Sponsors of individually designed qualified retirement plans that have a zero or five as the last digit of their employer identification number (EIN) generally fall under?áCycle E of the Internal Revenue Service’s determination letter filing program.?á The deadline for Cycle E determination letter filings is January 31, 2011.
Generally, single-employer defined benefit pension plans must amortize shortfalls in funding over seven years. However, certain relief from the seven-year period was enacted this year. The IRS has issued Notice 2011-3, which provides guidance on the rules on funding relief for these plans (including multiple employer plans). The notice is presented in question and answer format and provides guidance on various topics, including the general rules for funding relief, questions relating to the effects on funding relief of installment acceleration amounts (including calculation of excess compensation amounts, excess shareholder payment amounts, and the impact of mergers and acquisitions), and elections to use an alternative amortization schedule. The notice also answers questions about notice and reporting requirements and transition rules. A copy of the notice can be found here.
New FAQs clarify that employers do not have to comply with the automatic enrollment rules of healthcare reform until regulations are issued. In addition, the 60-day prior notice requirement for material modifications to group health plans is not effective until March 23, 2012, when plans are required to provide the new summary of benefits and coverage explanation. The FAQs also provide that if a plan has a deductible or out-of-pocket limit that is based on a formula using a percentage of the employee?ÇÖs compensation formula, that arrangement will not cause the plan to lose its grandfathered status as long as the formula remains the same (even if the employee?ÇÖs compensation increases). Finally, although healthcare reform generally requires non-grandfathered group health plans to provide coverage for recommended preventive services without cost sharing, it is permissible for a group health plan to impose a copayment on a preventive service performed at an… Continue Reading
Prior guidance under healthcare reform provided that except with respect to certain ?Ç£90 percent pharmacies,?Ç¥ debit cards used in connection with health flexible spending accounts and health reimbursement accounts could not be used to purchase over-the-counter medicines or drugs after January 15, 2011. However, guidance was issued this week providing that debit cards could be used to purchase over-the-counter medicines or drugs after January 15, 2011 if: (1) prior to purchase, the prescription for the drug is presented to the pharmacist, the pharmacist dispenses the drug in accordance with applicable law, and an Rx number is assigned, (2) the pharmacy retains a record of the Rx number, the name of the purchaser and the date and amount of the purchase in a manner that meets IRS recordkeeping requirements, (3) these records are available to the employer upon request, and (4) the debit card system will not accept a charge for… Continue Reading