It has taken over forty years but they have finally arrived! The IRS has published a set of final regulations concerning 403(b) programs – commonly known as tax-sheltered or tax deferred annuity plans. The new regulations contain significant changes and an overall reorganization of the 403(b) guidance created in 1964. These changes to the original guidance reflect significant laws that have been enacted since 1964, including the Employee Retirement Income Security Act of 1974 (ERISA), the Tax Reform Act of 1986, the Small Business Job Protection Act of 1996 (SBJPA), the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Pension Protection Act of 2006 (PPA). The new regulations, which replace those issued on December 24, 1964, eliminate many of the differences in operation and administration between 403(b) plans and 401(k) and 457(b) plans. For further reading, please click on the links below.

»» http://www.keenan.com/news/brief/2007/0906_403breg.pdf
»» http://www.irs.gov/retirement/article/0,,id=172431,00.html
»» http://www.irs.gov/pub/irs-tege/td9340.pdf

Keenan Summit 2007 Keenan will again present our annual Keenan Summit in November 2007. The events held last year were an overwhelming success, drawing approximately 400 attendees from over 350 public entities, educational agencies and health care organizations across the state. Content will focus on developments in health care and risk management, emphasizing an open exchange of ideas across a wide range of viewpoints.

This past July, for the first time in ten years, the state published its 2007 California Building Standards Code, which incorporates the latest national and international building codes. The improved standards for safe buildings, fire prevention and access for persons with disabilities, utilize the most current technologies and methods of construction. The California Building Standards Code is comprised of twelve parts that incorporate public health, life safety, and general welfare standards used in the design and construction of buildings in California. For further reading on the state’s new publication, please click on the link below.

»» http://www.bsc.ca.gov/prpsd_chngs/documents/2006/ Approved_Standards_for_2007_Building_Standards_Code.doc

Under a 2004 law, when school employees are given an annualization election - choosing to be paid during the school year or over a 12-month period – and they choose the 12-month period, they are deferring part of their income from one year to the next. New deferred-compensation rules set forth by the Internal Revenue Service (IRS) will affect school employees who are paid in this manner in school years beginning after January 1, 2008. Please click on the links below for further reading.

»» http://www.irs.gov/newsroom/article/0,,id=172884,00.html
»» http://www.irs.gov/newsroom/article/0,,id=172883,00.html

Disability income benefits are designed to pay a percentage of injured workers’ salary if they are unable to perform their regular job duties. Typically, these income benefits are reduced by other payments the insured can receive for their disability and they are commonly referred to as “offsets”. Common offsets include worker’s compensation insurance and Social Security Disability Insurance [SSDI]. The purpose of these benefit reductions is so the insured cannot receive more money while disabled than while working. Problems have arisen as a result of group disability insurers taking on the task of estimating and deducting from the maximum allowable benefits to the insured. The California Department of Insurance recently issued proposed regulations that would prohibit insurers from estimating and deducting for certain offsets and require insurers to make greater disclosure regarding benefits reductions. To read more about how this will affect disability income, please click on the link below.

»» http://www.irs.gov/retirement/article/0,,id=172431,00.html

Bond Act Questions Requiring Labor Compliance Programs Continue

School and community college districts have yet to receive answers as to whether their construction projects require Labor Compliance Programs (LCP). With legislation still pending, answers may come later rather than sooner. Proposition 1D (Education Facilities Bond Act of 2006) did not specify whether an agency using its funds requires to have an LCP. Senate Bill 18 would clear that confusion by requiring that districts use an LCP for projects funded by Proposition 1D. For further information on LCP legislation, please click on the link below.

»» http://www.keenan.com/news/brief/2007/0814_labor.pdf

Section 125, Basics Revisited

One of the less-discussed aspects of both the Governor's and the state Democratic leaders' universal healthcare proposals is one that would require employers to establish pretax Section 125 Plan (or "Cafeteria Plan") accounts for their employees. The Governor's plan states that this will allow employees to make tax-sheltered contributions for health insurance as well as save employers additional FICA contributions. The Assembly Committee report on AB 8, the Democratic leaders' bill, states, "both employees and employers save on taxes because 125 plans reduce taxable wages, including the amount of wages on which employers must pay Social Security and Medicare taxes." With all of this renewed interest in Section 125 plans, we thought it was a good time to review some of the basics. Please click on the link below for further reading.

»» http://www.keenan.com/ezine/NOW/125QA.DOC

FMLA Provides Life Balance

In 1993 congress enacted the Family and Medical Leave Act to require private employers with 50 or more employees and all public employers to provide unpaid leave for the birth, adoption or foster care of an employee’s child as well as for the serious health condition of a spouse, son, daughter or parent, or the employees own condition. FMLA provides protection for your job during an extended absence. In June, the U.S. Department of Labor released the results of its Request for Information regarding the effects the FMLA has had on workers and their employers. For further reading on FMLA, the DOL study and legislation that may change the FMLA and related laws, please click on the links below.

»» http://www.keenan.com/news/brief/2007/0417_family.pdf
»» http://www.dol.gov/esa/whd/FMLA2007FederalRegisterNotice/07-3102.pdf

Keenan’s Employee Benefits Operation Acquires Key Member

Keenan & Associates announced the addition of James J. Czesak as Senior Vice President of Employee Benefits in their Torrance office. Czesak brings more than 30 years of benefit consulting experience to Keenan which continues to surround itself with superior personnel to address the varied needs of California’s public organizations.

»» http://www.www.keenan.com/news/articles-pr/2007/0815_czesak.asp