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Client Alert from the Employee Benefits & Executive Compensation Practice

March 23, 2010


Health Care: President Signs Health Care Reform Bill after House Approves.  
The United States House of Representatives approved, by a vote of 219 to 212, the Senate’s health reform care bill late Sunday evening. The President has now signed the legislation.  Montgomery McCracken will be sending out a summary of the final bill’s principal provisions once the Senate takes up, and presumably passes, the reconciliation bill that was also passed by the House on Sunday evening. The final provisions of the Health Care Reform legislation remain in doubt pending Senate approval of the reconciliation bill, which makes significant changes in the Senate bill that the President has now signed into law.      

Qualified Pension Plans: Payments From Variable Annuity Will Qualify As a Joint And Survivor Annuity.
The IRS holds in a Private Letter Ruling that even though annuity payments may vary with investment performance, this feature will not preclude the annuity payments from being considered payments under a qualified joint and survivor annuity (QJSA) for purposes of IRS rules that require defined benefit pension plans to have a QJSA. A copy of the private letter ruling can be found here.

403(b) Plans: DOL Provides Annual Report and Coverage Guidance.
As part of an overall outreach and compliance assistance effort on behalf of Code Sec. 403(b) plans, DOL’s Employee Benefits Security Administration has released a field assistance bulletin to answer many frequently asked questions from the 403(b) community on the new Form 5500 reporting requirements and some coverage issues. A copy of the Field Assistance Bulletin can be found here.

Qualified Pension and 401(k) Plans: Cycle E Ends on January 31, 2011.
If the principal employer sponsor of a tax-qualified pension or 401(k) plan has an employer identification number that ends in 5 or 0, the deadline for amending and restating the plan to comply with EGTRRA and other recent statutes and regulations and for submitting the plan to the IRS for a new favorable determination letter is January 31, 2011.

Qualified Pension Plans: Senate Approves Funding Relief.
Pension funding relief provisions in a tax-cut extension bill (H.R. 4213) have now passed the Senate. It would establish complex timing rules for employers that accept the temporary relief from their pension funding obligations. The relief would give employers additional time to amortize their pension funding shortfalls in exchange for certain restrictions on employee compensation and employer stock dividends, according to the summary of the bill’s pension funding relief provisions. The legislation will now be considered by the House of Representatives. A copy of a press release from Senator Benjamin L. Cardin, one of the co-sponsors of the legislation, can be found here.

401(k) and 403(b) Plans: DOL Issues New Proposed Investment Advice Regulations.
The U.S. Department of Labor has recently issued new proposed regulations relating to the provision of investment advice to participants and beneficiaries of participant-directed individual account plans and to beneficiaries of individual retirement accounts and similar plans. Under the Pension Protection Act, a new statutory exemption to the prohibited transaction rules was created for certain investment advice arrangements.The new proposed regulations essentially follow the prior rules with respect to the exemption for level fee arrangements and computer model based arrangements.  Citing concerns over self-dealing by investment advisors, the “class exemption” included in the prior regulations has been removed. A copy of the new proposed regulations can be found here.