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Third Federal Judge Upholds Health-Care Law

?áfederal judge in Washington D.C. became the third district court judge to uphold the constitutionality of the health reform law?ÇÖs requirement that individuals maintain health coverage or pay a penalty. In her opinion, U.S. District Court Judge Gladys Kessler said Congress was within its constitutional authority to regulate interstate commerce when it chose to penalize people who choose not to have health insurance. ?Ç£Congress had a rational basis for its conclusion that the aggregate of individual decisions not to purchase health insurance substantially affects the national health insurance market,?Ç¥ Judge Kessler wrote in her opinion. Two other district court judges have recently ruled that the same provision is unconstitutional. Thus, to date there have been three district court judges ruling in favor of the constitutionality of the individual mandate and two district court judges ruling against the constitutionality of this mandate. It is expected that the United States Supreme Court… Continue Reading

IRS Issues Guidance on Section 403(b) Plan Terminations

The Internal Revenue Service recently issued Revenue Ruling 2011-7, which clarified how Section 403(b) plans can be terminated and whether the distributions made in connection with such termination are includable in gross income. The revenue ruling identifies four situations in which Section 403(b) plans that are funded in different ways terminate (e.g., individual annuity contracts, group annuity contracts, and custodial accounts treated as annuity contracts). The guidance identifies the following framework for a Section 403(b) plan to be considered terminated: (1) the plan permits distributions upon termination; (2) the employer approves a binding resolution to cease contributions to the Section 403(b) plan, approves the termination, and fully vests participants upon termination; (3) the participants and beneficiaries are notified of the plan termination, including notice of rollover rights to another retirement plan or IRA; (4) all plan assets are distributed as soon as administratively practicable following the termination date, but within… Continue Reading

March 2011