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Employers and Business Groups Urge Congress to Adopt Pension Funding Relief

"Over 200 employers and trade associations, representing thousands of pension plans covering millions of employers, have signed a letter urging Congress to enact legislation to stabilize the pension funding interest rate rules. Similar actions have been urged by Mercer and by [ASPPA]."

'Unrelated Business Taxable Income' Did Not Spoil Tax-Exempt Organization's Exemption from Excise Tax on Plan Asset Reversion

"[A 20%] excise tax is imposed on employer reversions [of assets] from a 'qualified plan,' defined ... as a plan that is qualified under Code Sec. 401(a) or Code Sec. 403(a), 'other than ... a plan maintained by an employer if such employer has, at all times, been exempt from tax under subtitle A[.]' ... The IRS maintained that the plan was a 'qualified plan' [and hence subject to the excise tax despite the aforesaid exemption for tax-exempt employers] because the taxpayer had paid unrelated business income tax, which is a tax under Subtitle A, for certain years.... The court held that the employer was an organization that had, at all times, been exempt from tax under Subtitle A. Thus, the employer's pension plan was not ... liable for the Code Sec. 4980 excise tax."

Number of Small Business Health Care Credit Claims Lower than Expected

The volume of claims for the credit has been low despite IRS efforts to inform 4.4 million taxpayers who could potentially qualify for it. According to the IRS, as of mid-May 2011, just more than 228,000 taxpayers had claimed the credit for a total amount of more than $278 million.

HHS Report Outlines Effects of Health Reform Law

[HHS] released a report summarizing some of the results of the September 2010 implementation of provisions in the Patient Protection and Affordable Care Act. The report calls these provisions the 'Patient's Bill of Rights.'

Pension Contribution by Self-Employed Taxpayer Not Deductible for Self-Employment Tax

"Self-employed taxpayers may deduct expenses associated with their trade or business when determining self-employment income. However, the court explained, a pension contribution is not an expense attributable to a self-employed taxpayer's trade or business. The exception under Code Sec. 404(a)(8) is limited to income tax."

Employee Plans Enforcement Activities: An Overview (PDF)

With the adoption of the 'cycle-based' determination letter program, enforcement staff who used to be shifted to determinations to handle the various filing spikes, such as the 'GUST' deadline in 2002, are less likely to be temporarily assigned outside their enforcement roles.

Seventh Circuit Finds IRA Owner Liable for Additional Tax for Early Withdrawal from IRA After Rollover from Pension Plan

"The IRA owner argued that it did not make sense that he could take a distribution from his law firm's plan without owing the 10% additional tax, but would have to pay the extra 10% tax if he took a distribution from an IRA after having rolled his law firm's plan benefits to the IRA. The appellate court responded that the Code says that the difference here matters and that many of the provisions in the Code are compromises and are arbitrary. The court noted that the tax deferrals provided for amounts in pension plans and IRAs are expensive to the Treasury and so the Code makes using some tax-deferral opportunities costly. Congress established the boundaries, and the court was not authorized to redraw them."

Roth IRA Was Not Eligible Shareholder of S Corporation

"An individual incorporated his business and elected subchapter S status. The corporation's sole shareholder in 2003 was a custodial Roth IRA for the benefit of the individual. The IRS issued a notice of deficiency, determining that the corporation was taxable as a C corporation for 2003.... [The] Tax Court sided with the IRS, finding that the Roth IRA did not qualify as an eligible shareholder of the S corporation."

Better Coordination Between Agencies Could Spur Small Employer Plan Sponsorship, Says GAO

"The GAO report recommends that the Secretary of Labor convene an interagency task force with representatives from Treasury, IRS, and SBA, and other agencies deemed appropriate, to review, analyze, and address the challenges facing small business retirement security in the United States."

Early Retirees' Fraudulent Misrepresentation Claims Time-Barred by ERISA's Three-Year Period for Fiduciary Breach

"The retirees argued that the six-year limitations period set forth in ERISA Section 413 should apply because the fiduciaries' alleged misrepresentation amounted to fraud and thus fell within the fraud-or-concealment exception to the normal three-year limitations period. The appellate court rejected this argument because the retirees failed to adequately plead that any fraud had taken place.... The court dismissed all other claims, ruling that (1) the union did not act as a ERISA fiduciary; (2) the retirees failed to state a claim for equitable estoppel; (3) the retirees failed to show the fund did not provide requested plan documents; and (4) ERISA preempted the retirees' state law claims." [Cataldo v. United States Steel Corporation (CA-6)]