Compilation of Links Pertaining to the Pension Protection Act of 2006

The 907-page Pension Protection Act of 2006 passed last week by Congress is sure to keep benefits lawyers busy for years to come. I have compiled a collection of links pertaining to the Act, some of which I am hoping…

The 907-page Pension Protection Act of 2006 passed last week by Congress is sure to keep benefits lawyers busy for years to come. I have compiled a collection of links pertaining to the Act, some of which I am hoping to house permanently over in a sidebar section on the right:

See also the following articles from the Wall Street Journal:

More on the Pension Protection Act of 2006 . . .

From the Wall Street Journal: Bill to Aid 401(k) Investors Raises Bias ConcernThe Big Pension Bill: Is That All There Is? Also, from Reuters: US senators expect to solve airline pension dispute Finally, many thanks to the Pension & Benefits…

From the Wall Street Journal:

Also, from Reuters:

Finally, many thanks to the Pension & Benefits Weblogger for staying up most of the night to create this great effective date outline here (completed at 3:48 in the morning!) of the 907-page bill. See also this helpful commentary here on how the PPA will affect lump sum distributions. Excerpt:

Various provisions under the Pension Protection Act of 2006 (H.R. 4) affect the valuation and distribution of lump sum distribution of the value of a participant’s accrued benefits under a defined benefit pension plan. . .

. . . For a pension plan other than a hybrid pension plan, the amount of a lump sum distribution will be valued using the 3-segment yield curve introduced by PPA for pension funding. [PPA §302] For the lump sum valuation, the yield curve is based on the rates for the month before the distribution, rather than on the 24-month average used for the plan’s funding. Lump sum amounts should generally be lower under the new rates than under the pre-PPA determination, which is based on 30-year Treasury bond rates, with the largest cuts going to youngest employees. The new rates take effect during a 5-year transition period beginning in 2008.

Frist Comments on Pension Legislation

Thanks to the TaxProf Blog for this link to Senator Frist's recent comments on the proposed pension legislation (discussed in this previous post here). More on the ongoing battle over the legislation here….

Thanks to the TaxProf Blog for this link to Senator Frist’s recent comments on the proposed pension legislation (discussed in this previous post here). More on the ongoing battle over the legislation here.

Final Regulations: Comparability Requirements for Employer Contributions to Health Savings Accounts

In August of 2005, proposed regulations (REG-138647-04) pertaining to HSA comparability requirements were issued. The proposed regulations clarified and expanded upon the guidance regarding the comparability rules for HSAs published in IRS Notice 2004-2 and in Notice 2004-50 (2004-33 IRB…

In August of 2005, proposed regulations (REG-138647-04) pertaining to HSA comparability requirements were issued. The proposed regulations clarified and expanded upon the guidance regarding the comparability rules for HSAs published in IRS Notice 2004-2 and in Notice 2004-50 (2004-33 IRB 196), Q & A-46 through Q & A-54. Today, the IRS has issued final regulations (which you can access here) adopting the provisions of the proposed regulations with certain modifications.

One of the modifications is that the final regulations provide additional guidance on how employer HSA contributions are made through a cafeteria plan:

Specifically, the final regulations provide that employer contributions to employees’ HSAs are made through the cafeteria plan if under the written cafeteria plan, the employees have the right to elect to receive cash or other taxable benefits in lieu of all or a portion of an HSA contribution (i.e., all or a portion of the HSA contributions are available as pre-tax salary reduction amounts), regardless of whether an employee actually elects to contribute any amount to the HSA by salary reduction. The final regulations also provide several examples that illustrate the application of the cafeteria plan exception to the comparability rules.

House passes Pension Protection Act of 2006

From the House Committee on Ways and Means, "Comprehensive Pension Bill Clears the House Bill to Bolster Retirement Security Now Moves to the Senate": Today, the U.S. House of Representatives approved H.R. 4, the Pension Protection Act of 2006, by…

From the House Committee on Ways and Means, “Comprehensive Pension Bill Clears the House Bill to Bolster Retirement Security Now Moves to the Senate“:

Today, the U.S. House of Representatives approved H.R. 4, the Pension Protection Act of 2006, by a vote of 279-131. This critical piece of legislation reflects months of negotiations between the House and Senate. . .

More links here.

See also this recent article from CCH: “House passes comprehensive pension reform bill.”

UPDATE: A good summary of the legislation is here.

Article: Changes to Nonqualified Deferred Compensation Rules Applicable to Tax-Exempt Employers

I have added the following article to the 409A section in the sidebar on the right (scroll down): "Changes to Nonqualified Deferred Compensation Rules Applicable to Tax-Exempt Employers" by Gregory L. Needles and Kimberly A. Butlak, Morgan, Lewis & Bockius,…

I have added the following article to the 409A section in the sidebar on the right (scroll down): “Changes to Nonqualified Deferred Compensation Rules Applicable to Tax-Exempt Employers” by Gregory L. Needles and Kimberly A. Butlak, Morgan, Lewis & Bockius, LLP.

DOL’s FAQs for Reservists Being Called To Active Duty

The DOL has posted a number of benefits-related questions and answers pertaining to reservists being called to active duty. You can access the FAQs here….

The DOL has posted a number of benefits-related questions and answers pertaining to reservists being called to active duty. You can access the FAQs here.

District Court Opines That ERISA Preempts Maryland’s Fair Share Health Care Fund Act: Notable Quotes

The Retail Industry Leaders Association won a victory last week when a federal district court ruled that Maryland's Fair Share Health Care Fund Act was preempted by ERISA. Access the opinion here: Retail Industry Leaders Association v. James D. Fielder,…

The Retail Industry Leaders Association won a victory last week when a federal district court ruled that Maryland’s Fair Share Health Care Fund Act was preempted by ERISA. Access the opinion here: Retail Industry Leaders Association v. James D. Fielder, Jr., Maryland Secretary of Labor, Licensing, and Regulation.

Notable quotes from the opinion written by Federal District Judge J. Frederick Motz:

1. “The fact that two local jurisdictions, New York City and Suffolk County, have enacted “fair share” legislation of their own highlights the uniformity problem. Unless such legislation is deemed to be preempted, nationwide employers potentially will face not only fifty different requirements imposed by the States, but also a virtually limitless number of requirements that local subdivisions in each State may enact.” (From footnote 13).

2. “My finding that the Act is preempted is in accordance with long established Supreme Court law that state laws which impose employee health or welfare mandates on employers are invalid under ERISA. See, e.g., Greater Washington Bd. of Trade, 506 U.S. 125; Shaw, 463 U.S. 85. The Secretary contends, however, that these authorities are not controlling because a trilogy of cases, Travelers, 514 U.S. 645, Dillingham, 519 U.S. 316, and DeBuono v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806 (1997), have “changed the landscape of ERISA preemption analysis.” The short answer to this contention, of course, is that this court has no authority to disregard Supreme Court precedent on the basis of the prediction that the Court would overrule its decisions. . . Moreover, the Secretary over-reads the cases upon which he relies.”

3. “Although, as the Fourth Circuit noted in Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1466-67, 1468 (4th Cir. 1996), the Supreme Court in Travelers “narrow[ed]” its “interpretation of the scope of ERISA preemption” and “adopted a pragmatic approach” to determining whether a state law “relate[s] to” an employee benefit plan, nothing in Travelers or its progeny suggests that the Court would now uphold a state statute or local ordinance mandating that an employer provide a certain type or monetary level of welfare benefits in an ERISA plan.”

4. “Of course, I am expressing no opinion on whether legislative approaches taken by other States to the problems of health care delivery and its attendant costs would be preempted by ERISA. For example, the Commonwealth of Massachusetts has recently enacted legislation that addresses health care issues comprehensively and in a manner that arguably has only incidental effects upon ERISA plans. In light of what is generally perceived as a national health care crisis, it would seem that to the extent ERISA allows, it is strongly in the public interest to permit states to perform their traditional role of serving as laboratories for experiment in controlling the costs and increasing the quality of health care for all citizens.” (From footnote 15)

4. “The Secretary’s third argument is that the Act by its terms does not require an employer to spend a certain amount on health care costs but rather simply provides that if the employer does not do so, it shall pay to the Secretary an amount equal to the difference between its actual health care expenditures and the required amount. Again, while this is theoretically true, it does not even approximate reality. If employers are faced with the choice of paying a sum of money to the State or offering an equal sum of money to their employees in the form of health care, no rational employer would choose to pay the State. While repeatedly emphasizing that employers have a “choice,” the Secretary does not offer a single reason why an employer would pay the State rather than generate good will with its work force by increasing its employees’ benefits. The “choice” here is a Hobson’s choice. See Travelers, 514 U.S. at 664 (noting that a Hobson’s choice “would be treated as imposing a substantive mandate”).”

5. “Second, the Secretary contends that an employee could comply with the Act by spending an amount equal to the requisite percentage of its payroll on first aid facilities. This contention is based upon 29 C.F.R. §2510.3-1(c)(2), which excepts from the definition of ERISA plans “[t]he maintenance on the premises of an employer of facilities for the treatment of minor injuries or illness or rendering first aid in case of accidents occurring during working hours.” While the Secretary’s argument may evidence the active imagination of his lawyers, it is utterly out of line with reality.”

Previous posts on the legislation are here and here. See also Professor Paul Secunda’s thoughtful post on the opinion here.

UPDATE: Excerpt from an article from Law.com–“Federal Judge Overturns Wal-Mart Health Care Spending Law“:

Kevin Enright, a spokesman for the Maryland attorney general’s office, said the state would appeal to the 4th U.S. Circuit Court of Appeals in Richmond, Va.

Enright said the state disagreed with Motz on several counts, particularly in finding that the law is pre-empted by ERISA.

“Supreme Court precedent makes it clear that this law does not impermissibly impact health benefit plans,” Enright said. “Employers may choose to pay the tax or avoid paying the tax in several ways.”

KaiserNetwork.org has more reaction to the opinion here.

409A Article from Tax Analysts

As part of the 409A section in the sidebar, I am adding a link to this article from Tax Analysts: "Vesting of Deferred Compensation: When Words Are More Taxing Than Deeds."…

As part of the 409A section in the sidebar, I am adding a link to this article from Tax Analysts: “Vesting of Deferred Compensation: When Words Are More Taxing Than Deeds.”