Watson Wyatt Suggests Whipsaw Fix
Legislative and legal developments have created an uncertain climate for employers who sponsor hybrid pension plans. Much of this uncertainty involves "whipsaw"—the way lump sum distributions are calculated in cash balance plans. Eric Lofgren, Watson Wyatt's Global Director of Benefits Consulting, took this opportunity to write key lawmakers to discuss the problem and suggest simple solutions. Court Ruling Threatens Employer-Sponsored Retiree Medical Benefits
Without much fanfare—but with potentially significant implications for retiree medical plans—the District Court for the Western District of Pennsylvania ruled in Erie County Retirees Assoc. v. County of Erie, Pennsylvania, that the county's retiree medical plan failed the equal benefit/equal cost safe harbor under the Age Discrimination in Employment Act (ADEA). This is the first court to apply the equal benefit/equal cost safe harbor under the ADEA. Congress Passes Pension Reform
As this issue of the Watson Wyatt Insider went to press, bipartisan pension reform awaited President Bush's signature. The legislation moved forward this spring, when the House and Senate included the retirement security legislation in President Bush's tax package. Joint Committee on Taxation Suggests Changes to Benefit Regulations
The Joint Committee on Taxation (JCT) recently studied the U.S. tax system and issued a report recommending wide-ranging changes to simplify the Internal Revenue Code, tax compliance and administration. The JCT identified many sources of complexity in the Code, including lack of clarity and readability, frequent changes in the law, use of the tax code to advance social and economic policies, increased complexity in the economy and interaction with other areas of law. IRS Releases 2001 Guidance Priority List
The 2001 Guidance Priority List is out, reflecting the IRS's regulatory intentions for the current year (although the agency may release other guidance as well). Several trends have been consistent enough over recent years to be considered IRS traditions. The number of guidance projects on the list has increased again this year, with the total number now at 299. FMLA Concerns Prompt New Legislation
The Family and Medical Leave Act of 1993 (FMLA) provides up to 12 weeks of unpaid leave following the birth or adoption of a child, to care for an employee's own serious medical condition or to care for an ill family member. In recent years, bills and regulations have attempted to expand the FMLA. For example, some bills have proposed adding "parental involvement" leave that parents could use to attend their children's school activities, meet with teachers or take their children to doctors.
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