September 15, 2004
BB 04—92

In this issue:

  • Sanders Cash Balance Amendment Delayed Until September 21
  • CMS Announces September 30 Open Door Forum Conference Call
  • Treasury Working to Provide Direct Deposit of Refunds in IRAs

Sanders Cash Balance Amendment Delayed Until September 21

The House of Representatives has suspended debate on the Treasury-Transportation Appropriations bill (H.R. 5025) and will resume on the afternoon of September 21. At that time, Representative Bernard Sanders (I-VT) is expected to introduce an amendment to withhold any funding to the U.S. Treasury Department that is "used to assist in overturning the judicial ruling" in the case of Cooper v. IBM.

As we have long reported, in the case of Cooper v. IBM the U.S. District Court for the Southern District of Illinois ruled that the IBM cash balance plan violated the age discrimination provisions of ERISA. This ruling remains contrary to the legislative history of ERISA and most legal precedent. By limiting Treasury's ability to address this court decision, this amendment would add further complexity to the treatment of cash balance plans.

Rep. Sanders was able to insert a similar amendment during the 2003 appropriations process. Senator Tom Harkin (D-IA) followed suit in the Senate and the measure was enacted early in 2004. This was a key element in the Treasury Department's decision to withdraw its proposed regulations governing cash balance plans. The Council urges you to follow the instructions of the September 14 Action Alert and contact your representatives in opposition to this amendment.

For more information, contact Diann Howland, Council vice president, retirement policy, at (202) 289-6700.

CMS Announces September 30 Conference Call on Requirements for Coordination Between Plans Under Part D of Medicare Act

The Centers for Medicare and Medicaid Services (CMS) has announced it will host a nationwide Open Door Forum conference call on September 30, 2004, from 2:00 to 4:00 p.m. (Eastern Time) to discuss the establishment of requirements of benefit coordination among: Medicare Part D plans, State Pharmaceutical Assistance Programs, States, pharmaceutical benefit managers, employers, data processing experts, pharmacists, pharmaceutical manufacturers, and other interested and affected parties (or customers and partners) under provisions of the recently enacted Medicare Prescription Drug Improvement and Modernization Act (MMA). The September 14 announcement in the Federal Register specifically says the Forum will enable interested parties to comment and raise issues regarding requirements for enrollment file-sharing, claims processing, claims reconciliation reports, application of the catastrophic out-of-pocket protection and other administrative procedures under the provisions of the MMA.

In addition to the upcoming CMS Open Forum call, the Council has prepared a list of specific Medicare issues on which CMS is seeking comments and has drafted a comment letter to CMS on the employer provisions in the proposed Medicare prescription drug benefit regulations (Subpart J: Rules for Employer Options | Subpart R: Employer Subsidy). The draft comment letter, prepared by PricewaterhouseCoopers on behalf of the Council and the U.S. Chamber of Commerce, is available by clicking here or by pasting the following URL into your Web browser:

The Council will hold a conference call on September 17, 2004, at 11:00 a.m. to solicit comments and suggestions from our members. For call-in information or to RSVP for the call, click here or paste the following into your Web browser:

For additional information, please contact Paul Dennett, Council vice president, health policy, or Susan Relland, Council health policy legal counsel, at (202) 289-6700.

Treasury Working to Provide Direct Deposit of Refunds in IRAs

The Council has learned that the U.S. Treasury Department is working to address administrative issues in order to allow taxpayers to directly deposit a portion of their income tax refunds into Individual Retirement Accounts (IRAs). This option will likely be available for refunds from 2005 tax returns (returns due April 15, 2006). The direct deposit proposal was first contained in the Bush Administration's Fiscal Year 2005 budget proposal released in February 2004.

Treasury officials have indicated that an IRA contribution made by way of a tax refund would ideally be attributable to the tax year to which the refund relates, but that this may be difficult to do administratively. Treasury is discussing potential alternatives for the event in which a return contains errors but the taxpayer had requested an IRA direct deposit refund, including the possibility of issuing a check to the taxpayer. The direct deposit refund would likely only be available to pre-existing IRAs because a routing number would be needed on the return. It is also possible that the direct deposit option would apply to Section 529 plans (prepaid tuition and other State-sponsored tuition plans that meet the Section 529 requirements), Education Savings Accounts, and Health Savings Accounts. For more information, contact Jan Jacobson, Council director, retirement policy, at (202) 289-6700.


The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.