By Employee Benefit Research Group
More retirement-related regulatory news for plan sponsors, including links to detailed information.
DOL pension service provider compensation/expense information based on 2010 Form 5500s
The Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) published a bulletin providing information on administrative expenses of pension plans with 100 or more participants.
“Schedule C Bulletin – Service Provider Information, an Abstract of 2010 Form 5500 Private Pension Annual Reports” provides information on direct and indirect compensation paid to service providers. The information is provided in aggregate, but is broken down by single-employer and multiemployer plans, defined contribution (DC) and defined benefit (DB) plans, amount of assets, industry, number of participants, and type of service provided.
To read the entire report, click here.
IRS closed May 24 and four other days due to sequester; filing/payment deadlines unchanged
The Internal Revenue Service (IRS) has announced additional details about the closures planned for May 24, June 14, July 5, July 22, and August 30, 2013.
Due to the current budget situation, including the sequester, all IRS operations will be closed on those days. This means that all IRS offices, including all toll-free hotlines, the Taxpayer Advocate Service, and the agency’s nearly 400 taxpayer assistance centers nationwide, will be closed on those days. IRS employees will be furloughed without pay. No tax returns will be processed and no compliance-related activities will take place.
For more information, click here.
Student loan interest rate bill includes retirement savings distribution requirement
The Student Loan Affordability Act (S.953) introduced today to freeze the 3.4% student loan interest rate for two years (on subsidized Federal Direct Stafford Loans) includes a provision that would generally require retirement savings accounts to be distributed to a non-spouse beneficiary within five years of the death of the account holder. The student loan interest rate is set to double to 6.8% on July 1; Congress last year enacted a one-year extension and is expected to address this issue before the rate-change deadline.
The required distribution from retirement savings accounts would raise about $4.6 billion in revenue (over 10 years) and help pay for the student loan provision, along with two other offsets (subjecting oil from tar sands to the taxes that support the oil spill liability trust fund, and tightening the limitation on the deductibility of interest paid by an expatriated entity to related persons) contained in the president’s FY2014 budget proposal. The retirement savings account distribution requirement would not apply if a beneficiary is: within 10 years of the account holder’s age; or an individual with special needs or disabled. A beneficiary who is a minor would be allowed to receive payments up to five years after they attain the age of majority.
May 2013 EBRI notes: IRA withdrawals
The Employee Benefit Research Institute (EBRI) recently published the May 2013 EBRI Notes article, “IRA Withdrawals: How Much, When, and Other Saving Behavior.”
Here is an excerpt from the executive summary:
• Households between ages 61 and 70 that made withdrawals even though they were not yet required to take IRA distributions (i.e., not subject to the required minimum distribution rules, or RMD) made larger withdrawals than older households, both in absolute dollar amounts as well as a percentage of IRA account balance.
• The bottom-income quartile of this age group had a very high percentage (48 percent) of households that made an IRA withdrawal, and that their average annual percentage of account balance withdrawn (17.4 percent) was higher than the rest of the income distribution.
• Among households between ages 71 and 80 that are subject to RMDs, those that have a withdrawal exceeding the RMD amount had average withdrawal amounts that were more than double the amounts taken by those that withdrew only the RMD amount. The percentage of account balance withdrawn was also much larger for households that withdrew more than the RMD amount.
• Younger households (61 to 70) that made IRA withdrawals spent most of it, while for those between 71 and 80 there was some increase in savings (in CDs and similar holdings) associated with an IRA withdrawal.
Read the entire article here.