Category Archives: Benefit News

Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

Proposed rule on nondiscrimination relief for closed DB plans
The Internal Revenue Service (IRS) has released a proposed rule on nondiscrimination relief for closed defined benefit (DB) plans and additional changes to retirement plan nondiscrimination requirements. The rule would modify the nondiscrimination requirements applicable to certain retirement plans that provide additional benefits to a grandfathered group of employees following certain changes in the coverage of a defined benefit plan or a defined benefit plan formula.

The proposed rule also makes certain other changes to the nondiscrimination rules that are not limited to these plans. The regulation would affect participants in, beneficiaries of, employers maintaining, and administrators of tax-qualified retirement plans.

To read the entire proposed rule, click here.

Proposed improvements to financial reporting of pension and other postretirement benefit plans
The Financial Accounting Standards Board (FASB) has issued two proposed Accounting Standards updates intended to improve financial reporting by employers related to defined benefit pension and other postretirement benefit plans. The proposed updates are entitled:

• Compensation—retirement benefits—defined benefit plans—general (subtopic 715-20): Changes to the disclosure requirements for defined benefit plans
• Proposed Accounting Standards update—compensation—retirement benefits (topic 715): Improving the presentation of net periodic pension cost and net periodic postretirement benefit cost

To download the proposed updates, click here.

Proposed rule on applicability of normal retirement age regulations to governmental pension plans
The IRS released a proposed rule under section 401(a) providing guidance on the applicability of the 2007 normal retirement age (NRA) regulations to governmental plans.
The proposed rule are intended to assist in determining whether the normal retirement age under a governmental plan satisfies the requirements of section 401(a) by amending the 2007 NRA regulations to provide additional rules for governmental plans.

To read the entire proposed rule, click here.

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Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

Deadline to adopt restated preapproved DC plans
The Internal Revenue Service (IRS) has published deadlines for employers to adopt preapproved defined contribution (DC) retirement plans.

• April 30, 2016, is the deadline for employers using preapproved retirement plan documents to sign an updated version of their 401(k), profit-sharing, or other defined contribution retirement plans.
• April 30, 2017, is the extended deadline for any defined contribution preapproved plan adopted on or after January 1, 2016, other than a plan that is adopted as a modification and restatement of a defined contribution preapproved plan that had been maintained by the employer prior to January 1, 2016. This extension is to facilitate a plan sponsor’s ability to convert an existing individually designed plan into a current defined contribution preapproved plan. See Notice 2016-3.

For more information, click here.

Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

IRS survey regarding determination letter elimination
The Internal Revenue Service (IRS) Advisory Committee on Tax Exempt and Government Entities (ACT) is conducting its 2015-2016 project on the IRS’s decision to eliminate most determination letters for individually designed plans. As part of the project, the agency has prepared a short, confidential online survey to solicit retirement practitioner/service provider feedback on the elimination and to determine the choices plan sponsors are likely to make as well as how the IRS can minimize the impact of the change. The ACT would like responses by February 1.

To take the survey, click here.

CFPB releases guide to help consumers navigate pension payout options
The Consumer Financial Protection Bureau (CFPB) has released a guide to help consumers navigate their pension payout options and make the right decisions about their retirement income. The guide gives near-retirees the information they need to understand the trade-offs of taking their pension in a monthly payment or in a lump sum.

To help consumers who are considering a lump-sum payout option from a private-sector defined benefit pension plan, the CFPB guide also provides tips and warnings about how to protect and best manage that money.

To read the entire guide, click here.

Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

Revisions to the employee plans determination letter program
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) has issued guidance regarding the elimination of the five-year remedial amendment cycle system for individually designed plans under the employee plans determination letter program, effective January 1, 2017. Notice 2016-03 provides guidance on (1) controlled groups and affiliated service groups that have previously made a Cycle A election and are permitted to submit determination letter applications during the Cycle A submission period beginning February 1, 2016, and ending January 31, 2017; (2) expiration dates on determination letters issued prior to January 4, 2016, that are no longer operative; and (3) the period during which certain employers may, on or after January 1, 2016, establish or adopt a defined contribution preapproved plan and, if permissible, apply for a determination letter, which has been extended from April 30, 2016, to April 30, 2017.

For more information, click here.

IRS updates 2016 revenue procedures for employee plans and exempt organizations
The IRS has published its latest Internal Revenue Bulletin. The bulletin includes various revenue procedures for issuing letters, rulings, determination letters, and technical advice on specific issues related to employee benefits.

To read Internal Revenue Bulletin 2016-1, click here.

IRS announces beginning of processing electronic Form 1094 and 1095, B and C
The IRS announced that the processing of electronic Forms 1094 B/C and Forms 1095 B/C will begin on January 21, 2016. The IRS posted a November 2015 revision of Publication 5165, Guide for Electronically Filing ACA Information Returns for Software Developers and Transmitters (processing year 2016). This version represents the most current technical information and should replace previous “Early Look” versions.

For more information, click here.

PBGC ready to accept 2016 premium filings
The Pension Benefit Guaranty Corporation (PBGC) announced that My PAA is now ready to accept electronic premium filings for plan years beginning in 2016.

For additional information, see the following pages: Premium payment instructions and addresses, What’s new in My PAA, Online demos, and Online premium filing with My PAA.

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Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

PBGC to modify collection of information on locating and paying participants
The Pension Benefit Guaranty Corporation (PBGC) is modifying its collection of information on locating and paying participants and is requesting that the Office of Management and Budget (OMB) approve the revised collection of information under the Paperwork Reduction Act for three years. This notice informs the public of the PBGC’s request and solicits public comment on the collection of information.

For more information, click here.

Employers’ Tax Guide for 2016
The Internal Revenue Service (IRS) has published Publication 15, Employer’s Tax Guide, for 2016. This publication explains the tax responsibilities of an employer. It explains the requirements for withholding, depositing, reporting, paying, and correcting employment taxes. It explains the forms that must be given to employees, those that employees must give to the employer, and those that must be sent to the IRS and U.S. Social Security Administration (SSA). This guide also has tax tables needed to figure the taxes to withhold from each employee for 2016. References to “income tax” in this guide apply only to federal income tax.

To download Publication 15, click here.

Employer’s tax guide for fringe benefits for 2016
The IRS has published Publication 15-B, Employer’s Tax Guide to Fringe Benefits, for 2016. This publication supplements Publication 15, Employer’s Tax Guide, and Publication 15-A, Employer’s Supplemental Tax Guide. It contains information for employers on the employment tax treatment of fringe benefits.

To download Publication 15-B, click here.

U.S. public pension holdings drop to $3.2 trillion in third quarter
According to the U.S. Census Bureau, the holdings of the largest 100 U.S. public pension systems dropped 4.9% from the previous quarter to $3.2 trillion in the third quarter because of negative earnings. Earnings fell from a gain of $32.6 billion in the second quarter of 2015 to a loss of $145.9 billion in the third. Total holdings were also 2.5% lower than the same quarter last year.

To learn more, click here.

Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

GASB issues exposure drafts related to retirement plans
The Governmental Accounting Standards Board (GASB) has issued three exposure drafts proposing accounting and financial reporting guidance related to fiduciary activities, certain asset retirement obligations, and pension issues.

The exposure draft on fiduciary activities would establish guidance regarding what constitutes fiduciary activities for financial reporting purposes, the recognition of liabilities to beneficiaries, and how fiduciary activities should be reported. The proposed statement would apply to all state and local governments.

The exposure draft on certain asset retirement obligations would establish guidance for determining the timing and pattern of recognition for liabilities related to asset retirement obligations and corresponding deferred outflows of resources. An asset retirement obligation is a legally enforceable liability associated with the retirement of a tangible capital asset, such as the decommissioning of a nuclear reactor.

The exposure draft on pension issues addresses practice issues raised by stakeholders during the implementation of Statements No. 67, Financial Reporting for Pension Plans, and No. 68, Accounting and Financial Reporting for Pensions.

For more information, click here.

PBGC issues final rule on partitions of eligible multiemployer plans
The Pension Benefit Guaranty Corporation (PBGC) has issued a final rule making minor changes to part 4233 of its regulations. The changes were added from the PBGC’s interim final rule on Partitions of Eligible Multiemployer Plans (80 FR 35220, June 19, 2015). Many of the changes respond to public comments.

Part 4233 prescribes the statutory conditions and the information and notice requirements that must be met before the PBGC may partition an eligible multiemployer plan under section 4233 of ERISA. This final rule makes minor revisions to part 4233 with respect to information requirements, the time period for the PBGC’s initial review of an application for partition, and the coordinated application process for partition and benefit suspension.

To read the entire final rule, click here.

 

Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

PBGC posts premium filing instructions
The 2016 comprehensive premium filing instructions have been approved by the Office of Management and Budget (OMB). The instructions are now available on the website of the Pension Benefit Guaranty Corporation (PBGC).

To access the premium filing instructions, click here.

IRS releases cumulative list of changes for plan qualification requirements
The Internal Revenue Service (IRS) has issued Notice 2015-84, providing the 2015 cumulative list of changes in plan qualification requirements. Plan sponsors and practitioners should use the list to submit determination letter applications for plans during the period beginning February 1, 2016, and ending January 31, 2017.

To read the entire notice, click here.

GASB issues new pension guidance designed to assist certain multiple-employer DB plans
The Governmental Accounting Standards Board (GASB) has issued guidance designed to assist governments that participate in certain private or federally sponsored multiple-employer defined benefit pension plans such as Taft-Hartley plans.

This new guidance removes an impediment to complying with the GASB’s financial reporting requirements for governments participating in certain multiple-employer defined benefit pension plans. It also promotes enhanced consistency among those applying the standards. The new guidance in GASB Statement No. 78, Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plans, assists these governments by focusing employer accounting and financial reporting requirements for those pension plans on obtainable information.

To read the full text of GASB Statement 78, click here.

CBO’s 2015 Social Security policy options
The Congressional Budget Office (CBO) has published a report analyzing 36 policy options commonly proposed by policymakers and analysts. Many of them could improve Social Security’s long-term finances, but only a few would significantly postpone the combined trust funds’ exhaustion date.

To read the entire report, click here.

Benefits, retirement, and savings make up larger percentage of government employee compensation
According to a U.S. Bureau of Labor Statistics chart, state and local government employer costs for employee benefits over the last 10 years have increased as a share of total compensation. This can be mostly attributed to increases in retirement and savings, specifically defined benefit plans. Retirement and savings as a share of total compensation increased from 6.6% in March 2005 to 10.4% in September 2015.

To view the chart, click here.

Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

IRS issues notice on the application of Obergefell to qualified retirement plans
The Internal Revenue Service (IRS) has issued Notice 2015-86, providing guidance on the application of the decision in Obergefell v. Hodges, 576 U.S. ___, 135 S.Ct. 2584 (2015), to retirement plans qualified under section 401(a) of the Internal Revenue Code (Code) and to health and welfare plans, including cafeteria plans under section 125 of the Code. This guidance relates solely to the application of federal tax law with respect to same-sex spouses. Notice 2015-86 will be in Internal Revenue Bulletin (IRB) 2015-52, dated December 28, 2015.

To read the entire notice, click here.

Multiemployer pension plan application to reduce benefits: Reopening of comment period
On October 23, 2015, the U.S. Department of the Treasury published a notice of availability and request for comments regarding an application to reduce benefits under the Central States, Southeast, and Southwest Areas Pension Plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to reopen the comment period and provide more time for interested parties to provide comments. Comments must be received on or before February 1, 2016.

To read the entire notice, click here.

PBGC launches new e-filing portal
The Pension Benefit Guaranty Corporation (PBGC) has upgraded its e-4010 application and renamed it the PBGC e-filing portal. In addition to preparing and submitting 4010 filings via the e-filing portal, practitioners will have the option of filing information required under PBGC’s new ERISA 4043 regulation via the portal. The new e-filing portal also has a multiemployer plan module from which various applications and notices may (or in some cases, must) be submitted to the PBGC (e.g., applications for financial assistance, annual funding notices, critical and endangered notices). The new e-filing portal has no impact on the PBGC’s My Plan Administration Account (My PAA) interface.

Practitioners who don’t already have an e-4010 account will need to set up an account to be able to use the PBGC e-filing portal. Current e-4010 account holders have been informed via email of the minimal ways in which this change affects them.

To access the e-filing portal, click here.

President signs transportation bill repealing recently enacted Form 5500 filing extension

Congress has approved, and the president has signed, the Fixing America’s Surface Transportation Act (H.R. 22). The new law, which funds highway and mass transit projects, contains a provision that repeals the three-and-a-half month automatic extension of the Form 5500 filing due date. The extension was part of a law, the Surface Transportation and Veterans Health Care Choice Improvement Act (P.L.114-41), enacted in July that would have applied to filings made in 2017 for plan years beginning after 2015.

The repeal of the automatic extension means that the filing deadlines for Form 5500 (Annual Return/Report of Employee Benefit Plan) will not change from today’s deadlines: Employee benefit plan sponsors must file Form 5500 by the end of the seventh month following the end of the plan year, with a two-and-a-half month extension available. For calendar-year plans, the due date is July 31, with an extension to October 15 for those filing a Form 5558 in a timely manner.

The repeal also means that other filing deadlines, e.g., for Internal Revenue Service (IRS) Form 8955-SSA, and participant notification dates that are coordinated with the Form 5500 filing date, e.g., Summary Annual Report distributions, will not change.

For additional information about this revised and repealed Form 5500 filing deadline, please contact your Milliman consultant.

Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

DOL posts 2015 Form 5500 and Form 5500-SF for information purposes only
The U.S. Department of Labor (DOL) has made available advance copies of the 2015 Form 5500, Annual Return/Report of Employee Benefit Plan, on its website, along with instructions that highlight new electronic filing requirements and various form modifications.

The electronic filing requirements for filing the Form 5500 and Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan, to the Internal Revenue Service (IRS) apply to employee benefit plans that are required to file at least 250 returns in a calendar year. They go into effect in 2016 for reporting on plan years that begin in or after 2015. Plans were already required to file electronically to the DOL.

For more information, click here.

OMB approval of revised collections of information for e-filing requirements
The Pension Benefit Guaranty Corporation (PBGC) has issued a notice stating that the Office of Management and Budget (OMB) has approved revisions to five collections of information under the PBGC’s regulations.

On September 17, 2015, the PBGC published a final rule amending its regulations on filing, issuance, computation of time, record retention, termination of multiemployer plans, and duties of plan sponsors following mass withdrawals that require mandatory e-filing of certain multiemployer plan notices starting in 2016. New amendments affect three collections of information:

• Duties of plan sponsor following mass withdrawal
• Notice of insolvency
• Termination of multiemployer plans

For more information, click here.

On September 11, 2015, the PBGC published a final rule amending its regulation on reportable events and certain other notification requirements to modify the system of waivers from reporting, implement provisions of the Pension Protection Act of 2006, and make other changes. The PBGC made changes to two collections of information:

• Reportable events
• Notice of failure to make required contributions

OMB approved the revised collections of information through November 30, 2018.

For more information, click here.

FASB issues proposed accounting standards update on fair value measurement
The Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU) intended to improve the effectiveness of disclosure requirements on fair value measurements. Stakeholders are asked to review and provide comment on the proposed ASU by February 29, 2016.

The proposed ASU is part of the FASB’s broader disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements by clearly communicating the information that is most important to users of a reporting organization’s financial statements.

The proposed ASU would improve existing disclosure requirements related to fair value measurement and clarify disclosure requirements, as well as identify ways to improve the FASB’s decision process.

Fair value measurement is one of four areas where the FASB will evaluate and improve existing disclosure requirements. Other areas the FASB will address include an employer’s disclosure of defined benefit plans, income taxes, and inventory.

For more information, click here.

PBGC issues Table I-16 used to value benefits in plans with 2016 valuation dates
The Pension Benefit Guaranty Corporation (PBGC) has issued a final rule amending its regulation on allocation of assets in single-employer plans by substituting a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination, with valuation dates falling in 2016. This table is needed in order to compute the value of early retirement benefits and, thus, the total value of benefits under a plan.

The final rule amends Appendix D to replace Table I-15 with Table I-16 in order to provide an updated correlation, appropriate for calendar year 2016, between the amount of a participant’s benefit and the probability that the participant will elect early retirement. Table I-16 will be used to value benefits in plans with valuation dates during calendar year 2016. The final rule is effective on January 1, 2016.

To read the entire final rule, click here.