EMPLOYEE PLANS

Rev. Rul. 2002–41, page 75. Health reimbursement arrangements (HRAs). This ruling describes an employer-provided medical care expense reimbursement plan called a health reimbursement arrangement (HRA), in which reimbursements for medical care expenses made from the plan are excludable from employee gross income. Among other things, the HRA described retains favorable tax treatment because it only reimburses employees or former employees for medical care expenses of the employee or former employee and their spouses and dependents; is solely employer-funded and not paid for directly or indirectly from salary reduction; and although it allows participants to carry forward unused amounts for use in later coverage periods, these amounts may never be used for anything but reimbursements for qualified medical care expenses.

Rev. Rul. 2002–42, page 76. Merger or conversion; partial termination; notice. This ruling describes a situation where a merger or conversion of a money purchase pension plan into a profit-sharing plan is not a partial termination of the money purchase pension plan and also describes the type of notice that must be given to affected plan participants. Rev. Rul. 94–76 amplified.

Notice 2002–45, page 93. This notice describes the tax treatment of an employerprovided medical care expense reimbursement plan called a health reimbursement arrangement (HRA). The notice explains that to maintain favorable tax treatment, HRAs may only reimburse employees or former employees for their medical care expenses and their spouses’ and dependents’. This notice also explains that the requirements for flexible spending arrangements (FSAs) stated in section 125 of the Code are generally not applicable to HRAs. In particular, an HRA may allow a plan participant to carry forward unused reimbursement amounts to be used for medical care expense reimbursements in later coverage periods. Also, this notice explains that to retain exemption from the section 125 FSA requirements, the HRA must be solely employer-funded and cannot be directly or indirectly paid for pursuant to salary reduction election.

Notice 2002–46, page 96. Optional forms of benefit; section 645 of EGTRRA; request for comments. This notice requests comments from the public on proposed regulations that will be issued concerning elimination of optional forms of benefit from defined benefit plans.

Notice 2002–47, page 97. Application of employment taxes to statutory stock options. This notice provides that until Treasury and the Service issue further guidance, in the case of a statutory stock option, the Service will not assess the Federal Insurance Contributions Act (FICA) tax or Federal Unemployment Tax Act (FUTA) tax, or apply federal income tax withholding obligations, upon either the exercise of the option or the disposition of the stock acquired by an employee pursuant to the exercise of the option.