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Regulatory roundup

April 20th, 2015 No comments

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

DOL issues proposed fiduciary rule
The U.S. Department of Labor (DOL) has released a proposed rule that will protect 401(k) and IRA investors by mitigating the effect of conflicts of interest in the retirement investment marketplace. Under the proposals, retirement advisers will be required to put their clients’ best interests before their own profits. Those who wish to receive payments from companies selling products they recommend and forms of compensation that create conflicts of interest will need to rely on one of several proposed prohibited transaction exemptions.

To read the entire proposed rule, click here.

Bureau of Labor Statistics: A look at today’s pension equity plans
Among the changes in pension plans tracked by the Bureau of Labor Statistics (BLS) since the late 1970s are different formulas for calculating benefits. One of those formula types is the pension equity plan, or PEP. These plans were first identified by BLS private industry surveys conducted in the late 1990s; today, they make up a small share of all pension plans. The latest issue of BLS’s Beyond the Numbers examines the concept behind pension equity plans and looks at some unique features of these plans.

To read the latest issue, click here.

FASB issues accounting standards update on employer’s defined benefit obligation and assets
The Financial Accounting Standards Board (FASB) has issued a new accounting standards update entitled “Practical expedient for the measurement date of an employer’s defined benefit obligation and plan assets.” The update gives companies “practical expedient” to decide fair value measurement date for plan benefits when there is mismatch in timing.

The amendments are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this update are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Earlier application is permitted. The amendments in this update should be applied prospectively.

To read the entire update, click here.

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IRS eases correction methods for common 401(k)/403(b) plan failures

April 14th, 2015 No comments

This Client Action Bulletin discusses recently issued IRS Revenue Procedure 2015-28 that will allow sponsors of 401(k) and 403(b) plans to fix two common administrative errors. The IRS released guidance that will allow sponsors of 401(k) and 403(b) plans to easily correct two common administrative errors without first having to obtain approval from the agency. Revenue Procedure 2015-28 modifies and improves the Employee Plans Compliance Resolution System (EPCRS) by providing a new safe harbor relating to automatic contribution features (including automatic enrollment and automatic escalation of elective deferrals) and a separate new special safe harbor correction method for faulty elective deferrals that occur over a period of limited duration.

Regulatory roundup

April 13th, 2015 No comments

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

IRS updates determination letter guidance and FAQs
The Internal Revenue Service (IRS) has updated its web guidance on applying for a determination letter as it applies to individually designed plans. The IRS also updated its set of frequently asked questions (FAQs).

To read the updated determination letter guidance, click here.
To read the updated FAQs, click here.

The National Technical Information Service receives comment letters on the Death Master File
Section 203 of the Bipartisan Budget Act of 2013, requires the Secretary of Commerce to establish a program to certify persons who may access the Social Security Administration’s Death Master File (DMF). As a result of this action, the National Technical Information Service (NTIS) created regulations that establish the requirements and procedures for access to the DMF. Additionally, this action established a fee structure for the certification program for access to the DMF for any deceased individual, within three years of the individual’s death.

The NTIS issued proposed regulations with a comment period that ended on March 30, 2015. To read the comment letters, click here.

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Regulatory roundup

April 6th, 2015 No comments

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

IRS releases guidance on safe harbor correction methods
The IRS has issued Revenue Procedure 2015-28, which contains modifications to Revenue Procedure 2013-12, 2013-4 I.R.B. 313. The modifications reflected in this revenue procedure include new safe harbor EPCRS correction methods relating to automatic contribution features, including automatic enrollment and automatic escalation of elective deferrals, in plans described in § 401(k) and § 403(b). The special safe harbor correction methods established for plan including those with automatic contribution features that have failures that are of limited duration involving elective deferrals.

To read the entire guidance, click here.

PBGC issues proposed rule on electronic filing of multiemployer plans
The Pension Benefit Guaranty Corporation (PBGC) is proposing to amend its regulations to require electronic filing of certain multiemployer notices. These changes would make the provision of information to the PBGC more efficient and effective. The proposed rule would require the following notices to be filed electronically with PBGC:

• Notices of termination under part 4041A
• Notices of insolvency and of insolvency benefit level under parts 4245
• Notices of insolvency and of insolvency benefit level under part 4281 (following mass withdrawal)
• Applications for financial assistance under part 4281 (following mass withdrawal).

To read the entire proposed rule, click here.

IRS reminds plan sponsors to keep track of loans and hardship distributions
Even if a plan sponsor uses a third party administrator (TPA) to handle participant transactions, they are ultimately responsible for the proper administration of their retirement plan. The IRS has published recordkeeping requirements regarding loans and hardship distributions.

For more information, click here.

IRS issues guidance on plan distributions to foreign persons
The IRS has published information for plan sponsors making distributions to foreign individuals. To read the entire guidance, click here.

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Regulatory roundup

March 30th, 2015 No comments

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

IRS issues private letter ruling on VEBA income used to pay benefits
The Internal Revenue Service (IRS) released a private letter ruling on the treatment of income received by a voluntary employees’ beneficiary association (VEBA) to pay plan benefits. The IRS ruled that a VEBA established by an earlier collective bargaining agreement between a union and a liquidating company to provide health insurance for retired union members is maintained pursuant to a collective bargaining agreement for the purposes of Section 419A(f)(5) of the tax code. Also, employer contributions and any income received by the VEBA and set aside to pay plan benefits is exempt function income under Section 512 and therefore won’t constitute unrelated business taxable income within the meaning of that section.

To read the entire private letter ruling, click here.

IRS posts information on multiemployer actuarial certification
The multiemployer defined benefit plan actuary must complete an annual actuarial certification of the plan’s funding status (IRC Section 432[b][3]). This must be submitted to the IRS no later than 90 days after the beginning of the plan year. The determination of endangered and critical status is detailed in Section 432(b).

For more information, click here.

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PBGC requires plan sponsors to report risk transfer activities

March 26th, 2015 No comments

Single-employer and multiemployer defined benefit plan sponsors that undertake “de-risking” activities must now disclose information about annuity purchases or lump-sum window offerings when they pay their premiums to the Pension Benefit Guaranty Corporation (PBGC), beginning with the filings for the 2015 plan year. For sponsors of plans with calendar-year plans, the first filing with the de-risking disclosures is due October 15, 2015. The PBGC’s rationale for this new requirement is that there currently is available no comprehensive, detailed, and reliable source for information on risk transfer activities, which can result in substantially reduced premium payments to the agency. This Client Action Bulletin provides more perspective.

Regulatory roundup

March 23rd, 2015 No comments

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

DOL rules on timing of annual disclosures for participant-directed account plans
The U.S. Department of Labor (DOL) has released a direct final rule and a companion proposed rule on the timing of annual disclosures that affect fiduciary requirements for disclosure in participant-directed account plans. The direct final rule amends the DOL’s participant-level fee disclosure regulation by making a technical adjustment to a timing requirement of the current regulation. It amends the definition of the term “at least annual thereafter” and substitutes the term “14-month period” for the term “12-month period.” The amendment provides plan administrators with flexibility as to when they must furnish annual disclosures.

The accompanying proposed rule would make the technical amendment necessary to implement the direct final rule’s annual timing requirement. If the DOL receives no significant adverse comments during the 90-day comment period, the direct final rule will go into effect without the agency taking further action. But if it receives significant adverse public comment, the direct final rule will be withdrawn.

To read the entire direct final rule, click here.
To read the entire proposed rule, click here.
Also, for a fact sheet, click here.

IRS extends temporary nondiscrimination relief for closed defined benefit plans
The Internal Revenue Service (IRS) recently published Notice 2015-28, extending the temporary nondiscrimination relief provided in Notice 2014-5 for an additional year. The new guidance applies relief to defined benefit plan years beginning before 2017 if the conditions of Notice 2014-5 are satisfied. During the period for which this extension applies, the remaining provisions of the nondiscrimination regulations under § 401(a)(4), including the rules relating to the timing of plan amendments under § 1.401(a)(4)-(5), continue to apply.

To read Notice 2015-28, click here.

Joint Committee on Taxation issues explanation of tax legislation enacted in the 113th Congress
Twelve tax bills passed the 113th Congress and were signed by the president—including several that have an impact on retirement savings—according to a Joint Committee on Taxation report detailing each piece of legislation.

Read the entire report here.

Regulatory roundup

March 16th, 2015 No comments

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

OMB approves PBGC 2015 premium filing instructions
The Office of Management and Budget (OMB) has approved 2015 premium filing instructions. The My Plan Administration Account (My PAA) website of the Pension Benefit Guaranty Corporation (PBGC) has been updated and is now ready to accept electronic premium fillings for plan years beginning in 2015.

For more information, click here.

IRS updates 403(b) listing of required modifications package
The Internal Revenue Service (IRS) has updated its Section 403(b) plan listing of required modifications (LRM). Also updated was a marked-up version showing changes to the 403(b) plan LRM from 2013. The package contains sample plan provisions that satisfy certain specific Internal Revenue Code requirements applicable to Internal Revenue Code Section 403(b) plans.

For the 403(b) plan LRM and information package (3-2015), click here. For the marked-up version showing changes to the 403(b) plan LRM (3-2013, revised 3-2015), click here.

Senate finance letter addresses affordable retirement advice
Chairman Lamar Alexander (R-Tenn.) led a group of eight Republicans on the U.S. Senate Labor Committee in a letter recently cautioning OMB Director Shaun Donovan on the potential negative impact of approving the proposed rule of the U.S. Department of Labor (DOL) to redefine and expand the term “fiduciary” if the current proposal has not changed significantly from the proposal the DOL offered in 2010.

To read the entire letter, click here.

PBGC study: Multiemployer guarantee
The PBGC has published a new study entitled “Multiemployer guarantee.” The study found that more than half of the people in terminated multiemployer plans running out of money in the near future face a reduction in benefits under current PBGC guarantees. This compares to 20% of workers and retirees who saw reduced benefits under plans that have already run out of money and are relying on PBGC financial assistance.

To download the entire study, click here.

Regulatory roundup

March 9th, 2015 No comments

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

Changes to the employee plans determination letter process begin in 2015
The Internal Revenue Service (IRS) has posted changes to the employee plans (EP) determination letter process for 2015. The changes, effective February 1, 2015, will begin with Cycle E2 applications and are expected to improve the program’s efficiency and consistency.

For more information, click here.

PBGC seeks to extend actuarial reporting collection with modifications (Form 5500 series)
The Pension Benefit Guaranty Corporation (PBGC) is requesting that the Office of Management and Budget extend approval of a collection of information with modifications on annual financial and actuarial reporting under the Form 5500 series, specifically the 2015 Schedule MB (multiemployer defined benefit plan and certain money purchase plan actuarial information) and instructions and the Schedule SB (single-employer defined benefit plan actuarial information) instructions.

Analysis of the information helps the agency anticipate potential demands on the system and allows the PBGC to direct its resources to situations that would create the largest risk to the system.

To read the entire notice, click here.

GASB issues final statement on fair value measurement and application
The Governmental Accounting Standards Board (GASB) has issued final guidance on accounting and financial reporting issues related to fair value measurements, which primarily applies to investments made by state and local governments.

GASB Statement No. 72, Fair Value Measurement and Application, defines fair value and describes how fair value should be measured, what assets and liabilities should be measured at fair value, and what information about fair value should be disclosed in the notes to the financial statements.

To read the entire guidance, click here.

IRS issues plan feature comparison chart for tax-exempt and governmental entities
The IRS’s Employee Plans publication has issued a comparison of plan types available to employees of tax-exempt and governmental entities. The publication includes a plan feature comparison chart with highlights of eight types of retirement plans—noting the latest tax laws specific to each plan.

To download the entire publication, click here.

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Employee benefits on the U.S. Supreme Court’s docket

March 4th, 2015 No comments

The U.S. Supreme Court has heard—and will hear—several cases that may be of interest for plan sponsors. On March 4, the Court will hear arguments on whether the federal premium tax credit subsidies available under the Patient Protection and Affordable Care Act (ACA) are available to people in all states or only to those buying coverage in states with a state-run exchange. On February 24, the Court heard arguments on whether 401(k) plan participants may file a suit challenging the retirement plan’s fiduciaries’ actions that took place before the six-year statute of limitations period allowed under ERISA for filing a claim. The Court will also consider the constitutionality of state laws barring same-sex marriages and the recognition of same-sex marriages lawfully performed out of state, though oral arguments have not yet been scheduled.

This Client Action Bulletin summarizes these cases of interest for plan sponsors.