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Bipartisan Bill Introduced in Senate to Reduce “Leakage” from 401(k) Plans

Bipartisan legislation was recently introduced to the U.S. Senate by Senators Herb Kohl (D-WI) and Mike Enzi (R-WY) to reduce leakage (or loss from retirement savings) from 401(k) plans. The bill, referred to as the “Savings Enhancement by Alleviating Leaking in 401(k) Savings Act of 2011,” if enacted would (1) extend the time employees have to repay plan loans; (2) reduce the overall number of loans taken to three at one time; (3) allow participants to continue making additional contributions during the six-month period following a hardship withdrawal; and (4) ban 401(k) debit cards. The bill is currently in committee, and its prospects are unclear. A copy of the bill can be found here.

Reimbursement of Retiree Telephone Expenses is not a Pension Plan Under ERISA

A group of retirees sued AT&T claiming that the practice of reimbursing the telephone expenses of retirees who live outside of the AT&T?ÇÖs service area constitutes a pension plan under ERISA on the grounds that (i) ERISA defines an employee pension plan as one that ?Ç£results in a deferral of income for periods extending to the termination of…employment or beyond?Ç¥ and (ii) the reimbursements were taxable income to the retirees. The Fifth Circuit Court of Appeals upheld the federal district court?ÇÖs decision that it is not an employee pension plan. Both parties agreed that the reimbursement arrangement was not a welfare benefit plan. The Fifth Circuit determined that it is also not a pension plan because (i) those retirees who were inside AT&T?ÇÖs service area did not have taxable income from the services they received (it was a ?Ç£no-additional-cost?Ç¥ service under the fringe benefit regulations), and (ii) while taxable income,… Continue Reading

IRS Publishes Procedures for Electronic Filing of Form 8955-SSA on Vested Deferred Benefits

The IRS recently published Revenue Procedure 2011-31, which provides instructions for plan administrators to file electronically the new Form 8955-SSA, Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits. For plan years beginning on or after January 1, 2009, plan administrators are required to file the new stand-alone Form 8955-SSA instead of filing a Schedule SSA attached to the Form 5500. The revenue procedure provides specific instructions for filing Form 8955-SSA through the Filing Information Returns Electronically (FIRE) System for current and prior plan year returns filed during 2011. A copy of Rev. Proc. 2011-31 can be found here.

SEC Adopts Rules Establishing Whistleblower Program

On May 25th, 2011, the Securities and Exchange Commission (?Ç£SEC?Ç¥) adopted final rules implementing the new whistleblower program established as part of the Dodd-Frank Wall Street Reform and Consumer Protect Act (?Ç£Dodd-Frank Act?Ç¥).?á The new whistleblower program is intended to reward individuals who act early to expose violations and who provide significant evidence that helps the SEC bring successful cases. The final rules require that a whistleblower must voluntarily provide the SEC with original information that leads to the successful enforcement by the SEC of a federal court or administrative action in which the SEC obtains monetary sanctions totaling more than $1 million.?á The rules will be effective 60 days after they are submitted to Congress or published in the Federal Register.?á?á Link to the final rules: http://www.sec.gov/rules/final/2011/34-64545.pdf

Fifth Circuit Permits Retroactive Amendment to LTD Plan

In an unpublished opinion, the U.S. Court of Appeals for the Fifth Circuit (which includes Texas) permitted an employer to rely on an amendment to a long term disability (?Ç£LTD?Ç¥) plan to offset future benefits for a participant?ÇÖs receipt of money from a tort settlement received prior to the plan amendment. The plaintiff in this case was seriously injured in an accident in 1991 and began receiving monthly payments under her employer?ÇÖs LTD plan at that time. Beginning in 1994, the plaintiff received a lump sum payment and monthly payments for 240 months as part of a tort settlement related to her injury. In 1998, the LTD plan was amended to allow the plan to take offsets for monies received from third-parties responsible for an injury. In 2005, the plan sponsor learned that the participant was receiving monies as part of the tort settlement and determined that from 1994-2005 the… Continue Reading

HHS Announces Proposed Changes to HIPAA Privacy Rule

On May 31, 2011, the U.S. Department of Health and Human Services (?Ç£HHS?Ç¥) released a notice of proposed rulemaking containing changes to the Health Insurance Portability and Accountability Act (?Ç£HIPAA?Ç¥) Privacy Rule, pursuant to the Health Information Technology for Economic and Clinical Health Act (?Ç£HITECH?Ç¥). The proposed rules provide individuals with the right to receive an access report discussing any electronic access to their protected health information (?Ç£PHI?Ç¥). Also included in the proposed rule are changes to the accounting requirements for disclosures of PHI which are intended to better provide individuals with such disclosure information that is most likely to impact the individuals?ÇÖ legal and personal interests. Comments are requested on the proposed rule through August 1, 2011. The proposed rule can be found here.

Retirement Plan Fee Disclosures Effective Dates Extended

Last year, the Department of Labor (DOL) issued an interim final rule regarding fee disclosures from pension plan service providers to fiduciaries and a final rule regarding fee disclosures from plan administrators to participants. The DOL has proposed that the fiduciary-level disclosure rule not apply until January 1, 2012. This would align its applicability date with the participant-level fee disclosure rule, which is applicable for plan years beginning on or after November 1, 2011. The DOL has also proposed an extension of the transition provisions in the participant-level disclosure rule, which would permit initial disclosures to be made within 120 days (instead of 60 days) after the plan becomes subject to the participant-level disclosure rule.

PBGC Board Approves New Investment Policy

The Board of Directors of the Pension Benefit Guaranty Corporation (PBGC) unanimously adopted a new investment policy. The new policy establishes a 30 percent target asset allocation for equities and other non-fixed income assets and a 70 percent allocation to fixed income. The objective is to maximize total return within a prudent risk framework. See the full policy here.

HHS Publishes Final Regulations on Review of ?Ç£Unreasonable?Ç¥ Rate Increases by Insurers

The Department of Health and Human Services published final regulations implementing the health care reform requirements for the disclosure and review of potentially unreasonable rate increases by health insurers. Proposed regulations on this topic were issued in December 2010, and the final rule adopted most of those provisions. The final regulations establish a rate review program to ensure that a rate increase that meets or exceeds a specified threshold is reviewed by a state regulatory agency or by the U.S. Centers for Medicare & Medicaid Services to determine whether (1) the rate increase is unreasonable and (2) certain rate information has been made publicly available. A copy of the regulations is available here.

Federal District Court Dismisses Benefit Claim from Greedy, Cheating Plaintiff

The employee received statements from the pension fund in 2004 reflecting no pension credits for any year before 2003. She requested that pension fund reflect such credits. After the pension fund refused, she filed suit. She did not meet the criteria for participation. The federal district court dismissed the suit upon granting two Rule 56 motions for absence of genuine issue of material fact. ?Ç£In candor, for Adkins?ÇÖ counsel to attach the misleading label of ?Ç£restitution?Ç¥ to her effort to latch onto other peoples?ÇÖ entitlements masks nothing but sheer greed. . .If Adkins were to succeed, that would be nothing more or less than cheating the system.?Ç¥ Adkins v. Local 705 Int?ÇÖl Brotherhood of Teamsters Pension Fund, No. 10 c 8279 (N.D.Ill. May 26, 2011).

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