Compliance December 11, 2008

IRS Offers Relief on 403(b) Written Plan Requirement

December 11, 2008 (PLANSPONSOR.com) - The IRS issued a notice on Thursday announcing relief for 403(b) plans that do not have a written plan in place by January 1, 2009.
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The IRS said it was extending the deadline for plan sponsors to adopt new written plans or amend existing plans to satisfy the requirement of the final 403(b) regulations “…because of difficulties expressed by numerous plan administrators” in meeting the current deadline of January 1, 2009 (See  Attorneys Ask for Delay of 403(b) Effective Date ). 

In making the announcement, the IRS said the extension would give plan sponsors additional time to put their plan documents in place.  Notice 2009-3 says the IRS will treat plans as meeting the requirements of 403(b) and the regulations during the 2009 calendar year if:

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  • By December 31, 2009, the plan sponsor has adopted a written 403(b) plan that is intended to satisfy the requirements of 403(b) and the regulations;
  • During 2009, the plan sponsor operates the plan in accordance with a reasonable interpretation of 403(b) and the related regulations; and
  • By the end of 2009, the plan sponsor makes its best effort to retroactively correct any operational failure during the 2009 calendar year to conform to the written plan.

The IRS said in a news release that it plans to issue further guidance on 403(b) plans, including a revenue procedure establishing a pre-approved plan program (See IRS Developing Pre-approved Plan Program for 403(b)s ) and guidelines allowing plans to make remedial amendments to retroactively fix plan provisions under rules that similar to those that apply for 401(a) qualified plans. 

IRS Notice 2009-3 is here .

Benefits December 10, 2008

Wal-Mart to Settle MN Break Time Suit

December 10, 2008 (PLANSPONSOR.com) - Wal-Mart Stores Inc. said Tuesday it will pay as much as $54.25 million to settle a class-action lawsuit that alleges the retailer violated Minnesota labor laws, the Associated Press reports.
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In July, a Minnesota state judge awarded $6.5 million in compensatory damages to Wal-Mart workers in the state after finding the giant retailer violated state labor laws more than two million times by not giving employees meal and rest breaks and “willfully” not stopping managers from having employees work off the clock (See Wal-Mart Hit with $6.5M Payment in MN Comp Case).

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The company faced a second trial in October on state law violations in front of a jury. Minnesota’s statute provides for fines of up to $1,000 per violation of state labor law, so Wal-Mart’s liability could total more than $2 billion with the funds going to state coffers, and punitive damages could have been awarded to class members at the second trial.

The class includes about 100,000 current and former hourly workers who were employed at Wal-Mart Stores and Sam’s Clubs in Minnesota from September 11, 1998, through November 14, 2008, the AP said. A preliminary hearing for approval of the settlement will be on January 14.

Wal-Mart faced similar allegations in Pennsylvania and California (See PA Jury Finds Wal-Mart Violated Labor Laws).

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