’s valuations and raises doubts as to each of the subject transactions,” the court said.
The order requires Bruister, Smith and Henry to jointly pay $4.5 million in restitution to the plans and requires Bruister to pay an additional $1.98 million in prejudgment interest. The order also held Bruister Family LLC liable with all defendants for $885,065 and jointly liable with Bruister for $390,604.
Company Stock Investments Carry Special ERISA Risks
Purchases of company stock by an ESOP or other employee benefit plan can create a wide range of risks under ERISA’s fiduciary responsibility rules. When making investment or other decisions under an employee benefit plan, the general fiduciary duty standards of ERISA § 404 generally require plan fiduciaries to act prudently and solely in the interest of participants and beneficiaries. Meanwhile, except in certain narrow circumstances and subject to fulfillment of ERISA § 404, the prohibited transaction rules of ERISA § 406 among other things prohibits plan fiduciaries from causing the plan to engage in a transaction, if he knows or should know that such transaction is a direct or indirect:
- Sale or exchange, or leasing, of any property between the plan and a party in interest;
- Furnishing of goods, services, or facilities between the plan and a party in interest;
- Transfer to, or use by or for the benefit of a party in interest, of any assets of the plan; or
- Acquisition, on behalf of the plan, of any employer security or employer real property in violation of section 1107 (a) of this title.
As for all plan investment transactions, detailed, unbiased valuation documentation showing the prudence of any decision to invest or hold the investments of the plan in company stock is critical when determining the initial purchase or sale prices for plan transactions involving company stock. Since the sponsoring company is a party-in-interest of the plan, holding, must less using plan assets to purchase company stock or other activities resulting in the inclusion of company stock among the plan assets held by the plan creates presumptions of impropriety that impose higher than usual burdens upon the plan, its sponsor and fiduciaries to prove the appropriateness of the transaction. See e.g., Pfeil v. State Street Bank & Trust Co., 671 F.3d 585 (6th Cir. 2012). As ESOP transactions to purchase company stock inherently require a host of complicated party-in-interest and other conflict of interest concerns, these risks are particularly heightened. Employee benefit plans, their fiduciaries and sponsors the need to continuously and prudently conduct documented monitoring and evaluations evaluate and monitor the investment of plan assets in company stock,the analysis and decisions about whether to continue to keep and offer this stock under the plan, as well as the qualifications, credentials and conduct of the fiduciaries and others empowered to influence these decisions. The Labor Department’s statement in announcing the Parrot litigation sums up the messages from these cases. “Plan officials are required by law to manage the ESOP in a careful, prudent manner and to act solely to benefit the plan’s participants,” said Jean Ackerman, director of the Employee Benefit Security Administration’s (EBSA’s) San Francisco Regional Office, which. “This action underscores the department’s commitment to protect the benefits that employers promise to their employees.”
In light of these exposures, plan fiduciaries, sponsors and their management, service providers and consultants participating in these activities need to both act with care and carefully document their actions to position to defend potential challenges.
Plans, their sponsors and fiduciaries also should ensure that appropriate steps are taken in selecting the fiduciaries, management and service providers responsible for administering or overseeing the administration of their plans, the selection of vendors, and other critical details. Appropriate background checks and other credentialing should be done both at commencement and periodically. Bonding and fiduciary liability insurance should be arranged and reviewed periodically along with their activities. Documentation of these and other steps should be carefully created and preserved.
When and if a change in stock value or other event that could compromise the investment occurs, consideration should be given as to the responsibilities that such events create under ERISA. As company leaders often have dual responsibilities to both the company and the plan, it is important that the company sponsoring the plan, its management and owners learn in advance how these responsibilities impact each other so that they are aware of the issues and have a good understanding of responsibilities and options as situations evolve.
Businesses and business leaders that fail to conduct and maintain the necessary evidence that these requirements are met when involving the plan in these transactions risk significant liability.
“Plan fiduciaries have an obligation to work solely in the interest of plan participants,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi.in the Labor Department’s October 31, 2014 announcement of the judgment. “When they fail to do so, the retirement security of workers is put in jeopardy, and we will take action to make plan participants whole.”
For Help or More Information
If you need help reviewing and updating, administering or defending your employee benefit, human resources, insurance, health care matters or related documents or practices to monitor or respond to evolving laws and regulations, drafting or administering programs, resolving or defending audits, investigations or disputes or other employee benefit, human resources, safety, compliance 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 monitor 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.
©2014 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press. All other rights reserved.
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Posted by Cynthia Marcotte Stamer
January 20, 2014
The Internal Revenue Service (IRS) recently granted temporary nondiscrimination relief for certain “closed” defined benefit pension plans (i.e., defined benefit plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date).
Notice 2014-05 allows certain employers that sponsor a closed defined benefit plan and a defined contribution plan to show that the aggregated plans comply with the nondiscrimination requirements of Internal Revenue Code Section 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis. The Notice also requests comments on possible permanent changes to the nondiscrimination rules under Internal Revenue Code Section 401(a)(4).
Notice 2014-was published in Internal Revenue Bulletin 2014-2 on January 6, 2014
For Representation, Training & Other Resources
If you need assistance monitoring these and other regulatory policy, enforcement, litigation or other developments, or to review or respond to these or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.
Board Certified in Labor & Employment Law, Past Chair of the ABA RPTE Employee Benefit & Other Compensation Arrangements Group, Co-Chair and Past Chair of the ABA RPTE Welfare Plan Committee, Vice Chair of the ABA TIPS Employee Benefit Plans Committee, Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health plan and employee benefit, insurance, financial services, employer and health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to establish and administer medical privacy and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.
For the past two years, Ms. Stamer has served as the scribe for the ABA Joint Committee on Employee Benefits agency meeting with OCR. Ms. Stamer also regularly works with OCR, FTC, USSS, FBI and state and local law enforcement on privacy, data security, health care, benefits and insurance and other matters, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications. For instance, Ms. Stamer for the second year will serve as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR. Her insights on HIPAA risk management and compliance often appear in medical privacy related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, the American Bar Association, the Health Care Compliance Association, a multitude of health industry, health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others. You can get more information about her HIPAA and other experience here.
If you need assistance with these or other compliance concerns, wish to ask about arranging for compliance audit or training, or need legal representation on other matters please contact Ms. Stamer at (469) 767-8872 or via e-mail here.
You can review other recent publications and resources and additional information about the other experience of Ms. Stamer here. Examples of some recent publications that may be of interest include:
- IRS Published Covered Compensation Table For 2014
- J.P. Morgan Chase Hit For $461M For Madoff-Related Bank Secrecy Act Violations
- Dermatology Practice To Pay $150K To Settle Charges It Breached HIPAA Breach Notice Rule
- Employer Faces $2M FLSA Lawsuit For Alleged Worker Misclassification
- OIG 2013 Top Management Challenges List Signals Tightening of Labor Department Enforcement
- DOL Sues PBI Bank For Alleged Fiduciary Breach In Sale of ESOP Stock
- Agencies Proposes To Treat Certain EAP, Dental and Vision Only Plans As ACA & HIPAA Excepted Benefits
- 1/1/14 Exchange Enrollment Deadline Extended As Enrollment Still Lags
- Businesses Performing Income, Payroll Tax Duties For Employers Confirm Compliance With Updated IRS Procedures
- IRS Provides Closed DB Plan Relief, Qualified Plan Changes List & In-Plan Roth Rollovers Guidance
- Report Documents Disappointing Lag In American Use of ACA Health Insurance Exchanges Despite Administration’s Positive Spin Efforts
- IRS To Tax Health Insurers On Assessments To Cover ACA Section 9010 Annual Fee
- 2014 Standard Mileage Rates Announced
- US Labor Department Seeks $300K+ Whistleblower Recovery Against Employer For Firing Worker
- Careful Selection & Contracting With Vendors Critical Part of Health Plan Renewals
- Exchange Enrollment Kicks Off Plagued By Government Shutdown, Other Challenges
- Model Language May Aid Section 83(b) Elections Even As Executive & Other Special Compensation Carry Growing Liability Traps
- Labor Risks Rising For Employers Despite NLRB Loss Of Arizona Secret Ballot Challenge
- USI Advisors Will Pay $1.27 Million To Settle Charges It Violated ERISA Fee Disclosure Requirements
- Wal-Mart Settlement Shows ADA Risks When Considering Employee Return To Work Accommodation Requests & Inquiries
- Stamer Speaks On HIPAA Developments On 9/14 At ABA Joint Tax/RPTE Fall Meeting In Boston
- Employer Pays $475,000 To Settle ADA Discrimination Lawsuit Challenging Medical Fitness Testing For EMTs, Firefighters & Other Public Safety Worker’s
- Employers & Plan Fiduciaries Reminded To Confirm Credentials & Bonding For Internal Staff, Plan Fidiciaries & Vendors Dealing With Benefits
- HIPAA & Texas Law Require HIPAA Training. Register Now For August 14 HIPAA Update Workshop!
- EBSA Updates Guidance On Fee Disclosure Requirements For 401(k) Plan Brokerage Window Arrangements
- Federal Mandate That Employer Health Plans Must Cover 100% Of Contraceptive, Other Women’s Health Services With No Cost Sharing Now Effective
- Use NIH & Other Free Government Resources To Help Round Out Wellness Programs
- 96% Employers of 50+ Employees, 36% Employers of Smaller Employers Provide Health Coverage
- 12 Steps Every Employer With A Health Plan Should Do Now To Manage 2012-14 Health Plan Risks & Liabilities
- Congress Gives Defined Benefit Plan Sponsors Welcome Funding Relief, Raises PBGC Premiums & Makes Other Reforms
- IRS To Offer Help For U.S. Citizens Overseas With Foreign Retirement Plans, Dual Citizenship Tax Issues
- New EEOC State Discrimination Charge Data Helpful Employer Risk Assessment Tool Discrimination Exposures Grow
- Obama’s Reaffirms Commitment Prosecute Disability Discrimination To Mark Omlstead Anniversary
- IRS Changing Individual Taxpayer ID Number Application Requirements
- Insurer Group Health Inc. To Refund $500,00+ & Change Claims Practices To Settle NY AG Charges It Wrongfully Denied Coverage
- NLRB Moves To Promote Non-Union Employee Use of Collective Action Rights By Launching Webpage
- Making Wellness Work On A Shoestring Budget
- Tighten Defensibility of Criminal & Other Background Check Practices In Light of Labor Department Non-Discrimination Regulation & Enforcement Emphasis
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 here. For important information concerning this communication click here.
©2013 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc. All rights reserved.
Comments Off on IRS Gives Temporary Nondiscrimination Relief For Closed Defined Benefit Plans | Employers, Health Plans, HIPAA, Human Resources, Insurance | Tagged: 125, 401(a)(4), cafeteria plan, closed defined benefit plan, defense of marriage act, defined benefit plan, discrimination testing, FSA, HSA, nondiscrimination, Qualified Plan, Windsor | Permalink
Posted by Cynthia Marcotte Stamer
December 13, 2013
With 2013 rushing to the close, the Internal Revenue Service (IRS) has issued guidance providing nondiscrimination relief for certain defined benefit plans is providing temporary nondiscrimination relief for some defined benefit plans, its annual list of qualified plan changes, and guidance about in-plan Roth rollovers,.
DB Plan Discrimination Rule Relief
Notice 2014-05 provides temporary nondiscrimination relief for certain “closed” defined benefit pension plans (i.e., defined benefit plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date). The Notice allows some employers that sponsor a closed defined benefit plan and a defined contribution plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of § 401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis. The notice also requests comments on possible permanent changes to the nondiscrimination rules under § 401(a)(4).
Plan sponsors and administrators of plans that may benefit from this relief should consult with qualified legal or tax counsel for assistance in understanding the potential applicability and implications of the guidance.
In Plan Roth Rollover Guidance
Notice 2013-74 provides guidance on in-plan Roth rollovers, the practitioner community is looking forward to this guidance.
Notice 2013-84 contains the 2013 Cumulative List of Changes in Plan Qualification Requirements (2013 Cumulative List) described in section 4 of Rev. Proc. 2007-44, 2007-2 C.B. 54.
For Assistance or More Information
If you have questions or need help with these or employee benefit, human resources, insurance, health care matters or related documents or practices, please contact the author of this update, Cynthia Marcotte 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 25 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 monitor 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, HR.com, Insurance Thought Leadership, Solutions Law Press, Inc. and other 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. Her widely respected publications and programs include more than 25 years of publications on health plan contracting, design, administration and risk management including a “Managed Care Contracting Guide” published by the American Health Lawyers Association and numerous other works on vendor contracting. 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 from Ms. Stamer here.
Other Helpful Resources & Other Information
We hope that this information is useful to you. If you found these updates of interest, you also be interested in one or more of the following other recent articles published on the Coalition for Responsible Health Care Reform electronic publication available here, our electronic Solutions Law Press Health Care Update publication available here, or our HR & Benefits Update electronic publication available here . You also can get access to information about how you can arrange for training on “Building Your Family’s Health Care Toolkit,” using the “PlayForLife” resources to organize low-cost wellness programs in your workplace, school, church or other communities, and other process improvement, compliance and other training and other resources for health care providers, employers, health plans, community leaders and others here. 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 here. You can reach other recent updates and other informative publications and resources.
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©2013 Cynthia Marcotte Stamer. Nonexclusive right to republish granted to Solutions Law Press, Inc. All other rights reserved.
Comments Off on IRS Provides Closed DB Plan Relief, Qualified Plan Changes List & In-Plan Roth Rollovers Guidance | Defined Benefit Plans, Defined Contribution Plans, Employee Benefits, Employers, Retirement Plans | Tagged: 401(a)(4), defined benefit plan, defined contribution plan, discrimination testing, plan qualification | Permalink
Posted by Cynthia Marcotte Stamer
August 1, 2013
The Internal Revenue Service (IRS) is extending the deadline for sponsors and practitioners of defined benefit mass submitter lead plans to submit on-cycle applications.
Announcement 2013-37 extends to January 31, 2014, the deadline to submit on-cycle applications for opinion and advisory letters for sponsors and practitioners maintaining defined benefit mass submitter lead plans for the plans’ second six-year remedial amendment cycle.
Announcement 2013-37 will be in IRB 2013-34, dated August 19, 2013.
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 or with other employee benefits, human resources, health care or insurance matters, please contact the author of this update, Cynthia Marcotte Stamer.
A Fellow in the American College of Employee Benefit Counsel, 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 leading 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 monitor 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 from Ms. Stamer here.
Other Resources
If you found this update of interest, you also may be interested in reviewing some of the other updates and publications authored by Ms. Stamer available including:
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, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources available at ww.solutionslawpress.com.
THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS. ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.
©2013 Cynthia Marcotte Stamer, P.C. Non-exclusive license to republish granted to Solutions Law Press. All other rights reserved.
Comments Off on IRS Extends Remedial Amendment On Cycle Opinion Deadline For Some Defined Benefit Plans | Bankruptcy, Corporate Compliance, Employee Benefits, Employers, ERISA, Fiduciary Responsibility, Health Plans, Mental Health, Mental Health Parity, Professional Liability, Retirement Plans, Risk Management, Tax | Tagged: defined benefit plan, determination letter, prototype, remedial amendment, remedial amendment cycle, Retirement Plans | Permalink
Posted by Cynthia Marcotte Stamer
December 27, 2012
Peter Madoff (Madoff), the former Chief Compliance Officer and Senior Managing Director of Bernard L. Madoff Investment Securities LLC (BLMI), was sentenced on December 20, 2012 to 10 years in prison after he pled guilty among other things, to conspiracy to commit securities fraud, tax fraud, mail fraud, ERISA fraud and falsifying records of an investment adviser.
In addition to the prison term, Madoff also was sentenced to one year of supervised release, ordered to pay a $200 special assessment, and ordered to forfeit $143.1 billion, including all of his real and personal property. This amount represents all of the investor funds paid into BLMIS from 1996 – the start of Madoff’s involvement in the conspiracy – through December 2008.
As part of the defendant’s forfeiture, the Government previously entered into a settlement with Madoff’s family that requires the forfeiture of all of his wife Marion’s and daughter Shana’s assets, and assets belonging to other family members. The surrendered assets include, among other things, several homes, a Ferrari and more than $10 million in cash and securities. Marion Madoff was left with approximately $771,733 to live on for the rest of her life.
Madoff’s Sentence Part of Continuing Actions Seeking To Rectify BLMIS Fraud
Among other things, the Superseding Information against Madoff charged that the overt acts in the conspiracy count also included, among other things, making false statements to investors about BLMIS’s compliance program and the nature and scope of its Investment Advisory business. Madoff pled guilty in June 2012. He was sentenced in Manhattan federal court by U.S. District Judge Laura Taylor Swain.
Manhattan U.S. Attorney Preet Bharara said: “Peter Madoff was a gatekeeper, who was supposed to guard against fraud, but instead enabled it – facilitating his brother Bernie’s breathtaking scheme by falsifying compliance records and lying to both regulators and clients of BLMIS. The decade he will spend in prison and the disgorgement of his assets are a just result. Our efforts to hold to account anyone and everyone who played a role in this unprecedented Ponzi scheme continue.”
According to the Superseding Information to which Madoff pled guilty and other court filings:
- Madoff was employed at BLMIS from 1965 through December 2008. Beginning in 1969, he became the Chief Compliance Officer (“CCO”) and Senior Managing Director of BLMIS. In his role as CCO, Madoff created false and misleading BLMIS compliance documents, as well as false reports that were filed with the U.S. Securities and Exchange Commission (“SEC”) that materially misstated the nature and scope of BLMIS’s Investment Advisory (“IA”) business.
- As CCO, Madoff created numerous false compliance documents in which he stated that he had performed compliance reviews of the trading in the BLMIS IA business on a regular basis, when in reality, the reviews were never performed. The false statements were designed to mislead regulators, auditors, and IA clients.
- In August 2006, BLMIS registered as an investment adviser with the SEC. As a registered investment adviser, on at least an annual basis, BLMIS was required to file forms with the SEC that are used as part of the oversight process of investment advisers. Madoff was integrally involved with both the SEC registration process and in the creation of the forms, known as “Forms ADV,” which were materially false and misleading. The numerous false statements in the Forms ADV created the false appearance that BLMIS’s IA business had a small number of highly sophisticated clients and far fewer assets under management than was actually the case. Madoff also misrepresented that he, as CCO, ensured that reviews of the IA trading were being performed.
- From 1998 through 2008, Madoff engaged in a tax fraud scheme involving the transfer of wealth within the Madoff family in ways that allowed him to avoid paying millions of dollars in required taxes to the IRS. Most, if not all of the “wealth,” came directly or indirectly from IA client funds held at BLMIS. The schemes in which he engaged also allowed Bernard L. Madoff to evade his tax obligations.
- The methods by which Madoff engaged in tax fraud included the following:
- Madoff also arranged for his wife to have a “no-show” job at BLMIS from which she received between approximately $100,000 to $160,000 per year in salary, a 401(k), and health benefits to which she was not entitled.
- In December 2008, when the collapse of BLMIS was virtually certain, Madoff agreed with others to send the $300 million that remained in the IA accounts to preferred employees, family members and friends. BLMIS collapsed before the funds were ever disbursed. On December 10, 2008, one day prior to BLMIS’s collapse, Madoff also withdrew $200,000 from BLMIS for his personal use.
- Madoff received approximately $15,700,000 from Bernard L. Madoff and his wife, and executed sham promissory notes to make it appear that the transfers were loans, in order to avoid paying taxes;
- Madoff gave approximately $9,900,000 to family members, and in order to avoid paying taxes, executed sham promissory notes to make it appear that the transfers of these funds were loans;
- Madoff did not pay taxes on approximately $7,750,000 that he received from BLMIS;
- Madoff received approximately $16,800,000 from Bernard L. Madoff from two sham trades, and disguised the proceeds of the trades as long-term stock transactions in order to take advantage of the lower tax rate for long-term capital gains;
- Madoff charged approximately $175,000 in personal expenses to a corporate American Express card and did not report those expenses as income.
Madoff Victim Compensation Process Continues
In addition to the sentencing of Madoff, the Government has taken steps to clear the way to begin distributing assets forfeited by Peter Madoff in connection with the victim compensation process by filing a motion requesting that the Court find restitution to be impracticable, A similar motion was granted by United States Circuit Judge Denny Chin, who as a United States District Judge sentenced Bernard L. Madoff in 2009. The Department of Justice intends to return the assets forfeited as a result of the Madoff fraud to victims through the remission process.
Richard C. Breeden was retained to serve as Special Master on behalf of the Department of Justice to administer the process of compensating the victims of the Madoff fraud with the forfeited funds. A former chairman of the SEC, Mr. Breeden is Chairman of Richard C. Breeden & Co., which has been involved in (among other things) the administration and distribution of securities fraud claims since 1996. Among other things, Mr. Breeden has served as Corporate Monitor of WorldCom, Inc. and KPMG under its deferred prosecution agreement with the U.S. Attorney’s Office. Mr. Breeden also served as remission special master in connection with the fraud committed through Adelphia Communications Corporation. In April 2012, more than $728 million forfeited in connection with this Office’s investigation and prosecution of the Adelphia fraud was distributed to approximately 8,500 victims, the largest single distribution of forfeited assets to victims in Department of Justice history.
Now that a new Special Master has been retained, and given the pledge of SIPC Trustee Irving Picard and his counsel to lend their support and resources to the new Special Master for the benefit of the fraud victims, we expect the victim claims process to begin shortly. It is anticipated that victims who filed claims in the SIPA proceeding will not have to refile their claims to be eligible for remission. New information about the remission Special Master, and information about the victim claims process, will be posted on the Office’s Madoff website at http://www.justice.gov/usao/nys/vw_cases/madoff.html as soon as it becomes available, along with a link to a dedicated website Mr. Breeden’s firm will establish in connection with the remission proceedings.
Investment Advisors and Others With Discretion Over Funds Should Exercise Fiduciary Care
While the Madorf scandle represents an exceptionally large and long-standing stream of mishandling of employee benefit funds, the investigations and prosecutions also serve as a reminder of the need to carefully comply with the fiduciary responsibility and other requirements of ERISA and other laws to investment advisors and other employee benefit plan asset service providers, plan committees and fiduciaries and the plan sponsors, boards and other individuals responsible for investing or handling employee benefit monies or choosing the parties that possess and exercise that discretion.
ERISA generally requires that plan asset investments be made prudently and for the exclusive benefit of participants and beneficiaries. Service providers or others with discretionary responsibiliity or that are investment managers of plan assets must be prudently selected based on careful credentialing and other procedures. e No prohibited transactions should be permitted. Fees and other compensation must be set appropriately and properly reported in accordance with ERISA’s fee disclosure rules. The actions and performance of parties investing in plan assets and their investment performance must be reviewed and monitored prudently. Proper bonding must be maintained. Concerns and questions about these activities must be timely investigated in a prudent manner. Failure to properly conduct these and other ERISA fiduciary responsibilities can expose responsible parties to personal liability for losses, profits improperly realized, a fiduciary administrative penalties, disqualification to serve in plan fiduciary or other positions, and attorneys fees and other costs of recovery, as well as in certain cases like the Madorff fraud, criminal prosecution.
For Help or More Information
If you need help reviewing and updating, administering or defending your employee benefit, human resources, insurance, health care matters or related documents or practices to monitor or respond to evolving laws and regulations, drafting or administering programs, resolving or defending audits, investigations or disputes or other employee benefit, human resources, safety, compliance 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 monitor 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 concerning 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:
- IRS Plans To Issue 2013 Withholding Guidance By 12/31
- ESOP, Other Employee Plan Investments In Company Stock Land Plans, Fiduciaries, Sponsors & Others In Hot Water
- Confirm Qualified Plans Updated By Reviewing Against 2012 Required Plan Qualification Requirements Change List
- Catch Up On Health Reform & Other Key Employee Benefits & Insurance Issues Emerging Issues and Litigation Relating to Life, Health, Disability and ERISA Symposium In Ft. Lauderdale
- 2013 Standard Mileage Rates Announced
- IRS Shares Rules Allowing Government Plans To Switch Remedial Amendment Cycles
- Reminder To Amend Health FSA Plan Terms To Include ACA $2500 Contribution Before 2013 Plan Year Begins
- Bank’ $1Million Plus Overtime Settlement Shows Risks of Misapplying FLSA’s Administrative Exemption
- Labor Department Serves The Christmas Light Co. & Its Owner With Holiday Season FLSA Lawsuit
- Boston Hides and Furs Ltd. Sued For $1 Million For Alleged Willful FLSA Wage & Hour Law Violations
- 2013 Maximum Yearly PBGC Guaranteed Pension Benefit Amount To Increase Slightly In 2013
- New OCR HIPAA De-Identification Guidance Among Developments Covered In 12/12 HIPAA Update Web Workshop
- Rare Court Order Telling Union To Stop Filing Grievances Example Of Employer Risks When Caught Between Competiting Unions
- IRS OKs Retirement Plans Allowing Plan Loans & Hardship Withdrawals To Hurricane Sandy Victims
- New Employee Smart Phone App New Tool In Labor Department’s Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers
- 12 Steps Every Employer With A Health Plan Should Do Now No Matter Who Wins the Election
- Boost Employee Recognition of Value Of Employer & Other Retirement Savings Tools & Plans
- Texas Landscaper’s $106,000 In Minimum Wage & Overtime Settlement Reminds Employers To Prepare For FLSA Enforcement
- NLRB’s Nailing of Bel Air Hotel Reminder RIFs, Other Reengineering & Transactions Impacting Workforce Requirement Proper Risk Management
- Tighten Employment Disability Risk Management As Obama Declares 12/10 National Disability Employment Awareness Month
- Tighten Disability Discrimination Defenses As National Disability Employment Awareness Month Promises To Whip Up New Claims & Awareness
- Settlement of OFCCP Employment Discrimination Charge Reminder To ARRA, Other Government Contractors Of Heightened Enforcement Risks
- $1.25M NLRB Backpay Order Highlights Risks of Mismanaging Union Risks In Health Care & Others M&A Deals
- As EEOC Steps Up ADA Accommodation Enforcement, New DOD Apple App, Other Resources Released
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- Labor Risks Rising For Employers Despite NLRB Loss Of Arizona Secret Ballot Challenge
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- Wal-Mart Settlement Shows ADA Risks When Considering Employee Return To Work Accommodation Requests & Inquiries
- Record $2.3 Million+ H-2A Backpay Order Plus Civil Money Penalty Reminds Businesses Employing Foreign Workers To Manage Compliance
- Supreme Court Decision Puts Health Plans Under Fire To Complete ACA-Required Summary of Benefits & Communications & Other Health Plan Updates
- $27M+ Settlement Highlights Fiduciary Risks Plan Sponsors & Fiduciaries Risk If Plan Vendors, Compensation Improperly Set
- Employers & Plan Fiduciaries Reminded To Confirm Credentials & Bonding For Internal Staff, Plan Fidiciaries & Vendors Dealing With Benefits
- HIPAA & Texas Law Require HIPAA Training
- EBSA Updates Guidance On Fee Disclosure Requirements For 401(k) Plan Brokerage Window Arrangements
- Federal Mandate That Employer Health Plans Must Cover 100% Of Contraceptive, Other Women’s Health Services With No Cost Sharing Now Effective
- Use NIH & Other Free Government Resources To Help Round Out Wellness Programs
- OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach
- Model Language May Aid Section 83(b) Elections Even As Executive & Other Special Compensation Carry Growing Liability Traps
- IRS To Offer Help For U.S. Citizens Overseas With Foreign Retirement Plans, Dual Citizenship Tax Issues
- New EEOC State Discrimination Charge Data Helpful Employer Risk Assessment Tool Discrimination Exposures Grow
- IRS Changing Individual Taxpayer ID Number Application Requirements
- Insurer Group Health Inc. To Refund $500,00+ & Change Claims Practices To Settle NY AG Charges It Wrongfully Denied Coverage
- NLRB Moves To Promote Non-Union Employee Use of Collective Action Rights By Launching Webpage
- Making Wellness Work On A Shoestring Budget
- Update Health Plans For Expanded MHPAEA & Health Care Reform Mental Health Mandates
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.
1 Comment | ADA, Corporate Compliance, EEOC, Employers, GINA, Human Resources, OFCCP, Retaliation | Tagged: defined benefit plan, Employer, ERISA, Fiduciary Responsibility, Human Resources, pension plan, plan qualification, profit sharing plan, Retirement Plans, Tax | Permalink
Posted by Cynthia Marcotte Stamer
December 10, 2012
Companies that sponsor employee benefit plans that have purchased or own stock in their sponsor beware. Declines in the stock value of company stock purchased by employee stock ownership plans (ESOP) or other employee benefit plans in their plan sponsor have a growing number of plans and the plan sponsors, sponsoring company owners and management, plan trustees and other plan fiduciaries in hot water with the Department of Labor. ESOP or other employee plans that have purchased or allow investments in company stock and their sponsors, fiduciaries and advisors should carefully review for defensibility the current stock value, the purchase price and analysis supporting that purchase and other aspects of these investments of plan assets and take carefully documented action to prove the prudence and other appropriateness of the investment and continued retention of the investment in these assets.
Company Stock Investments Carry Special ERISA Risks
Purchases of company stock by an ESOP or other employee benefit plan can create a wide range of risks under the fiduciary responsibility rules of the Employee Retirement Income Security Act (ERISA). When making investment or other decisions under an employee benefit plan, the general fiduciary duty standards of ERISA § 404 generally require plan fiduciaries to act prudently and solely in the interest of participants and beneficiaries. Meanwhile, except in certain narrow circumstances and subject to fulfillment of ERISA § 404, the prohibited transaction rules of ERISA § 406 among other things prohibits plan fiduciaries from causing the plan to engage in a transaction, if he knows or should know that such transaction is a direct or indirect:
- Sale or exchange, or leasing, of any property between the plan and a party in interest;
- Furnishing of goods, services, or facilities between the plan and a party in interest;
- Transfer to, or use by or for the benefit of a party in interest, of any assets of the plan; or
- Acquisition, on behalf of the plan, of any employer security or employer real property in violation of section 1107 (a) of this title.
Stock Drops Create Rising Exposures For Plans Invested In Company Stock
Amid economic downturns or other situations where the stock value of company held by plans significantly lower than the price the plan paid for the stock, the Labor Department, plaintiffs in private lawsuits or both may bring “stock drop” or other lawsuits against the plan, its sponsor and its officers and board members, its fiduciaries and others for breach of fiduciary duties under these rules. See e.g., Enron v. Tittle, 463 F.3d 410 (5th Cir. 2006); In Re: BP p.l.c. ERISA Litig., No. 4:10-cv-4214 (S.D. Texas); Vivian v. Worldcom (N.D. Cal. 2002). Since the sponsoring company is a party-in-interest of the plan, using plan assets to purchase company stock or other activities resulting in the inclusion of company stock among the plan assets held by the plan creates presumptions of impropriety that impose higher than usual burdens upon the plan, its sponsor and fiduciaries to prove the appropriateness of the transaction. See e.g., Pfeil v. State Street Bank & Trust Co., 671 F.3d 585 (6th Cir. 2012).
The filing of stock drop cases tends to rise and fall in reflection to the economic times. Following the economic downturn in 2002, federal courts saw a surge in stop drop case challenges as well as Labor Department enforcement actions. The number of these cases dropped as the economy improved later in the decade only to rise again between 2010 and the present in response to the current economic crisis.
Tough Economic Times Fueled Stock Drops Creating Rising Risks & Enforcement
The latest economic downturn is fueling resurgence in these “stock drop” challenges. Fifteen stop drop lawsuits were filed during 2010 and 2011. Additional suits and Labor Department stop drop challenges have emerged this year.
In Griffin v. Flagstar Bancorp, Inc., No. 11-1497 (6th Cir. 2012), for instance, plaintiffs alleged various fiduciaries allegedly breached their duties under ERISA by allowing employer stock to be offered as a 401(k) plan investment option while the company was facing a precarious financial situation. The Griffin court overruled the lower court’s dismissal of the plaintiff’s lawsuit. The Court of Appeals held that the defendants offering of company stock to plan participants made ERISA’s “safe harbor” (Section 404(c)) provision for participant self-directed investments inapplicable. The Sixth Circuit ruled “[a]fter reviewing the factual allegations in the complaint – which go far beyond documenting a simple drop in stock price to recite announcements from Flagstar itself, statements by analysts and financial media publications, and actions taken by Flagstar suggesting a precarious financial situation– we must conclude that the complaint raises a plausible claim for breach of fiduciary duty.”
In addition to private class action lawsuits like Griffin, plans holding company stock, their sponsors, owners, management and fiduciaries also need to be ready to defend against investigations and enforcement by the Labor Department, which often zealously investigates and takes enforcement action against plans, their fiduciaries, sponsors, company boards and management and others for losses to plan asset values resulting due to the investment or retention of investments by their plans in company stock. See also Labor Department Backs M&I Employees In Stock-Plan Suit.
Labor Department Suits Show Particular Risks For ESOPs
Over the past year, the Labor Department has been particularly aggressive in taking action when the value of company stock purchased or held by employee stock purchase plans or “ESOPS” drops significantly.
For instance, the purchase by the Rembar Inc. Employee Stock Ownership Plan (“Rembar Plan”) of all the stock of its sponsor, Rembar Inc. has landed the trust company that served as the Plan’s independent fiduciary and Rembar Inc.’s owner and Chief Executive Officer in hot water.
The Labor Department is suing Rembar Inc.’s Chief Executive Officer and owner, Frank Firor, First Bankers Trust Services Inc. and the Rembar Plan to recover losses that the Labor Department charges Rembar Plan participants suffered because the Rembar Plan paid too much when it purchased all of the stock of Rembar Inc.
Rembar Inc. manufactures and distributes precision parts made from refractory metals. The Labor Department lawsuit alleges that, in June 2005, First Bankers Trust Services allowed the Rembar Plan to purchase 100 percent of the company’s stock from Firor and Firor’s relatives for $15.5 million. A Labor Department investigation found that First Bankers Trust Services failed to comply with its duty to understand the valuation report that set the purchase price, identify and question assumptions in the report, and verify that the conclusions in the report were consistent with the company’s financial data. As a result of First Bankers Trust Services’ failure to comply with its fiduciary duties, the Labor Department claims the Rembar Plan overpaid for the stock and suffered losses. The suit seeks, among other things, to recover jointly from First Bankers Trust Services and Firor all losses suffered by the Rembar Plan.
Similarly, the Labor Department also has filed an ERISA stock drop lawsuit against the Maran Inc. Employee Stock Ownership Plan (Maran Plan), First Bankers Trust Services Inc. and others to recover losses suffered by participants.
According to the pleadings, First Bankers Trust Services was hired as an independent fiduciary and trustee in connection with the company’s ESOP to decide whether, and at what price, to purchase shares of Maran Inc. from majority shareholders. The suit charges First Bankers Trust Services violated ERISA in 2006 when it approved the ESOP’s purchase of 49 percent of the outstanding stock of Maran Inc. for about $71 million, which was more than the fair market value. The Labor Department claims that as a result of the purchase of overvalued stock, the Maran Plan participants suffered significant losses. The suit seeks to recover all losses and have First Bankers Trust Services enjoined from serving as a fiduciary to ESOP plans.
Likewise, the Labor Department in April sued in the U.S. District Court for the Northern District of California seeking to recover losses suffered by participants in the Parrot Cellular Employee Stock Ownership Plan (Parrot Plan).
The suit names as a defendant Dennis Webb, the principal owner of Entrepreneurial Ventures Inc. (EVI), which operates Parrot Cellular telephone retail stores in northern and central California, and is the sponsor of the Parrot Plan; EVI executives Matthew Fidiam and J. Robert Gallucci; Consulting Fiduciaries Inc., an Illinois company that served as the independent fiduciary and investment manager for the Parrot Plan in 2002 when the Parrot Plan bought 90 percent of EVI stock.
According to the pleadings, the Parrot Plan paid for more than $28 million to buy approximately 90 percent of EVI’s stock in 2002. Around the same time as the stock purchase, EVI also set aside $4 million pursuant to a deferred compensation agreement with Webb and entered into a second executive compensation agreement with Webb for $12 million.
The Labor Department charges defendants allegedly violated ERISA by rejecting their fiduciary duties of loyalty and prudence to the plan, engaging in self-dealing, permitting or engaging in prohibited transactions, and failing to monitor the performance of the plan’s appraiser when they caused or permitted the Parrot Plan to purchase EVI stock for more than fair market value. The suit also charges that Webb enriched himself by millions of dollars at the expense of the plan and its participants because a reasonable value for the company as of November 2002 was far less than the amounts the Parrot Plan paid for the stock and the total deferred compensation agreements entered into with Webb.
In addition to seeking the recovery of all losses to the Parrot Plan resulting from the above violations, the Labor Department’s suit seeks the disgorgement of unjust profits from Webb that he received from the two deferred compensation agreements and from his sale of EVI stock to the Parrot Plan.
Plans, Sponsors and Fiduciaries Must Act Continously To Manage Risks
These and other actions send a stong message for ESOP and other employee benefit plans, their fiduciaries and sponsors about the need to continuously and prudently evaluate and monitor the investment of plan assets in company stock,the analysis and decisions about whether to continue to keep and offer this stock under the plan, as well as the qualifications, credentials and conduct of the fiduciaries and others empowered to influence these decisions. The Labor Department’s statement in announcing the Parrot litigation sums up the messages from these cases. “Plan officials are required by law to manage the ESOP in a careful, prudent manner and to act solely to benefit the plan’s participants,” said Jean Ackerman, director of EBSA’s San Francisco Regional Office, which conducted the investigation. “This action underscores the department’s commitment to protect the benefits that employers promise to their employees.” Plan fiduciaries, sponsors and their management, service providers and consultants participating in these activities need to both act with care and carefully document their actions to position to defend potential challenges.
Plans, their sponsors and fiduciaries also should ensure that appropriate steps are taken in selecting the fiduciaries, management and service providers responsible for administering or overseeing the administration of their plans, the selection of vendors, and other critical details. Appropriate background checks and other credentialing should be done both at commencement and periodically. Bonding and fiduciary liability insurance should be arranged and reviewed periodically along with their activities. Documentation of these and other steps should be carefully created and preserved.
When and if a change in stock value or other event that could compromise the investment occurs, consideration should be given as to the responsibilities that such events create under ERISA. As company leaders often have dual responsibilities to both the company and the plan, it is important that the company sponsoring the plan, its management and owners learn in advance how these responsibilities impact each other so that they are aware of the issues and have a good understanding of responsibilities and options as situations evolve.
For Help or More Information
If you need help reviewing and updating, administering or defending your employee benefit, human resources, insurance, health care matters or related documents or practices to monitor or respond to evolving laws and regulations, drafting or administering programs, resolving or defending audits, investigations or disputes or other employee benefit, human resources, safety, compliance 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 monitor 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:
- Confirm Qualified Plans Updated By Reviewing Against 2012 Required Plan Qualification Requirements Change List
- Catch Up On Health Reform & Other Key Employee Benefits & Insurance Issues Emerging Issues and Litigation Relating to Life, Health, Disability and ERISA Symposium In Ft. Lauderdale
- 2013 Standard Mileage Rates Announced
- IRS Shares Rules Allowing Government Plans To Switch Remedial Amendment Cycles
- Reminder To Amend Health FSA Plan Terms To Include ACA $2500 Contribution Before 2013 Plan Year Begins
- Bank’ $1Million Plus Overtime Settlement Shows Risks of Misapplying FLSA’s Administrative Exemption
- Labor Department Serves The Christmas Light Co. & Its Owner With Holiday Season FLSA Lawsuit
- Boston Hides and Furs Ltd. Sued For $1 Million For Alleged Willful FLSA Wage & Hour Law Violations
- 2013 Maximum Yearly PBGC Guaranteed Pension Benefit Amount To Increase Slightly In 2013
- New OCR HIPAA De-Identification Guidance Among Developments Covered In 12/12 HIPAA Update Web Workshop
- Rare Court Order Telling Union To Stop Filing Grievances Example Of Employer Risks When Caught Between Competing Unions
- IRS OKs Retirement Plans Allowing Plan Loans & Hardship Withdrawals To Hurricane Sandy Victims
- Agencies Release ACA Wellness, Adult Pre-Existing Condition, Essential Health Benefits Guidance; Briefing Planned
- New Employee Smart Phone App New Tool In Labor Department’s Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers
- 12 Steps Every Employer With A Health Plan Should Do Now No Matter Who Wins the Election
- Boost Employee Recognition of Value Of Employer & Other Retirement Savings Tools & Plans
- Texas Landscaper’s $106,000 In Minimum Wage & Overtime Settlement Reminds Employers To Prepare For FLSA Enforcement
- NLRB’s Nailing of Bel Air Hotel Reminder RIFs, Other Reengineering & Transactions Impacting Workforce Requirement Proper Risk Management
- Tighten Employment Disability Risk Management As Obama Declares 12/10 National Disability Employment Awareness Month
- Tighten Disability Discrimination Defenses As National Disability Employment Awareness Month Promises To Whip Up New Claims & Awareness
- Settlement of OFCCP Employment Discrimination Charge Reminder To ARRA, Other Government Contractors Of Heightened Enforcement Risks
- $1.25M NLRB Backpay Order Highlights Risks of Mismanaging Union Risks In Health Care & Others M&A Deals
- As EEOC Steps Up ADA Accommodation Enforcement, New DOD Apple App, Other Resources Released
- $1.5 M HIPAA Security Breach Resolution Agreement Shows Looming HIPAA Risks
- Labor Risks Rising For Employers Despite NLRB Loss Of Arizona Secret Ballot Challenge
- USI Advisors Will Pay $1.27 Million To Settle Charges It Violated ERISA Fee Disclosure Requirements
- Wal-Mart Settlement Shows ADA Risks When Considering Employee Return To Work Accommodation Requests & Inquiries
- Record $2.3 Million+ H-2A Backpay Order Plus Civil Money Penalty Reminds Businesses Employing Foreign Workers To Manage Compliance
- Supreme Court Decision Puts Health Plans Under Fire To Complete ACA-Required Summary of Benefits & Communications & Other Health Plan Updates
- $27M+ Settlement Highlights Fiduciary Risks Plan Sponsors & Fiduciaries Risk If Plan Vendors, Compensation Improperly Set
- Employers & Plan Fiduciaries Reminded To Confirm Credentials & Bonding For Internal Staff, Plan Fidiciaries & Vendors Dealing With Benefits
- HIPAA & Texas Law Require HIPAA Training
- EBSA Updates Guidance On Fee Disclosure Requirements For 401(k) Plan Brokerage Window Arrangements
- Federal Mandate That Employer Health Plans Must Cover 100% Of Contraceptive, Other Women’s Health Services With No Cost Sharing Now Effective
- Use NIH & Other Free Government Resources To Help Round Out Wellness Programs
- OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach
- Model Language May Aid Section 83(b) Elections Even As Executive & Other Special Compensation Carry Growing Liability Traps
- IRS To Offer Help For U.S. Citizens Overseas With Foreign Retirement Plans, Dual Citizenship Tax Issues
- New EEOC State Discrimination Charge Data Helpful Employer Risk Assessment Tool Discrimination Exposures Grow
- IRS Changing Individual Taxpayer ID Number Application Requirements
- Insurer Group Health Inc. To Refund $500,00+ & Change Claims Practices To Settle NY AG Charges It Wrongfully Denied Coverage
- NLRB Moves To Promote Non-Union Employee Use of Collective Action Rights By Launching Webpage
- Making Wellness Work On A Shoestring Budget
- Update Health Plans For Expanded MHPAEA & Health Care Reform Mental Health Mandates
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.
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Posted by Cynthia Marcotte Stamer
December 9, 2012
Qualified plan sponsors, fiduciaries, administrators and advisors and other service providers should review the 2012 Cumulative List of Changes in Plan Qualification Requirements (2012 Cumulative List) in Notice 2012-76 to identify any required or recommended changes to promote continued fulfillment of applicable qualification requirements.
The Internal Revenue Service (IRS) publishes a cumulative list annually to guide plan sponsors and practitioners submitting qualifed plan determination letter applications for plans during the upcoming year. The 2012 Cumulative Listinforms plan sponsors of issues the Service has specifically identified for review in determining whether a plan filing in Cycle C has been properly updated. Specifically, the 2012 Cumulative List reflects law changes under the Pension Protection Act of 2006 (PPA ’06), Pub. L. 109-280; the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery and Iraq Accountability Appropriations Act, 2007, Pub. L. 110-28; the Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act), Pub. L. 110-245; the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), Pub. L. 110-458; the Small Business Jobs Act of 2010 (SBJA), Pub. L. 111-240; the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010), Pub. L. No. 111-192; and the Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub. L. 112-141.
The 2012 Cumulative List sets forth guidance and regulations implementing these requirements and provides certain model amendment language. 2012 Retirement Plan Notices are published here.
The IRS intends that the 2012 Cumulative List will be used by plan sponsors and practitioners submitting determination letter applications for plans during the period beginning February 1, 2013 and ending January 31, 2014. In order to be qualified, a plan must comply with all relevant qualification requirements, not just those on the 2012 Cumulative List including those enacted or effective after publication of the 2012 Cumulative List. The list of changes in the Cumulative List does not extend the deadline for amending a qualified plan to comply with any statutory, regulatory, or guidance changes.
Plans using 2012 Cumulative List will primarily be single employer individually designed defined contribution plans and single employer individually designed defined benefit plans that are in Cycle C, and § 414(d) governmental plans (including governmental multiemployer or governmental multiple employer plans) that choose to file during Cycle C. Generally an individually designed plan is in Cycle C if the last digit of the employer identification number of the plan sponsor is 3 or 8. In addition, the 2012 Cumulative List will be used by sponsors of defined benefit pre-approved plans (that is, defined benefit plans that are master and prototype (M&P) or volume submitter (VS) plans) for the second submission under the remedial amendment cycle described in Rev. Proc. 2007-44.
The IRS issued Notice 2012-76 in conjunction with the determination letter program for individually designed plans eligible for Cycle C. The IRS is scheduled to accept determination letter applications for Cycle C individually designed plans from February 1, 2013 to January 31, 2014. In addition, the Service will start accepting opinion and advisory letter applications for defined benefit pre-approved plans beginning on February 1, 2013. The 12-month submission period for non-mass submitter sponsors and practitioners, word-for-word identical adopters, and M&P minor modifier placeholder applications will end on January 31, 2014. The 9-month submission period for mass submitters will end on October 31, 2013.
For Help or More Information
If you need help reviewing and updating, administering or defending your employee benefit, human resources, insurance, health care matters or related documents or practices to monitor or respond to evolving laws and regulations, drafting or administering programs, resolving or defending audits, investigations or disputes or other employee benefit, human resources, safety, compliance 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 monitor 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 concerning 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 registerto 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:
- New Employee Smart Phone App New Tool In Labor Department’s Aggressive Wage & Hour Law Enforcement Campaign Against Restaurant & Other Employers
- 12 Steps Every Employer With A Health Plan Should Do Now No Matter Who Wins the Election
- Boost Employee Recognition of Value Of Employer & Other Retirement Savings Tools & Plans
- Texas Landscaper’s $106,000 In Minimum Wage & Overtime Settlement Reminds Employers To Prepare For FLSA Enforcement
- NLRB’s Nailing of Bel Air Hotel Reminder RIFs, Other Reengineering & Transactions Impacting Workforce Requirement Proper Risk Management
- Tighten Employment Disability Risk Management As Obama Declares 12/10 National Disability Employment Awareness Month
- Tighten Disability Discrimination Defenses As National Disability Employment Awareness Month Promises To Whip Up New Claims & Awareness
- Settlement of OFCCP Employment Discrimination Charge Reminder To ARRA, Other Government Contractors Of Heightened Enforcement Risks
- $1.25M NLRB Backpay Order Highlights Risks of Mismanaging Union Risks In Health Care & Others M&A Deals
- As EEOC Steps Up ADA Accommodation Enforcement, New DOD Apple App, Other Resources Released
- $1.5 M HIPAA Security Breach Resolution Agreement Shows Looming HIPAA Risks
- Labor Risks Rising For Employers Despite NLRB Loss Of Arizona Secret Ballot Challenge
- USI Advisors Will Pay $1.27 Million To Settle Charges It Violated ERISA Fee Disclosure Requirements
- Wal-Mart Settlement Shows ADA Risks When Considering Employee Return To Work Accommodation Requests & Inquiries
- Record $2.3 Million+ H-2A Backpay Order Plus Civil Money Penalty Reminds Businesses Employing Foreign Workers To Manage Compliance
- Supreme Court Decision Puts Health Plans Under Fire To Complete ACA-Required Summary of Benefits & Communications & Other Health Plan Updates
- $27M+ Settlement Highlights Fiduciary Risks Plan Sponsors & Fiduciaries Risk If Plan Vendors, Compensation Improperly Set
- Employers & Plan Fiduciaries Reminded To Confirm Credentials & Bonding For Internal Staff, Plan Fidiciaries & Vendors Dealing With Benefits
- HIPAA & Texas Law Require HIPAA Training
- EBSA Updates Guidance On Fee Disclosure Requirements For 401(k) Plan Brokerage Window Arrangements
- Federal Mandate That Employer Health Plans Must Cover 100% Of Contraceptive, Other Women’s Health Services With No Cost Sharing Now Effective
- Use NIH & Other Free Government Resources To Help Round Out Wellness Programs
- OCR Hits Alaska Medicaid For $1.7M+ For HIPAA Security Breach
- Model Language May Aid Section 83(b) Elections Even As Executive & Other Special Compensation Carry Growing Liability Traps
- IRS To Offer Help For U.S. Citizens Overseas With Foreign Retirement Plans, Dual Citizenship Tax Issues
- New EEOC State Discrimination Charge Data Helpful Employer Risk Assessment Tool Discrimination Exposures Grow
- IRS Changing Individual Taxpayer ID Number Application Requirements
- Insurer Group Health Inc. To Refund $500,00+ & Change Claims Practices To Settle NY AG Charges It Wrongfully Denied Coverage
- NLRB Moves To Promote Non-Union Employee Use of Collective Action Rights By Launching Webpage
- Making Wellness Work On A Shoestring Budget
- Update Health Plans For Expanded MHPAEA & Health Care Reform Mental Health Mandates
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.
Comments Off on Confirm Qualified Plans Updated By Reviewing Against 2012 Required Plan Qualification Requirements Change List | ADA, Corporate Compliance, EEOC, Employers, GINA, Human Resources, OFCCP, Retaliation | Tagged: defined benefit plan, Employer, Human Resources, pension plan, plan qualification, profit sharing plan, Retirement Plans, Tax | Permalink
Posted by Cynthia Marcotte Stamer
October 22, 2012
Studies suggest that employees need to save an estimated 40% of current earnings to have sufficient savings to fund the anticipated cost to keep up their lifestyle post retirement for their expected post retirement life expectancy. Although times are tough, American workers need to understand the importance of taking advantage of employer sponsored and other retirement saving and funding tools. Here is a free Department of Labor resource that employers might want to include in their retirement education toolkit.
For More Information Or Assistance
If you need help reviewing or responding to the defined benefit plan funding or other employee benefit, compensation or employment regulations or other related matters please contact Cynthia Marcotte Stamer here or (469)767-8872.
About Ms. Stamer
Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, an American College of Employee Benefits Counsel Fellow, past Chair and current Welfare Benefit Committee Co_Chair of the American Bar Association (ABA) RPTE Employee Benefit & Other Compensation Group, a Council Member of the ABA Joint Committee on Employee Benefits, current TIPS Employee Benefits Committee, Vice Chair, and Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, management attorney and consultant Cynthia Marcotte Stamer has more than 25 years experience advising and representing employers, health and other employee benefit plans, their sponsors, fiduciaries and plan administrators, consultants, vendors, outsourcers, insurers, governments and others about employment, employee benefit, compensation, and a wide range of other performance, legal and operational risk management practices and concerns. As a part of this work, Ms. Stamer has worked extensively with clients to manage risks and defend practices under a wide range of laws and circumstances. Her experience includes extensive work advising and representing employers, plans, plan fiduciaries, trustees, investors, and others about managing and resolving risks relating to distressed pension and other employee benefit plans, downsizing and other workforce re-engineering and other similar matters. A prolific author and popular speaker, Ms. Stamer also publishes, conducts client and other training, testifies, speaks and consults extensively on other employment and employee benefit risk management practices and concerns for the ABA, World At Work, SHRM, American Health Lawyers Association, Institute of Internal Auditors, Society for Professional Benefits Administrators, HCCA, Southwest Benefits Association and many other organizations. An Editorial Advisory Board member and contributing author of HR.com, Insurance Thought Leaders, Employee Benefit News and many other publications, her insights on these and related topics have appeared in Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, Managed Healthcare, Health Leaders, various ABA publications and a many other national and local publications. To learn more about Ms. Stamer, her experience, involvements, programs and publications, see here or contact Ms. Stamer.
Other Resources & Developments
If you found this information of interest, you also may be interested in reviewing other recent Solutions Law Press updates including:
If you or someone else you know would like to receive future updates and notices about upcoming programs and events, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here. For important information concerning this communication click here.
©2012 Cynthia Marcotte Stamer. All rights reserved.
Comments Off on Boost Employee Recognition of Value Of Employer & Other Retirement Savings Tools & Plans | Bankruptcy, Corporate Compliance, Employers, ERISA, Fiduciary Responsibility, Internal Controls, Reporting & Disclosure, Restructuring, Retirement Plans | Tagged: defined benefit plan, disclosure, ERISA, funding, Labor Department, notices, PBGC, pension plans, reporting, underfunded plans | Permalink
Posted by Cynthia Marcotte Stamer
July 31, 2012
The Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Internal Revenue Code generally require employers that sponsor defined benefit pension plans make sufficient contributions to their defined benefit pension plans to ensure that their plans meet minimum funding requirements.
Failure to meet minimum funding requirements triggers a series of complicated reporting and disclosure, funding and excise tax liabilities, liens and other obligations that are serious and require prompt redress through prompt payment of required contributions and penalties, request for funding waivers or termination under a series of complicated rules or both. Special controlled group, lien and successor liability rules incorporated into these funding requirements often spread the risk of funding deficiencies under these rules by extending liabilities to commonly controlled or affiliated employers, lenders, potential purchasers and others dealing with these plans or the businesses that sponsor them.
Because employer funding obligations under these rules depend heavily upon interest and other investment performance used to calculate funding levels, employer funding obligations tend to spike during economic depressions or slowdowns, resulting in sharp increases in funding obligations for employers at a time when the tight economy already makes finances tight. Congress has faced growing pressure to provide some sort of defined benefit pension plan funding relief as low investment returns and strained corporate budgets during the ongoing economic crisis have fueled an underfunding epidemic among employers sponsoring defined benefit pension plans and threatened the financial viability of many sponsoring employers and the federal insurance program responsible for providing backup insurance for private employer defined benefit commitments administered by the PBGC.
MAP-21 provides immediate defined benefit plan funding relief by changing how the interest rates that employers must use to calculate their current defined benefit plan funding obligations are calculated. MAP-21 defined benefit plan funding reforms effectively decrease current defined benefit plan funding costs by establishing a minimum and maximum for the interest segment rates defined benefit plans use to calculate currently required funding based on a historic 25-year average of those segment rates. It is important that employers and plan fiduciaries keep in mind that the MAP-21 interest rate change applies to the calculation of current funding obligations that employer. It does not apply for purposes of calculating lump sum distributions, limits on deductible contributions to single-employer plans, PBGC variable-rate premiums, fi
With many employers continuing to meet defined benefit plan funding requirements driven up by the continued excessively low investment performance of their benefit plan investment in the slow economic environment, defined benefit pension plan funding relief included in the “Moving Ahead for Progress in the 21st Century Act”(MAP–21”) signed into law by President Obama on July 6, 2012 provides welcome and much-needed pension funding relief. For many financially strapped businesses that sponsor defined benefit plans, the MAP-21 relief may allow the employer to avoid terminating its defined benefit plan, escape costly underfunding consequences that many defined benefit plan sponsors fear will financially cripple or bankrupt their companies, or both.
MAP-21 provides immediate funding relief for financially strapped defined benefit plan sponsors and makes various other reforms impacting defined benefit pension plans and the Pension Benefit Guarantee Corporation (PBGC) insurance program that helps to insure certain benefit commitments made under these defined benefit plans. The MAP-21 funding relief is intended to help employers struggling to meet heightened pension funding obligations brought about by the decline in investment performance resulting from the economic downturn.
nancial reporting under Section 4010 of ERISA, and qualified transfers of excess pension assets to retiree medical accounts.
In addition to changing the rules for calculating interest rates for purposes of determining defined benefit plan minimum funding obligations, MAP-21 also extends rules allowing transfers of excess pension assets to retiree health accounts to December 31, 2021 and expands those transfer rules also to allow transfers to fund retiree group term life insurance accounts.
Finally, in addition to these changes to defined benefit pension plan funding rules, MAP-21 also reorganizes the PBGC organizational structure and increases PBGC insurance premiums.
While the MAP-21 reforms will provide welcome relief, sponsoring businesses, their commonly controlled and affiliated employers, lenders, investors and successors still must exercise care to carefully monitor the funding status of defined benefit plans and the potential liabilities and responsibilities associated with these plans. Appropriate steps should be taken to maintain required funding levels or, at the first sign of trouble, to seek experienced legal and actuarial advice and help to identify and take prompt steps to pursue options to head off a potential crisis by freezing or terminating the plan, providing required notifications and disclosures to participants and beneficiaries, the PBGC, lenders, investors, and other concerned parties, and other actions to mitigate exposures.
For More Information Or Assistance
If you need help reviewing or responding to the defined benefit plan funding or other employee benefit, compensation or employment regulations or other related matters please contact Cynthia Marcotte Stamer here or (469)767-8872.
A Fellow in the the American College of Employee Benefits Council, Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, Immediate Past Chair and current Welfare Plan Committee Co-Chair of the American Bar Association (ABA) RPTE Employee Benefit & Other Compensation Group, a Council Member of the ABA Joint Committee on Employee Benefits, Vice-Chair of the ABA TIPS Employee Benefits Commitee, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, management attorney and consultant Cynthia Marcotte Stamer nearly 25 years experience advising and representing employers, employee benefit plans, their sponsors, bankruptcy creditors, debtors and trustees, plan fiduciaries and plan administrators, consultants, vendors, outsourcers, insurers, governments and others about employment, employee benefit, compensation, and a wide range of other performance, legal and operational risk management practices and concerns. As a part of this work, Ms. Stamer has worked extensively with clients to manage risks and defend practices under a wide range of laws and circumstances. Her experience includes extensive work advising and representing employers, plans, plan fiduciaries, trustees, investors, and others about managing and resolving risks relating to distressed pension and other employee benefit plans, downsizing and other workforce reengineering and other similar matters. A prolific author and popular speaker, Ms. Stamer also publishes, conducts client and other training, speaks and consults extensively on GINA and other employment and employee benefit risk management practices and concerns for the ABA, World At Work, SHRM, American Health Lawyers Association, Institute of Internal Auditors, Society for Professional Benefits Administrators, HCCA, Southwest Benefits Association and many other organizations. Her insights on these and related topics have appeared in Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, Managed Healthcare, Health Leaders, various ABA publications and a many other national and local publications. To learn more about Ms. Stamer, her experience, involvements, programs and publications, see here or contact Ms. Stamer.
Other Resources & Developments
If you found this information of interest, you also may be interested in reviewing other recent Solutions Law Press updates including:
If you or someone else you know would like to receive future updates and notices about upcoming programs and events, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at here. To unsubscribe, send an e-mail with “Unsubscribe” in the subject here. For important information concerning this communication click here.
©2010 Cynthia Marcotte Stamer. All rights reserved.
Comments Off on Congress Gives Defined Benefit Plan Sponsors Welcome Funding Relief, Raises PBGC Premiums & Makes Other Reforms | Bankruptcy, Corporate Compliance, Employers, ERISA, Fiduciary Responsibility, Internal Controls, Reporting & Disclosure, Restructuring, Retirement Plans | Tagged: defined benefit plan, disclosure, ERISA, funding, Labor Department, notices, PBGC, pension plans, reporting, underfunded plans | Permalink
Posted by Cynthia Marcotte Stamer
November 18, 2010
Plan sponsors and administrators of defined benefit plans must carefully monitor and comply with the funding, notification, insurance and other associated requirements of the minimum funding rules imposed under the Employee Retirement Income Security Act and the Internal Revenue Code. The Department of Labor’s Employee Benefits Security Administration today (November 18, 2010) its Pension Protection Act web page with the Annual Funding Notice for Defined Benefit Plans Proposed Rule, available at here, a fact sheet, available here, a model notice for single employer plans, available here, and a model notice for multiemployer plans, available here.
Pension plan funding, reporting and disclosure and termination requirements are complicated in non-distress situations. This complexity and the potential legal exposures of non-compliance can grow exponentially when a pension plan or one or more of its contributing employers becomes distress. Furthermore, special controlled group, lien and successor liability rules incorporated into these funding requirements often create hidden risks for affiliated employers, lenders, potential purchasers and others dealing with these plans or the businesses that sponsor them. As a consequence, all parties dealing with these plans should exercise care to understand and properly manage these exposures to avoid unintentionally triggering liability under these rules.
For More Information Or Assistance
If you need help reviewing or responding to the defined benefit plan funding or other employee benefit, compensation or employment regulations or other related matters please contact Cynthia Marcotte Stamer here or (469)767-8872.
About Ms. Stamer
Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization, Chair of the American Bar Association (ABA) RPTE Employee Benefit & Other Compensation Group, a Council Member of the ABA Joint Committee on Employee Benefits, Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group, management attorney and consultant Cynthia Marcotte Stamer has more than 23 years experience advising and representing employers, health and other employee benefit plans, their sponsors, fiduciaries and plan administrators, consultants, vendors, outsourcers, insurers, governments and others about employment, employee benefit, compensation, and a wide range of other performance, legal and operational risk management practices and concerns. As a part of this work, Ms. Stamer has worked extensively with clients to manage risks and defend practices under a wide range of laws and circumstances. Her experience includes extensive work advising and representing employers, plans, plan fiduciaries, trustees, investors, and others about managing and resolving risks relating to distressed pension and other employee benefit plans, downsizing and other workforce reengineering and other similar matters. A prolific author and popular speaker, Ms. Stamer also publishes, conducts client and other training, speaks and consults extensively on GINA and other employment and employee benefit risk management practices and concerns for the ABA, World At Work, SHRM, American Health Lawyers Association, Institute of Internal Auditors, Society for Professional Benefits Administrators, HCCA, Southwest Benefits Association and many other organizations. Her insights on these and related topics have appeared in Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, Managed Healthcare, Health Leaders, various ABA publications and a many other national and local publications. To learn more about Ms. Stamer, her experience, involvements, programs and publications, see here or contact Ms. Stamer.
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©2010 Cynthia Marcotte Stamer. All rights reserved.
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Posted by Cynthia Marcotte Stamer
January 14, 2010
By Cynthia Marcotte Stamer
Regulations published by the Department of Labor today (January 14, 2010) offer employers the opportunity to know their deposit of employee contributions and other amounts withheld from wages or otherwise received from employees with a pension, profit-sharing, health, or other welfare benefit plan is timely for purposes of the fiduciary responsibility requirements of the Employee Retirement Income Security Act (“ERISA”) and the prohibited transaction rules of the Internal Revenue Code (the “Code”) by depositing those amounts with the plan within the seven day period specified in a new safe harbor included in the Regulations.
Certainty about the timeliness of these deposits is important, as mishandling of these employee contributions, participant loan repayments or other employee benefit plan assets frequently triggers judgments, fines and penalties against companies that sponsor employee benefit plans as well as owners, board members, or other members of management. See Mishandling Employee Benefit Obligations Creates Big Liabilities For Distressed Businesses & Their Leaders. Consequently, businesses sponsoring employee benefit programs and owners, officers, directors or other members of management with authority over or responsibility for the handling or application of amounts withheld or collected from employees as employee contributions or plan loans should make arrangements for these amounts to be properly handled and timely deposited with the appropriate employee benefit plan in accordance with these new plan asset regulations.
Title I of ERISA generally requires that employee benefit “plan assets” be held in trust, prudently handled and invested, used for the exclusive benefit of the plan and its participants, and otherwise used and administered in accordance with ERISA’s fiduciary responsibility rules. Meanwhile, the use of “plan assets” of certain employee benefit plans in a manner prohibited by the Code’s prohibited transaction rules also may trigger excise taxes and other penalties.
For purposes of both ERISA and the Code, Labor Department Regulation § 2510.3-102, specifies that amounts (other than union dues) that an employer withholds from wages or otherwise collects from employees as employee contributions or loan repayments to an employee benefit plan generally become plan assets subject to these fiduciary responsibility rules “as of the earliest date on which such contributions or repayments can reasonably be segregated from the employer’s general assets.” Since employers, business owners, members of management can risk exposure to damages, administrative penalties and/or excise taxes, knowing when amounts collected from employees are considered plan assets is a critical first step to managing these risks.
Unfortunately, the subjectivity of this standard leaves room for much uncertainty and debate about the precise deadline by which employee contributions, plan loans and other amounts from employees must be received by the plan. The subjectivity inherent in this standard leaves many employers uncertain about the adequacy of their compliance efforts and frequently fuels debate among plans, debtors, creditors, regulators or others about the when amounts earmarked to be withheld from employee wages cease to be assets of the debtor employer and become plan assets.
To mitigate debate and uncertainty about the timing of these events, Labor Department Regulation § 2510.3-102 as published in final form today includes a new “safe harbor” rule for plans with fewer than 100 participants at the beginning of the plan year. Under the safe harbor, employee contributions, plan loans and other amounts withheld from wages or received from employees for payment to an employee benefit plan are treated as treated timely paid to the plan if deposited with the plan not later than the 7th business day following the day on which such amount is received by the employer (in the case of amounts that a participant or beneficiary pays to an employer), or the 7th business day following the day on which such amount would otherwise have been payable to the participant in cash (in the case of amounts withheld by an employer from a participant’s wages). While this safe harbor assures employers and others that withhold from wages or receive employee contributions or participant loan payments owing to less than 100 participant plans that their deposit will be considered timely if received by the plan within seven days, the plan asset regulations leave open that deposit with the plan more than 7 after receipt might still be considered timely deposit with the plan under certain circumstance.
Where deposit with the plan is not made within the seven-day period established by the safe harbor, the plan asset rules continue to leave room for great subjectivity in the determination of the deadline for deposit. In addition to the seven-day safe harbor, the plan asset regulations clearly establish bright-line deadlines after which the deposit of employee contribution or plan loan amounts always will be considered untimely. Thus, the plan asset rules provide that the deadline for depositing employee contributions and plan loans with the plan in no event ever extends beyond the applicable of the following dates (the “Latest Date”)
- For pension plans, the 15th business day of the month following the month in which the employee contribution or participant loan repayment amounts are withheld or received by the employer;
- With respect to a SIMPLE plan that involves SIMPLE IRAs the 30th calendar day following the month in which the participant contribution amounts would otherwise have been payable to the participant in cash; and
- For health and other welfare benefit plans, 90 days from the date on which the employee contribution is withheld or received by the employer.
In all other instances, the plan asset regulations leave open to uncertainty and debate when and if an employer’s deposit of employee contributions and plan loans more than seven-days after payroll deduction or receipt but before the Latest Date will qualify as timely for purposes of ERISA Title I or the Code’s prohibited transaction provisions.
Companies and owners, officers and directors of businesses that harm plans by failing to ensure that these amounts are timely deposited into an employee benefit plan or otherwise are involved in the mishandling of these funds frequently become subject to prosecution, damage awards, civil penalties and excise taxes. To mitigate potential exposure to these risks, businesses and leaders of businesses that withhold from wages or collect employee contributions or plan loan payments from employees should make arrangements to ensure that these amounts timely are deposited with the appropriate plans and otherwise handled appropriately in accordance with ERISA and the Code.
If your business or employee benefit plan needs assistance evaluating or responding to these or other employee benefit, or other employment, workplace health and safety, corporate ethics and compliance or other concerns or claims, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer.
Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, a representative to the ABA Joint Committee on Employee Benefits Council, past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 22 years. She is experienced with assisting employers, insurers, administrators, and others to design and administer group health plans cost-effectively in accordance with these and other applicable federal regulations as well as well as advising and defending employers and others against tax, employee benefit, labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly. For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.
Other Information & Resources
We hope that this information is useful to you. 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 here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here. Some other recent updates that may be of interested include the following, which you can access by clicking on the article title:
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Posted by Cynthia Marcotte Stamer
December 23, 2009
Curran Tomko Tarski LLP Labor & Employment Practice Chair Cynthia Marcotte Stamer the author of three articles in the December 2009 Issue of the American Bar Association Real Property Probate & Trust Section E-Report:
Chair of the American Bar Association RPTE Employee Benefits & Compensation Committee, an ABA Joint Committee on Employee Benefits Council member, and Chair of the Curran Tomko Tarski Labor, Employment & Employee Benefits Practice, Cynthia Marcotte Stamer is nationally and internationally recognized for her work assisting businesses, employee benefit plan fiduciaries and vendors, insurers, administrative services providers, governments, and other entities to develop administer and defend cost-effective employee benefit other human resources programs, policies and procedures to meet their budgetary, risk management and compliance and other objectives. Board certified in Labor & Employment law, Ms. Stamer applies her extensive experience regarding employment, employee benefit, and other related laws to assists clients in a wide range of business and litigation contexts. The co-founder of the Solutions Law Consortium, Ms. Stamer, also is the publisher of Solutions Law HR & Benefits Update. She speaks and writes extensively about employee benefits and other human resources, compensation and internal controls matters.
If your organization or employee benefit plan needs assistance with employee benefits, labor and employment or other internal controls and risk management matters, please contact Ms. Stamer at cstamer@cttlegal.com, (214) 270-2402; or another Curran Tomko Tarski, LLP attorney of your choice. For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi, LLP team, see here.
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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 here or e-mailing this information to cstamer@cttlegal.com or registering to participate in the distribution of these and other updates on our CTT HR & Employee Benefits Update distributions in blog form via RSS feed here. You also may be interested in staying abreast of emerging internal controls and compliance challenges by reviewing and registering for our Corporate Compliance, Risk Management & Internal Controls distributions. For important information concerning this communication click here. If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to support@cttlegal.com.
©2009 Curran Tomko Tarski LLP. All rights reserved.
If you have questions about or need assistance evaluating, commenting on or responding to the Proposed Regulations, the Q&As, or other employment, compensation, employee benefit, workplace health and safety, corporate ethics and compliance practices, concerns or claims, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer. Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group, Ms. Stamer is experienced with assisting employers and others about compliance with federal and state equal employment opportunity, compensation and employee benefit, workplace safety, and other labor and employment, as well as advising and defending employers and others against tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. Ms. Stamer has advised and represented employers on these and other labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 20 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly. For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.
Other Information & Resources
We hope that this information is useful to you. 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 here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here. Some other recent updates that may be of interested include the following, which you can access by clicking on the article title:
For important information concerning this communication click here. If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.
©2009 Cynthia Marcotte Stamer. All rights reserved.
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Posted by Cynthia Marcotte Stamer
December 8, 2009
By Cynthia Marcotte Stamer
The U.S. Department of Labor (Labor Department) plans to implement a host of new employee benefit and employment regulations seeking to strengthen employee benefit, wage and hour, safety and other protections with greater transparency and disclosure, the Labor Department announced yesterday.
Employee Benefits, Wage & Hour, OSHA & Other Rules Seek To Protect Workers With Transparency
Employee Benefits Security Administration (EBSA) plans to implement a host of new rules designed to strengthen retirement security by expanding the private employee benefit plan disclosure requirements and enhancing the availability of information to pension plan participants and beneficiaries and employers, according to the Department of Labor (DOL) 2009 Regulatory Agenda (the “Regulatory Agenda”) announced yesterday.
According to the Regulatory Agenda, EBSA plans to promote these goals through the implementation of a host of new rules including:
- Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans, which would increase transparency between individual account pension plans and their participants and beneficiaries by ensuring that participants and beneficiaries are provided the information they need, including information about fees and expenses, to make informed investment decisions.
- Amendment of Standards Applicable to General Statutory Exemption for Services, which would require service providers to disclose to plan fiduciaries services, fees, compensation and conflicts of interest information.
- Annual Funding Notice for Defined Benefit Plans, which would require defined benefit plan administrators to provide all participants, beneficiaries and other parties with detailed information regarding their plan’s funding status.
- Periodic Pension Benefits Statements, which would require pension plans to provide participants and certain beneficiaries with periodic benefit statements.
- Multiemployer Plan Information Made Available on Request, which would require pension plan administrators to provide copies of financial and actuarial reports to participants and beneficiaries, unions and contributing employers on request.
The 2009 Regulatory Agenda highlights the most noteworthy and significant regulatory projects that the Labor Department has established for the EBSA, the Employment Standards Administration (ESA), Mine Safety and Health Administration (MSHA), Occupational Safety and Health Administration (OSHA), and Employment and Training Administration (ETA) for the upcoming year. In addition to the transparency rules planned for EBSA, the 2009 Regulatory Agenda also indicates that employers can expect new Labor Department regulations targeting transparency in other areas. These include:
- The MSHA to propose a rule on Notification of Legal Identity, which would require mine operators to provide increased identification information, would allow the agency to better target the most egregious and persistent violators and deter future violations.
- The Office of Labor-Management Standards’ to propose regulations on Notification of Employee Rights Under Federal Labor Laws, which would implement Executive Order 13496 and require all Government contracting agencies to include a contract clause requiring contractors to inform workers of their rights under Federal labor laws.
- The Wage and Hour Division to update its regulations about Records to be Kept by Employers Under the Fair Labor Standards Act to enhance the transparency and disclosure to workers as to how their wages are computed and to allow for new workplace practices such as telework and flexiplace arrangements.
- OSHA to modify its Hazard Communication Standard to require standardized labeling requirements and order of information for safety data sheets and to update its Occupational Injury and Illness Recording and Reporting Requirements rule, which would propose the collection of additional data to help employers and workers track injuries at individual workplaces, improve the Nation’s occupational injury and illness information data, and assist the agency in its enforcement of the safety and health workplace requirements.
Other Employee Benefit Regulations Planned
Beyond its planned EBSA transparency initiative, the 2009 Regulatory Agenda reflects that other EBSA regulatory priorities for the year ahead include:
- Issue guidance implementing the group health plan Genetic Information Nondiscrimination Act of 2008 (GINA) amendments to ERISA which generally prohibit group health plans from discriminating in health coverage based on genetic information and from collecting genetic information. This will be a joint rulemaking action with the Departments of Health and Human Services and the Treasury.
- Provide guidance regarding the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) amendments to ERISA. MHPAEA creates parity for mental health and substance use disorder benefits under group health plans by mandating that any financial requirements and treatment limitations applicable to mental health and substance abuse disorder benefits to be no more restrictive than predominant requirements or limitations applied to substantially all medical and surgical benefits covered by a plan.
- Issue guidance clarifying the circumstances under which health care arrangements established or maintained by state or local governments for the benefit of non-governmental employees do not constitute an employee welfare benefit plan for purposes of ERISA.
- Propose amendments to its regulations to clarify the circumstances under which a person will be considered a fiduciary when providing investment advice to employee benefit plans and their participants and beneficiaries of such plans.
- Explore steps it can take by regulation, or otherwise, to encourage the offering of lifetime annuities or similar lifetime benefits distribution options for participants and beneficiaries of defined contribution plans.
Employers and employee benefit plan sponsors, fiduciaries, and service providers should take into account these planned regulatory changes for budgeting and program design purposes and keep alert for announcements of proposed or final regulations or other guidance in these and other areas.
If your organization needs assistance with monitoring, assessing, managing or defending these or other labor and employment, compensation or benefit practices, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer or another Curran Tomko Tarski LLP attorney of your choice. Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group and a nationally recognized author and speaker, Ms. Stamer is experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, risk management and internal controls matters. Ms. Stamer is experienced with assisting employers and others about compliance with federal and state equal employment opportunity, compensation, health and other employee benefit, workplace safety, and other labor and employment laws, as well as advising and defending employers and others against tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. She has counseled and represented employers on these and other workforce matters for more than 22 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly. For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.
Other Information & Resources
We hope that this information is useful to you. 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 here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here. Examples of other recent updates you may have missed include:
For important information concerning this communication click here. If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.
©2009 Cynthia Marcotte Stamer. All rights reserved.
Comments Off on Labor Department To Expand Employee Benefits, Wage & Hour, OSHA & Other Reporting & Disclosure Requirements & To Implement Other New Employee Benefit Regulations | Absenteeism, ADA, Affirmative Action, Corporate Compliance, Defined Benefit Plans, EEOC, Employee Benefits, Employers, ERISA, family leave, GINA, Government Contractors, Human Resources, Military Leave, OFCCP, OSHA, Retirement Plans, Risk Management, Safety, Uncategorized, Wellness | Tagged: COBRA, Corporate Compliance, defined benefit plan, Disability Discrimination, Disease Management, Employee Benefits, Employers, Employment, ERISA, GINA, Human Resources, Insurance, Internal Controls, Medical Coverage, Military Leave, Minimum Wage, Occupational Injury, Overtime, Privacy, Retirement Plans, Risk Management, Wellness | Permalink
Posted by Cynthia Marcotte Stamer
December 5, 2009
Get a peek at the U.S. Department of Labor’s (DOL’s) regulatory plans for 2010 on Monday, December 10, 2009.
On Monday, Dec. 7, the DOL will release its annual regulatory agenda for the upcoming year. The same day, it also will video cast remarks by Secretary Hilda L. Solis outlining the department’s regulatory agenda beginning at 10 a.m. EST. From 2 to 3 p.m. EST Ssecretary Solis alsowill host a live Web chat open to the public to discuss the contents of the agenda. Questions may be submitted in advance of the chat following the video presentation. Register to join the chat on Monday here.
If your organization needs assistance with assessing, managing or defending labor and employment, compensation or benefit practices, please contact the author of this article, Curran Tomko Tarski LLP Labor & Employment Practice Group Chair Cynthia Marcotte Stamer or another Curran Tomko Tarski LLP attorney of your choice. Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group and a nationally recognized author and speaker, Ms. Stamer is experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, risk management and internal controls matters. Ms. Stamer is experienced with assisting employers and others about compliance with federal and state equal employment opportunity, compensation, health and other employee benefit, workplace safety, and other labor and employment laws, as well as advising and defending employers and others against tax, employment discrimination and other labor and employment, and other related audits, investigations and litigation, charges, audits, claims and investigations by the IRS, Department of Labor and other federal and state regulators. She has counseled and represented employers on these and other workforce matters for more than 22 years. Ms. Stamer also speaks and writes extensively on these and other related matters. For additional information about Ms. Stamer and her experience or to access other publications by Ms. Stamer see here or contact Ms. Stamer directly. For additional information about the experience and services of Ms. Stamer and other members of the Curran Tomko Tarksi LLP team, see here.
Other Information & Resources
We hope that this information is useful to you. 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 here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here. Examples of other recent updates you may have missed include:
For important information concerning this communication click here. If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject here.
©2009 Cynthia Marcotte Stamer. All rights reserved.
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Posted by Cynthia Marcotte Stamer
December 4, 2009
Underfunded defined benefit pension plans raise significant liability risks for businesses that sponsor or who belong to control or affiliated service groups that include a business that sponsors an underfunded defined benefit plan as well as for businesses contemplating lending to, investing in, or purchasing stock or assets of these businesses.
Radical drops in plan asset values attendant to the economic downturn and Congress’ amendment of federal funding rules to accelerate the funding of defined benefit plans have triggered a defined benefit plan underfunding epidemic. Indeed, challenges of meeting their defined benefit plan funding obligations increasingly are resulting in an unprecedented number of distress terminations and forcing many businesses to restructure or even file bankruptcy. Currently, recently released Internal Revenue Service (IRS) and Pension Benefit Guarantee Corporation (PBGC) guidance makes it necessary or desirable that sponsoring businesses or fiduciaries of defined benefit plans take action before year end or shortly thereafter to meet critical compliance deadlines.
Complex New Rules Increase Underfunding Risks & Obligations
The new rules seek to implement Congressional amendments to the pension funding requirements intended to short up the security of the U.S. pension system and the pension guarantee insurance program run by the PBGC under the Pension Protection Act of 2006, as amended (PPA). Under the PPA, single-employer plans that are between 60 and 80 percent funded may not pay lump sums or other accelerated distribution forms with values in excess of: (1) 50 percent of the amount that would be paid absent the restriction or, if smaller (2) the present value of PBGC’s maximum guarantee computed under PBGC guidance. The PPA also requires certain funding certifications, notices and other requirements.
Enacted while the economy was strong, the burden of meeting the added pension funding demands resulting from the decreased earnings and acceleration of benefits associated with the economic downturn combined with the new rules’ expedited funding requirements are overwhelming many plan sponsors. With the economic downturn, however, the prospects for Congressional or other regulatory relief are not good. The PBGC is straining to keep up. The 2009 Annual Management Report submitted to Congress in November shows the PBCG ended fiscal year 2009 with an overall deficit of $22 billion, compared with the $11.2 billion deficit for fiscal year 2008. The deficit in the PBGC’s insurance program for single-employer pension plans widened to $21.1 billion for the year, $10.4 billion more than the prior-year’s $10.7 billion shortfall. The separate insurance program for multiemployer pension plans posted a deficit of $869 million, exceeding last year’s $473 million shortfall by $396 million. Accordingly, the PBGC and the IRS have continued to roll out a series of complex new regulations to implement the new rules.
New Defined Benefit Plan Regulations Complex Maze of Burdensome Requirements
Single employer pension plans generally must begin complying with final funding regulations published by the IRS in October during 2010; however, many plan sponsors are likely to find it desirable to adopt certain amendments or take other steps during 2009. Under these rules, underfunded plan benefit accruals and certain amendments will be curtailed and certain notifications, certifications and other actions required. Timely compliance with these mandates can help to mitigate some of the otherwise draconian liability associated with pension plan underfunding while helping to mitigate the continuing growth of these liabilities in an already underfunded pension plan.
Under section 101(f) of ERISA and guidance issued by the Department of Labor, starting with plan years beginning on or after January 1, 2008, single-employer plans with liabilities that exceed plan assets by $50 million or more must provide PBGC with a copy of the Annual Funding Notice by the Annual Funding Notice due date. Single-employer plans with liabilities that exceed plan assets by less than $50 million must provide PBGC with a copy of the Annual Funding Notice within 30 days of receiving a written request from PBGC. See Department of Labor Field Assistance Bulletin No. 2009-01 (Feb. 10, 2009), here.
In addition, defined benefit pension plans, their sponsors and fiduciaries also must contend with a host of complex new PBGC insurance, premium, certification and reporting and other requirements and guidance. For instance:
On March 16, 2009, PBGC published a Final Rule that amends its regulation on Annual Financial and Actuarial Information Reporting (29 CFR part 4010). The final rule implements Pension Protection Act of 2006 changes to ERISA section 4010 and makes other modifications and clarifications to the reporting requirements. PBGC expects to update the e-4010 filing application and related materials (e.g., filing instructions) within a few days. Until the application is updated, filers should not attempt to enter data for post-PPA filing; such data will be lost when the application is updated. However, first-time filers may log on to the application to set up an account and familiarize themselves with the application, through here. The first filings under the new rules were due April 15, 2009.
On November 23, 2009, PBGC published:
- A Request For Public Comment on purchases of irrevocable commitments to provide plan benefits before initiating a standard termination under ERISA section 4041. Comments are due by January 22, 2010;
- A Proposed Rule that would conform PBGC’s reportable events regulation under section 4043 of ERISA and several other PBGC regulations to statutory and regulatory changes resulting from the Pension Protection Act of 2006. The proposed rule also would eliminate most of the automatic waivers and filing extensions, add two new reportable events, and make some other changes and clarifications. Comments on the proposed rule are due by January 22, 2010;
- Asked the Office of Management and Budget a request for approval of changes to the reporting requirements under ERISA Part 4043;
- Issued Technical Update 09-4, which extends guidance provided in Technical Update 09-1 and Technical Update 09-3 for 2010 plan years. PBGC expects to supersede the guidance in Technical Update 09-4 with a final rule amending the reportable events regulation sometime during 2010.
On December 1, 2009, PBGC:
- Published a Final Rule amending its valuation regulation by substituting a new table for selecting a retirement rate category. The new table applies to any plan being terminated either in a distress termination or involuntarily by the PBGC with a valuation date falling in 2010.
- Published a Final Rule removing the maximum guarantee table from its benefit payment regulation and telling the public where to find maximum guaranteeable benefits on its Web site. The maximum guaranteeable monthly benefit for 2010 is $4,500.00 (unchanged from 2009).
- Published a Notice stating that the per-participant flat-rate premium for single-employer plans for plan year 2010 is $35.00 (up from $34.00 for Plan Year 2009) and $9.00 (unchanged from Plan Year 2009) for multiemployer plans. By law, the premium rates are adjusted for inflation each year based on changes in the national average wage index. The notice states that no further flat premium rate notices will be published in the Federal Register and tells the public where to find flat premium rates on its Web site.
On December 4, 2009, PBGC submitted draft information requirements to the Office of Management and Budget in connection with PBGC’s pending Proposed Rule on Reportable Events are now available on PBGC’s Web site. PBGC has posted the information that would be required (under the proposed rule) to be reported on Form 10, Form 10-A, and Form 200 and the corresponding draft instructions.
Previously, during 2009, the PBGC also:
- Announced an increase in the per-participant flat-rate premium for plan year 2010 to $35.00 for single-employer plans (up from $34.00 for plan year 2009) and to $9.00 for multiemployer plans (unchanged from plan year 2009).
- Published certain relief for certain small plans from part 4043 reporting requirements if a required quarterly contribution for the 2009 plan year is not timely made to a plan, and the failure to make the contribution is not motivated by financial inability under Technical Update 09-3.. The Technical Update waives reporting in such cases if the plan has fewer than 25 participants and provides a simplified reporting requirement if the plan has at least 25 but fewer than 100 participants.
- Issued Technical Update 09-2, which allows 4010 filers to determine benefit liabilities for 4010 reporting purposes using the form of payment assumption described in 29 CFR § 4044.51 (generally an annuity form of payment). This is an alternative to the form-of-payment-assumption under § 4010.8(d)(2)(i) of PBGC’s Final Regulation On 4010 Reporting, which requires filers to use the form-of-payment assumption for determining the minimum required contribution.
- Updated the e-4010 filing application and related materials have been updated to reflect changes in the March 16, 2009 Final Rule. The application is now available to accept post-Pension Protection Act of 2006 filings.
Free December 10 Study Group Teleconference Examines New Requirements
Persons concerned about these issues may wish to consider participating in a free one hour “Study Group” conference call that the American Bar Association RPTE Employee Benefits & Other Compensation Group (Group) plans to host December 10, 2009, at 1 PM Eastern, Noon Central, 11 AM Mountain and 10 AM Pacific. The Study Group will explore a number of current/breaking issues of interest to practitioners and their clients dealing with single-employer defined benefit plans. Key topics will include:
- Recent Regulatory Guidance on Funding and Benefit Restrictions
- Mandatory and Optional Amendments to be Adopted by 2009 Plan Year End
- PBGC Proposal to Eliminate Most Reporting Waivers and Extensions (and PBGC Interim Guidance)
- Pre-Standard Termination Irrevocable Commitment Purchases (PBGC Comment Request)
- Update on PBGC Pursuit of “Downsizing” Liability (ERISA Section 4062(e)).
The conference call will be moderated by:
- Group Chair, Cynthia Marcotte Stamer, Curran Tomko Tarski LLP, Dallas, TX;
- Group’s Plan Termination Committee Chair, Harold Ashner, Keightley & Ashner LLP, Washington, DC, and
- Group’s Plan Termination Committee Vice-Chair, Henry Talavera, Hunton & Williams LLP, Dallas, TX.
Interested persons can participate in the Study Group by dialing 1-800-504-8071 and entering the passcode 9885683. To assist the Group in anticipating the number of participants, the Group encourages those planning to participate to e-mail Group Chair Cynthia Marcotte Stamer at here to RSVP.
Curran Tomko Tarski LLP Attorneys Can Help
If your business needs assistance with distressed or bankruptcy company, defined benefit plan funding or other employee benefit, human resources, corporate ethics, and compliance practices, or other related concerns or in responding to restructuring and bankruptcy, employment or employee benefits related charges, audits, investigations or suits, please contact Curran Tomko Tarski LLP Corporate Restructuring & Bankruptcy Chair G. Michael Curran at mcurran@cttlegal.com, (214) 270-1402, Employment Practice Chair Cynthia Marcotte Stamer at cstamer@cttlegal.com, (214) 270-2402, or your favorite Curran Tomko Tarski, LLP attorney.
Mr. Curran provides legal counsel on all aspects of out-of-court reorganizations and workouts, as well as bankruptcy proceedings. He has represented debtors, debtors’ and creditors’ committees, and third party purchasers in a variety of complex factual and legal scenarios, and has also acted as special counsel. His experience includes substantial experience addressing defined benefit and other employee benefit and human resources issues arising in connection with restructuring, bankruptcy and other significant business events and transactions.
Ms. Stamer is experienced with assisting employers, fiduciaries, bankruptcy trustees, investors, purchasers and others about defined benefit plan and other employee benefit, labor and employment, compensation and other related concerns involved with distressed businesses or benefit plans, bankruptcy and restructuring transactions and other corporate or plan related events. Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization and Chair of the American Bar Association RPTE Employee Benefits & Other Compensation Group and a Joint Committee on Employee Benefit Council Member, Ms. Stamer has advised and represented these and other business clients on employee benefit, labor and employment, compensation, employee benefit and other personnel and staffing matters for more than 20 years. Her experience includes significant experience representing and advising employee benefit plan sponsors, fiduciaries, and service providers and their affiliates; investors, creditors, bankruptcy trustees, and others about employee benefit, labor and employment and related services and compensation concerns affecting transactions involving bankrupt or distressed corporations. Ms. Stamer also speaks and writes extensively on these and other related matters. Among her many publications is her November, 2009 publication, “Calculation of Minimum Contributions Required For Single Employer Pension Plans: The Final Rules for The Measurement of Assets and Liabilities For Pension Funding Purposes under Final Treasury Regulation Section 1.430(d)-1.” Persons interested in a copy of this publication may contact Ms. Stamer. See here for additional information about Ms. Stamer and her experience, here to review other recent updates, here for other articles and publications, and review selected training and presentations here or contact Ms. Stamer directly.
Other Information & Resources
We hope that this information is useful to you. 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 here or e-mailing this information here or registering to participate in the distribution of our Solutions Law Press HR & Benefits Update distributions here. Some other recent updates that may be of interested include the following, which you can access by clicking on the article title:
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©2009 Cynthia Marcotte Stamer. All rights reserved.
Comments Off on Rising Defined Benefit Plan Underfunding & Changing Rules Create New Obligations & Risks For Business | Corporate Compliance, Defined Benefit Plans, Employee Benefits, Employers, ERISA, Income Tax, Reporting & Disclosure, Retirement Plans, Risk Management, Tax | Tagged: Corporate Compliance, defined benefit plan, Employee Benefits, Employers, Employment Agreements, ERISA, ERISA 302, Human Resources, Internal Controls, IRC 412, Labor, PBGC, pension plan, pension plan funding, Retirement Plans | Permalink
Posted by Cynthia Marcotte Stamer
May 2, 2009
On March 27, 2009, the Internal Revenue Service issued Notice 2009-31, 2009-16 I.R.B. 856, providing guidance to multiemployer defined plans making elections described in sections 204 and 205 of the Worker, Retiree, and Employer Recovery Act of 2008, P.L. 110-458 (WRERA). These elections relate to provisions of Section 432 of the Internal Revenue Code (Code) by the Pension Protection Act of 2006, P.L. 109-280 (PPA) that impose requirements on multiemployer defined benefit plans that are significantly underfunded.
Notice 2009-42 to be published at I.R.B. 2009-20 on May 18, 2009, extends the time period for making elections described in section 204 of the WRERA. In addition, if (1) as of the otherwise applicable deadline (i.e., the deadline for a plan as modified by this notice) for making an election under section 204 or 205, a plan sponsor has been unable to reach agreement as to whether to make the election, so that the decision must be resolved through an arbitration process; (2) the plan sponsor makes an election by the otherwise applicable deadline that is contingent on the resolution of the arbitration; and (3) the resolution is to not make an election, then the IRS will automatically approve a request to revoke the election.
Cynthia Marcotte Stamer and other members of Curren Tomko and Tarski LLP are experienced with advising and assisting employers with these and other labor and employment, employee benefit, compensation, and internal controls matters. If your organization needs assistance with assessing, managing or defending its wage and hour or other labor and employment, compensation or benefit practices, please contact Ms. Stamer at e-mail, (214) 270-2402; or your favorite Curren Tomko Tarski, LLP attorney. For additional information about the experience and services of Ms. Stamer and other members of the Curren Tomko Tarksi, LLP team, see the Curren Tomko Tarski Website or Cynthia Marcotte Stamer, P.C. Website.
More Information
We hope that this information is useful to you. You can register to receive future updates and information about upcoming programs, access other publications by Ms. Stamer and access other helpful resources at CynthiaStamer.com For additional information about Ms. Stamer and her experience, see here or contact Ms. Stamer directly. If you or someone else you know would like to receive updates about developments on these and other human resources and employee benefits concerns, please be sure that we have your current contact information – including your preferred e-mail- by creating or updating your profile at CynthiaStamer.com. If you would prefer not to receive these updates, please send a reply e-mail with “Remove” in the subject line to support@SolutionsLawyer.net. You also can register to participate in the distribution of these updates by registering to participate in the Solutions Law Press HR & Benefits Update Blog here.
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Posted by Cynthia Marcotte Stamer
slphrbenefitsupdate.com 