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

DOL posts lifetime income illustration and fact sheet
Workers participating in defined contribution plans, like 401(k) plans or similar savings plans, are responsible for managing their retirement savings while employed and during their retirement years.

As described in an advance notice of proposed rulemaking (ANPRM), the Department of Labor is considering proposing a rule that pension benefit statements include the participant’s account balance as a single sum as well as an estimated lifetime income stream of level payments using both the participant’s current account balance and the projected account balance at retirement. For married participants, the statement also must include joint and survivor lifetime income payments.

Using assumptions described in the ANPRM (noted below), this calculator illustrates an annuitization approach to estimate the monthly lifetime income streams based on both the participant’s current account balance and on the projected value of the account balance at retirement. For both balances, the calculator develops two level lifetime payments: one for the life of the participant (with no benefits to any survivors) and the second for the joint lives of the participant and the spouse with a fifty percent survivor’s benefit for the spouse’s lifetime.

This calculator uses a simplified computation (e.g., annual contributions, mid-year retirement). Depending on the comments received in response to the ANPRM, the next version of the calculator may provide a more precise computation (e.g., monthly contributions, retirement in a specified month).

For a copy of the fact sheet, click here. For the calculator, click here.

DOL issues ANPRM on pension benefit statements
The Department of Labor (DOL) has issued an advanced notice of proposed rulemaking (ANPRM) regarding the pension benefit statement requirements under section 105 of the Employee Retirement Income Security Act of 1974 (ERISA), as amended. The ANPRM describes certain rules the Department is considering as part of the proposed regulations.

The rules being considered are limited to the pension benefit statements required of defined contribution plans. First, the Department is considering a rule that would require a participant’s accrued benefits to be expressed on his pension benefit statement as an estimated lifetime stream of payments, in addition to being presented as an account balance. Second, the Department also is considering a rule that would require a participant’s accrued benefits to be projected to his retirement date and then converted to and expressed as an estimated lifetime stream of payments. This ANPRM serves as a request for comments on specific language and concepts in advance of proposed regulations.

Comments are due on or before 60 days after publication in the Federal Register. The ANPRM is scheduled was published on May 8, 2013.

Federal Reserve: Early withdrawals from retirement accounts during the great recession Three economists at the Federal Reserve released a paper titled Early Withdrawals from Retirement Accounts During the Great Recession which shows that for every dollar workers contributed to their pension and individual retirement accounts in 2010, taxpayers younger than 55 took nearly half – 45 cents – as a taxable distribution.

“For families headed by someone younger than age 55, about 45 percent of total new contributions to retirement accounts in 2010 were offset by early withdrawals, but that number was 30 percent in 2004, and some of that increase is attributable to declining contributions. The analysis here of factors associated with early withdrawals in 2010 suggests that propensities to receive cash-outs or to take taxable withdrawals is higher for lower-income families, because lower-income families are much more likely to experience the sorts of shocks that lead to withdrawals and slightly more likely to take a withdrawal when they experience those shocks. These findings may help to explain why the observed cross-section distribution of retirement account balances—even within the covered population, and relative to contributions—is skewed towards higher income families.”

Read the entire paper here.

IRS PLR extending 60-day rollover period because of bank error
The Internal Revenue Service (IRS) has issued a private letter ruling (201319034) dealing with the 60-day rollover period.

The ruling concludes:

The information and documentation submitted by Taxpayer A is consistent with the assertion that the failure to accomplish a timely rollover of Amount 1 was due to a mistake by Bank D. Therefore, pursuant to section 408(d)(3)(l) of the Code the Service hereby waives the 60-day rollover requirement with respect to the distribution of Amount 1 from IRA B.

Read the entire letter here.

SEC, FINRA issue investor alert on pension or settlement income streams
The Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) recently issued an investor alert entitled Pension or Settlement Income Streams – What You Need to Know before Buying or Selling Them.

The investor alert informs investors about the risks involved when selling their rights to an income stream or investing in someone else’s income stream. The alert urges investors considering an investment in pension or settlement income streams to proceed with caution.

Anyone receiving a monthly pension or regular distributions from a settlement following a personal injury lawsuit may be targeted by salespeople offering an immediate lump sum in exchange for the rights to some or all of the payments the person would otherwise receive in future. Typically, recipients of a pension or structured settlement will sign over the rights to some or all of their monthly payments to a factoring company in return for a lump-sum amount, which will almost always be significantly lower than the present value of that future income stream.

The investor alert contains a checklist of questions before selling away an income stream:

• Is the transaction legal? Federal law may restrict or prohibit retirees from ‘assigning’ their pension to someone else.
• Is the transaction worth the cost? Find the discount rate that the factoring company has applied to your income stream and compare this rate to alternatives such as a bank loan.
• What is the reputation of the company offering the lump sum? Check the factoring company’s record with the Better Business Bureau, and research the firm on the Internet and with a financial professional.
• Will the factoring company require life insurance? The factoring company may require you to purchase a life insurance policy, which will add to your transaction expenses and reduce your payout.
• What are the tax consequences? The lump-sum payment you collect may be taxable.

For a copy of the Investor Bulletin, click here.

JTC summarizes tax reform proposals/ways & means working with retirement incentives
The Joint Committee on Taxation (JCT) issued Report to the House Committee on Ways and Means on Present Law and Suggestions for Reform Submitted to the Tax Reform Working Groups (JCS-3-13). The 568-page document summarizes current law, key tax reform proposals, and formal submissions to the House of Representatives Ways and Means Committee working groups on tax reform. Among the tax incentives that are discussed, those dealing with the employer-sponsored retirement system are discussed specifically.

Download a copy of the report here.

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

FASB proposes deferral of certain disclosures for nonpublic employee benefit plans
The Financial Accounting Standards Board (FASB) has issued a proposal to defer indefinitely the effective date for certain disclosures about investments held by a nonpublic employee benefit plan in the plan sponsor’s own equity securities. Stakeholders are asked to provide comments on proposed Accounting Standards Update, Fair Value Measurement (Topic 820): Deferral of the Effective Date of Certain Disclosures for Nonpublic Employee Benefit Plans in Update No. 2011-04, by May 31, 2013.

The proposal seeks to address stakeholder concerns about certain disclosure requirements that would potentially provide proprietary information about private companies through the dissemination of their employee benefit plans’ financial statements on the plan regulator’s website. The deferral would allow time for discussions between the regulator(s) and stakeholders about the specific quantitative disclosures and their potential effect on the plan sponsor as a result of making that information public.

The proposed deferral would be effective upon issuance of the final Update. That final Update is expected to be issued in June 2013.

Read the entire proposal here.

PBGC requests OMB approval of multiemployer plan guaranty program survey
The Pension Benefit Guaranty Corporation (PBGC) intends to request that the Office of Management and Budget (OMB) approve, under the Paperwork Reduction Act, a voluntary collection of information for a survey to assist PBGC in modeling potential outcomes of pension plans insured under its multiemployer program. This notice informs the public of the PBGC’s intent and solicits public comment on the collection of information.

PBGC is researching the effects of potential changes to its multiemployer program. PBGC’s objective is to quantify the effect of potential policy proposals on multiemployer plans that are or could enter critical status with respect to projected dates of insolvency, amount of financial assistance that PBGC would be required to provide, and the benefit changes plan participants would experience. To assist in this research PBGC intends to request that OMB approve a survey of multiemployer pension plans, their actuarial service providers, and their stakeholders, including unions and relevant professional and trade organizations.

IRS issues final regulations updating employer identification numbers
The Internal Revenue Service (IRS) has issued final regulations that require any person assigned an employer identification number (EIN) to provide updated information to the IRS in the manner and frequency prescribed by forms, instructions, or other appropriate guidance. These regulations affect persons with EINs and will enhance the IRS’s ability to maintain accurate information as to persons assigned EINs.

The final regulations will be applicable as of January 1, 2014, so that the IRS can publish the relevant form and instructions in advance of the applicability date.

IRS posts tips to avoid processing delays with your voluntary correction program submission
The IRS has posted five tips to avoid processing delays with your VCP submission under Revenue Procedure 2013-12.

To read the tips, click here.

Government Accountability Office report: State and local governments’ fiscal outlook (April 2013 update)
Declines in state and local pension asset values stemming from the 2007 to 2009 economic recession could also affect the sector’s long-term fiscal position. Pension asset values increased by almost 22 percent, from $2.3 trillion at the end of 2008 to $2.8 trillion at the end of 2011. However, as of 2011, values have not recovered to match or exceed the 2007 value of $3.2 trillion. Furthermore, pension asset values varied throughout 2011, ending the year approximately $82 billion below the fourth quarter 2010 value. In our prior work, we reported that while most state and local government pension plans have assets sufficient to cover benefit payments to retirees for a decade or more, plans have experienced a growing gap between assets and liabilities. In response to this gap, state and local governments are taking steps to manage their pension obligations, including reducing benefits and increasing member contributions.

To read the entire report, click here.

Bureau of Labor Statistics: Differences in union and non-union compensation (2001 – 2011)
Union workers continue to receive higher wages than nonunion workers and have greater access to most employer-sponsored employee benefits. During the 2001–2011 period, the differences between union and nonunion benefit cost levels appear to have widened.

For more information, click here.

The Internal Revenue Service (IRS) issued Revenue Procedure 2013-22, which establishes the procedures the agency will follow when issuing opinion and advisory letters for 403(b) preapproved plans that may be adopted by tax-exempt organizations, public schools, and church-related organizations. Beginning June 28, 2013, sponsors of preapproved 403(b) plans may apply to the IRS for an opinion letter (prototype plans) or an advisory letter (volume submitter, including mass submitter, plans).

The revenue procedure explains:

• The requirements that the preapproved plans must satisfy,
• The preapproved plan sponsors’ responsibilities,
• The procedures for applying for opinion and advisory letters, and
• The conditions under which an eligible employer that adopts a preapproved 403(b) plan can rely on the plan documents meeting the tax code and regulatory requirements under section 403(b).

The IRS guidance also includes a remedial amendment provision that allows eligible employers to retroactively correct their plans to satisfy the 403(b) requirements. The new procedures permit the retroactive remedial amendment of 403(b) plans in order to satisfy the written plan requirements and to correct any form defects. This generally would be automatically satisfied if the employer retroactively adopts a 403(b) preapproved plan. Although employers may retroactively amend individually designed plans to correct any defects, the IRS at this time is not offering determination letters for individually designed plans.

Sample language that preapproved 403(b) plan sponsors may use in preparing to submit their plans to the IRS for approval is posted on the agency’s website.

For more information about the IRS’s new procedures for opinion and advisory letters for preapproved 403(b) plans, please contact your Milliman consultant.

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

IRS posts guidance on determination letters for governmental plans
Governmental plan sponsors who apply for determination letter can’t rely on a favorable letter for whether:

• Contributions made to the plan are the employer’s ‘pick-up contributions,’ or
• The plan has a qualified governmental excess benefit arrangement.

Sponsors may, however, apply for a private letter ruling from the IRS for these matters.

The posting discusses how a governmental plan can have a valid “pick-up contributions” arrangement and a qualified governmental excess benefit arrangement, as well as how to request a private letter ruling from the IRS.

For more information, click here.

IRS’s final report on tax-exempt colleges/universities compliance covers compensation/retirement plan issues
The IRS today released its final report summarizing audit results from the IRS’ colleges and universities study, which began in 2008. This final report describes the agency’s multi-year project on a major segment of tax-exempt organizations.

The final report focuses on two primary areas within the examinations: reporting of unrelated business taxable income, and compensation, including, employment tax and retirement plan issues.

To read the final report, click here.

PBGC updates booklet on finding a lost pension
The Pension Benefit Guaranty Corporation (PBGC) today released an update of “Finding a Lost Pension”, a guide for people who think they have a pension, but who cannot find their pension plan or former employer to begin receiving their benefits.

The booklet, produced in partnership with the Gerontology Institute of the University of Massachusetts Boston, includes search tips from professional pension counselors as well as resources that a searcher can turn to for more extensive help.

The booklet was last updated in 2009.

Download a copy of the booklet here.

ERISA advisory council to meet June 4-6 (Missing participants; de-risking; plan communications)
The open meeting of ERISA’s Advisory Council will study the following issues: (1) Locating missing and lost participants, (2) private sector pension de-risking and participant protections, and (3) successful retirement plan communications for various population segments.

To read the entire notice of meeting, click here.

IRS releases revised forms and LRM for pre-approved defined benefit plans The Internal Revenue Service (IRS) released revised forms for sponsors and practitioners to use when submitting a pre-approved defined benefit (DB) plan to the IRS as well as a revised Listing of Required Modifications and Information Package (LRM).

The updated DB LRM package (LRM) contains sample language that sponsors and mass submitters of DB Master and Prototype (M&P) plans are encouraged to use in drafting their plans. M&P sponsors and mass submitters are also encouraged to identify where the LRM is used in their plan documents.

Sponsors and practitioners should use Form 4461-A (Rev. 3-2013), Attachment 1-A, and Form 8717-A (Rev. 2-2013), when submitting a pre-approved DB plan to the IRS.

For more information, click here.

IRS VCP submission kit for sponsors who missed deadline to adopt pre-approved DC plan This kit guides a plan sponsor through the steps in filing a submission for a Voluntary Correction Program (VPC) compliance statement. It includes instructions and a sample submission correctly completed. It’s designed for sponsors that:

• Maintained a pre-approved defined contribution plan but failed to adopt a new plan document by April 30, 2010, and; • Are correcting the failure by adopting a pre-approved defined contribution plan that reflects the provisions of EGTRRA.

IRS approval of a submission filed in accordance with this kit is not enough to restore the tax-favored status of the retirement plan if there were other failures in addition to the failure to timely adopt a restated plan document.

Other failures could include failing to amend the plan for major legislation before EGTRRA or failing to operate the plan in accordance with its written terms.

Download the entire submission kit here.

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

Public Employees Pension Transparency Act (PEPTA) reintroduced in the House
Representative Devin Nunes reintroduced the Public Employees Pension Transparency Act (PEPTA) on April 18, 2013.

PEPTA would require state and local government pension plans to disclose the true nature of their liabilities with the Secretary of the Treasury. This information would be available to the public through a searchable website. State and local governments that fail to disclose the requested information would have their federal tax-exempt bonding authority eliminated. The bill also expressly states that state and local pension obligations are solely the responsibility of those entities and that the federal government will not provide a bailout.

For a copy of the bill, click here.

GASB: Why governmental accounting/financial reporting is and should be different
“Governments are fundamentally different from for-profit business enterprises in several important ways. Their organizational purposes, processes of generating revenues, stakeholders, budgetary obligations, and propensity for longevity differ. These differences require separate accounting and financial reporting standards in order to provide information to meet the needs of stakeholders to assess government accountability and to make political, social, and economic decisions.

“Although state and local governments (herein after referred to as “governments”) in the United States have had separate standards for over 100 years, the question is sometimes asked: Why can’t general purpose governments (cities and counties, for example) simply apply the standards established for business enterprises? The following questions and answers briefly address that issue, and the accompanying paper and its appendices provide an expanded discussion…”

To read the entire paper, click here.

BLS Report: Retirement and Medical Benefits – Who Has Both?
“Employee compensation packages commonly include both wages and benefits. For decades, employee benefits have been used as part of the total compensation package to attract and retain highly qualified workers. Just as workers in various occupations receive different levels of pay, they also receive access to different types and combinations of employee benefits.

This article uses March 2012 National Compensation Survey (NCS) data to examine private industry workers’ access to medical benefits, retirement benefits, and combinations of the two benefits, by major occupation group, wage category, part-time and full-time status, union and nonunion status, and establishment size. The study finds notable differences in the patterns of access to medical and retirement benefits—separately, and in combination—among the various worker groups…”

To read the entire article, click here.

IRS issues relief from anti-cutback requirements of § 411(d)(6) for certain ESOP amendments
IRS issues Notice 2013-17, which notice provides relief from the anti-cutback requirements of § 411(d)(6) of the Internal Revenue Code for plan amendments that eliminate a distribution option described in § 401(a)(28)(B)(ii)(I) from an employee stock ownership plan, as defined in § 4975(e)(7) (ESOP), that becomes subject to the diversification requirements of § 401(a)(35), which apply to certain defined contribution plans that hold (or are treated as holding) publicly traded employer securities.

The notice addresses circumstances in which an ESOP that satisfied the diversification requirements of § 401(a)(28)(B)(i) by allowing distribution of a portion of a participant’s account has become subject to the diversification requirements of § 401(a)(35). As a result of becoming subject to § 401(a)(35)(E), § 401(a)(28)(B) no longer applies and such an ESOP is no longer able to make distributions that (in the absence of the applicability of § 401(a)(28)(B)(i)) would be impermissible under other rules restricting the distribution of plan benefits before termination of employment or the occurrence of certain other events. Thus, under current rules for such plans, some in-service distribution options used to satisfy the diversification requirements under § 401(a)(28)(B) are no longer permissible.

To read Notice 2013-17, click here.

ERRP notice: Sets termination dates for several operational processes
This notice sets forth termination dates for several processes under the Early Retiree Reinsurance Program (ERRP) in preparation for the January 1, 2014 program sunset date. These operational processes, which involve plan sponsors and other parties, include: the submission of changes to information in a plan sponsor’s ERRP application; the reporting of plan sponsor change of ownership; the submission of reimbursement requests; the reporting and correction of data inaccuracies; and the request for reopenings of reimbursement determinations.

The notice is scheduled to be published in the Federal Register on April 23, 2013.

Senate panel’s tax reform options paper covers child care and education benefits, work tax credits The Senate Finance Committee recently released its third “options paper” on tax reform. This paper, prepared by committee staff, deals with “families, education, and opportunities.” The options are not necessarily endorsed by the Committee’s Chairman or Ranking Member.

The paper’s options of interest to employers include:

• Repealing the exclusion for employer-provided child care;
• Making the Work Opportunity Tax Credit (WOTC) permanent and potentially expanding it;
• Streamlining the WOTC employer certification requirement by, for example, allowing employers to certify employees as members of targeted groups in some circumstances;
• Replacing the WOTC with payroll credits tied to unemployment rates (e.g., the credit could be a percentage of increase in payroll over a base period);
• Creating employer-matched, portable, employee-owned savings accounts to finance education and training;
• Expanding tax expenditures for education savings account by providing, for example, a tax incentive for employers to contribute to employees’ accounts; and
• Repealing the Defense of Marriage Act (DOMA) for federal tax purposes.

The Committee’s paper is available at here.

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

Senate panel’s tax reform options paper includes required electronic returns/reports for retirement plans
The Senate Finance Committee has released the first in a series of papers compiling tax reform options to be discussed in weekly meetings over the next few months. The first options paper is on tax code simplification. Among the options to “reduce the tax gap” is a required electronic filing for certain employee benefit plan information returns and reports. Specifically, the options paper refers to a provision that had been included in a bill (S.1289) from the 112th Congress, expressly authorizing the Treasury Department to require electronic filing of annual ERISA registration statements; annual returns of pension, annuity, stock bonus, profit-sharing, and other funded deferred compensation plans; and the periodic actuarial reports under tax code section 412.

Read the entire paper here.

Are you ineligible to be a 403(b) plan sponsor?
The Internal Revenue Service (IRS) has posted guidance on its website for 403(b) plan sponsors. The guidance discusses who is eligible to be a 403(b) plan sponsor; what are the consequences of an ineligible employer adopting a 403(b) plan; who is eligible to use the Voluntary Correction Program; and how to make a VCP submission.

To read the entire guidance, click here.

IRS issues new phone number to check the status of VCP submissions
The new telephone number to check the status of your Voluntary Correction Program submission is (626) 927-2011 (not a toll-free number).

Appendix D, Acknowledgement Letter, has been updated to reflect this change. If you have saved an older copy of Appendix D (or Appendix E, for submissions under Revenue Procedure 2008-50), please update your file.

To inquire about the status of your case, call the number above and leave a message with:

• The plan name
• Your name
• Your phone number
• The control number listed in the acknowledgment letter (if received)

For more information, click here.

Pension Benefit Guaranty Corporation makes changes to address of missing participant program
The lockbox addresses for sending payment of designated benefits and/or other amounts due missing participants with a completed payment voucher have changed. You can find the new addresses for U.S. Postal Service and other mail delivery services, as well as for wire transfers, on page 5 of our Missing Participants Filing Instructions. The address for sending the Schedule MP (including any required attachments) along with the post-distribution certification has not changed.

PBGC’s risk-based policy keeps almost $1 billion in pension obligations from healthy companies
The Pension Benefit Guaranty Corporation recently said that its shifting enforcement policy away from companies unlikely to default on their pensions benefited about 50 businesses by almost $1 billion since the start of a pilot program announced in November.

The new approach screens out financially sound companies and small plans with less than 100 people, which excludes 92 percent of businesses that sponsor plans from the agency’s enforcement efforts.

The agency’s policy change follows a Presidentially-mandated review of regulations and feedback from companies that said PBGC targeted businesses even when plans posed little or no risk of defaulting on pension obligations. Under a section of pension law called 4062(e), when a company ceases operations at a facility, and 20 percent of workers in the pension plan lose their jobs, PBGC requires financial assurance to support benefits earned by plan participants. Typically companies provide that assurance through additional contributions to the plan or a letter of credit guaranteeing future contributions.

For more information about PBGC’s 4062(e) pilot program, click here.

Exposure draft DB plans: Employee contributions (Amendments to IAS 19)
In February 2013 the International Accounting Standards Board (IASB) tentatively decided to publish an Exposure Draft proposing amendments to IAS 19 Employee Benefits. These amendments are intended to specify the accounting for contributions from employees or third parties set out in the formal terms of a defined benefit plan.

The balloting process of Exposure draft DB plans: Employee contributions (Amendments to IAS 19) (the Exposure Draft) is underway and its publication is scheduled for the end of March 2013.
The purpose of this paper is to:

(a) Provide the IASB with a brief summary of the proposed amendments ; and
(b) Explain the steps in the due process that the IASB has taken before the publication of the Exposure Draft (see Appendix A) and ask the IASB to confirm that it has complied with the due process requirements to date.

The paper is available here.

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

DOL posts tips on using the fee and investment information from your retirement plan
The U.S. Department of Labor (DOL) posted tips on comparing investment options in a 401(k) or similar retirement plan.

To read the entire article, click here.

PBGC updates e-4010 filing instructions to reflect guidance on MAP-21
The Pension Benefit Guaranty Corporation (PBGC) has updated the e-4010 instructions to reflect its guidance on the effect of the Moving Ahead for Progress in the 21st Century Act (MAP-21) on 4010 reporting. In addition, a few other minor modifications were made to the application.

To read the updated e-4010 instructions, click here.

IRS issues corrections to proposed rule on shared responsibility for multiemployer plans
The Internal Revenue Service (IRS) has issued corrections to the proposed regulation providing guidance under section 4980H of the Internal Revenue Code with respect to the shared responsibility for employers regarding employee health coverage.

The most important correction is made to the section on large employer members participating in multiemployer plans.

Read the correction here.

FASB education session: Fair value measurement disclosures of employee benefit plans
The Financial Accounting Standards Board (FASB) has scheduled an education session following its board meeting on March 20, 2013, to discuss the following topics:

1. Revenue recognition.
2. Fair value measurement disclosures of private company employer securities held by employee benefit plans.
3. Application of asset- or entity-based guidance to nonfinancial assets in an entity.

The session will start at approximately 9:00 a.m. EDT. The meeting will be videocast.

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

Federal Reserve report shows DB and DC plan assets dip slightly in 4th quarter
On March 7, the Federal Reserve released its report, Flow of Funds Accounts for the United States, for the fourth quarter of 2012. The report shows that U.S. corporate defined benefit (DB) and defined contribution (DC) plans had combined assets of $6.584 trillion as of December 31, down 0.27% or $18 billion from the third quarter.

Corporate defined benefit plans had $2.332 trillion in assets as of December 31, and defined contribution plans had $4.252 trillion. DB plan assets dipped 0.51% over the previous quarter, while defined contribution assets dipped just 0.14%.

The entire report can be accessed here.

DOL issues field assistance bulletin on ERISA’s annual funding notice requirements
The Department of Labor (DOL) has issued Field Assistance Bulletin 2013-1, which provides guidance to the Employee Benefits Security Administration’s national and regional offices on compliance by plan administrators of single-employer defined benefit pension plans with section 40211(b)(2) of the Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub. L. 112-141, 126 Stat. 405. This section of MAP-21 amended the annual funding notice requirements of section 101(f) of ERISA to require additional disclosure of the effect of segment rate stabilization on the funding of single-employer defined benefit plans. This memorandum also includes a supplement to the model annual funding notice that plan administrators of such plans may use to comply with these new requirements.

Read the entire bulletin here.

IRS issues guidance/transition relief for employers on work opportunity tax credit (Notice 2013-14)
The Internal Revenue Service (IRS) has issued Notice 2013-14 providing guidance on § 309 of the American Taxpayer Relief Act of 2012, Pub. L. No. 112-240, enacted on January 3, 2013, and transition relief for employers claiming the Work Opportunity Tax Credit (WOTC) under §§ 51 and 3111(e) of the Internal Revenue Code (the Code), as extended by the Act.

Section 309 of the Act amended § 51 to extend the WOTC through December 31, 2013, for taxable employers and for qualified tax-exempt organizations. Specifically, this notice provides employers that hire members of targeted groups additional time beyond the 28-day deadline in § 51(d)(13) of the Code for submitting Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to designated local agencies (DLAs).

Notice 2013-14 will be published on March 25 in Internal Revenue Bulletin 2013-13. To read the guidance, click here.

IRS releases draft Form 5300 and instructions (Revised February 2013)
The IRS released a draft revised 2012 Form 5300 and its instructions. Form 5300, the Application for Determination for Employee Benefit Plan, is generally used to request an IRS determination that an individually designed retirement plan meets the requirements for tax qualification.

The revised draft form and the instructions have undergone revisions in the format and the information required. Some of the revisions were made under Announcement 2011-82, 2011-52 I.R.B. 1052, which eliminated demonstrations regarding coverage and nondiscrimination requirements and limited Form 5307, Application for Determination for Adopters of Modified Volume Submitter (VS) Plans applications.

For a copy of the revised draft Form 5300, click here. Also, the instructions are available here.

PBGC/GAO testified on multiemployer pension plans at House Committee summary available
On Tuesday, March 5, the Subcommittee on Health, Employment, Labor and Pensions, chaired by Rep. Phil Roe (R-TN), held a hearing entitled, “Challenges Facing Multiemployer Pension Plans; Reviewing the Latest Findings by PBGC and GAO.” Pension Benefit Guaranty Corporation (PBGC) Director Joshua Gotbaum and Charles Jeszech, with the Government Accountability Office (GAO), both testified.

To watch video footage of the hearing, click here.

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

IRS posts retirement plans FAQs about required minimum distributions
The Internal Revenue Service (IRS) has posted on its website frequently asked questions and answers regarding required minimum distributions.

The questions cover the types of plans that require minimum distributions and how calculations are made, as well as different rules that may apply to 403(b) plans.

To read the entire FAQ, click here.

IRS expands voluntary worker classification settlement program (IR-2013-23)
The IRS has expanded its Voluntary Classification Settlement Program (VCSP) by modifying several eligibility requirements thus making it possible for many more interested employers, especially larger ones, to apply for this program. The program allows taxpayers to voluntarily reclassify their workers as employees for future tax periods for employment tax purposes.

For a copy of IR-2013-23, click here.

Target date retirement funds: Tips for ERISA plan fiduciaries
The U.S. Department of Labor has posted on its website “Target Date Retirement Funds – Tips for ERISA Plan Fiduciaries,” which assists plan fiduciaries in selecting and monitoring target date funds (TDFs) and other investment options in 401(k) and similar participant-directed individual account plans.

Read the entire article here.

JCT publishes general explanation of tax legislation enacted in the 112th Congress
The Joint Committee on Taxation has published “General Explanation of Tax Legislation Enacted in the 112th Congress,” which as the title indicates provides an explanation of tax legislation enacted in the 112th Congress. The explanation follows the chronological order of the tax legislation as signed into law. For each provision, the document includes a description of present law, an explanation of the provision, and the effective date.

The 261-page report ranges from an explanation of the provisions relating to the extension of the Highway Trust Fund to revenue provisions of the American Taxpayer Relief Act of 2012 (Pub. L. No. 112-240).

To access the entire general explanation, click here.

PBGC creates link to alert when regulations are under OMB review
The Pension Benefit Guaranty Corporation (PBGC) has added a feature to its laws and regulations that make it easier for practitioners to see which PBGC information collection requests are under Office of Management and Budget (OMB) review.

The site announces that proposed nonmaterial changes to the 4010 filing requirements, primarily to reflect the Moving Ahead for Progress in the 21st Century Act (MAP-21), are currently undergoing review. The site will be updated whenever OMB receives a PBGC information collection request for review.

IRS posts 403(b) fix-it guide
The IRS has posted on its website a 403(b) Fix-it Guide. To access the guide, click here.

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

House Ways and Means Committee work groups on tax reform to consider retirement benefits
The effort by the U.S. House Ways and Means Committee to reform the tax code is likely to entail the creation of bipartisan subgroups that will focus on specific topics. Committee Chairman Dave Camp (R-MI) is working with Ranking Member Sander Levin (D-MI) to create the working groups.

In a February 12 memo to committee Democrats, Levin stated that his agreement with Camp resulted in the following list of 11 subject area groups (listed here in no particular order):

• Real estate
• Pensions/retirement
• Charitable/exempt organizations
• Financial services
• Small business/pass throughs
• Energy
• Education and family benefits
• International
• Debt, equity and capital
• Manufacturing
• Income and tax distribution

The memo indicates that the work groups are expected to produce a report to the full committee; they “are not expected to make policy recommendations or produce legislation.” Camp previously stated his intention to pass a comprehensive tax reform bill by the end of 2013.

IRS issues notice with 25-year average segment rates/adjusted 24-month average segment rates for PY beginning in 2013
The Internal Revenue Service (IRS) has issued Notice 2013-11 which provides guidance on the 25-year average segment rates that are applied to adjust the otherwise applicable 24-month average segment rates that are used to compute the minimum contribution requirements for single-employer defined benefit plans under § 430 of the Internal Revenue Code (Code) and § 303 of ERISA for plan years (PY) beginning in 2013. The guidance reflects the changes made to the Code and ERISA by the Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub. L. No.112-141.

Notice 2013-11 will be published in Internal Revenue Bulletin 2013-11 on March 11, 2013.

For a copy of Notice 2013-11, click here.

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