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August 7, 2007
403(b) Plans: ERISA Exemption?
One of the questions that has been nagging tax-exempt organizations is how to preserve a plan’s exemption from ERISA. Generally, not-for profit organizations sponsoring 403(b) plans are subject to ERISA, unless the plan is fully funded with employee money, and as long as certain other conditions are met. With the issuance of the new 403(b) regulations, a question has arisen about how an employer can make an employee-funded plan available that would be exempt from ERISA? The day after the final 403(b) regulations were issued, the DOL’s Employee Benefits Security Administration came out with Field Assistance Bulletin (FAB) 2007-02 to give direction on this question.
403(b) Plans: Are You Ready for Some Fun?
At long last, the IRS has issued final 403(b) regulations. These regulations have been in the making for quite some time. The good news is that these rules generally do not apply until January 1, 2009, with some exceptions. This gives employers a little bit of time to get prepared for these regulations.
July 5, 2007
Federal Minimum Wage Update
On July 5, 2007, the DOL’s Wage and Hour Division released a revised Federal minimum wage poster reflecting the new minimum wage increases. Beginning July 24, 2007, the minimum wage will be $5.85 per hour, increasing to $6.55 in 2008 and $7.25 in 2009. Employers subject to the Fair Labor Standards Act’s minimum wage provisions are required to post this notice, in a conspicuous place in all of its locations, where employees can readily read it.
Massachusetts Health Care Reform Law: Employer Obligations At-A-Glance
Fair and Reasonable Contribution Penalty - Fair Share Contribution
Note to Employers Seeking Medicare Retiree Drug Subsidy: Reconciliation
For employers who offered retiree drug benefits in 2006, and who have made application to receive the subsidy, reconciliation of the 2006 plan year is due 15 months following the close of the plan year. For a calendar year plan, the first reconciliation will be due by March 15, 2008. For plans whose reconciliation would be due prior to that date, an automatic extension is given until November 30, 2007.
Retiree Health Coordination on the Move Again?
For the last several years, there has been an unresolved issue relating to retiree health coverage and the Age Discrimination in Employment Act (ADEA). A few years ago, a Third Circuit Court decided that it would be a violation of the ADEA for an employer to coordinate retiree health benefits with Medicare. In other words, employers would be prohibited from providing greater benefits for pre-Medicare eligible retirees, than for post-Medicare eligible retirees.
June 5, 2007
Electronic Form 5500 Filing Requirement Delayed
An EBSA official has stated that the required electronic filing of the Form 5500 has been delayed from January 1, 2008 to January 1, 2009. For calendar year plans, this means the first electronic filing will be due in 2010.
Massachusetts Employers: A New Cafeteria Plan Requirement
As part of the Commonwealth of Massachusetts’ effort to provide universal health coverage to all residents, the State is requiring employers to offer its employees an IRC Section 125 (cafeteria) plan, effective July 1, 2007. This rule applies to all employers employing 11 or more full-time equivalent employees in the Commonwealth. It applies to employers whether they offer insured health plans, self-funded health plans, or no health insurance plan at all. Failure to comply with the cafeteria plan requirement may cause the employer to be subject to the Free Rider Surcharge.
2008 HSA Cost-of-Living Adjustments
In Rev Proc 2007-36, the IRS released 2008 cost of living adjustments for health savings accounts. Following are annual deductible amounts for a high deductible health plan (HDHP) used in conjunction with a health savings account (HSA), and limits for out-of-pocket expenses and contributions for both 2007 and 2008.
HSA Guidance Again: Comparability Rules Re-Visited
On June 1, 2007, the IRS and Treasury issued proposed regulations on two very narrow aspects of the health savings account (HSA) comparability rules. These proposed regulations address the situation in which an individual has either not established, or has not advised the employer about the establishment of, an HSA prior to the end of the calendar year. The proposed regulations also address a situation of accelerating contributions to individuals who incur medical expenses. The regulations provide guidance about how to ensure compliance with the HSA comparability rules in these situations.