Source: http://www.tagdata.com/aggregator/sources/1?page=2
Timestamp: 2018-12-15 23:28:47
Document Index: 64910474

Matched Legal Cases: ['§4022', '§4022', '§4022', '§4022', '§4022', '§4022', '§4022', '§4022']

PBGC proposes conforming changes to guaranteed benefits and asset allocation regs concerning owner-participants
Tue, 04/17/2018 - 18:34
The Pension Benefit Guaranty Corporation (PBGC) has issued proposed rules to conform its guaranteed benefits and asset allocation regulations to changes in the phase-in rules for owner-participants under the Pension Protection Act of 2006 (PPA).
ERISA Secs. 4022 and 4044 cover the PBGC’s guarantee of plan benefits and allocation of plan assets, respectively, under terminated single-employer defined benefit plans. Special provisions within these sections apply to owner-participants, who have certain ownership interests in their plan sponsors. PPA made changes to these provisions, which the PBGC has been operating under since they became effective. With these proposed regulations, the PBGC intends to increase transparency into its operations and provide guidance for plan administrators on the impact of the statutory changes.
The proposed regulations would amend the PBGC’s benefit payment regulation by replacing the guarantee limitations applicable to substantial owners with a new limitation applicable to majority owners. In addition, the proposed regulations would amend the PBGC’s asset allocation regulation by prioritizing funding of all other benefits in priority category 4 ahead of those benefits that would be guaranteed but for the new, owner-participant limitation. The proposed regulations also clarify that plan administrators may continue to use the simplified calculation in the existing rule to estimate benefits funded by plan assets and provide new examples to aid plan administrators in implementation.
In related amendments, the PBGC proposes to make conforming amendments to its regulations on terminology, termination of single-employer plans, and reportable events and certain other notification requirements. The PBGC also proposes to correct PBGC Reg. §4022.62(e), which currently provides that in a PPA 2006 bankruptcy termination, “bankruptcy filing date” is substituted for “proposed termination date” in PBGC Reg. §4022.62(c), by making the substitution applicable to both paragraph (c) (applicable to non-owner-participants) and paragraph (d) (applicable to owner-participants) of PBGC Reg. §4022.62.
Amendments unrelated to PPA
The PBGC proposes to make minor, nonsubstantive changes to the examples not involving owner-participants in PBGC Reg. §4022.62 and §4022.63 of the benefit payment regulation in order to improve readability. The PBGC also proposes to correct two clerical errors that were made when the PBGC previously amended the regulation—the first duplicated paragraph (f) of PBGC Reg. §4022.62, and the second duplicated the designation of paragraph (c)(1) of PBGC Reg. §4022.63. Finally, the PBGC proposes to replace the term “estimated title IV benefit” with “estimated asset-funded benefit” at PBGC Reg. §4022.63.
The PBGC proposed regulations would follow the applicability dates of the provisions of PPA that the regulations would incorporate. Thus, the proposed amendments would be applicable to plan terminations under ERISA Sec. 4041(c) with respect to which notices of intent to terminate are provided under ERISA Sec. 4041(a)(2) after December 31, 2005, and under ERISA Sec. 4042 with respect to which notices of determination are provided under that section after December 31, 2005.
Source: PBGC proposed regulations, 83 FR 9716.
IRS guidance covers issuance of opinion/advisory letters, employer adoption deadline, opening of determination letter program for pre-approved DB plans
The IRS has released guidance on the issuance of opinion and advisory letters for pre-approved defined benefit (DB) plans. Also included are the deadline for employers to adopt these pre-approved plans, and the timing for the opening of the determination letter program for pre-approved DB plan adopters.
Rev. Proc. 2016-37 provides that every pre-approved plan has a regular, six-year remedial amendment cycle and that master and prototype (M&P) sponsors and volume submitter (VS) practitioners may apply for new opinion or advisory letters once every six years. In addition, Rev. Proc. 2016-37 provides that when the review process for a cycle of pre-approved plans has neared completion, the IRS will publish an announcement supplying the date by which adopting employers must adopt the newly approved plans. This date is intended to provide adopting employers a window of approximately two years in which to adopt plans and, if they are otherwise eligible, apply for an individual determination letter.
Opinion/advisory letters
The IRS has announced that it intends to issue opinion and advisory letters for pre-approved DB plans that were restated for changes in plan qualification requirements listed in IRS Notice 2012-76, and that were filed with the IRS during the submission period for the second six-year remedial amendment cycle under Rev. Proc. 2007-44. The IRS expects to issue the opinion and advisory letters on March 30, 2018, or, in some cases, as soon as possible thereafter.
Under Rev. Proc. 2016-37, the second six-year remedial amendment cycle for pre-approved DB plans ends on January 31, 2019, unless the IRS revises these timing requirements and announces the revision in future guidance. Consistent with the revenue procedure, the IRS has announced the extension of the end of a pre-approved DB plan’s remedial amendment cycle with respect to the changes in plan qualification requirements included on the 2012 Cumulative List to April 30, 2020. The IRS states that an adopting employer whose DB plan is eligible for the six-year remedial amendment cycle system under section 19 of Rev. Proc. 2016-37, and who adopts, by April 30, 2020, an M&P or VS DB plan that was approved based on the 2012 Cumulative List, will be considered to have adopted the plan within the second six-year remedial amendment cycle.
Opening of individual determination letter program
An adopting employer of a pre-approved DB plan may apply for an individual determination letter (if otherwise eligible) during the period beginning May 1, 2018 and ending April 30, 2020, according to the IRS. See Rev. Proc. 2018-4) for additional information about determination letter applications for pre-approved plans.
Third six-year remedial amendment cycle
Section 16.01 of Rev. Proc. 2016-37 provides that the third six-year remedial amendment cycle for DB pre-approved plans begins on February 1, 2019. The IRS states that it will announce in future guidance a delayed starting date for this third six-year remedial amendment cycle for these plans.
Source: IRS Announcement 2018-05.
Honeywell retirees did not have vested lifetime health care benefits
Fri, 04/13/2018 - 18:52
Collective bargaining agreements did not vest Honeywell International retirees with lifetime health care benefits because the CBAs contained general durational clauses, held a federal district court in Michigan. Without an express clause in the CBA vesting lifetime benefits, the right to benefits terminates with the CBA. However, the court rejected the employer’s argument that it could require retirees to pay a portion of the premiums, finding instead that the language of the CBA did not place a ceiling on the employer’s required contributions, but was merely a floor. Summary judgment on that point was granted in the retirees’ favor.
A union and retired workers filed an action against Honeywell alleging ERISA violations and an anticipatory breach of the CBA entered into by the union and employer-specifically, as to the scope and duration of health benefits to which the retirees were entitled. The union and employer had a series of CBAs and master negotiations (including 2003 and 2007 agreements) which contained provisions stating that the limit on the employer’s contribution to retiree health benefits will be a subject of bargaining for the 2007 CBA, and that the employer’s contribution for health care coverage after 2007 shall be not less than the greater of (1) the actual amount of the employer’s retiree contribution in 2007, or (2) the employer’s actuary’s 2003 estimate of the employer’s retiree contribution in 2007. In 2011, the employer notified retirees of its intent to limit health care contributions beginning in 2012. Ultimately, it did not do so until 2014. The retirees objected on the grounds that the CBA did not contain a cap.
Caps on premium contributions.
The plaintiffs moved for summary judgment and an injunction regarding the employer’s plan to collect monthly premium contributions from post-2003 retirees. The retirees argued that the language in the 2003 and 2007 CBAs created a floor, not a ceiling; the employer countered that the language created a cap, based on the fact that elsewhere in the document, it referred to the clause as a limit on contributions. The court sided with the retirees, holding that the “shall not be less than” language created a floor and that the parties had agreed to bargain on the issue but had not agreed on a cap. The word limit can mean a maximum or a minimum, therefore, there was no evidence to support a finding that the CBAs provided for a cap on the employer’s retiree health care contributions. Partial summary judgment for the retirees on this point was granted and the court enjoined the employer from paying anything less than the full premium amount for health care coverage for retirees under the CBAs that contained that language.
Vesting of lifetime benefits.
The employer moved for summary judgment on the grounds that the CBA does not created lifetime vested retiree health care contributions to pre-2003 retirees and contribution caps apply to those retirees. Based on recent precedent, including the Supreme Court’s 2015 decision in M & G Polymers USA, LLC v. Tackett, when the general durational clause is for the term of the CBA, the CBA does not vest retirees with lifetime health care benefits, unless there is an express clause providing that retirees are entitled to vested lifetime health care benefits. In this case, the CBA contained a general durational clause, and the CBAs did expire on the specific termination dates included in the contracts. In addition, the CBAs had a durational clause regarding health care insurance that stated that the CBA would remain in effect until a specified termination date. Therefore, the retirees were not entitled to lifetime health care benefits. Summary judgment was granted for the employer with respect to the claim that it breached the CBA by concluding that the retirees were not entitled to vested lifetime retiree health care benefits.
Breach of implied warranty of authority.
The employer filed a counterclaim arguing that the union breached an implied warranty of authority by misrepresenting its authority to negotiate on behalf of retirees. The court denied the union’s motion for summary judgment on this claim, finding a genuine dispute of fact on the issue. The parties disagreed as to the identity of the union’s chief negotiator and there was a dispute as to whether the employer believed that the union had authority to negotiate on behalf of the retirees.
The union also argued that the claim was time-barred, but the court rejected that argument. The claim was based on fraudulent concealment. The statute of limitations was potentially tolled because there was a dispute as to whether the union concealed that it lacked authority to negotiate on behalf of the retirees and a dispute as to whether the employer exercised due diligence. The union also argued that the counterclaim was barred by the LMRA, but the court rejected that argument as well. In order to analyze the breach of warranty claims, the court said, it would need to examine the conduct of the parties during contract negotiations, but not the CBAs themselves.
SOURCE: United Auto Workers v. Honeywell International, Inc. (E.D. Mich.), No. 2:11-cv-14036-DPH-DRG, March 29, 2018.
Fri, 04/13/2018 - 18:41
Fri, 04/13/2018 - 17:35
Analysis: Potential withdrawal liability, 3/18 (620.-15)
Analysis: MEWAs, 3/18 (606.1.-1)
Analysis: Avoiding the ACA’s excise tax, 3/18 (563.-5)
Analysis: CHIP, 3/18 (501.-81)
Many small businesses using QSEHRA to offer health benefits for first time, survey finds
More than 70 percent of small businesses that used the new qualified small employer health reimbursement arrangement (QSEHRA) in 2017 did so to offer employee health benefits for the first time, according to The QSEHRA: Annual Report 2018 from PeopleKeep.
The IRS has issued a set of frequently asked questions (FAQs) that address the new employer credit under Code Sec. 45S for paid family and medical leave. The Tax Cuts and Jobs Act (P.L. 115-97) created the credit, which is generally effective for wages paid in taxable years of the employer beginning after December 31, 2017. It is not available for wages paid in taxable years beginning after December 31, 2019.
Thu, 04/12/2018 - 18:40
Affirming summary judgment against FMLA interference and retaliation and disability bias claims of a 911 dispatcher who was fired after being late repeatedly, the Seventh Circuit found it was not established that she actually suffered from sleep apnea at the time and clearly was not under continuing treatment for it to qualify as a serious health condition. Her prior tardiness was not constructive notice of her need for FMLA leave, and the decision to terminate her was made before she requested FMLA during her termination meeting. Although she had taken several FMLA leaves during her tenure and had been disciplined within months, she failed to show that any of the disciplinary actions were unwarranted and had no direct evidence linking her discipline to her FMLA leaves; temporal proximity wasn’t enough to support her retaliation claims. Finally, whether or not the dispatcher had a disability, she had not shown that she suffered an adverse action because of a disability; the supervisor who fired her did so after warning her that her repeated tardiness could cost her the job, and he did not know she suffered from sleep apnea.
The dispatcher worked at the county’s 911 call center from 2002 until she was fired in 2013. In 2006 she was diagnosed with sleep apnea and treated for it; in 2008, she had gastric bypass surgery, which appeared to alleviate her sleep apnea. She had not been re-diagnosed with sleep apnea when she was fired. But she did have a checkered disciplinary history. She received five verbal or written warnings about her use of vacation time or casual time between 2004 and 2013; three verbal or written warnings for failure to timely complete mandatory proficiency tests; and one verbal warning for failure to report to work (she mistakenly believed she was not scheduled). She also had taken several FMLA leaves during her tenure, and several of these disciplinary actions happened shortly after her return from those leaves. In the second half of 2012 and early 2013 she was late four times, and after the fourth incident, where she said she had overslept, received a written warning that if she were late again, she could be fired.
No FMLA notice.
Notwithstanding that finding, the appeals court also disagreed with the dispatcher’s argument that the county had constructive notice of her need for FMLA leave from her repeated and allegedly uncharacteristic tardiness. But five instances of oversleeping over a period of more than eight months was not “the sort of stark and abrupt change which is capable of providing constructive notice of a serious health condition,” concluded the court. (At the time, the dispatcher had also attributed non-medical reasons to her late arrivals, the court also pointed out.) Finally, even if the dispatcher had provided actual notice at the time of her termination meeting, it was undisputed that the decision to fire had already been made by an individual who had no notice of her sleep apnea before actual notice of a request for FMLA leave had been made. Thus, her FMLA interference claim failed on appeal.
Here, the appeals court succinctly noted that the decision to terminate the dispatcher’s employment was made by an individual with no knowledge of her sleep apnea, and her request for FMLA leave at the termination meeting a week later could not have “caused” her termination. Her contentions that earlier FMLA leaves had been followed by disciplinary action relied only on temporal proximity, said the court, which was not enough to establish a fact issue to survive summary judgment, and she did not contend that any of the earlier disciplinary action had been unwarranted.
No viable disability claims.
Saying it need not decide whether the dispatcher was a qualified individual with a disability, the appeals court said that even if she was, she failed to identify any evidence to show she suffered an adverse employment action resulting from her alleged disability. The decisionmaker did not know that she had sleep apnea prior to deciding to fire her; instead, she was fired for her repeated failures to show up to work on time, not as a result of a disability.
In fact, there was no evidence that the county was even aware of dispatcher’s initial diagnosis of sleep apnea or subsequent treatment. Her 2011 fitness-for-duty exam failed to even mention sleep apnea, although it did say she “no longer has excessive need for sleep or sleep hunger and is really feeling much more like her normal self.” The only other record evidence as to whether the county was informed that she had sleep apnea was disputed (either her last day late or the day she was terminated), but the conduct for which the dispatcher was fired had already occurred. The undisputed evidence establishes that she was fired based on her repeated late arrivals, the last of which occurred before her conversation with her immediate supervisor (not the decisionmaker), when she may have revealed she might have sleep apnea. “After the fact requests for accommodation do not excuse past misconduct,” stressed the appeals court.
SOURCE: Guzman v. Brown County (CA-7), No. 16-3599, March 7, 2018.
Thu, 04/12/2018 - 18:33
Wed, 04/11/2018 - 18:02
Source: Joint Economic Committee “Retirement Security in Peril.”
Benefits were 31.7 percent of total compensation in December 2017, BLS finds
Employer-provided benefits costs for civilian workers in private industry and state and local governments in December 2017 averaged $11.38 per hour worked, accounting for 31.7 percent of total compensation costs, which averaged $35.87 per hour worked. The cost of benefits as a percentage of compensation has risen over the past several years from 27.4 percent of total compensation. These are among the findings of the December 2017 Employer Costs for Employee Compensation report, produced quarterly by the Bureau of Labor Statistics (BLS).
Insurance benefits costs averaged $3.14 per hour, or 8.7 percent of total compensation, in December 2017, representing the largest nonwage employer cost. Legally required benefits costs averaged $2.63 (7.3 percent), employer costs for paid leave benefits averaged $2.55 (7.1 percent), and the cost of retirement and savings benefits averaged $1.90 (5.3 percent).
According to the BLS, private industry benefits costs averaged $10.25 per hour in December 2017, accounting for 30.4 percent of total compensation costs, which averaged $33.72 per hour worked. Private industry employer costs for insurance benefits averaged $2.70 (8.0 percent), legally required benefits averaged $2.62 (7.8 percent), paid leave benefits averaged $2.36 per hour worked (7.0 percent), and retirement and savings benefits averaged $1.29 (3.8 percent).
Health care benefits, private industry.
The average cost for health care benefits in private industry was $2.55 per hour worked (7.6 percent of total compensation) in December 2017. Among occupational groups, employer costs for health care benefits ranged from $2.75 (9.8 percent) for production, transportation, and material moving occupations to $1.06 per hour (6.7 percent) for service occupations. Health care benefits for goods-producing industries averaged $3.55 per hour (9.1 percent of total compensation), compared with $2.35 (7.2 percent) for service-producing industries.
In December 2017, state and local government benefits costs accounted for 37.4 percent of total compensation, or $18.38 per hour worked. Employer costs for insurance benefits averaged $5.82 per hour, or 11.8 percent of total compensation. The largest component of insurance costs was for health insurance, which averaged $5.68 per hour worked, or 11.5 percent of total compensation. The average cost for retirement and savings benefits in state and local governments was $5.65 per hour worked, or 11.5 percent of total compensation. Costs for legally required benefits averaged $2.72 per hour worked, or 5.5 percent of total compensation.
Pension & Benefits NetNews – April 3, 2018
AG coalition opposes DOL’s AHP expansion proposal, but would it increase health care access?
IRS reduces user fee for determination letter request submitted on Form 5310
IRS provides tax tips on early plan withdrawals
A final rule promulgated by the Department of Labor in April 2016 expanding the definition of “investment advice fiduciary” conflicts with the text of ERISA and the Internal Revenue Code and is unreasonable under Chevron and the APA, the Fifth Circuit has held. For more information, see ¶2114H.
A coalition of 17 Attorneys General have registered their opposition to the Department of Labor’s proposed rule that would expand the criteria for forming association health plans (AHPs), in what they see as a move to evade the consumer protections enshrined in the Patient Protection and Affordable Care Act (ACA) and sabotage the health care reform law. For more information, see ¶2114I.
Despite a confusing sequence of events in which an employee called HR to falsely request bereavement leave related to the death of her grandfather when she actually intended to assist her grandmother, who suffered with dementia, to visit family—and then did not timely return from that leave but instead called back and requested leave “to tend to” her grandmother, a federal district court in Illinois denied cross-motions for summary judgment on the employee’s claims for violations of the FMLA based on her resulting discharge. For more information, see ¶2114M.
Millennials interact with their health care providers differently than other generations, according to recent research from the Employee Benefit Research Institute (EBRI). For more information see ¶2114O.
The IRS has reduced the user fee applicable to a determination letter request submitted on Form 5310 (Application for Determination for Terminating Plan). Appendix A (Schedule of User Fees) of Rev. Proc. 2018-4 has been modified to reflect a reduction of the user fee from $3,000 to $2,300 effective January 2, 2018. In Rev. Proc. 2018-4, the IRS had increased the fee from $2,300 for 2017 to $3,000 for 2018. Applicants who paid the $3,000 user fee listed in Rev. Proc. 2018-4 will receive a refund of $700. For more information, see ¶17299v72.
The IRS has released guidance on the issuance of opinion and advisory letters for pre-approved defined benefit (DB) plans. Also included are the deadline for employers to adopt these pre-approved plans, and the timing for the opening of the determination letter program for pre-approved DB plan adopters. For more information, see ¶17097u32.
Many taxpayers may need to take out money early from their Individual Retirement Account or retirement plan. Doing so, however, can trigger an additional tax on early withdrawals. They would owe this tax on top of other income tax they may have to pay. The IRS has provided some tax tips on key points that taxpayers should know. For more information, see ¶156p.
Tue, 04/03/2018 - 17:52
Only 51 percent of Americans believe they are knowledgeable about Health Savings Accounts (HSAs), according to a new joint report by the LIMRA Secure Retirement Institute and Insured Retirement Institute (IRI).
The survey found that many Americans are unaware that they can use HSA assets accumulated in their working years to pay for health care and long-term care expenses in retirement. In fact, two in five Americans mistakenly believe that balances must be spent by the end of the year, or forfeited. The growing costs of health care and long-term care have prompted many advisors to address these risks with their clients as they plan for retirement. Nine in 10 advisors surveyed say they typically discuss health care or long-term care with clients but only seveb in 10 have specifically addressed the use of an HSA. Those who do not discuss HSAs acknowledge they have insufficient expertise with HSAs. Nearly all advisors (96 percent) surveyed say they would like to learn more.
Fri, 03/30/2018 - 17:33
Though an employer argued that certain events during an employee’s FMLA leave were the “final” straw that led to her being terminated following her return from a six-week FMLA leave, triable issues prevented a federal court in Wisconsin from granting its motion for summary judgment on her claims of FMLA interference and retaliation. The employer would have to explain to a jury why, after years of inaction and solid reviews, it suddenly chose to act on alleged, longstanding concerns about her performance only a few days after she returned from leave.
The employee worked as a children’s services manager in a county’s department of human services (DHS). She was hired on March 2012, after DHS split the job of “professional services manager” into two separate new positions. The individual who had served in that initial role became her counterpart as the behavioral health and clinical services manager.
Relationship with counterpart.
The employee and her counterpart had a strained relationship, and he complained early on to their supervisor about her poor leadership and communication skills. Her supervisor then consulted with members of her staff, who provided mixed feedback. At some point, the supervisor counseled her about the need to contain her own emotions and to serve as a better example to her staff.
Early positive reviews.
Nevertheless, she received positive performance reviews during her first two years on the job. She was rated as “very good” or “exceptional” in all categories, except in her second review she received a “satisfactory” rating for communication. The comments in these evaluations were also positive and optimistic, but identified some areas for improvement.
During 2014, her supervisor received additional complaints relating to her leadership skills and she also failed to submit a grant application, resulting in the loss of a source of funding. As a result, in early December she was placed on a six-month Corrective Action Plan (CAP) which identified nine areas for improvement. Though she was later formally removed from the plan after she received a fairly positive review, her supervisor purportedly continued to hold private concerns about her performance and met with the county’s attorney regarding his concerns and desire to replace her.
FMLA leave and termination.
Meanwhile, the employee was granted her request to take six weeks of FMLA leave to undergo total knee replacement surgery, from December 21, 2015 to February 1, 2016. On January 22, while she was still on leave, the county discovered that a child it serviced had lost Social Security disability payments and eligibility, purportedly due to the employee’s error. Around the same time, two senior staff members complained about the low morale caused by her lack of leadership and threatened to quit if the conditions continued.
At the outset, the court tossed her FMLA claims against the supervisor since he had only been sued in his official capacity. Her claims against DHS were also dismissed since it was merely a division of the county. Moreover, since she didn’t dispute that their inclusion was unnecessary and inappropriate, any objection to their dismissal was waived.
Timing and prior inaction.
However, the county would face a jury on her FMLA interference claim since triable issues existed as to whether she was denied her FMLA right to reinstatement. While the county maintained that the termination decision was unrelated to her leave, a reasonable jury could infer that her taking FMLA leave and continuing to take intermittent leave was a factor. In particular, the close temporal proximity could justify an inference of causation.
The evidence could also lead a jury to reasonably conclude that a retaliatory motive was present and that the county’s explanation was pretextual. While her reviews may have been an attempt to maintain morale or due to one of the county’s other “benign explanations,” resolving this issue required credibility determinations. For example, a jury might reasonably choose to discount the early performance concerns that led to her CAP, given the length of time that elapsed between those concerns and her termination, or it could reasonably choose to credit those concerns, especially after being reinforced while she was on leave.
SOURCE: Degner v. Juneau County, (W.D. Wis.), No. 3:16-cv-00674-wmc, March 5, 2018.