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San Francisco Amends Health Care Security Ordinance

San Francisco has amended its Health Care Security Ordinance which requires employers in San Francisco to pay the health care expenses of employees through contributions to health reimbursement accounts. The amendment extends the time period from one year to two years for which contributions to health reimbursement accounts must be available for use by employees. As a result, effective January 1, 2012, any unused funds in these health reimbursement accounts as of December 31, 2011 will be available for use by employees through December 31, 2012. A copy of the amended law is available here.

Second Circuit Holds that Money Purchase Plan Must Pay Benefits Even if Plan Erroneously Overpaid Account to Ex-Spouse under QDRO

An orthopedic surgeon participated in two plans, a profit sharing plan (“PSP”) and a money purchase plan (“MPP”). When he divorced, the terms of the qualified domestic relations order (QDRO) provided that his ex-wife was entitled to half of his account in the PSP, and a fixed amount of $47,358 from the MPP. Due to a clerical error, the third party service provider transferred half of his account in both plans to his ex-wife, resulting in an overpayment of approximately $764,000. When he discovered the error, the participant sued the MPP seeking to recover the funds erroneously removed from his account with interest. The U.S. federal district court entered a $1,571,723.73 judgment against the MPP which included lost earnings. It also entered judgment against the ex-wife to repay the MPP for the same amount. The U.S. Court of Appeals for the Second Circuit held that ERISA’s prohibition on alienation does… Continue Reading

IRS Issues Model Section 436 Amendment and Extends Deadline for Adoption

The Internal Revenue Service (IRS) has extended by one year the deadline to amend defined benefit plans to comply with Section 436 of the Internal Revenue Code, which limits the accrual and payment of benefits when single-employer defined benefit plans are underfunded. The deadline for adoption, previously the last day of the plan year that begins on or after January 1, 2011 (for calendar year plans, December 31, 2011), has been extended to the last day of the plan year that begins on or after January 1, 2012 (for calendar year plans, December 31, 2012). In this notice, the IRS also has issued a model plan amendment that defined benefit plan sponsors may adopt to comply with the requirements of Section 436 of the Internal Revenue Code. This guidance is available here.

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