Today’s Federal Register contains the final regulations relating to golden parachute payments under section 280G of the Internal Revenue Code. The regulations which were mentioned here last Friday incorporate changes and clarifications to reflect comments received concerning the proposed regulations, primarily in these areas: the small corporation exemption, repayment of the excise tax, and the definition of change in ownership or control.
News regarding the IBM and Xerox cash balance plan decisions:
“Pension Rulings Roil Hundreds of Businesses: Companies Seek U.S. Role In Cash-Balance Plans.”: Ellen E. Schultz for the Wall Street Journal reports today. The article discusses both the IBM and Xerox cash balance plan decisions handed down late last week. (You can access previous discussions on the IBM case here and previous discussions on the Xerox case here). With respect to IBM’s plans to appeal, the article makes the point that employers will have reason to worry since the IBM appeal “will be heard in the Seventh Circuit, where it may be decided by one or more of the judges who just ruled against Xerox on appeal. These include Judge Posner, a highly regarded judge whose opinions have been cited by the Supreme Court, and a prolific writer of Erisa decisions that have had substantial impact.”
Deepa Babington for Reuters has this: “IBM ruling turns promising pension move into headache.”
Milliman USA has issued this Client Action Bulletin: “Emerging Developments for Cash Balance Plans.”
Stephen Taub for CFO.com also reports: “Court Decision Big Blow to Cash-Balance Plans.”
News regarding pension funding and accounting:
David Reilly discusses pension accounting and pension deficits in the U.K. in today’s Wall Street Journal: “‘How Much?’ Is Just First Issue On Companies’ Pension Deficits.”
Dennis Cauchon reports for USA Today in an article entitled: “Pension peril hits W.Va. hardest.” The article states that “the West Virginia teachers retirement system is the worst-funded public pension fund in the nation” and that it “has only 19% of the assets needed to pay current and future benefits.” Another article for USA Today reports: “State pensions face loss of billions.”
Lawrence B. Lindsey and Marc Sumerlin for the Washington Post make some very interesting comments regarding the pension funding crisis in this op-ed: “Herbert Hoover Pension Rules.” The article makes the point that “[j]ust as the government works to discourage contributions during good times, it also forces companies to make excessive payments during bad times.” Regarding fixes to the problem, the article states: “The best way to get out of any hole is to stop digging. Proposals in this area must specifically preempt collective bargaining contracts that allow pension benefits to rise automatically, even though the plan is underfunded and the company is in trouble.”
“The Next Scrambled Nest Egg? Companies are struggling to meet their pension-plan obligations, and Washington is starting to worry. How your retirement plan could be at risk“: Jyoti Thottam for Time Online reports.
News regarding health care:
Finally, “Mandated employer health insurance gains support” in California, reports Kathy Robertson for the Sacramento Business Journal via MSNBC.com. Richard Costigan, a lobbyist for the California Chamber of Commerce, states that if the legislation is passed it will create a Pandora’s box on many levels, one of which is ERISA which makes self-insured plans exempt from state insurance laws.