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1111 SUPERIOR AVENUE
CLEVELAND, OHIO 44114
216.696.4200
Schneider, Smeltz, Ranney & LaFond is pleased to bring you its April 2009 E-Newseltter. | |
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 Employers Jump
as Federal Stimulus Package Stirs COBRA |
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The Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") generally enables former employees to maintain employer group health coverage for 18 months by paying continuation premiums at 102% of the cost of their group plan premiums. The federal stimulus package (officially, the American Recovery and Reinvestment Act of 2009) (the "Act") includes a temporary provision intended to make it easier for former employees to elect continuation of health coverage under COBRA, in effect requiring the federal government to pay for a 65% reduction of the employee's continuation premium for the first 9 months of continued coverage. The mechanism for shifting the cost - a payroll tax credit - depends on employers, who are immediately responsible for additional notice and reporting requirements.
Covered Employers.
The premium reduction rules apply to businesses covered by COBRA, which generally means businesses with 20 or more employees. The premium reduction also applies to smaller employers who offer comparable continuation coverage under State laws (in Ohio, R.C. § 3923.38).
Covered Employees.
The premium reduction is available only for employees who qualify for and elect to carry continuation coverage after involuntary termination occurring between September 1, 2008 and December 31, 2009, and for their qualified beneficiaries. The premium reduction is not available for employees who voluntarily terminate.
Notice Requirements.
Plan administrators must provide notification of the new law to any employee who qualifies for COBRA between September 1, 2008 and December 31, 2009. This includes notifying employees who terminated employment between September 1, 2008 and February 16, 2009, the date of the Act. The deadline for providing notice is April 18, 2009.
Special Election.
For employees terminated between September 1, 2008 and February 16, 2009, there is also a special election opportunity to elect continuation coverage and benefit from the premium reduction, provided that they make the election within 60 days of receiving notice and are covered by COBRA itself (not by state law).
Reporting Requirements.
Employers initially pay the 65% premium subsidy to their insurers (or accept 35% of the employee's premium, if self-insured). The premium reduction amount is not income to employees. The employer then reports the premium reduction amount on its IRS Form 941, the employer's quarterly tax return, as a credit.
Work Opportunity Tax Credit.
Another employer tax credit addressed under the Act is the Work Opportunity Tax Credit, which provides a tax credit of up to $2400 per employee to businesses that employ members of nine "targeted groups." The Act adds two new targeted groups - unemployed veterans and youths not in school - in addition to loosening qualifications for other targeted groups such as ex-felons, and food stamp recipients. |
| When Waivers Don't Actually Waive: Inadvertently Leaving a Retirement Plan to a Former Spouse |
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William worked for a major corporation where he participated in a retirement plan. He completed a beneficiary designation form naming his wife, Liv, as beneficiary. William and Liv later divorced. As a part of the divorce, Liv signed a decree waiving all of her rights to William's retirement plans. William's retirement plan documents provided that if there was no named beneficiary, the assets would be paid to William's estate. William died ten years after the divorce without ever signing a new beneficiary designation form. The only beneficiary designation form on file with the retirement plan documents still named his (now former) wife, Liv, as beneficiary.
Who receives William's retirement plan benefits? William's estate or Liv? If you answered "Liv," you agree with all nine justices of the U.S. Supreme Court, who decided this case in January 2009. In Kennedy v. DuPont, the Supreme Court held that when one ex-spouse generally waives her rights to the other spouse's retirement benefits in a divorce decree it is insufficient to cancel her rights under the plan if the waiver does not follow the terms of the retirement plan.
The case arose under the Employee Retirement Income Security Act, or "ERISA," the federal law that governs many pension and retirement plans. ERISA is designed to avoid disputes and lawsuits over who receives benefits under a retirement plan by requiring the administrator of the plan to closely follow the plan's governing documents. The plan's governing documents include specific beneficiary designation forms and waivers that a participant must complete to change individuals' rights under the plan. If a plan participant does not change beneficiaries using the forms prescribed by a plan, the portion of a divorce decree purporting to change beneficiaries' rights under the plan may be of no effect.
We should note that this case was decided under federal law specific to employer-sponsored retirement plans, and that a different result would have been reached if different law (e.g., Ohio law) were applied to different types of assets (e.g., IRA accounts, life insurance, etc.).
Nonetheless, the lesson of this case is simple: Update your beneficiary designations! William's family would have received his retirement plan if he had simply filled out a new beneficiary designation form after his divorce.
Remember, estate planning is not an event-it is an ongoing process. While it is always important to keep one's estate plan, including beneficiary designations, up to date, the time during and after a divorce can be a particularly important one where a few simple steps can save much heartache and litigation later. |
FMLA Regulatory Update |
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In late 2008, the US Department of Labor issued new regulations implementing The Family and Medical Leave Act (FMLA). The new regulations went into effect on January 16, 2009.
The FMLA creates unpaid leave entitlements for eligible employees who work for covered employers. Leave is available in circumstances connected to the birth or adoption of a child, the serious health condition of the employee or family member of the employee, a "qualifying exigency" of a family member in the military, or the care of military service member with a serious injury or illness.
Some highlights among the many changes, updates, and clarifications in the new regulation:
- The new regulations introduce two new types of military family leave -- "qualified exigency" leave and "military caregiver" leave. Qualified exigency leave is available in connection with a call to duty issued to a family member in the Reserves, National Guard, or retired military. Military caregiver leave is an extended grant of leave for the care for a family member suffering from injuries sustained on active duty in the line of duty.
- An employer must take into account the time an employee would have worked, but for service in the National Guard or Reserves, when calculating that employee's "hours of service" for eligibility purposes.
- There is a new notice regimen for employers and employees. Employers are immediately responsible not only for providing general initial notice of FMLA rights to employees but also for three subsequent types of notice: eligibility notice, notice of rights and responsibilities, and designation of leave notice. Employees who need to take FMLA leave are subject to stricter standards in regard to the timing and content of the notice they must give to their employers. Employers have more opportunity to draft policies governing employee notice requirements.
- Forms regarding notice and certification of eligibility for leave have been improved.
- Employees must provide sufficient certification for leave; employers who do not receive sufficient certification may deny FMLA leave.
- Employers may, in certain circumstances, contact an employee's health care provider to authenticate or clarify a medical certification.
Important definitions and clarifications are also comprised in the new regulations:
- The definition of a "serious health condition" now includes specific timelines regarding the healthcare treatments.
- Employers may institute policies requiring paid leave to run concurrently with FMLA leave.
- "Light duty" does not count toward FMLA leave.
Despite the creation of significant new obligations for employers, the regulations are generally considered to incorporate "employer friendly" changes. Maximizing opportunity around the new regulations, however, requires close attention to an employer's policies and practices.
Schneider, Smeltz, Ranney & LaFond attorney, Todd Masuda, joins Herbruck Alder in presenting a webinar covering these recent changes in FMLA law. Sessions are offered on Wednesday, April 22, 2009 at 10:00 a.m. and Monday, April 27, 2009 at 3:00 p.m. Click here to register for the 4/22 session; Click here to register for the 4/27 session; or contact Alison Muth at 216-377-2595 or amuth@herbruckalder.com. | |
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Attorney Spotlight
Janice Rieth graduated, Phi Beta Kappa, with a Bachelor of Arts degree from Ohio University in 1975. She obtained her law degree from Case Western Reserve University School of Law in May, 1978 and was admitted to the bar of the State of Ohio in November of that year. She began her legal career as an associate for Dennis Ibold, now of Peterson & Ibold, in Chardon, Ohio. In 1980 she became a law clerk in the Legal Department of the Cuyahoga County Domestic Relations Court. She was Director of the Legal Department and then a Referee with the Court from 1982 until November, 1987 when she became an associate with the firm of Schneider, Smeltz, Ranney & LaFond, P.L.L. Jan has been a partner with the firm since 1992. Her practice is devoted to family law in Cuyahoga County and surrounding counties.
While with the Court, Jan was instrumental in drafting the first Local Rules of Court and remained a member of the Rules Advisory Committee until 1997. She also was involved in the establishment of the Court's Guardian Ad Litem program and was a member of the Guardian Ad Litem Advisory Committee throughout its existence. Jan is a trained Guardian Ad Litem for Domestic Relations Court and is regularly appointed to represent the best interest of children in divorce cases.
Jan is a member of the Family Law sections of the Cleveland Metropolitan Bar Association and the Ohio State Bar Association and of the Women In Law section of the Cleveland Metropolitan Bar Association. She is also a member of the Ohio Women's Bar Association and the American Bar Association. She is currently a member of the Board of Trustees of the Cleveland Metropolitan Bar Association. She served on the Cleveland Bar Association's Judicial Selection Committee from 1997 through 2002. She co-chaired the Judicial Selection Committee of the Ohio Women's Bar Association in its inaugural year of 2004 - 2005 and in 2005 - 2006 and is currently an active member of that Committee. She has served on the Judicial Candidates Rating Coalition since its inception in 2002. She is a member and former trustee of the Center for Principled Family Advocacy, a group of attorneys who support alternative processes to litigation to resolve marital conflict.
Jan was a member of the planning committee for the Ohio Women's Bar Association's annual golf outing in 2005 and 2006 and has been a member of the Golf Committee for the annual Joint Bar Associations Golf Outing (now the Cleveland Metropolitan Bar Association Golf Outing) since 2006. She also participates in the Cleveland Metropolitan Bar Association's Food for Thought Program. She received the Cleveland Bar Association's Justice For All Award in 2006 for her volunteer work with Legal Aid. | |
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Schneider Smeltz
Launches Its
Ohio Family Law
Update Blog
The law firm of Schneider, Smeltz, Ranney & LaFond, P.L.L. announces the launch of its new Ohio Family Law Update blog. The blog was created and is maintained by Ryan Nowlin, a member of the firm's Family Law and Litigation practice groups. The blog features regular updates regarding Ohio family law cases and related legislation, current events in all areas of family law, including post-decree issues, as well as general commentary regarding the overall procedure of divorce. The Ohio Family Law Update is directed to attorneys in all practice areas as well as to the general public. To access the Ohio Family Law Update blog, please visit http://ohiofamilylaw.typepad.com. | | |
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Contemplating Divorce? |
Get Control of Your Finances.
If you are contemplating a termination of your marriage, it is important that you get your personal finances in order. To do so, you need to become familiar with your overall financial situation - current assets, debts and monthly expenses. Here are some ideas to get you started.
You should review all monthly or quarterly statements for all accounts in your and your spouse's names, whether maintained individually or jointly. You should also familiarize yourself with the current value of real estate owned by you and/or your spouse and secure information regarding the assets and operating expenses of any closely held business in which you or your spouse own an interest. If you do not handle the family finances and this information is not available to you, you can secure information directly from any bank, investment company, mortgage holder and credit card company for any accounts maintained in your name individually or jointly with your spouse.
It is important to be aware of the balances in all accounts maintained at any financial institution or through an employer, including investment accounts, 401(k) plans, IRAs and other retirement accounts, and the monthly entitlement of you and your spouse in any pension plans. You should also have full knowledge of all your debt, including balances/charges on all credit cards, balances owed on all mortgages and home equity loans or lines of credit and amounts owed for all automobiles and other motor vehicles.
You also need to start keeping track of your monthly expenses by retaining copies of receipts for purchases, credit card charges and ATM withdrawals. You should know how much you are spending and for what. This accounting should be as detailed and accurate as possible. It should be done over an extended period of time so as to be sure to encompass those expenses not incurred on a monthly basis. This will allow you to create a realistic and documented budget for purposes of child support and spousal support calculations.
You should set up a checking account in your own name, if you don't already have one. Even though you do not intend, or need, to use it right away, it will be immediately available to you once you decide to proceed with a termination of your marriage. You will also be able to get an ATM card in your name for quick access to cash, if and when you need it. If all of your credit cards are held jointly, try to establish a credit card account in your own name. An account with a local department store or discount store will give you the opportunity to make small purchases and pay them off timely, thereby establishing a good credit history.
Your own credit card will also allow you to begin separating your and your spouse's debt. This is beneficial since you can be held liable for joint debts even if your divorce decree provides otherwise, if your spouse fails to pay debts that are in both of your names. You might also want to secure a small loan, perhaps with a co-signer, from a credit union or bank and use the money to make the monthly payments as another way to create your own positive credit history.
Already Divorced?
Some Things You Should Know.
If you are divorced, you should be aware that all issues related to minor children (under the age of 18 or, in cases of support, 18 but not graduated from high school) are subject to modification by the Court. Typically, child support orders are the ones most frequently adjusted after a divorce as a result of a change in income of one or both parents. However, as children get older, visitation schedules and parenting plans may become outdated or impractical requiring revisions. Occasionally, a change in the situation of a custodial parent after a divorce is significant enough to warrant a modification of the allocation of parental rights as well. It may be time to review your divorce decree or latest Court orders to determine whether changes have occurred since their issuance that would warrant a modification of their terms. |
You've Filed Your Taxes - Did that Nonprofit You Work With File Theirs? |
Nonprofit organizations do not file tax returns like for profit businesses or individuals, but they must file a report annually with the IRS. The IRS is estimating that half a million nonprofit organizations could lose their tax-exempt status in May 2010 if they fail to file the required Form 990-N, also known as the e-Postcard. Before 2007, nonprofit organizations whose annual gross receipts were normally $25,000 or less were not required to report to the IRS. The Pension Protection Act of 2006 now requires these smaller nonprofits to file the e-Postcard or the Form 990, or 990-EZ. The Pension Protection Act also mandates that if a nonprofit organization fails to file the required e-Postcard (or Form 990 or 990-EZ) for three consecutive years, it automatically loses its tax exempt status.
The first e-Postcards were due in 2008 for tax years ending on or after December 31, 2007. That means revocations of tax exempt status will automatically begin in May 2010 for those nonprofits who have failed to file for three consecutive years. If a nonprofit loses its exemption because of failure to file, it will have to reapply to the IRS for exemption - a time consuming and costly process.
If you serve on the board or work with a smaller nonprofit, make sure the leadership is aware of the filing requirements.
Who must file?
Most small tax-exempt organizations with gross receipts that are normally $25,000 or less must file the e-Postcard. Exceptions include: organizations that are included in a group return and churches.
The following organizations cannot file the e-Postcard but must file different forms instead:
· Tax-exempt organizations with annual gross receipts that are normally greater than $25,000 must file Form 990 or 990-EZ.
· Privatefoundations must file Form 990-PF.
· Section 509(a)(3) supporting organizations that are required to file Form 990 or 990-EZ.
· IRC Section 527 (political) organizations required to file an annual exempt organization return must file Form 990 or 990-EZ. |
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At Schneider, Smeltz, Ranney & LaFond, we offer thoughtful, practical solutions to the complex problems facing our clients. Established in 1895, Schneider, Smeltz, Ranney & LaFond is Cleveland's oldest law firm. We not only apply the technical expertise our clients require, but also provide excellent, personal, and timely service to our clients.
We are a civil practice firm. Our primary areas of practice are business law, business succession planning, estate planning, estate and trust administration, charitable planning, family law, employment law, litigation, real estate, taxation and health care law.
Please feel free to contact one of our attorneys if you would like more information on any of the above issues or if you are in need of quality, legal services.
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