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Executive Compensation Year-End Action Items

Correct any severance plans, change-in-control agreements, or other employment arrangements that are subject to Code Section 409A and that improperly condition the timing of payments on the executive executing a release of claims, noncompete agreement, or other document.

ISS Issues 2013 Draft Policies for Comment

Institutional Shareholder Services, Inc. (?Ç£ISS?Ç¥) issued draft policies for 2013 relating to board governance and to executive compensation.?á ISS is proposing the following changes: Recommend a vote ?Ç£against?Ç¥ or ?Ç£withhold?Ç¥ from the entire board if the board failed to act on a shareholder proposal that received the support of a majority of shares cast (rather than outstanding) in the previous year. Use a company?ÇÖs selected peers with size constraints as an input to its peer group methodology Incorporate a comparison of realizable pay to grant date pay as part of the qualitative evaluation of pay-for-performance alignment. Add pledging of company stock as a factor that may lead to negative recommendations under the existing problematic pay practices evaluation. Include existing change-in-control arrangements maintained with named executive officers in its current policy on Golden Parachute proposals (rather than focusing only on new or extended arrangements). A copy of the draft policies is?áhere.

Retirement Plan Year-End Action Items

The following non-exhaustive list of annual notices for retirement plans must be distributed within a reasonable time prior to the start of the plan year. For calendar year plans, providing them by December 1 will meet this requirement. Safe Harbor 401(k) Notice ?Çô for 401(k) plans that are designed to comply with the safe harbor requirements of the Internal Revenue Code (the ?Ç£Code?Ç¥). Automatic Enrollment Notice ?Çô for any plan that includes automatic enrollment provisions. Qualified Automatic Contribution Arrangement Notice ?Çô for plans that are designed to comply with the Code?ÇÖs qualified automatic contribution provisions. Eligible Automatic Contribution Arrangement Notice ?Çô for plans that are designed to comply with the Code?ÇÖs eligible automatic contribution provisions. Qualified Default Investment Alternative (?Ç£QDIA?Ç¥) Notice ?Çô for plans with participant-directed investments that include a QDIA in which a participant?ÇÖs account will be invested if the participant fails to make an investment election. Distribute Summary… Continue Reading

Health and Welfare Year-End Action Items

Distribute Summary of Benefits and Coverage with open enrollment materials and to new hires / new enrollees for the plan year beginning on or after September 23, 2012. Ensure process is in place for health coverage reporting on Form W-2 to be distributed in January, 2013. Reduce Health FSA limit to $2,500 for the plan year beginning on or after January 1, 2013. Distribute Medicare Part D Notices of Creditable and/or Non-Creditable coverage by October 15. Distribute annual WHCRA and CHIPRA notices. Adopt amendments for 2012 Plan Design Changes (ensure non-grandfathered plan claims procedures comply with latest PPACA guidance). Re-submit Annual Limit Waiver Extension form and attestation by December 31, 2012 if the plan has been granted a waiver under PPACA. Distribute Annual Limit Waiver notice to participants with any materials describing plan benefits (e.g., SPDs). Include the Grandfathered Plan Status Notice and the Patient Protection Notice, as applicable, in… Continue Reading

2013 Adjusted Limits for Archer MSAs

The limits for high deductible health plans for purposes of Archer MSAs have been adjusted for 2013.?á For self-only coverage, a high deductible health plan must have an annual deductible that is not less than $2,150 and not more than $3,200, and an annual out-of-pocket limit no greater than $4,300.?á For family coverage, a high deductible health plan must have an annual deductible that is not less than $4,300 and not more than $6,450, and an annual out-of-pocket limit no greater than $7,850.?á Rev. Proc. 2012-41 can be found?áhere.

Fifth Circuit Confirms ERISA Does Not Preempt Medical Provider?ÇÖs State Claims Against Insurance Company; Overrules Prior Cases

The company, Access Mediquip (?Ç£Access?Ç¥), procures medical devices to be used during surgeries by health care providers.?á Access first contacts insurance companies to ensure that its medical devices are covered prior to procurement.?á Access had received prior authorization for a medical device from UnitedHealthcare; however, UnitedHealthcare later denied the reimbursement claim from Access by stating it would only cover such devices when billed by surgical facilities.?á The U.S. District Court for the Southern District of Texas found that ERISA preempted Access?ÇÖ state law claims seeking reimbursement from UnitedHealthcare.?á However, on appeal, the U.S. Court of Appeals for the Fifth Circuit reversed the district court with respect to Access?ÇÖ claims for negligent misrepresentation, promissory estoppel and violations of the Texas Insurance Code.?á UnitedHealthcare then petitioned for a rehearing en banc, arguing that the Fifth Circuit?ÇÖs decision was inconsistent with its prior opinions.?á On the rehearing en banc, the Fifth Circuit reinstated… Continue Reading

IRS Announces 2013 Qualified Pension Plan Limitations

The Internal Revenue Service announced the 2013 cost-of-living adjustments on October 18, 2012. ?áHere are some of the key limits for 2013 that will affect employer qualified retirement plans: The Code section 402(g) limit on elective deferrals for employees who participate in 401(k) and 403(b) plans will increase from $17,000 to $17,500. The Code section 415(c) limit for annual additions under defined contribution plans will increase from $50,000 to $51,000. The Code section 414(v) catch-up contribution limit for employees aged 50 and over who participate in 401(k) and 403(b) plans will remain unchanged at $5,500.?á The Code section 415(b) annual benefit limit under a defined benefit?á plan will increase from $200,000 to $205,000. The Code section 416(i) dollar limit on compensation for defining a key employee in a top heavy plan will remain unchanged at $165,000. The Code section 414(q) dollar limit on compensation for defining a highly compensated employee… Continue Reading

IRS Releases FAQ Relating to Same-Sex Couples

The IRS recently released answers to frequently asked questions regarding taxation of same sex couples.?á In the FAQ, the IRS reinforces its position that provisions of the federal tax law that apply only to married taxpayers or their spouses?ádo not apply to same-sex partners because federal law does not treat same-sex partners as married for federal tax purposes.?á The FAQ can be found here.

Facebook Sued over Newly Launched ?Ç£Want?Ç¥ Button

You can?ÇÖt always get what you want, and sometimes just wanting can be problematic. Facebook was sued in federal court on Friday for its recent launch of a ?Ç£Want?Ç¥ button ?Çô a feature that lets users create wish lists of products by clicking a button that appears beside the products online. Facebook recently announced that it was testing the new feature on the websites of several online retailers, including Pottery Barn, Nieman Marcus, and Victoria?ÇÖs Secret.?á Facebook is also trying out a ?Ç£Collect?Ç¥ button and the familiar ?Ç£Like?Ç¥ button to see which of the three draws more clicks. But a Michigan company called CVG-SAB, LLC claims that it has marketed and used a ?Ç£Want?Ç¥ button in essentially the same way since September 2010.?á The company, which operates the websites wantbutton.com and wanttt.com, also owns several U.S. trademark registrations, and even more pending applications, for the term ?Ç£WANT?Ç¥ when used in… Continue Reading

District Court Finds Plaintiff?ÇÖs LTD Claim Time Barred by the Limitations Term in the Plan

An employee covered under his employer?ÇÖs long-term disability plan (?Ç£Plan?Ç¥), which was governed by ERISA, sought to recover benefits for a 2001 claim filed with the Plan.?á The claim was denied pursuant to the Plan?ÇÖs claims and appeals process and the employee did not file an action at that time.?á In 2008, the employee filed another claim for long-term disability benefits and sought reconsideration of his 2001 claim.?á The terms of the Plan provided that any legal action cannot be brought more than three years after the time the proof of claim is required.?á In connection with his 2001 claim, the plaintiff was required to file a proof of claim no later than by March 12, 2002 and, therefore, under the limitations provision in the Plan, the plaintiff was required to take legal action by March 12, 2005.?á The federal district court stated that for ERISA claims, courts normally apply… Continue Reading

October 2012