Response to comments

I have received some comments and the time has come to address some of them. Remember: this is not legal advice.

C.H. wrote with the following questions. “Do Medicaid rules require that group counseling services provided to special education students in schools be given in groups of 6 students or less? Do these rules vary from state to state? If Medicaid rules require small group counseling, does this conflict with Least Restrictive Environment rules that children be served in regular classrooms when appropriate?” Typically, Medicaid and education are fiefs alone. Although we know well that the two do meet and should be better coordinated, education rules would likely apply to a school-provided counseling service. Each state will have different rules. As to counseling and LRE, my thought is that counseling is not something inherently amenable to the concept of least restrictive environment. Counseling would seem to be unlike academic instruction or social activities that are open to all or required of all. The question might be whether the counseling is delivered in the right environment, but without the added layer of LRE.

Regarding the entry for Section 403(b) employee benefits plans, Kristine asks “Are you interpreting this regulation to mean that if a teacher complies with the election provisions, no additional tax is due?” Sorry, Kristine, I am not going to touch that one. You will need to consult tax experts and review the IRS guidance. 

Back to Medicaid and special education funding, an anonymous commenter asks “Is there a site where we can check how much our school district will lose each year because of these changes?” Not to my knowledge.  The actual loss will depend on a number of factors, such as how many students participate in medical assistance and whose parents permit the district to bill and how aggressive the district is in claiming medical assistance money.  In my experience, some parents will not permit the district to access such funds and some district really do not put much effort into securing the funds. Because of these factors, even taking the “savings” estimated by CMS as a per pupil amount would likely be wildly inaccurate because of the many factors. I suggest you contact the person in charge of the district’s medical assistance related matters and or the district’s business manager. 

Finally, suburbanmom asks, “Who do I contact if I think Title IX is not being enforced?” There are a number of places to turn. You may want to contact your school’s Title IX coordinator. You may also contact your state or the federal departments of education. This is a link to the federal DOE’s Office for Civil Rights, which enforces Title IX, among other laws. 

New IRS Guidance on § 409A and Deferred Compensation

The IRS has again issued new guidance impacting on education in particular.  In response to teacher concerns about recent changes to deferred compensation rules, the IRS issued a press release and a “frequently asked questions” guidance regarding deferred compensation under § 409A. 

This part of the Tax Code affects teachers and others whose compensation payments are not based a typical calendar year.  Teachers, for example, might be paid an annual salary over 10 months, a typical school term.  But a school system may also allow teachers to elect to be paid over 12 months, although the months in that case coincide with a typical school year rather than a calendar year.  If a person elects a 12 month schedule, the compensation spans two taxable years and so the election must meet the procedures of § 409A.  These procedures are further addressed in the FAQs.  

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IRS releases final § 403(b) regulations

On July 26, 2007 the IRS published final regulations regarding § 403(b) plans and related regulations. Named after the pertinent section of the Internal Revenue Code, § 403(b) plans involve tax sheltered retirement annuities offered by public schools, colleges, universities, and § 501(c)(3) charitable organizations. The final regulations (including commentary) can be viewed in the Federal Register.   

The regulations will take effect, generally, in December 2008, with some exceptions. The IRS press release, Employee Plans News, highlights the impact of the regulations, including effective dates.  Additional information can be found at the IRS’s website.

Although much of the information is publicly available, tax planning is complicated and neither this Blog nor the public information should be mistaken for legal advice. Anyone interested in § 403(b) plans can contact one of the Fox Education Law Group attorneys or, for general tax matters, a member of the Tax Department.