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Saturday, October 3, 2020

How Not to "Gett" Out of a Multiemployer Plan

Sometimes the dissolution of the marriage between an employer and a multiemployer plan can end in a messy divorce.  

In American Federation of Musicians & Employers Pension Fund v. Neshoma Orchestra & Singers, Inc., No. 19-1093 (2d Cir. Sept. 3, 2020), a Jewish wedding band from Long Island was held to have failed timely to challenge a $1.1 million withdrawal-liability assessment.  The band had contested the liability by sending a letter to the pension fund - rather than by filing an arbitration demand with the American Arbitration Association within 60 days of the receipt of the assessment, as the applicable contract provisions had required. 


Wednesday, August 5, 2020

Dividend Equivalent Rights II, the 409A Sequel; and Toy Story 3, the Oscar-Nominated Sequel

[originally posted in 2011; see note at end below]
General Background
Dividend equivalent rights ("DERs") were specifically addressed in the 162(m) regulations regarding the question of whether the grant thereof in connection with an option grant disqualifies the option from favorable treatment as performance-based compensation. Not a whole lot of fuss was made about it at the time.
Now we get DER II, set in 409A-Land, and, just when you thought it was safe to go back in the water (thanks, Jaws II), things get a little scary. At their speeches and other presentations, Treasury and IRS officials have for a while been informally indicating concern under 409A about arrangements under which option-related DERs cut off once the option is exercised. Supposedly, so they say, in such a case the DER is somehow contingent in the exercise of the option.
A DER by its nature would, however, generally cut off on exercise of the underlying option, in that, once the option is exercised, the actual dividend then becomes payable. Thus, if there is really a problem here, DERs on options could be fundamentally at odds with the requirements under Section 409A. The informal position being taken is confusing to me and I'm extremely surprised it's being taken.
Unfortunately, the position seems to be being taken repeatedly, and in some circles is having a bit of a chilling effect on the granting of DERs connected to options. As described below, I think that the position is wrong, and indeed clearly so.
The issue arises under Section 1.409A-1(b)(5)(i)(E) of the Treasury Regulations. Section 1.409A-1(b)(5)(i)(E) provides that "the right, directly or indirectly contingent upon the exercise of a stock right, to receive an amount equal to . . . dividends . . . between the date of grant and the date of exercise . . . constitutes an offset to the exercise price . . . (generally causing such right to be subject to Section 409A)."
DERs and Section 162(m) - Happier Times
First, some history. Section 1.162-27(e)(2)(vi)(A) of the Treasury Regulations set out the predecessor rule, which applied, and still applies, for purposes of the exception for certain performance-based compensation from the $1 million limit on deductions under Section 162(m). The 162(m) rules state: "Whether a stock option grant is based solely on an increase in the value of the stock after the date of grant is determined without regard to any dividend equivalent that may be payable, provided that payment of the dividend equivalent is not made contingent on the exercise of the option." Treas. Reg. § 1.162-27(e)(2)(vi)(A) (third sentence). The idea was that, if the option-related DER were to be made contingent on exercise, then the DER would effectively constitute a purchase-price reduction. And, if that's true, the option, even if otherwise granted at grant-date FMV, would nevertheless essentially be an in-the-money option not eligible for favorable treatment (as performance-based compensation) under 162(m).
Treasury pithily described the foregoing, when it issued the 162(m) regulations that included this rule, as follows: "If the payment of the dividend equivalent is conditioned upon the employee exercising the option, the dividend effectively reduces the exercise price of the option, thereby causing the option to be nonperformance based upon its exercise." 60 Fed. Reg. 65,534, 65,535 (Dec. 20, 1995). Historically, in those cases in which favorable 162(m) treatment was sought, the practical effect of this rule under 162(m) in at least some cases has been that the employer pays the DER up until the time the option is exercised, and keeps paying it throughout the term of the option until its expiration if the option remained unexercised.
It would seem to be evident that, using that approach, the DER does not operate as a mere purchase-price reduction, as the DER would be paid when there's never a purchase under the option at all (i.e., when the option expires unexercised so that there's no purchase whatsoever under the option). (Sometimes, in the case of certain more generous programs, the DER will be retained even if the option never vests. Other employers provide that the DER won't be paid if the underlying option didn't vest.
But the question of whether to hold the DER back depending on whether the option has vested is a different matter than the one being considered herein - the key point here is that the DER is to be paid regardless of whether the option is exercised, and indeed regardless of whether the option is ever exercised.) That all makes eminent sense - so far, so good.
DERs, Redux - A Scary 409A Sequel
409A then proceeds to make use of similar thinking in connection with requiring, for treatment as an option (or other stock right) not subject to 409A, that the option (or other stock right) not be granted in the money. Thus, as noted above, Section 1.409A-1(b)(5)(i)(E) of the Treasury Regulations says that "the right, directly or indirectly contingent upon the exercise of a stock right, to receive an amount equal to . . . dividends . . . between the date of grant and the date of exercise . . . constitutes an offset to the exercise price . . . (generally causing such right to be subject to Section 409A)."
Conversely, Section 1.409A-1(b)(5)(i)(E) expressly and properly confirms that, "A plan providing for a right to dividends . . . , the payment of which is not contingent upon . . . the exercise of a stock right, may provide for a deferral of compensation, but the existence of the right to receive such an amount will not be treated as a reduction to the exercise price . . . . Thus, a right to such dividends or distributions that is not contingent, directly or indirectly, upon the exercise of a stock right will not cause the related stock right to fail to satisfy the requirements of the exclusion from the definition of a deferral of compensation . . . ." Treasury seems to have described all of this correctly when the 409A regulations were finalized, saying: "The final regulations adopt the rule that a right to a payment of accumulated dividend equivalents at the time of the exercise of a stock right generally will be treated as a reduction in the exercise price of the stock right, causing the stock right to be deferred compensation subject to the requirements of section 409A. The final regulations provide that an arrangement to accumulate and pay dividend equivalents the payment of which is not contingent upon the exercise of a stock right may be treated as a separate arrangement for purposes of section 409A." 72 Fed. Reg. 19,234, 19,242 (Apr. 17, 2007).
Still, so far, so good. Again, this all makes sense. Now, how and why does it all go awry? The notion seems to have developed in some governmental circles* that contingency is somehow a two-way street. As the thinking apparently goes, if (i) the DER is impermissibly contingent on the exercise of the option where the right to retain already-accrued DER payments is contingent on the exercise of the option, then (ii) the DER is likewise impermissibly contingent on the exercise of the option where the right to receive new, continuing and additional DER payments is contingent on the non-exercise of the option.
 But this thinking turns the whole thing topsy-turvy; that is, in the foregoing clause (ii) it is the right to continue to receive additional DER payments (not the right to retain DER payments) that is contingent on the non-exercise of the underlying option (as opposed to contingent on exercise). So let's see if it is or should be true that a DER that is only paid if an option is exercised really is the same, on an analytical or policy basis, as a DER that turns off when the option is exercised.
Perhaps it's worth examining the fundamental difference between what the anti-contingency rule really addresses, and what is being suggested as being addressed by the anti-contingency rule. What you're not allowed to have is the following: option exercise --> retaining DER accruals. That would make the retention of the accrual "contingent" on exercise. It is suggested here, however, that the rule plainly does not (and should not) address the following: option exercise --> cessation of additional DER payments. Stated another way, "if A then B" ≠ "if A then not-C" (where (i) A is the exercise of the option, (ii) B is being able to retain accrued DER payments, and (iii) C is being able to continue the receipt of additional DER payments). Thus, the regulation expressly and properly confirms that, "A plan providing for a right to dividends . . . , the payment of which is not contingent upon . . . the exercise of a stock right, may provide for a deferral of compensation, but the existence of the right to receive such an amount will not be treated as a reduction to the exercise price . . . . Thus, a right to such dividends or distributions that is not contingent, directly or indirectly, upon the exercise of a stock right will not cause the related stock right to fail to satisfy the requirements of the exclusion from the definition of a deferral of compensation . . . ."
As can be seen, the reduction-in-price rationale is specifically baked into the above-quoted words of the 409A regulatory language itself, and the cessation of future additional DER payments simply does not involve a reduction in the exercise price of the underlying option. If there is no required exercise of the underlying option (no contingency!) in order to retain the DER payments , then there can be no putative impermissible exercise-price-reduction, which is the only thing the rule are or should be after. In the case of a DER that turns off on exercise of the underlying option it's not the payment that's contingent on exercise - it's the nonpayment that's conditioned on exercise! They're just not the same thing. Maybe symmetry of equating the two is facially seductive - there’s often an equitable sense of that "what's good for the goose is good for the gander, even though different considerations may apply to the goose and the gander. Cf. my prior post on provisions in employment agreement relating to attorneys’ fees.
From an analytical perspective, the logic underlying this distinction is arguably steel-trap. Surmise that an option vested but then expires unexercised, and there were DER accruals linked to the option which will be retained by the optionee. In that case, the DER will have gotten paid (or will at least have vested) either at or before vesting** and yet the option never got exercised. Conclusively, then, last I looked at what "contingent" means, that DER just ain't contingent. A lack of a policy problem naturally and inexorably follows. Indeed, there's not even any policy reason to try to engraft the other-way (dare I say "wrong way") directionality onto the contingency rule. As reflected right on the face of the Section 1.409A-1(b)(5)(i)(E) rule, the question is whether there's a "reduction" in "exercise price", and that's just not a concern where it's nonpayment, as opposed to payment, that's contingent on exercise. Since the DER is retained regardless of whether the option is exercised, it simply doesn't act as a purchase-price reduction, and therefore doesn't implicate the price-reduction concerns underlying the 409A (and 162(m)) regulations.
The rule I’m suggesting here also has the advantage of being a rational one from a business perspective. It's at least sensible to pay the DER whether the option is exercised. It makes no sense, however, for the DER to be paid after the option is exercised. That's a double payment - the continuing DER, coupled with the actual payment of the real dividend on the actual stock. In this regard, one would hope, the tax rules just don't require the implementation of an irrational or otherwise silly program. Maybe having DERs be inherently inconsistent with 409A would make some sense if DERs were somehow evil or otherwise undesirable, such that they should be discouraged altogether.
But I don’t think that DERs are somehow always "bad" by their very nature. The fact is - the rules do not require a DER to be structured irrationally. And the key is that it's not the payment of the accrued DER that's contingent on exercise; it's the continued payment that’s contingent on non-exercise. They're just not the same thing. So maybe you're saying that this is sophistry on my part - a manipulative exercise in linguistic gymnastics. So maybe you’re saying, "Oh, c'mon, even if the stock might not go up right away, it's bound to go up someday."
But that's not right. Is it possible, not only as a theoretical matter but as a practical matter, that a given option will fail to be exercised? Of course it is. First, plainly, the stock might not go up. Are we forgetting that stock does not always increase in value, maybe not ever? The internet bubble burst a long time ago, with the subprime crisis having followed, and it's now quite clear that, yes, stock can actually go down and stay down. Has anyone ever heard of attempts to reprice hopelessly out-of-the-money options? (See also Treas. Reg. § 1.162-27(e)(2)(vii) (ex. 3) (whether there will be net income is always substantially uncertain).)
Second, even if a given stock would be destined or otherwise likely to go up someday, it might not be up at the time the option would otherwise expire. In this regard, an optionee will commonly wait until expiration to exercise (i) for tax reasons and (ii) so as to be able to continue to ride the investment in the underlying stock without having to make a capital investment (indeed, that's a hallmark of an option - the value of the option embedded in the optionality of the option). The compensatory landscape is littered with worthless, unexercised options - proof positive that the exercise of an option is anything but inevitable.
I think that, at the end, the analysis is ultimately quite straightforward and definitive, and can be demonstrated with the use of a baseline fact pattern. Take a vested option that is never exercised.*** Now assume a DER has been granted in connection with the option and the DER is paid (or vests) before or when the option vested. Assume further that, if the option is not exercised, the DER payment will be retained and, to make it easier, assume that the option is never exercised. On those facts: - Has the option been exercised? No - Will the option be exercised? No. - Has the DER been paid and retained? Yes. - Was the payment of the DER contingent on the exercise of the option. Uh - no. Like I said, steel-trap. I'm surprised that this has been made into an issue, even informally. I really think a technical misstep here is leading to confusion. To me, turning off a DER upon option exercise is fine under 409A, and, as asserted above, even clearly so.**** Now, in honor of the Oscars, it’s onto a more traditional kind of sequel . . . .
I noticed today (Oscar Day ‘11) that Toy Story 3, one of my favorite movies of all time, is nominated for best adapted screenplay. I have by this time been disabused of my flirtation, reflected in an earlier post, with the notion that TS3 will win the Oscar for Best Picture (go ahead, mock and otherwise laugh); however, the nomination for best adapted screenplay is fascinating. What is the source material on which the TS3 screenplay is based? The answer lies in the fact that the rules aren't really clear regarding into which of the two writing categories (original, adopted) a screenplay goes. Apparently, according to one helpful post (assuming it's right), the actual name of the category is, “Best Writing, Screenplay Based on Material Previously Produced or Published” - thus explaining that a sequel which itself has no direct source material could somehow be considered adopted by virtue of having been based indirectly on the sequel's predecessor(s).*****
Cool. And, of course, good luck to TS3 in this mainstream category!!
[originally posted in 2011; errant citations corrected thanks to my friend Jay D.]
* It's not clear that there's uniformity within the government on this.
** See also Treas. Reg. §§ 1.409A-1(b)(2), 3(e) (regarding deferred payment in the case of DERs connected with RSUs).
*** I can almost hear Henny Youngman intoning, "Take my wife - please."
**** The issue can be a big one where dividends are material, such as, for example, would generally be the case for options granted by REITs. But, whether the issue is economically a big one or a small one, the analysis should not get mucked up.
***** Cf. Treas. Reg. § 1.409A-1(b)(5)(i)(E) (twice using the "directly or indirectly" concept to cover something with either character by the same rule) (thus (ha ha) bringing this post full circle).

Monday, June 29, 2020

Idris Elba Took Your 401(k)

I just came across a dose of retirement-related reality that crept into an (indeed "The" ) Office over a decade ago.  During some economic hard times, the Dunder Mifflin crew were given a hard dose of reality.  None other than the "not unattractive"* Idris Elba's Charles Miner (sans British accent) stoically informed them: "[W]e are cutting three percent across the board, which means we will no longer be matching 401(k) contributions; and all overtime requests will need to come through the corporate office."**  Well, I guess that, if you're going to lose your 401(k) match and have your overtime pay cut back, you might as well be told by Idris Elba.
* . . . as Angela Kinsey's Angela Martin so informs.

 ** Research discloses that someone else with clearly too much time on her hands also noticed this loss of 401(k) benefits, although she did so in a much more timely fashion.

Saturday, June 6, 2020

Slayer, Part II - The Karavas File

I've previously commented on (what I think are interesting) developments regarding so-called "slayer" statutes and the effect they may have on a murderer's ability to collect insurance or other benefits on account of the death of the victim.  (Indeed, at least one commentator found my take on the matter interesting, as well - see "When Do State Laws Determine ERISA Plan Benefit Rights?" 47 John Marshall L. Rev. 145, 392 n.1434 (2013) (a 250-pager!!).)

Well, I was sitting at the September 2019 filming of a Carie Karavas stand-up show (you can see it on Crackle), at the urging of Sal (the Turtle) Governale.  Along the way, Ms. Karavos starts talking about the possible demise of her husband at her hands (or, more accurately, her legs), and, after a pause, asks, "Do I still get the pension?"

You just never know when you're going to be treated to an ERISA reference, do you?  You just gotta keep your eyes, and ears (and legs?!?), open!

Sunday, May 31, 2020

A Hater CARES Maybe Too Much While Swimming with the Sharks

I watched an old Shark Tank segment the other day.  The guy with the Hater dating app, in chronicling his path, noted how, among the things he did, he raided the money put away for his retirement, saying: "I liquidated my 401(k)".  Maybe he even paid early-withdrawal penalties.  Predictably, the Sharks fell all over themselves with admiration and adulation, maybe even adoration.  

For the record, I think the show is great and maybe often amazing, but here I think the message is a wrong-headed and dangerous one.  Is the idea to people that taking a flier with retirement assets is somehow a good, wise thing?  And is this entrepreneur's success somehow a validation of this rash and patently inadvisable approach?  Reminds me of the resource-constrained person who spends untold sums on lottery tickets and then wins, and who says, "See, I was right all along."  Oh, and, by the way, maybe not everyone can navigate such a self-imposed gauntlet as well as a Brown graduate with a Goldman pedigree.  Sheeeeesh.  

Guess what?  There's a reason that the rules encourage saving for retirement.  The money is there for when salary and other income is no longer coming in.  The thought of retirement funds being unavailable at a time when there are no other visible means of support is a potentially devastating and frightening one.  Thus the incredibly large tax subsidy for retirement programs, not to mention the associated comprehensive statutory scheme that may well be unsurpassed in its reach and complexity.  "Sure, go ahead, and put your 401(k) at risk.  Hope you guess right, like I did.  If not, hope you can eat when you're older."

This whole kerfuffle brings me back to one of the statutory responses to the COVID19 pandemic.  Under the CARES Act, there is dramatically increased access to retirement funds, through the mechanism of penalty waivers, tax relief and loan expansion.*  Surely, this is well-intended, with Congress's heart being in the right place, but I worry greatly about hurting people with kindness.  The effect of facilitating access to retirement money now is, of necessity, to eliminate its presence later, when it may most be needed.  Maybe there will be real suffering in the current environment, but if people access their retirement money now and then don't have later it when no new income is coming in - well, what then?  The Law of Unintended Consequences can be a real drag.**  I would submit that employers should be very thoughtful and contemplative (CARE(S)ful?) before choosing to amend their plans to facilitate access for their employees.

Indeed, the CARES Act itself does have a contrary tilt, as well.  Standing in contrast to the provisions facilitating access is a provision suspending RMDs and even allowing certain repayments thereof.  Now THERE's a good idea!

Be safe and be well, all, during these crazy, craaaazy, craaaaaaaazy times . . . 

* I want to vent about loans here for a moment.  People have the view along the lines of, "Hey, this is great.  I'll take a loan and I'm just paying myself back.  What a great deal."  But the insidious nature of this access, it turns out, is that the money loses its tax-preferred status while borrowed, and may ultimately come completely out of the retirement system if there's a default. 

** I'm reminded of when Obama and McCain were running against each other, and agreeing on almost nothing.  One proposal was to loosen up access to retirement funds to help deal with the financial crisis.  Both candidates supported the idea.  Imagine that!  Clearly, the loosening up was going to happen, right?  Well, it turns out, Obama won and you basically never heard the proposal again.  I can only imagine the policymakers telling our new President what a dangerous and potentially bad idea this was, notwithstanding its visceral appeal.  Anyway, went this supposedly wonderful, agreed-upon proposal.  

Sunday, April 19, 2020

Planning for Education in the Ozarks

So it looks like drug-dealing money-laundering accountants in the Ozarks take advantage of tax incentives to plan for their children's education, as revealed during this little chat with the FBI:

Jessica Frances Dukes' Maya Miller - Can I ask you a personal question?  When did you start a 529 for your kids?

Jason Bateman's Martin ("Marty") Byrde - When they started pre-school.  

Miller - OK.  Good.  Thank you.  

Thanks to Ozark for giving us a little planning reminder amidst the mayhem.  

Be safe and well . . .

Sunday, April 12, 2020

"The Good Place" to Retire

Well, we just finished watching the single most intelligent television show ever - The Good Place.  Yup.  Number One.  Now this is not to say that there other intelligent shows.  Indeed, they abound.  But this one takes the cake.  [SPOILER ALERT - read no further if you haven't seen it]  And just when I thought it couldn't get any better I found myself given a . . . retirement angle.  So we have Ted Danson's Michael (how could the Emmys have passed him/them up for the win?), once he [again, SPOILER ALERT] starts to bemoan his eternal status in the truly Good Place, saying:

I guess I'll just stay here forever, you know?  Putter around doing mundane things like some sad old retiree.  Maybe I'll have Janet make me a hardware store so I can buy a hex wrench that I don't really need.

Thanks, Michael, for giving me my retirement moment during the finale of the Smartest Television Show Ever. 

And stay safe and well, all . . .

Friday, November 22, 2019

Disney Meets Rocky in a Tale of ERISA Litigation?

Only here could you get a strained connection between Disney and Rocky in the guise of an ERISA discussion.

Years ago, I posted about how ERISA litigation might be entering a golden age, and compared (sorry) the situation to Disney's Golden Age, which began with The Little Mermaid.  One self-congratulatory note there is that I bemoaned the Court's failure to grant cert. in the Amschwand case, and expressed hope that the Court might someday address the continuing inability of claimants with arguably sympathetic cases to be substantively heard to any extent because of the theretofore uniform rejection of a monetary remedy in ERISA cases.  Voilà - we later got CIGNA v. Amara, which became and remains (laugh all you want) my favorite ERISA case. 

Then, some time later, in a Rocky-themed post about winning, I noted (courtesy of my friend Andy G.) the WSJ report about Justice Souter's retirement being hastened by . . . ERISA litigation.  To wit: "Justice Souter has complained about life in Washington and even about aspects of the court's work, such as the numbingly technical cases involving applications of pension or benefits law."  ERISAns won one!

Now, in the context of yet another term with three cases,* my mind turned back to the possible continuation of this Golden Age (again, sorry) of ERISA litigation and then, in turn, to the Souter report.  Fortuitously, my friend Steve R. has shown me some additional material that rings in the same Eeyore-type Souter-like* bemoaning of the sadness that ERISA litigation can be.***   In that spirit, I share the following;

- Justice Rehnquist said that “[t]he thing that stands out about [ERISA cases] is that they’re dreary,” and that the Court would grant review by virtue of “duty, not choice”

- Justice O’Connor referred to ERISA cases as being “tedious”

- Justice Ginsburg, whose first opinion on the Court was an ERISA decision, referred to ERISA cases as being “sloughy” (relating to being “shed or cast off”?) (relating to “a place of deep mud or mire”?) (relating to “a mental state of deep sadness or no hope”?)****

As Stan Lee might've said - 'Nuff said!

* I would argue that some years ago we had four cases, if you count Spokeo.  It looked like ERISA might, even if indirectly, again (see R.A. Gray) make it into the Court's constitutional (!) jurisprudence.  Spokeo, it turned out, was a dud, but it looks like Thole is now our current chance for some real constitutional fireworks.

** (reportedly)

*** The juxtaposition of the consistent bemoaning of ERISA and the undeniable propensity of the Court to take ERISA cases is an interesting one, at least to me.

**** Note also that rumor has it that it's the first-year justices who are allocated the . . . thrill . . . of writing the ERISA decisions.

Friday, July 12, 2019

Secretary Acosta - Another One Bites the Dust

Saw Bohemian Rhapsody and really liked it. I get it that there's plenty of fake news wrapped up in the movie, but . . . so what? Did you notice all the fake news in BlacKkKlansman? So long as no one's passing it off as fact and it advances the movie's narrative without making the ultimate message dishonest, who cares?‎ These are good and arguably important (and Oscar-winning) movies.* 

So, speaking of Bohemian Rhapsody, fake news and competing narratives, we have (music, please) the rise and fall, and prompt resignation, of Alexander Acosta. What's the link between Bohemian Rhapsody and Acosta? Isn't it obvious? - Another One Bites the Dust (in the Trump cabinet), of course! 

Now, I'm going to go out on a limb here and theorize that this isn't all about Epstein. I think the Trump administration just absolutely detested him, policy-wise. Indeed, there were reports about Mulvaney and Acosta and changed locks (!), and about other related general distrust and dismay.

Secretary Acosta, we hardly knew ya.**

* Contrast Bohemian Rhapsody with Rocketman, which was also great (although I'm biased, 'cuz Elton's my favorite pop star, and I adore Bernie), but which is more obviously stylized and fictionalized.  

** And thanks to my friend Matt R. for pointing out the somewhat interesting juxtaposition of Acosta's plea deal with Epstein, on the one hand, and Acosta's early Rule of Law WSJ op-ed (see generally my earlier post noting the op-ed), on the other.

Tuesday, June 18, 2019

An American Without Disabilities "Act" - Kodi Lee (no Joke(r))

OK, so let's dispense with and dispel all notions of what a "disability" is in the world as we know it.  I don't know what the ADA would or wouldn't say about Kodi Lee, but I will tell you this: I think that arguably the most amazing thing I've ever seen in the world of entertainment could be Kodi's America's Got Talent audition.  If you're not crying, something may be wrong with you.

What makes it THE most amazing thing ever is that an autistic guy who's legally blind could do this.  But let's not lose sight of how incredibly perfect the audition is, completely putting aside Kodi's challenges.‎  And have you seen his other stuff?  For example, check out this compilation, this incredible performance and this rockin' show. Are you kidding?!?

Where does it go from here?  What does he play on AGT?‎  I'd love to see All By Myself (with its classical interlude (!)), anything from Deep Purple (the vocals and keyboards seem right to me), anything from Elton John (duh) and Piano Man (duh, redux).  It's a Cheesecake Factory problem, though - since the kid can play ANYthing, what the heck do you select.  I guess I'll just have to wait and see what twists and turns my newest obsession takes.

And, speaking of the best things ever, have you seen the trailer for Joaquin Phoenix's Joker?  Honestly, it's maybe the best trailer I've ever seen in my life.  (Maybe I'm just in an over-the-top mode, because I think the first "live action" Lion King trailer may be the second best.)  Anyone who knows me knows that I think that Heath Ledger's performance in The Dark Knight is the best performance in the history of movies.  Could it be that Joaquin's Joker will somehow avoid suffering by comparison?  I guess we shall see . . .

Wednesday, October 10, 2018

Retirement and Elton John

My practice area revolves around retirement, and, with that wholly inadequate tie-in, I move on to reporting that I just witnessed Elton John's first NY-area installment of his farewell tour. Several thoughts:

- The Bernie Taupin thing is amazing. I've never fully understood how he's able to channel the performer's inner self in a way that it's frankly all but unimaginable that the words are written by someone else. I think he's one of the great poets of all time, harkening back to whatever classic poets you want to name. That the poetry is set to music doesn't diminish it. I think that Elton intentionally honored Bernie by leaving out of the set both the Broadway stuff and the couple of huge covers (although, to be fair, as he himself said, there simply was no way to get to all the material - his book is staggeringly broad).  

- He cemented his status with me as my favorite mainstream rocker of all time. In fact, even though I'm built more as a straight-ahead guy (see, e.g., AC/DC, G 'N' R, Led Zep and the like), for me he's right up there with any of 'em.

- His voice was utterly solid in-range - good as ever, if you ask me (although with the concession that the falsetto is no longer there). ‎And his piano playing hasn't lost a single nit. Incredible. He gets more noise out of that thing than anyone. Not only unsurpassed, but the best (with all due respect to Billy Joel).

- His rendition of Levon was a top-three (not even sure what if anything is ahead at number one or two) performance from among anything I've ever seen from anyone.

Not entirely sure why younger generations shouldn't/wouldn't appreciate this. His music seems timeless. ‎I know it's as trite as it gets to say it, but . . . you Rock. Thank you.  

P.S.: While few if any readers will understand this, I would like to say (having absolutely nothing to do with the above Elton John post) - Rocky, we love you, and always will.

Thursday, September 13, 2018

Severing Woody Allen?

I don't like the movie at all,* but I did come across an ever-so-slightly amusing termination-of-employment/severance moment in Woody Allen's "Everything You Always Wanted to Know About Sex* (*But Were Afraid to Ask)" from John Carradine's Dr. Bernardo, as Dr. Bernardo chronicled some of his not-so-impressive but indeed deranged . . . ahem . . . accomplishments: "They threw me out at Masters and Johnson - no severance pay and I had it coming. But I showed them. [sinister laugh follows]"  I guess I feel compelled to log examples like this as I come across them, even when they're not overly funny or interesting.  Oh, well . . .

*  Frankly, there's SO much in the Woody Allen cinematic universe that I don't like. (Indeed, there's a bunch in Mr. Allen's more general universe that I don't much like.)

Wednesday, September 12, 2018

Rip-Offs, from Ozark to the Oscars and from the Teamsters to Glenn Close [SPOILER ALERT]

Ozark and the Teamsters Pension Saga

So apparently ol' Buddy Dyker (Harris Yulin) from Ozark is tuned into the Teamsters pension saga. SPOILER ALERT (read no further if you're not through Season 2, Episode 2). Buddy is pushing Frank Cosgrove (John Bedford Lloyd) not to stand in the way of letting Marty Byrde (Jason Bateman) have a casino built. In response to Cosgrove's protestation that he's "doing just fine," Buddy cleverly points out that, "Your Teamsters pension is suffering."‎*

Note that this isn't the first ERISA-like reference in Ozark. Way back in the opening voice-over, we here Marty saying: "Half of all American adults have more credit card debt than savings. 25% have no savings at all. And only 15% of the population is on track to fund even one year of retirement."

ERISA references aside, I can barely keep up with the Ozark world. So many people ripping off so many other people. Geez. Cool stuff, though. Maybe not Breaking Bad. But, then again, that's quite the high bar.

The Oscars and Glenn Close

And, speaking of rip-offs, let's talk a bit about the Oscars.**

I want to give you my list of the top Oscar rip-offs that have most tweaked me, in reverse order:

- Ennio Morricone, The Good, the Bad & the Ugly (soundtrack) - the ridiculously unbelievable music was like another character***
- Richard Gere, Chicago - his performance may have made the movie
- Jim Carrey, The Truman Show‎ - not even a nomination?!?
- Burt Reynolds (RIP), Boogie Nights - not fair
- Eddie Murphy, Dreamgirls - great performance in a let-down of a movie
- Leonardo DiCaprio, Titanic - not even a nomination?!?!?!?
- Haley Joel Osment, ‎The Sixth Sense - are you kidding me?****
- Glenn Close, like everything she's ever done - not one freakin' Oscar?

Reese Witherspoon, Julia Roberts and Marissa Tomei have Oscars and Glenn Close doesn't? Meryl Streep has 384 Oscars and Glenn close doesn't have one? I respectfully submit that the Close snub is the worst snub of 'em all - and quite the enduring one.

So I just saw The Wife. Look, I don't care a whit about what this movie or performance was or wasn't. Look, they found a way to give Oscars to Paul Newman and John Wayne, and they're just going to have to figure out a way to give Glenn Close this one. End it now and don't even put it up for a vote. The most obvious omission was for Fatal Attraction, but the whole situation is a debacle.*****

In the words of Oscar Rogers****** (Keenan Thompson), FIX IT!!!

* On the labor-law (if not quite ERISA) side, there's also a reference to right-to-work laws, and there's some cleverness regarding the pushing of casino labor back to the union.

** Yes, I know, this segue is completely indefensible. But I just saw The Wife, so here goes.

*** To stay with the theme of this post, they finally righted this omission, sorta, with the Oscar for his work on The Hateful Eight.

**** Even Michael Caine, in his incredibly charming acceptance speech, pretty much acknowledged the enormity of Osment's performance.

***** Now just imagine if her daughter gets one for Best Supporting Actress, and they snub her yet again. Oooh.

****** How's THAT for a fortuitous first name here?

Tuesday, September 11, 2018

Wishing for Death (or at Least, Medical) Benefits‎ for Bronson

‎Apparently Charles Bronson incurred approximately $204,575 in medical bills for the treatment of multiple illnesses, including Crohn’s disease and Lyme disease. It is alleged that the applicable medical plan paid $15,448 and that the remaining $189,127 had to be paid by his wife, Kim. See Bronson v. SAG-AFTRA Health Plan, No. 2:18-cv-07820 (C.D. Cal, complaint filed Sept. 7, 2018). I have no idea regarding the veracity of any of the claims, and express no view with respect thereto - but I do know of the joy this man brought to so many, and feel that it's OK to hope that Kim prevails.

Tuesday, August 14, 2018

Employee Benefits on the Great White Way (Courtesy of GTBBT)

Employee benefits come to Broadway. In Gettin' the Band Back Together, Mitchell Jarvis' Mitch Papadapoulos is bemoaning the success of his hilarious nemesis, Brandon Williams' Tygen Billows. His lament? "I have great health insurance and a 401(k). Why am I jealous of this guy?" Never underestimate the value of employee benefits.

(By the way, opening night was great. Good luck to everyone at GTBBT!)

Thursday, June 28, 2018

IRAs in Jeopardy?!?

Pleased to present for your consideration* - a category in tonight‎'s** Jeopardy*** was "IRA".  And, just to say it, the category really was about IRAs.  Woo hoo.  Onwards . . . 

* thanks, Rod

** at least, on my television

*** Double Jeopardy round

Thursday, June 21, 2018

Done, Done, on to the Next One(s) - the Fiduciary Rule and Obamacare

First off, I want to use this as an opportunity to direct you to the Foo Fighters' SNL performance of All My Life.  I'm not sure there's ever been a better, more high-energy rock performance.  How the heck can anyone catch lightening in a bottle like that in a one-off live performance?  Wow.

Of course, the climactic moment of the song is the cathartic through-the-roof screaming of, "done, done, on to the next one".  Which brings me to two Obama-era initiatives that are somewhere between done and almost done.

So let's go back to two predictions I made, both of which were wrong in terms of details and, as discussed below, right (totally, in the case of the Fiduciary Rule, and maybe, in the case of Obamacare) in terms of ultimate results.  Better to be lucky than good, I guess.


One prediction was that the Trump administration would delay the applicability of the amended Fiduciary Rule and then kill it.  The early Presidential Memorandum on the Rule seemed clearly to presage that fate.

And then, while the DOL was rudderless (the Carl's, Jr. guy just didn't quite make it, and then now-Secretary Acosta was hung up while Gorsuch got confirmed), the Rule somehow bobbed and weaved its way to real, live June 2017 applicability.  Secretary Acosta in his WSJ op-ed opined that the Rule of Law made it too late for the DOL to reverse field (a conclusion with which I heartily disagreed), based on the essentially entrenching record that the DOL had laid down leading up to the Rule's applicability date.  Can you say "deep state"?  Maybeeeee . . .

So it looked like the Rule would make it.  The BIC exemption was essentially eviscerated during extended (effectively forever) transition, and non-ERISA IRA owners had literally no way to enforce any of this whatsoever (unless they could convince the IRS to bring an excise-tax claim - haha) - but there was no denying that the Rule was out there (in fact the basic regulation itself was fully applicable; only the exemptions were dumbed down), and making a fair amount of mischief.

Then came the judicial challenges.  It all seemed like so much tilting at windmills.  Case after case upheld the DOL's authority to issue the Rule.  Put aside for the moment whether the DOL SHOULD have taken this on; the courts were concluding, and many felt, that the DOL COULD take this on.

And then - cue some kind of loud/rousing/shocking music - came the Fifth Circuit decision in the Chamber of Commerce case.  Echoing other courts dealing with other Obama-era regulatory efforts (e.g., the CLO risk-retention case), the court resoundingly decided that the DOL was unreasonable, and arbitrary and capricous, in issuing the rule, and vacated it en toto.

Gee, that was quite the kick in the teeth to the Rule.  And then came the efforts to process what had happened.  Initially, the case seemed significant, but it was, after all, just one circuit.  And other courts seemed more sanguine with the rule.  So this was just another step in the process, right?

But as the case washed over the market, it started to become evident that something big - really big - was afoot.  Notwithstanding some market noise, in memoranda and interviews, that the case was limited in effect to the Fifth Circuit, the static quickly turned to . . . ahem . . . what the rules REALLY are.

In fact, the decision's potential impact was without geographic limitation and was utter and complete.  The key distinction is that the Fifth Circuit wasn't interpreting the rule; rather, it was deciding that the rule was invalid altogether.  The reality started to set in that, when a federal courts vacates a rule and the vacatur goes final, that's it.  Game over.  Rule dead.  Finis. 

And it sorta has to be that way.  If it weren't, how could you proceed based on a court's vacating of a rule, if another court in another circuit could someday resuscitate it!?  In fact, were that possible, you wouldn't even be safe in the circuit in question, because the Supreme Court could someday come to a contrary decision, invalidating the vacatur even in the circuit that did the vacating.

The enormity of the power of a single court here cannot be overstated.  If a rogue district court were to vacate a rule and that vacatur were to become final, the rule is off the books nationally - even if 12 circuit courts think that the rule is not only OK but is the only proper interpretation!!!

Look at it this way.  Let's say someone goes and bulldozes your house.  There may be 12 people that now want to grant your once and former house (apologies to Monty Python) landmark status.  But here's the thing - she's not there (apologies to The Zombies).  That's the situation here: no matter how many courts like the rule, once one final federal decision comes down killing the rule, it's dead.

Is there even any relevance, then, to a split in the circuits?  Well, sorta.  Let's go through it.

First, just to say it, in the case of the fiduciary rule, there probably wasn't a split in the circuits.  The Fifth Circuit killed the rule; other courts had only really said that the rule shouldn't fall based on particular points and arguments.

In any event, though, the relevance of a split or other disagreement is not that the vacatur is somehow compromised by the "other" circuit's (or circuits') opinion(s).  It's that the split or other disagreement might make it more likely that the Supreme Court would grant cert.  Ahhh, but therein lies the rub (apologies to Shakespeare).  If no one asks the Supreme Court to here the case, there's no request for cert. to be granted.

And that's what wound up happening here.

How can that be (apologies to Dr. Suess)?  Well, ordinarily, there's a fail safe.  In particular, the US government is there to file appeals and get the benefit of appropriate potential review, simply by continuing the case.  So, in my rogue-court example, the decision would have then to get by a circuit court and the Supreme Court, depending on the US's sticktoitiveness.

So now we come full circle back to the Trump election.  It may have been thought that the impact of the election on the rule was administrative - that the DOL would kill the rule through the administrative process.

But that's not what happened.  Rather, what happened is that the relevance of the election emerged in the litigation process.  What do I mean?

Look, it's not like the DOL abandoned its rule out of the gate.  Quite clearly, the DOL diligently and ably pursued its defense of the rule through the Fifth Circuit's rendering of its fateful opinion.

But when the Fifth Circuit did the dirty deed, it emerged that the Trump administration had the unilateral ability to get rid of this albatross.  The DOL (and DOJ) could have pursued an appeal if but for no other reason than to protect its general rulemaking authority.  But, really?  With the Presidential Memorandum and all the rhetoric out there, this administration was going to use scarce resources to rescue this rule?  Didn't seem likely.

And didn't happen.

So then the AARP and the states jumped in and asked to take over the case and have it reheard.  And take the federal government's decision-making process away from that government?  Now maybe one could almost imagine some kind of equitable argument were the US simply letting the rule die on the vine at the hands of some unthinking lower court.  But, yet again, that's not what had happened here.  The Fifth Circuit's opinion, right or wrong, is quite thoughtful, well-researched and well-written.  In fact, given the Fifth Circuit's stinging rebuke to the DOL and its thinking and process, Secretary Acosta's beloved Rule of Law now seemed to be pushing towards an abandonment of a rule held to be unreasonable and to be arbitrary and capricious.  It's also worth noting with amusement the Democratic Senators who, with a straight face, wrote a letter arguing that letting the rule die was leading to confusion.  Can you only imagine the Ball of Confusion (apologies to the Tempt's) that would have resulted from a decision by the DOL/DOJ to pursue this further?  (. . . like ERISA's very own li'l Bush v. Gore . . .)

So the Fifth Circuit then flatly rejected the seemingly wistful and seemingly desperate efforts of the AARP and the states to intervene.  And then the states (with the AARP moving on and removing itself from the process) moved to have THAT decision reheard.

And then the deadline for requesting cert. indeed came and went.  And then, earlier today, the mandate (with all of its hilarious grammatical shortcomings) effectuating the vacatur issued.

Dead Yet (apologies to Monty Python, redux)?  Yup.


And now for (I'm in a bit of a Monty Python vortex, it would seem) another wild ride.  I'll try to do this one a bit more quickly, but it too really is something.

As a (the?) centerpiece of the package of President Obama's policy initiatives, we got Obamacare.  The way in which the legislation was pushed through the House after Sen. Kennedy passed away, so as to avoid the need for another vote in the Senate, was impressive (Machiavellian?) to say the least  And, by the way, the phrase, "Obamacare", was initially used derisively by those who hated (despised?) the legislation, and then was ingeniously co-opted by the sponsors as a neutral (or maybe even positive) descriptor.  The whole process was incredible.

Then, in Sebelius, the Supreme Court upheld the law as a valid exercise of the United States' taxing power, with Justice Roberts (ironically?) providing the analytical horsepower to get there.  The idea is that the individual-mandate penalty was a tax.

And then, in Burwell, the Court held that the statutory provision that allowed for a subsidy in states with an exchange established by a state also applies in the case of a state with a federal exchange.  That effectively saved the statute, as the statute no longer would have worked sensibly if it were not so interpreted.  Another bullet dodged.  But for how long?

Well, in Tax Reform, they killed the penalty, effective 2019.  Hmm - in what might be quite a "gotcha" embedded in the passage of the statute, Attorney General Sessions then agreed that the elimination of the penalty effectively causes Obamacare to be unconstitutional (in 2019) because the statute will no longer "produce . . . revenue for the Government".

It's arguable that, already, without more, Tax Reform has cut the heart out of Obamacare.  And now it appears to be at least possible that what's left of Obamacare might be altogether unconstitutional, after all?!?  Wow, now wouldn't THAT be something?!?


Talk about two long and winding roads!  Wild rides?  Heck, I wonder if Mr. T‎oad ever had THIS much fun.

Saturday, April 14, 2018

ERISA (with a Public Flavor) Comes to Gotham?

Employee-benefits legislation tends to be reactive to problems, rather than being crafted in a vacuum.  The remedial nature of the effort often results in a comprehensive and complex regime.  For example, the fiduciary provisions of ERISA were enacted at least in part in response to Teamster abuses regarding the union's benefit plans.  Much of Jimmy Hoffa's shenanigans involved the Teamster plans - can you say "Meadowlands end zone"? 

Well, clearly our skills need to be brought to bear to help Gotham through some recent crises.  To wit, when Peter McRobbie's Mayor Holden Pritchard was trying to extricate himself from some problems he was having with Cameron Monaghan's Joker (Jerome Valeska) (doing a pretty decent job of channeling the unmatchable Heath Ledger, by the way), he quickly offered up, "I have access to the police pension fund."  Time to bring to Gotham long-time efforts to port ERISA over to the world of public plans, no?

Wednesday, January 3, 2018

Severance Benefits Come to . . . Black Mirror?!?

[NOTE - Black Mirror SPOILER ALERT below]

It seems as though everyone is levering off of employment terminations and severance as plot devices.  A recent post cited to two recent examples, one from Billboards/Ebbing and one from Bright.  Here [SPOILER ALERT] is one from the season finale of Season 4 of the truly amazing and indeed arguably incomparable Black Mirror:

Douglas Hodge's Rolo Haynes - "Human rights for cookies. . . .*  Anyhow, ACLU raised one heck of a stink‎.  And so thanks to this son of a monkey** I was out on my a-- with TCKR.***  Not even a severance package.  That's why I started this place.****"

Someone's gotta keep watching out for these things, so I guess I'll just have to be the one who keeps doing so. 

* Now THERE's a concept!

** If you want to get the "monkey" reference you'll have to watch the show.

*** That was a former employer of Rolo.

**** A reference to Rolo's museum.  Again, watch the episode.

Wednesday, December 27, 2017

Snippets from Bright and Stern, and Some Holiday Oldies

*SPOILER ALERT below (for Three Billboards Outside of Ebbing, Missouri)*

Without anything of any substance to say during this Holiday season, I offer some snippets, and a related back-reference or two (or three):

1.  From Bright, a project inevitably greenlit by Netflix (thanks, South Park) -

Andrea Navedo's Captain Perez, referring to the termination of Joel Edgerton's Nick Jakoby, an alien (like a from-outer-space alien) - "The Jakoby issue is sensitive.  The world['s] watching; we can't fire him without cause."

It doesn't rank with some of the great termination-of-employment scenes - see my prior post here - but I think it was worth a reference.  (SPOILER ALERT for the next sentence!!!)  Note also that in Three Billboards Outside Ebbing, Missouri, Sam Rockwell's Jason Dixon (how amazing is Sam Rockwell?!?) talks about what kind of severance compensation one may get for throwing a man off a building.

2.  From the Stern show, presented without further comment:

someone speaking in Ronnie "the Limo Driver" Mund's voice (referring to . . . ahem . . . what apparently is some new kind of retirement plan) (and, so that you get the right vibe, channeling that Andrew "Dice" Clay affect) - "I got a 469(k)!"

A prior Stern-related post can be found here.

3.  Having nothing to do with compensation or ERISA, here are some old Holiday posts:

Christmas songs

Merry Xmas, Happy New Year and Happy Holidays to all!

Friday, November 24, 2017

Employees vs. Independent Contractors - 1099s and 401(k)s, (and Bonuses, Too) in the Land of the Ozarks

So, courtesy of Netflix (where the heck is more Black Mirror?!?), it turns out that Ozark's pretty good.  Definite Breaking Bad vibe, but maybe just a bit more clean and Hollywood.  In Episode 2, while watching a pregnant "dancing" girl (geeeez), we hear the following -

Jason Bateman's Marty Byrde: I think that a, a higher caliber dancer would definitely translate into a higher-paying customer.  And is there any reason that you can't have beautiful women work here? - I don't think so.

Adam Boyer's Bobby Dean: Beautiful girls won't work here.  I won't let 'em.  Plain Jane's with a work ethic - that's my sweet spot right there. . . .  See I own the stage.  They pay me to climb up on it, plus 25% of their tips‎.   Ain't no payroll; all 1099s‎; independent contractors.  No health insurance, vacation time, 401(k)s, Social Security, sick leave.  And no liability.  But I want my 25%, read me?

A nice little primer on the withholding- and benefits-based distinctions between employees and independent contractors, no? 

Later, in Episode 6, Marty's wife, in asking the real-estate guy for whom she performs services for some additional compensation, engages in the following exchange -

Laura Linney's Wendy Bryde: Since I've been working with you, you've been able to increase your commission from five to seven percent.  Now I did some math and you've been able to have an additional earnings of $192,000‎.  I think it's only fair that I should request a bonus, beyond my hourly that will align‎ my total compensation with my value.

Sharon Blackwood's Eugenia Dermody: Wha -

Kevin L. Johnson's Sam Dermody: What're we talkin'?

Wendy: Half your increase in income.

Eugenia: Half?

Wendy: Oh, and y'know if you don't agree I thank you for everything and, y'know, I'll just go, go right over to Lakeville Reality.  I'll see what they can offer me.

Sam: Unh, Mom - OK - I'll give you ten thousand‎.

Wendy: Forty - that coupled with my salary will be a little less than a third of your additional profits, give or take.

Eugenia: Take.

They settle for a little less.  Methinks that someone on the writing staff knows something about compensation (see also that same surmise regarding Better Call Saul).

Never know what you'll learn from these shows . . .

Sunday, November 19, 2017

The NFL‎, Health Care and Employment Contracts - and Jimmy Kimmel, Too

From the 11/18/17 Saturday Night Live -

NFL Commissioner Roger Goodell is reportedly seeking a contract extension that would provide ‎him with a salary of $50 million, use of a private jet and lifetime health insurance for him and his family. That's how expensive health care is - he's going to make $50 million a year and he's still, like, "What about that health care, though?"*


Also, while we're on the subject of health care, I (belatedly) note all the noise about the Jimmy Kimmel Test as being the baseline standard for what should be in health-care reform. I just can't get my arms around Sen. Bill Cassidy (R-La.), that Pontificating Purveyor of Pop Culture, having appointed Kimmel, that bastion of policy-making capability, as the determiner of how the American health-care system should look. I guess Sen. Cassidy eventually came to regret that little misguided appointment, huh?

Happy Thanksgiving!

* By the way, for what (little) it's worth, while I don't pretend to be a rap aficionado (to say the least?), I thought - all kidding aside - that Eminem's emotional and intense performance on the show (channeling, I would suggest, Charles Barkley's "I am not a role model" sentiment) was maybe the best live rap performance I have ever seen. Just wanted to throw that out there.

Sunday, October 15, 2017

Harvey Weinstein - in His Own Words (or, More Accurately, Movie Titles)

Well, it looks like Mr. Weinstein has been "Derailed". This should be a pretty "Black Christmas" for him. Whatever you do, if you've got a daughter, don't leave ol' Harvey "Alone with Her"‎. It's like they ran a real "School for Scoundrels" over there. Seems like there was "No Escape" from that "Hell Ride". What a "Bully"! Didn't I hear Bob Weinstein referring to his beloved sibling as "Our Idiot Brother". Harvey is after all, at this point, the "Black Sheep"‎. Or maybe simply "The Nut Job" in the family. Surely, now, at least, one of the "Inglorious Basterds". Who woulda thought that in the end this movie titan would turn out to be just another "Nowhere Boy".

So I guess there is such a thing as bad publicity.

Or, somehow, does Harvey (or as Jackie Gleason might have said, har-VAY) wind up somehow getting a partial win here? There are reports that he may challenge his termination under his employment contract, and look for potentially large severance payments. On this point, query whether, in a rush to get this done, they jumped through all the right hoops so as to have successfully effected a termination for cause. Of course, even if a claim here might have some legs, query whether there will even be a company around to foot the bill for any severance that might in theory be payable. Maybe Harvey wins, and gets nothing anyway? Can you say, "Pyrrhic victory"?

I would suggest summing the whole thing up with a single word: wow.

Sunday, October 1, 2017

From Medical Marijuana to Pension Marijuana?

If you haven't heard of the concept of medical marijuana you probably live under a rock.  But  now from England comes the concept of pension marijuana.  What do I mean by that?  Well, I just got a thing from Legal & General, where I have some pension money, which amusingly informed me: "We've put together some information to help you understand the options available if you're thinking about accessing your pension pot."  Just for the record, that's not for me - but it still struck me as pretty funny.

Monday, September 25, 2017

K-1 Visas and 401(k) Hardships Meet in the World of 90-Day Fiancés

‎There's a counterintuitive aspect to the general and 401(k) hardship rules. Essentially, it can be pretty hard to get a hardship withdrawal. It all seems so cruel and harsh. Why should I be prohibited from getting my own money when I need it? Isn't that just another example of complex regulation giving rise to incomprehensible results for no good reason?

No - the concept of killing someone with kindness comes to mind. The idea here is that the enormous tax subsidy provided by the federal government for retirement plans is for money that's there for . . . retirement. If people are given access to retirement funds too easily, then, when it's really important for the retiree to have the funds to allow the new post-employment phase of life proceed as expected, the funds may not be there. And what could be more dangerous than an older retiree with no visable means of support?  So the greater the access, the more danger that the money won't be there for retirement, to the potential devastating impact on the retiree. That's the very retiree who, before retirement, may have been so upset that the money was not early available.

The rules are even tighter under Section 401(k). Section 401(k) runs counter to a fundamental seminal tax-code concept, in particular that, once the applicable facts are set, the taxpayer does not have control over when taxation occurs. For example, service providers are taxed not only on actual receipt of compensation but also on constructive receipt of compensation. The idea is that, if under some set of facts the time of taxation is triggered, then the individual can't just decide to change that timing. Section 401(k) stands in stark opposition to that foundational concept. So Congress (and Treasury and the IRS) provided that, here, where not only is the money there for retirement but it's there under a special provision allowing completely elective deferrals (and the control of the timing of taxation for the service provider that this control brings), the hardship rules would be even tighter.

Two high-profile considerations of this issue come to mind. The first was the odd spectacle of watching both the McCain and Obama campaigns, after the sub-prime crisis had hit, pandering away with criticisms of the IRS for not allowing expanded access to 401(k) money. How could the IRS be so cruel? This might've been like the only thing those two campaigns agreed on, and, hilariously, they were both flat-out wrong. The proof? After bipartisan support from the candidates themselves for this specatularly misguided initiative, it went absolutely nowhere after the election. I can only the imagine the meetings after the election at which senior Treasury officials said to President Obama, with Ringo-style peace and love,*something like, "President Obama, with all due respect, uh, . . . no."

Well, you think THAT was high-profile? Now, then, get ready for a high-profile Think Tank where the deepest thinkers here and abroad consider weighty matters relating to politics and economics. Yes, that's right, look no farther ‎TLC's 90-Day Fiancé: Before the 90 Days

So let's look at the story of Larry & Jenny. Larry has decided to traipse off to the Phillipines to meet and marry (!) a young girl named Jenny. We get the following, from Larry:

"I really hope Jenny likes the hotel because I spent my 401k on this trip. . . . I put everything on the line for this trip - my 401k, my heart, everything. . . . Most people find it crazy that I spent my 401k, but this could be the trip that changes my life forever."

Maybe he got all confused, being that "k" and "1" appear in both "K-1" and "401(k)"? While that's an appealing theory, it seems more like he just thought it was no biggie for him to wipe out his nest-egg ‎in favor of a trip to meet a girl that he had come upon on the Internet.

If you need convincing regarding the propriety of the 401(k) hardship rules, just keep reading Larry's series of deep-thinking statements above.  Read them over and over and over.  And over.

Maybe, just maybe, tight restrictions on access to 401(k) and other retirement savings really does make some sense. Sheesh.

* See (for what may well be one of the funniest things EVer, courtesy of Mr. Starr).

Monday, July 31, 2017

Washington, D.C.'s Fiduciary Rule Meets Gary, Indiana's Music Man (and Godzilla, too)

From ‎the July 30, 2017 edition of The Wall Street Journal, bridging the gap from Gary, Indiana to Washington, D.C.:
The main legal objection is the flimsy authority Labor used to up-end an industry and establish control.  In a flim-flam worthy of Robert Preston’s con man in “The Music Man,” Labor made an end run around the Securities and Exchange Commission by claiming authority to regulate these retirement accounts. 
In the musical, Preston’s character bases his authority to lead a band on a degree from a nonexistent Conservatory of Music in Gary, Ind.  Labor did much the same by invoking the 1974 Employee Retirement Income Security Act (Erisa), which gave it the authority to reduce the regulatory burdens on IRAs. Labor turned that on its head and used Erisa to impose a new, industry-altering regulation.

All of this follows Eugene Scalia's May 31, 2017 WSJ Op-Ed titled (with a flair that woulda made his dad proud), "Godzilla (the Fiduciary Rule) Ate the Rule of Law".  Oh, no, there goes Tok-ee-yo (go go, Godzilla).


Thursday, June 29, 2017

Scrivener's Errors, Redux

This must be my phase for updates of old posts, even where there's no new ERISA angle.  Previously, I posted on the Verizon case, where a clear scrivener's error almost cost the plan sponsor a billion (!) dollars.  Now, we have a Michigan case, El-Hayek v. Trico Products, in which a clear typographical error almost led to severance of . . . 22 times salary.  Once again, the court held that reformation of the contract, rather than a ridiculously absurd windfall, was the right answer.

One could take from all this the message that the courts are not likely to reward undeserving people with huge sums over typographical errors.  Cf. an old Prudential case involving several ships.  But I take away two contrary points: (i) it's scary how close people are getting successfully to carting off these windfalls (these are not necessarily straightforward cases from a legal perspective), notwithstanding how undeserving they may be, and (ii) gee golly would I EVER not want to be the person who's on the wrong end of making these kinds of typos (there but for the . . .).  See also examples of where money was indeed lost by virtue of an out-and-out mistake, including the GM/JPM debacle.*

* . . . and, going back several more years, there was the widely discussed case in which zeroes were left out of a number in a filing by a big firm, with the result that the creditor was left undersecured by millions.

Thursday, June 22, 2017

Another Possible Con-Vick-tion

There posts - here, here and here - have chronicled aspects of Roger Vick's descent into wrongdoing.  Just for the sake of completeness, with no additional ERISA overtones, the following is offered up.

It has now been reported that Vick's father has been charged, along with 11 other people, in a large-scale heroin distribution ring, for dealing heroin and money laundering. 

Apples, trees and all that rot.  Another one for the old saw that the thing that distinguishes fiction from reality is that fiction has to be credible. 

Saturday, April 22, 2017

United They Fall

The United debacle that's ALL over the news highlights an aspect of employment contracts that is sometimes - maybe often - missed. Protections in an employment contract are great, but the reality is that, if you want your job and if they want to play hardball, all of these protections may not be worth the paper on which they're written. There are now reports that suggest that ‎Oscar Muñoz had provisions in his employment contract that required him to ascend to the chairmanship of the Board and, furthermore, gave him Good Reason to quit if the ascension did occur. Then, he savagely mishandled the horrific passenger-ejection situation, and asserted that his job was not in trouble. Apparently, as a result, Mr. Muñoz will NOT ascend to the United chairmanship and, indeed, is . . . ahem . . . agreeing to the effective deletion of both the provision that would have required him to become Chairman and the provision that would have given him Good Reason to quit were he not to become Chairman. So, the net effect of the purportedly protective provisions? - zippo. Another lesson learned for those execs who might have some really, really good clauses in their employment contracts, but who might really, really, really prefer to have their jobs rather than enforcing those clauses.  

Sunday, April 2, 2017

Pensions for The Accountant

Not a huge ERISA reference, but pensions make it into the Ben Affleck flick, The Accountant.*  Jon Bernthal (Shane, from The Walking Dead, for fellow fans), as Brax, is beating on John Lithgow's Lamar Blackburn, while also expressing great anger regarding some of Lamar's financial shenanigans.  He identifies the harm being done not only to several companies, but also to their employees.  He then goes on to complain, while inflicting enormous physical pain, "Pensions are being rendered worthless because of you."  Hey, now THAT's some serious stuff.  

* By the way, Ben's Argo was the subject of one of my more prescient posts.

Friday, March 24, 2017

"Peeps" Goes the (Multiemployer) Weasel

You'd like to think being cute is good enough, right?  I just got done talking about how Louis C.K.'s company has to make contributions to a multi, and now the even-cuter (cuter than Louis C.K.?) manufacturer of those ubiquitous peeps may need to do so.  In Bakery & Confectionery Union & Indus. Int'l Pension Fund v. Just Born II, Inc., No. 8:16-cv-00793 (D. Md. Feb. 8, 2017), the court held that Just Born (could the name BE any cuter?!?) was required to continue to pay certain contributions to the plan even though the applicable agreement had purportedly expired.‎  Ouch.  The case is now being appealed.*


* Interestingly, earlier, the district court had rejected the parties' prior agreement to settle the case.

Wednesday, March 22, 2017

ERISA Goes "Oink" - Louis C.K.'s Pig Newton Owes Contributions to a Multiemployer Plan

There have previously been posts here relating to ERISA-related judicial difficulties surrounding Denny McLain, The J. Geils Band and Michael Vick.  Now let's add ‎MPPAA issues surrounding Louis C.K.'s Pig Newton to the mix.

In Pig Newton, Inc. v. Boards of Directors of Motion Picture Industry Pension Plan, No. 15-01029 (2d Cir. March 31, 2017), Pig Newton, Inc. did editing work on the TV show, "Louie," through its sole owner, Louis Szekely.  A multiemployer plan sued for allegedly required contributions.  Louis Szekely is known by many as the one and only Louis C.K.  See also here (relating to the derivation of the "C.K." he uses as his surname).

The Second Circuit affirmed the district court in concluding that ‎Pig Newton was required to make contributions for a flat number of hours for work, regardless of how many hours of work were actually performed.  In this case, there was a plan rule applicable to those controlling employees who could determine their own hours (and thereby potentially avoid applicable hours thresholds) under which Pig Newton had to contribute for Louis C.K. at set weekly and annual rates, regardless of the actual hours of editing work.

Hopefully, the proprietor's unsurpassed sense of humor will . . . ahem . . . somehow get him through this dark time.  More fun with ERISA!

Saturday, March 18, 2017

"Going in Style" with Pension-Centric Movies (Part III)

I have posted here and here about movies that are, unbeknownst to many, quite ERISA-centric.  Maybe the best (or at least most interesting) example is Wall Street, which is essentially a pension-reversion  movie.

Now, with the Arkin/Caine/Freeman remake (or "reboot," or whatever) of the Burns/Carney/Strasberg movie Going in Style we clearly have another example of ERISA-centric cinema.  The movie isn't yet out, but already we have a commercial starting with, "the pension fund is being dissolved," and trailers that contain the statements that, "Zentex [sp?] Steel has frozen all pension payments," and that, "Williamsburg Savings will manage the liquidation of the fund."  From there, the plot (and I don't think is a spoiler, given the marketing campaign) seems to center around some combination of vengeance and necessity revolving at least in part around the failed pension plan.

It's no Wall Street, I strongly suspect, but it's a pretty high-powered release with what seems to be much ERISAspeak.  I guess that, at some point, I really do need to see it.*

* For the record, back in the day, I DID see the original.

Sunday, March 12, 2017

Treatment of 401(k) Plans When . . . Men Join Sororities (?)

[SPOILER ALERT, for those of you who may see the movie Neighbors 2: Sorority Rising, the below reveals an important scene]

The critical question of what happens to 401(k) accounts when men join sororities is addressed by Seth Rogen's movie Neighbors 2: Sorority Rising‎.  In a key scene from the movie, when Zac Efron's ‎Terry is told by Chloë Grace Moretz‎'s Shelby that he's getting thrown out of the sorority (lonnnng story), we get the following exchange -

Shelby: We just voted.  And we decided it's best for you if you go.

Terry: When‎?

Shelby: Just now.  With our phones.

Terry: What - no?  No-  you can't do this to me.  I thought we were sisters. ‎We were supposed to be a team‎.  Why is this happening?  You can't do this to me.

Shelby: I, uh . . .

Terry: I quit my job!

Shelby: Well, we didn't tell you to do that.

Terry: I liquidated ["liquidated" - wow!!] my 401(k) for this.

Shelby: What's a 401(k)?

Terry: I don't know - now‎.[*]


* And then, by the way, they went on to address the arguably related aging-workforce issue, as follows -

Shelby: Look, I'm so happy that you helped us get this place that we're in.  You let really let us spread our wings and fly ‎as women.

Terry: This is all I have. I thought we were in this together.

Shelby: You're not like us, dude. You're an old person‎.

(By the way, Efron's about 29-years old.  Argh.  Shades of Dee Wallace's "old" 31ish Mary Lewis from the Bo Derek/Dudley Moore movie 10.)

Wednesday, February 22, 2017

Apple AirPods, Lil Buck, Marian Hill and . . . Pensions

So I'm noticing that the initial scene in a particular segment of Apple's major AirPod ad campaign - the one with the dancing of Lil Buck (Charles Riley) to Marian Hill's "Down" - features the word "PENSION" clearly emblazoned on a street-facing building wall in Mexico City.  I then get all kinds of excited (sorry!) that pensions had inserted themselves itself into yet another iconic setting in the World of Pop Culture.  But, no - it turns out that a "pension" is a term typically used in continental Europe and elsewhere for a type of guest house or boarding house‎, as in, for example, "Pension Las Brisas Marbella".  Ya learn somethin' new every day . . .  

Saturday, February 4, 2017

Johnny Depp and . . . the DOL's Fiduciary Rule?!?

It has been reported (thank you, Mike S.) that Johnny Depp is pursuing claims against his former business managers for fraud and other breaches of fiduciary duty.  Now, at least two writers, here and here, have drawn a connection between Depp's situation and the noise surrounding the DOL's fiduciary "investment advice" rule.  The point is that Depp's sad state of affairs may have been less likely to have occurred if only - ah, if only - the now-vanishing fiduciary rule had been applicable law.  Maybe Tim Burton can do "Edward Scissorhands II - the ERISA Connection"?!?*

Well, I'm not sure that the connection between Depp and ERISA is as strong as the writers think.  Obviously, the fiduciary rule, even if  applicable, would only have application in respect of retirement accounts, and I didn't see any indication that Johnny's assertions related to 401(k) or IRA money.  Even the DOL's expansive view of its charge wouldn't seem to lead to a justification of regulation outside of the retirement context.**  Details, details, details.

And, speaking of the fiduciary rule, how about yesterday's Trump memorandum directing a review of the rule, coupled with the DOL press release contemplating a delay in the applicability of the rule?  Yuuuuuge news.***

Onwards . . .

* I would note that Depp's representative makes a disparaging reference to the use of a series of press releases to "gaslight" the public into an adverse view of Mr. Depp.  I just want to go on record as saying that I'm not sure that the use of the gaslighting concept in this context is exactly right.  As I previously outlined, Gaslighting is more about punking people through subtle obfuscation than about bludgeoning people with on onslaught of assertions.  I think that the right reference would have involved some kind of accusation that Depp's enemies had blanketed (as opposed to gaslighted) the market with falsehoods.  Details, details, details.

**  Or would it?  The DOL's recent consumer-protection FAQs do contain the following arguably bold suggestion: "[T]he best interest standard and other significant consumer protections offered under the Department of Labor’s Rule and exemptions only apply to retirement accounts in ERISA plans (like 401(k) plans) and IRA accounts where you are building up savings for your future retirement[, and to certain other accounts]. . . .  An investor can always ask an adviser whether the adviser will live by the fiduciary “best interest” standard in the Department of Labor Rule and exemptions for all investments – and if they will not, can consider finding one who does."

*** Give me some credit - it looks like I may have it right, both here and here, that, as a result of the 2016 election, the rule's survival is in real jeopardy, to say the least.