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Alvin D. Lurie Dies at 92

We report with great sadness the death of Alvin D. "Al" Lurie Nov. 17, 2015. Most recently Of Counsel to the Wagner Law Group, Al's career spanned decades of service in the employer-sponsored retirement plan arena. He was the first person to be appointed Assistant Commissioner (Employee Plans and Exempt Organizations) under ERISA, a prolific author, an AV-rated attorney in private practice, and a Charter Fellow of the American College of Employee Benefits Counsel. Al will be greatly missed.  MORE >>

Alvin Lurie's Recent Employee Benefits Articles

Excerpt: The first article, It's a PIP - Or Is It?, concerns 'an idea ... to make employers in small businesses set up a payroll deduction facility for their employees not covered by employer-sponsored retirement plans, for the purpose of easing the making of contributions to an IRA established by or on behalf of the employee.' The second one, All in the Family on Foley Square, Lurie discusses the 2nd Circuit's recent cash balance plan decision in Hirt v. The Equitable Retirement Plan .... [And the third article is: Triple Play: Stevens to Roberts to Thomas or A View of LaRue.]  MORE >>

Alvin D. Lurie Receives Lifetime Employee Benefits Achievement Award

Excerpt: "BenefitsLink congratulates Alvin D. Lurie for having received the Lifetime Employee Benefits Achievement Award from the Employee Benefits Committee of the American Bar Association's Section on Taxation.... Al's broad experience with employee benefit plan operation, design and policy, coupled with his gift for clever and insightful writing (I think of him as the Mark Twain of ERISA) make him a national treasure."  MORE >>

Call for Authors for Lurie's New Treatise on the Federal Income Taxation of Pensions

Excerpt: Alvin Lurie writes to tell us that he will be the general editor of a forthcoming publication of a new treatise on the federal income taxation of pensions and other 'qualified' or nonqualified retirement arrangements, by a major legal publisher, shooting for publication in late 2007.  MORE >>

Al Lurie on the Decline in Defined Benefit Plans: 'The Canaries Sing But They Sing Not To Thee'

Excerpt: The subject is pensions. The mine is the deepening descent of defined benefit plans as they continually plunge in popularity, with a corresponding decline in numbers; while the canaries are the signs of danger in the mine. Thee are all those who can play a role in digging pensions out of this hole, but do not heed the warnings.

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Corrected Address for Alvin D. Lurie, Author of 'This Time is the Sky Really Falling on DB Plans?' (PDF)

An earlier version of Mr. Lurie's splendid article contained an outdated address and phone number at the end of the article; a corrected version of the article is available at this link, showing his correct address (Larchmont NY, phone (914) 834-6725). We regret the error!

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Al Lurie: Numbers Game In Congress Stalls Pension Reform and Cash Balance Legislation (PDF)

6 pages. Excerpt: As these lines are being written, the conference committee and its staffs are at work on that task that might spell life or death for the defined benefit scheme and, not so incidentally, for its cash balance variant.

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Toward a Trusty Test to Track, and Tax, the Tax Shelters

Prominent ERISA attorney Alvin D. Lurie asks, "How is one to know the bounds of the law in a universe where no one has been able to draw a generally recognized boundary line between abusive and nonabusive tax shelters?"

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Murphy's Law Has IBM Singing the Big Blues (PDF)

8 pages. Pension attorney Al Lurie analyzes (skewers?) the district court's reasoning in the recent Cooper v. IBM case, holding IBM's cash balance plan to be illegal under the Age Discrimination in Employment Act.

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Obama's Trojan Horse: The 3.8% 'Unearned Income Medicare Contribution' Provision in the ACA

"One has to believe it was no accident that the Tax Code amendment [adding section 1411 to the Internal Revenue Code] is buried deep within and close to the end of the nearly 3,000-page two-part legislative package. Doubtless only a relatively few who read the ACA before (or even after) its enactment got as far as section 1402 of HCRA; and, of those few, even fewer were searching for new tax legislation in that section or recognized the enormous impact of Section 1411 as an income tax rather than the payroll tax that its 'Medicare' title connoted.... But it is not clear how that strategy will play out in the Supreme Court when, as seems likely, a case testing the tax standing of Section 1411 appears on the Court's docket."

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The So-Called 3.8% Medicare Surtax: Unfit for Survival

"Section 1411 of the IRC, often erroneously called a Medicare surtax, is in actuality not that at all, and is rather in every respect a completely separate, full-blown, second income tax imposed on individual taxpayers, on trusts and estates, and indirectly on passive owners of interests in S corporations, LLCs and partnerships, on recipients of interests in qualified pension and other qualified plans and charitable remainder trusts inter alia -- an extraordinarily wide swath of taxpayers.... Even more problematic than the misleadingly false labeling of the tax is the establishment, as part of the Affordable Care Act, of a complicated, unbelievably difficult second income tax for the sole purpose of providing the government funds required to administer the health reform law, as long into the future as that legislation remains on the books."

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Unfinished Fiscal Fix -- But the Cliff Is Still There

"There is ... a litany of other taxes, penalties and fees introduced in the ACA ... [that] could legitimately be brought to bear by Republicans in addressing the fiscal cliff problem ... inasmuch as they, like the Medicare taxes, have been designed to hit high bracket businesses and individuals, by reason of being (i) targeted at big businesses (viz., medical device makers, pharmaceutical manufacturers, and health insurance companies), or (ii) drafted with specific thresholds based on size of business payrolls or on individuals' income levels, as regards health insurance or self-insurance mandates imposed on businesses, or relating to insurance that individuals must purchase for themselves or their families, or (iii) imposed on the purchase of a specific luxury health item colloquially called a 'Cadillac insurance plan.'"

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'A Menace to the State'

"The full quotation, of which the above title is a segment, goes 'Every law not based on wisdom is a menace to the State.' ... The decision of the Supreme Court upholding the constitutionality of the Affordable Care Act, resting on Congress' Taxing power under the Constitution, is largely the act of one man, its Chief Justice.... Historians must search more deeply for the reason that Justice Roberts, who knows constitutional law as well as any legal scholar today, was moved to rest the most major social legislation of our time on a foundation so vulnerable to challenge."  MORE >>

A Nonpartisan View of the Uncivil Wars Over Health Care Law and How They Have Affected the Three Branches of Our Government, Particularly the Self-Inflicted Wounds of the Supreme Court

"These battles have engendered great animosity among the participants, that have damaged the institutions in ways that have, at the least, greatly damaged their prestige and authority to perform their responsibilities, but -- more seriously -- have diminished their ability to carry out their Constitutional duties to govern, to legislate, and to adjudicate.... The price to be paid by the country at large for all this cannot be ignored. Serious efforts must be made to capture the key benefits of the present ACA while tempering its frightful excesses and budget-busting costs for government, business and individuals. This must be bipartisan solution, or the jockeying between the parties will continue indefinitely."

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Roberts Rules: First Impressions of the Supreme Court Ruling

"There can be no argument that Chief Justice Roberts crossed [the Anti-Injunction Act] bridge with a deftness that even his critics would have to admire. The opinion is a prime example of adroit lawyering, a veritable tour de force. Lawyers can certainly appreciate the art with which Roberts builds his case. But much of the general public is bound to find unsatisfactory this twisting of the word 'tax' to have entirely contradictory meanings when exactly the same economic event is tested under two separate and distinctive legislative enactments in the same litigation by the same judges on the same day, in one with the object of reaching a no-tax conclusion, in the other a tax conclusion."

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Governmental Pension Plans: Can Peter's Sponsor Borrow From Peter To Pay Peter?

"Whose skin is in the game when pension plans make loans to plan sponsors to pay pension contributions, and is the answer different if the plan sponsor is a government body? Those questions come to mind on learning that last year the highest elected officials in New York State authorized financially distressed local governments in the state to use a problematic borrowing scheme to defer a portion of their pension liabilities, by, in effect, borrowing from the state pension system to satisfy significant percentages of contributions owed to the pension trust for the retirement benefits of their respective employees."

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March Madness at the Court -- Sweet Sixteen Players? No, Nifty Nine

"Important as the unconstitutionality of the health care law may be, whether in part or in toto, an even much larger issue potentially is at stake, which the Court as a whole, or one or more of the several opinions which its Justices may file (concurring, concurring in part, dissenting or whatever), might confront -- namely, how big is too big a role of the Federal government? The issue divides the political parties and the electorate at large at this time, and it obviously directly affects one's view of the health care reform legislation. But, in a larger sense, it affects the entire fabric of our society."

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The Third Burning of Washington: Uncivil Health Care Wars Continue

"[T]he third branch of our democracy, the judiciary, may be about to take its lumps alongside the other two, as the Supreme Court takes up a case that is at the core of much of the breakdown of comity among the working parts of our federal government that has exacerbated the low esteem in which the government is presently held by the public.... [T]he impending health care review by the Court could actually carry much more potential threat to the Court's authority than Gore versus Bush[.]"  MORE >>

CIGNA Cash Balance Conversion Case: Justice Trumps Law 6-to-2 -- But Who Got It Right?

"[H]as the Court now taken a second large step towards loosening the tight-knit set of enforcement provisions that Congress crafted with such precision in section 502 of ERISA, where it spelled out with exquisite care the permissible civil actions for enforcing the requirements of ERISA, specifying not just the harms proscribed and the corresponding remedies (e.g., recovery of lost benefits, injunctions, breach of fiduciary suits, clarifications of future benefits, other appropriate equitable relief), but also who may bring the remedial actions (for some causes, participants and beneficiaries, for others, the plan, for another, the Secretary of Labor along with participants, beneficiaries and fiduciaries)?"  MORE >>

What Chance of Repealing Health Care Reform in the New Congress?

"The new law is called by the encyclopedic title Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act. The White House and Republican leadership called the Act a prototype for future compromises, foreshadowing a new era of bipartisan actions."  MORE >>

Post-Election Survey of Legislative Strategies For Overhauling 2010 Health Law

Excerpt: [I]t was clear that the message [President Obama] wanted to convey was that the door was open to such modifications, but not complete repeal. There is little doubt that the Republicans will not insist on total repeal, that is, rejection of everything in the present law. However, the meager examples that the President gave to reporters at his post-election press conference do not go anywhere near the modifications that the Republican leadership is certain to require as the price of desisting from their repeal efforts.

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The 2010 Health Care Legislation: Here Today, Gone Tomorrow?

Excerpt: Drastic health care reform legislation was voted into law less than six months ago by the 111th Congress. Is it possible that it will be voted out of law by the 112th Congress? It is possible. But it would take a trifecta [of events] to pull [it] off[.]

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Reforming Health Care: What Has the 'Public Plan Option' Got To Do With It? Instead: Think ERISA

"[T]he pension model [of federal preemption by ERISA of state laws regulating pension plans] would be no less effective with respect to the delivery of health care than it has proved to be in the regulation of pension benefits under ERISA, and completely refutes the claimed need for a 'competing' government plan option, while avoiding all the bureaucratic baggage and financial risks inherent in such a radical option. Why stray so far from the traditional approach of our 'more perfect Union?' "  MORE >>

DB Plan Meltdowns: Victims of Current Crisis

Excerpt: [A] radical overhaul of the private pension system, especially the defined benefit branch, will be required if it is to be preserved as a key engine for assuring the retirement security of our workers and their families. Whatever last legs the defined benefit plan design had been balancing on after the 'perfect storm' of 2002 have been knocked out from under it with the financial collapse of 2008.

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With the Second Circuit's Recent Cash Balance Decision in Favor of Plan Sponsors, It's All In The Family On Foley Square

Excerpt: The 2nd Circuit just resolved a family squabble among its district court judges ... involving an age discrimination issue that has had the pension community across the country in a tumult for 5 years. The appeals court affirmed the judgments of two courts of the Southern District of New York that had ruled that the cash balance plans at issue were not age discriminatory[.]

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The Payroll IRA Plan of S. 1141 and H.R. 2167: It's PIP – Or Is It?

Excerpt: An idea that has been wafting about in legislative halls and hearing rooms, in print and electronic media, and in assorted other venues for several years is to make employers in small businesses set up a payroll deduction facility for their employees not covered by employer-sponsored retirement plans, for the purpose of easing the making of contributions to an IRA established by or on behalf of the employee.... The PIP is more than just an idea. It has been embodied in several federal legislative proposals .... H.R. 2167 was one of the main topics discussed at a recent hearing on IRAs by the Ways & Means Committee's subcommittee on Select Revenue Measures, which has moved the legislation into the spotlight.

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Two Cash Balance Decisions Announced at the End of January, Both in the 3rd Circuit (PDF)

7 pages. Excerpt: Neither was apparently written with the benefit of having seen the other's opinion, but the cases arrived at remarkably similar conclusions, both dismissing age discrimination (and other) claims against cash balance plans launched by plan participants[.]  MORE >>

Valuing a Golden Egg: The FASB Revises Pension Accounting Rules

Excerpt: Alvin Lurie, [in] a recent opinion piece that he wrote for Barron's Magazine on August 28, 2006 [discusses] the far-reaching consequences of a revision by the FASB of the pension accounting rules.  MORE >>

This Time is the Sky Really Falling on DB Plans? Has FASB Administered the Coup de Grace? (PDF)

7 pages. Excerpt: [T]here are presently four matters any one of which has the clear and present potential to destroy what's left of the defined benefit pension scheme: the pending pension reform legislation ... the revised rules of accounting for pension liabilities proposed by [FASB] ... the decision of the 7th circuit court of appeals in the IBM cash balance litigation ... and ... Code section 409A ... ' (Expanded version of an article previously published on Leimberg Information Services.)

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409A Proposed Regs Are Tour de Force-- But Grandpa Is Still In Hiding

Excerpt: The proposed regulation on the nonqualified deferred compensation rules of Code section 409A ... is not a page turner (though it's a lot of pages to turn, at 238 pages); but that didn't stop this reader from furiously (if wearily) turning its pages to search for the grandfather rules that I had found so elusive in December when the initial official guidance under the statute ... was released by the Service ... Alas, my search of the just-proposed regs has proved unenlightening.

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More Sand(ers) In the Pension Machinery

Excerpt: Not content to rest on his dubious laurels in having initiated last year's Congressional action resulting in the shackling of Treasury's attempt to promulgate its regulation proposed in 2002 to free cash balance plans from vulnerability to charges of age discrimination - by a bill barring Treasury from spending any of it 2004 appropriation to that end -- Rep. Bernard Sanders (I-VT) has renewed his tactics in connection with this year's appropriation bill.  MORE >>

To Foil Filching from Federal Fisc -- Test to Thwart (Some) Shelters

Excerpt: Is the verb 'filch' too strong to describe a raid on the fisc by way of abusive tax shelters? In normal usage an 'abuse' connotes a corrupt practice. If we can identify corruption, in reference to tax practice, as frustrating collection of one's tax liability by unlawful means, I submit we have fairly described a filching. If anything, the verb is not strong enough.

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What Will Judge Posner Do Next? Balm or Bomb for Cash Balance Plans? (PDF)

5-page working paper. Excerpt: That IBM would appeal the decision of the trial court quickly became known, but hopes for a reversal were tempered by the knowledge of the cash balance cognoscenti that the appeal would go to the same court that had just decided Xerox: the 7th Circuit, with the author of that opinion, Judge Richard Posner, the likely author of an opinion on the IBM appeal. Speculation is rampant that Judge Posner ... will not overturn the lower court decision.

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Tax Shelters Not So Protected Any More

Excerpt: Of course, the line between abusive and responsible tax planning can be indistinct. But like the now much-quoted Supreme Court pragmatic definition of obscenity (and there is more than a little obscenity in some of the shelters promoted by some of the biggest names in the tax business), one can usually know abuse when one sees it.

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Proposed IRS Regs Are Balanced Response to Cash Balance Plans

Excerpt: Like a breath of spring air amidst the wintry blasts of December, the IRS proposed new rules for cash balance plans in mid-December that, if adopted, promise to thaw the deep freeze in which cash balance pension plans have been captured for the past three years, ever since the employees of IBM, using the company's vaunted intranet system, unleashed a storm of protest against the proposed conversion of the IBM defined benefit plans into cash balance plans.

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Case for Repealing the Investment Income Tax: Let Me Count the Whys

"Section 1411 of the Internal Revenue Code was inserted into the income tax system unannounced as an income tax. On the contrary, it was named as if it were a part of Medicare, and placed within the second of the two distinct acts which together have come to be called, colloquially, the Affordable Care Act.... [N]one of the proceeds of the tax are dedicated to the purposes of the [ACA], none of those revenues flows into the Medicare funds or contributes to Medicare in any way (its nomenclature as a 'Medicare contribution' notwithstanding), nor would section 1411 in any way impact the heath care provisions of the ACA were the tax to be repealed or ruled unconstitutional.... Little has been said in the legal literature, let alone in the broad press, op-ed commentary or public print generally, of the enormous complexity that this new statute has injected into the tax law of the Nation, and the inevitably resultant errors that will abound in all the places where its application will occur."

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More on Decoding the Fiscal Cliff: The Power of Doing Nothing and Other Ruminations on Opportunities for Cliff Maneuvers Inherent in the New 3.8% Medicare Surtax and AMT Patch

"[New federal taxes to be paid by high-income taxpayers] should be taken into account, not just as a means of mediating the differences between the [fiscal cliff] negotiating parties, but because failing to do so undercuts the implied moral underpinning of the Obama position that one who does not pay a new, stipulated higher rate of federal ordinary income tax is not contributing his fair share to the public fisc, notwithstanding the payment of other new, higher federal taxes equivalently enhancing the fisc.... One tax in particular introduced in the health care reform legislation is especially well suited to the proposition, a 3.8% tax on net investment income (misleadingly labeled in the law as a 'Medicare contribution') that comes into force in 2013 at income levels matching exactly the $250k/$200k figures that have been the battle cry of Obama in the fiscal cliff war of words.... The AMT 'patch' also lends itself to being ready-made to contribute in much the same way to resolution of the current fiscal crisis deadlock."

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Decoding The Fiscal Cliff

"The argument of this article is that there are already enacted a considerable number of new tax measures that will begin to fall in 2013 only on the very taxpayers who are in the President's target area, thus accomplishing Obama's goal and greatly reducing the principal obstacle to the negotiators averting the fiscal cliff.... [Two] increases in the Medicare tax go into effect next year under the health care reform law ... Nothing of these two appears to have been mentioned in the public prints or TV talk shows, or even in statements by the GOP leadership, in connection with the fiscal cliff issue; but these two tax increases properly should be included among the tax jumps in 2013 that build up the cliff just as certainly as the elimination of the Bush tax savings [and] the Budget Control spending cuts: [1] A 0.9 percent rise in the Medicare portion of the self employment tax, from 2.9 percent to 3.8 percent on earnings in excess of $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately, and $200,000 for all other taxpayers; and [2] A tax on what is termed in the law Net Investment Income[.]"

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