Agenda Packets - 1989/02/06 - Laserfiche WebLink

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ICompensation & �eile�iS A�i.1r,iii' A special bulletia from the Arthur Young Compensation & Benefits Group J.4 1988 Gp*ahm © h Arth. lent Section 89 and Welfare Bersefit Plan Compliance 71e 1986 Tax Reform Act (TRA) created a new Info nil rsvenue Code Section 89 which esablishe: suict uniform, nondiscrimination rules for welfare benefit Plans. prior to Section 89, employee benefir plans were subject to separate nondiscrimination rules for each type of benefit and the specific Code section in. volved. Health insurance plans were nor subject to nondicrinintion tests Section 89 nondiscrimination rates apply to the following summry employee benefit plans: group term life insurance (Sec 79) and accident or healrh plans (Sec. 105 (e)). At the employer's election, Sec. 89 con Rio Apply to the following plans: dependent cars assistance programs (Sec. 129 (al), qualified group Ito service Pisa$ (mrw expired, Sec. 120 {b)1, and educational assistance plans (now expired, Sec.127 (b)). 'These rules tie effective for pin ycers beginning tie, - the earlier of December 31, 1988 or three months following the issuance of Ttrasuzy regulations, Recent information indicates that de reguitiona rill not be released prior to the end of')86. in the case of coUec- tiv, bargaining agreements entered into prior to March 1, 1986. the eL4tth c data is the father of the end of the collective bargaining agreement or January 1, 1991. Section 89 subjects plans to both genert! requirements and specific tests. The following are the five general requirements that all the above welfare benefit pins must meet • The plan must be in writing, • The employee's rights are legally enfomesble, = Employees see provided remonabh notification of benefits snilsble under the plan, • The pin is maintained for the ezrlusive benefit of employee; and • The plan was established with the intent of being maintained for an indefaite period of time Warm to amply ssrth aff of r& abase w p mall in all tm?loyra Lsfixg their easployrr prosdded plea gensfrrt fvckaied is g.w taxab7r!amve. There see several noodiscimination Aso which accident, health and group tram Ufa insurance plans must pass. The ran in divided into ewo actions, eligibility and benefits, with an alternative special tere Each employe, mot ntisfy then era by ensuriaag tut the pin does not dixriminte in furor of bighly compensated employees. A pin must meet all of rs,e following eligibility ears- • 50% Test At Fut 50% of the cmpl:yees eligible to part• ipste are not highly compensated o4 aleH natively, the percentage of highly compensated eligible to ps.dcipate does note acted the percentage similarly determined for noahighly compensated. Qnp Arthur Young A MEMBER OF ARTHUR YOUNG INTERNATIONAL