Tax-effective ways to cut retirees' health care costs

Article Abstract:

Four tax-favored vehicles available to employers for reducing retirees' health care costs are evaluated. The first of these tax-effective approaches is the establishment of separate accounts which is allowed under Section 401(h). Under this arrangement, both employer and employee contributions are put in an account intended specifically for funding retiree health care benefits. The next strategy involves transferring surplus assets from a defined benefit plan to a Section (h) account under this plan or another employer-managed plan. The third approach is funding employee health care benefits through the tax-exempt voluntary employees' beneficiary associations. Finally, a nontraditional alternative is using separate medical accounts for individual qualified profit-sharing plan participants. The benefits and limitations of these four methods are discussed.

Medical care, Cost of, Health care costs, Employee benefits

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Medical group mergers require plan restructure

Article Abstract:

A merger between medical practices brings together various groups of physicians with different retirement plan histories and different visions of what the retirement plan for the merged organization should be. In this situation, existing individual plans should be scrapped and a new qualified retirement plan program should be developed. The planning process should consider the objectives of the doctors and should address such issues as the annual contribution level, the group of employees to be favored and employee contribution. Another important consideration is the structure of the plan, whether it should be a defined benefit plan, a defined contribution plan or a combination of plans. Potential plan obstacles should also be addressed, including the IRC's minimum participation rules, minimum coverage requirements and nondiscrimination rules.

Offices & clinics of medical doctors, Physicians & Surgeons, Offices of Physicians (except Mental Health Specialists), Mergers, acquisitions and divestments, Compensation and benefits, Physicians, Medical professions, Health facilities, Group medical practice

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Minimizing NOL limitations after an ownership change

Article Abstract:

Sections 381 and 382 restrict the net operating loss (NOL) carryforwards that can be used after a change in stock ownership, regardless of whether the whole NOL is reflected on the book of the company. Sec 382(b)(1) defines limitation as the value of the loss corporation right before the change in ownership multiplied by the Federal long-term tax-deductible rate. A corporate NOL is subject to the Sec 382 limitation if there is a 50 percentage point shift in stock, as opposed to a 50% increase in ownership. Under the 'anti-stuffing rule' of Sec 382(1)(1) taxpayers cannot exaggerate the value of the old loss corporation if the sole motivation for any transfer is to inflate the Sec 382 limitation. Although the ruling is designed to prevent trafficking in losses, Sec 382 may also block the usage of losses in nonabusive situations.

Analysis, Loss deductions

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