Compliance May 24, 2006

IRS Proposes Regulations for Dependant Care Expense Credit

May 24, 2006 (PLANSPONSOR.com) - The Internal Revenue Service (IRS) has proposed regulations regarding the credit for expenses for household and dependent care services necessary for gainful employment.
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According to the publication, the credit was initially enacted as section 44A of the Internal Revenue Code in 1979. The proposed regulations incorporate many of the rules of 44A, but are renumbered, restructured, and revised to improve clarity.

The proposed regulations include a change in the definition of a qualifying individual and a reduction in the maximum age of a qualifying child from under 15 to under 13, according to the publication. They also provide for an increase in the maximum amount of creditable expenses and the monthly amount of deemed earned income of a spouse who is a full-time student or incapable of self-care for taxable years beginning after December 31, 2002, and before January 1, 2011.

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Administrative issues that have arisen over the years are addressed by the proposed regulations, and more examples are provided.

The IRS is inviting written or electronic comments on the proposal by August 22. The publication, which includes addresses for submitting comments is here .

Benefits May 23, 2006

MA Officials Pay $1.2M in Age Discrimination Case

May 23, 2006 (PLANSPONSOR.com) - The Commonwealth of Massachusetts has paid out $1.26 million to 15 plaintiffs as part of a long-running battle over allegations that the state illegally denied older workers the right to apply for accidental disability retirements.
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An announcement from the USEqual Employment Opportunity Commission (EEOC) said that as a result of its lawsuit against state officials, the state, local and municipal employees will also get an additional $165,176 every year – raising the state’s ultimate payout to several million dollars.

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The EEOC said Tuesday’s announcement ends years of litigation in which the EEOC sued Massachusetts repeatedly for its retirement system’s violations of the Age Discrimination in Employment Act (ADEA). The EEOC said the Commonwealth amended its retirement statute to drop out provisions found to be discriminatory in 2000.

The original settlement, which extended back to October 16, 1992, provided accidental disability retirement pensions to all those otherwise eligible who were either denied, or discouraged from applying for these pensions solely because their ages exceeded Massachusetts’s maximum age limitations.

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