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Eliminating Prohibited Payment Options in Bankruptcy: IRS Proposes Exception to Anti-Cutback Rule

"[T]he proposed regulations address the constraint imposed by Code section 436(d)(2) which -- as added by the Pension Protection Act of 2006 -- requires single-employer defined benefit plans to provide that no prohibited payment will be made while the plan sponsor is in bankruptcy.... To resolve the competing interests, the regulations propose a limited exception to the anti-cutback rule by which a plan sponsor in bankruptcy would be permitted to amend the plan to eliminate a single-sum distribution (or other optional form providing for accelerated payment) if certain conditions are satisfied."

Enrollment in ACA's PCIP Program Shows Deep Need for Health Care by Adults with Pre-Existing Conditions

"A recent report on the PCIP program reveals the deep need for such coverage, and the striking difference in health care utilization between PCIP participants and those in established plans.... Illustrative of the need for care by the PCIP enrollees is a comparison between enrollees in the federally administered PCIP and those in an established health plan in the Federal Employees Health Benefits plan."

Text of IRS Rev. Rul. 2012-19: Dividends and Dividend Equivalents on Restricted Stock and Restricted Stock Units (PDF)

"Issue: Whether dividends and dividend equivalents relating to restricted stock and restricted stock units (RSUs) that are performance-based compensation under Section 162(m)(4)(C) of the Internal Revenue Code must separately satisfy the requirements under Section 162(m)(4)(C) to be treated as performance-based compensation."

CMS Addresses Affordable Care Act Requirements for Student Health Policies

"[T]he rule modifies the phase-in of the annual dollar limits on essential health benefits, requires notice to be given to students explaining how the coverage differs from other individual market coverage, and applies the medical loss ratio (MLR) requirements to the issuers (although certain adjustments are provided). With the goal of having the new requirements apply to the 2012-13 academic year, the final rule is generally effective for policy years beginning on or after July 1, 2012. The MLR requirements apply beginning January 1, 2013."

IRS Identifies PPA Compliance Issues for Agents Conducting Audits

"Seeking to provide training for agents who will be auditing plans for compliance with the Pension Protection Act of 2006 (PPA), the IRS initiated a project to identify potential areas of non-compliance. Although the project remains ongoing, the IRS released a list of issues it has identified so far ... [T]he release notes that many of the identified PPA compliance issues are failures to comply with the funding rules and would, therefore, involve the potential assessment of excise taxes and penalties rather than raise qualification concerns."

Change in Social Security Offset Is Not Prohibited Cutback, 11th Circuit Rules

"The 11th Circuit Court of Appeals ruled that an amendment changing the formula for calculating the social security offset in a defined benefit plan did not violate the anti-cutback rule under ERISA section 204(g) -- which prohibits plan amendments that reduce a participant's accrued benefit. The affected participants were not yet eligible for a retirement benefit under the plan, so the more favorable preamendment social security offset formula was not part of their accrued benefit, the court found."

IRS Clarifies 'Substantial Risk of Forfeiture' Under Section 83

"The IRS issued proposed regulations to clarify the application of Code section 83, which provides that property transferred in connection with the performance of services is included in the service provider's income once it is transferable or no longer subject to a substantial risk of forfeiture. The proposed regulations clarify that: (i) a substantial risk of forfeiture may be established only through a service condition or a condition related to the purpose of the transfer, (ii) both the likelihood that the forfeiture event will occur and the likelihood the forfeiture will be enforced need to be considered in determining whether there is a substantial risk of forfeiture, and (iii) transfer restrictions do not create a substantial risk of forfeiture except as specifically provided under Code section 83(c)(3) or related regulations."

ERISA Investment Disclosures to Participants Will Satisfy NASD Rules

The FINRA relief is similar to that issued earlier by the SEC. In an October 2011 No-Action letter, the SEC agreed to treat information provided by a plan administrator to participants that is 'required by and complies with' the ERISA ? 404(a) disclosure requirements as satisfying the requirements of Rule 482 under the 1933 Act. The ERISA ? 404(a) regulations include an optional Model Comparative Chart for making the required financial disclosures to plan participants.

Final 'Business Conduct Rules' for Swap Dealers Include Safe Harbor for ERISA Plans

The Commodity Futures Trading Commission (CFTC) included a safe-harbor for ERISA plans under the 'business conduct standards' for swap dealers under the Dodd-Frank Act .... In a letter to the CFTC, [DOL] affirmed that the final rule will not require swap dealers to engage in conduct that will cause them to become ERISA fiduciaries.

ERRP Reminder: March 30 Deadline for Submission of Full-Replacement Claim List

Last month the CMS announced that the ERRP would be closed for claims incurred after December 31, 2011, due to the projected exhaustion of funds.