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IRS Proposes Revisions to Minimum Essential Coverage Reporting

The IRS announced it intends to propose regulations under Internal Revenue Code Section 6055 relating to reporting of minimum essential coverage under the Affordable Care Act. Notice 2015-68, which was released on September 17, 2015, explains that the new rules will cover, among other topics, (1) the use of a truncated taxpayer identification number for reporting the plan sponsor of an insured group health plan and (2) rules for determining how to report coverage for an individual who is covered by multiple plans that provide minimum essential coverage. The Notice also invites comments relating to taxpayer identification number (“TIN“) solicitation by reporting entities and provides rules under which a reporting entity may be entitled to relief from penalties for failure to report a TIN with respect to 2015 coverage. Notice 2015-68 can be found?áhere.

PBGC Issues Final Rule Amending the Regulation on Reportable Events

On September 11, 2015, the Pension Benefit Guaranty Corporation (“PBGC“) issued a final rule amending its regulation on Reportable Events and Certain Other Notification Requirements and released an updated set of frequently asked questions regarding the rule. The final rule provides plan sponsors and pension plans with increased flexibility to determine whether a waiver from reporting will apply. Under the final rule, reporting is generally limited to situations that pose the greatest threat to the pension insurance system. The final rule adds new or expands reportable event waivers, and instead of focusing solely on funding levels, some reportable event waivers are based on whether plans and their sponsors pose a risk of not being able to maintain their pension plan, the plan is small and poses little risk to the pension insurance system, or the sponsor is public and has already made disclosure. The new reportable events rule will apply… Continue Reading

IRS Issues Final Rule on Determination of Minimum Required Contributions for Single-Employer Defined Benefit Plans

On September 8, 2015, the IRS and U.S. Treasury Department issued the final rule on the determination of required minimum contributions for single-employer defined benefit plans. The final rule is generally similar to the proposed rule issued back in 2008. The final rule also addresses the excise tax under Internal Revenue Code Section 4971 for failing to satisfy the minimum funding requirements. The final rule is effective for plan years beginning on or after January 1, 2016. The final rule can be found here.

IRS Rules Retiree VEBA May Be Amended To Pay for Active Benefits

The IRS recently issued a private letter ruling (“PLR“) which ruled that a tax-exempt, voluntary employees’ beneficiary association (“VEBA“) that had been created to provide post-retirement health benefits to retirees under an employer’s group health plan would not fail to qualify as a VEBA as a result of its amendment to use segregated funds to provide health benefits to active employees under the plan. The IRS reached this conclusion based on Treasury Regulation 1.501(c)(9)-3, which permits a VEBA to provide health benefits to active employees. The PLR may only be relied on by the taxpayer to whom it was issued, but it does provide useful insight regarding how the IRS would view an analogous tax situation. PLR 201532037 can be found here.

Court Holds that Benefit Denial Letters Must Disclose Limitations Period for Judicial Review

The Third Circuit U.S. Court of Appeals, in Mirza v. Insurance Administrator of America, Inc., recently held that a notice of benefit denial under ERISA must include a statement of any time limits for filing a claim for judicial review in order for such limits to be enforceable under ERISA. The claimant exhausted the internal appeals process under the employer?ÇÖs group health plan and received a final benefit denial letter from the claims administrator. Although the letter included a statement of the claimant?ÇÖs right to bring a civil action under Section 502 of ERISA, the letter did not mention the plan?ÇÖs one-year limitations period for filing a lawsuit. The federal district court dismissed the lawsuit as being time-barred because notice of the limitations period was contained in the plan?ÇÖs summary plan description (?Ç£SPD?Ç¥). In reversing, the Third Circuit held that regardless of whether the claimant had notice of the plan?ÇÖs… Continue Reading

New Regime Enacted for French-Qualified Restricted Stock Units

On August 7, 2015, France?ÇÖs ?Ç£Law on Growth and Economic Activity?Ç¥ (also known as the ?Ç£Macron Law?Ç¥) was enacted, effective as of the same date. Among other changes, the Macron Law revised certain aspects of the tax and legal regime applicable to French-qualified restricted stock units (?Ç£RSUs?Ç¥) by decreasing the applicable employer social tax percentage (payable under the new regime at vesting), reducing the minimum vesting period from two years to one year, reducing the acquisition and sale restriction periods, and providing for more favorable employee tax treatment. Importantly, the Macron Law provides that qualified RSUs can be granted under the new regime only if pursuant to an equity plan that is approved by shareholders after the August 7, 2015, effective date. It remains uncertain whether the new regime could apply to RSUs granted under a sub-plan to a shareholder-approved plan if the sub-plan is adopted by a company?ÇÖs board… Continue Reading

September 2015