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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 IRS released a private letter ruling on the treatment of income received by a voluntary employees’ beneficiary association (VEB) to pay plan benefits. The IRS ruled that a voluntary employees’ benefit association 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, 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 Oct. 15, 2015. The PBGC’s rationale for this new requirement is that there currently is no available 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 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. My PAA 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. Also updated was a redlined version showing changes to 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 403(b) plan listing of required modifications and information package (LRM) (3-2015), click here. For the redlined version showing changes to 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 Senate labor committee in a letter recently cautioning Office of Management and Budget (OMB) Director Shaun Donovan on the potential negative impact of approving the Department of Labor’s (DOL) proposed rule to redefine and expand the term “fiduciary” if the current proposal has not changed significantly from the proposal DOL offered in 2010.

To read the entire letter, click here.

PBGC study: Multiemployer guarantee
The Pension Benefit Guaranty Corporation (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 percent 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 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 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 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.

Regulatory roundup

March 2nd, 2015 No comments

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

New GAO report focuses on lump-sum information for plan participants
The Government Accountability Office (GAO) has released “Private pensions: Participants need better information when offered lump-sums that replace their lifetime benefits” (GAO-15-74). The report reviews the critical issues associated with lump-sum window offerings by large pension plan sponsors. The GAO’s review focused on the prevalence of lump-sum offers and sponsors’ incentives to use them, the implications for participants, and the extent to which selected lump-sum materials provided to participants include key information.

To read the entire report, click here.

SEC no-action letter extending Rule 482 relief
The Securities and Exchange Commission (SEC) has released a letter sent to the American Retirement Association in which it extends its position concerning Rule 482 to certain information furnished to participants and beneficiaries in certain retirement savings plans under Section 403(b) of the Internal Revenue Code of 1986 (Code) that are not subject to ERISA, i.e., non-ERISA 403(b) plans.

According to the letter, the SEC agrees to treat investment information required by the U.S. Department of Labor (DOL) furnished, in the manner described, to non-ERISA 403(b) plans, and participants and beneficiaries in such plans, as if it were a communication that satisfies the requirements of Rule 482 under the Securities Act.

The views expressed in the letter also extend to retirement savings plans that similarly are not subject to ERISA, including governmental 457(b) and 401(a) plans, 415(m) plans, church 401(a) plans, non-governmental 457(b) plans, and 409A plans or 457(f) plans of governmental or tax-exempt entities, i.e., other non-ERISA plans.

To read the entire letter, click here.

IRS changes address for 403(b) pre-approved plan determination letters submissions
The Internal Revenue Service (IRS) has issued Revenue Procedure 2015-22 containing a modification to Revenue Procedure 2013-22, 2013-18 I.R.B. 985, as modified by Revenue Procedure 2014-28, 2014-16 I.R.B. 944, and modifications to Revenue Procedure 2015-8, 2015-1 I.R.B. 235.

In particular, this revenue procedure changes the addresses to which applications for opinion and advisory letters for § 403(b) preapproved plans should be submitted and inserts a user fee that was omitted from Rev. Proc. 2015-8. This revenue procedure will be in Internal Revenue Bulletin 2015-11 dated March 16, 2015.

For more information, click here.

IRS issues employee plans newsletter
The IRS has issued the February 27, 2015, edition of Employee Plans News. To download the newsletter, click here.

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Regulatory roundup

February 23rd, 2015 No comments

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

PBGC seeks comments on Multiemployer Pension Reform Act (MEPRA) of 2014
The Pension Benefit Guaranty Corporation (PBGC) filed a request for information (RFI) to inform future PBGC guidance under section 4231 and 4233 of ERISA. The PBGC is seeking comments from all interested stakeholders, including multiemployer plan participants and beneficiaries, organizations serving or representing such individuals, multiemployer plan sponsors and professional advisors, contributing employers, unions, and other interested parties.

To read the entire RFI, click here.

PBGC posts FAQs on MEPRA
The PBGC has published a set of frequently asked questions (FAQs) regarding the MEPRA. The FAQ consists of 10 questions and answers. The PBGC will continue to update this FAQ web page to reflect changes.

To view the FAQs, click here.

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Tools for multiemployer pension plans in critical and declining status

February 17th, 2015 No comments

The Multiemployer Pension Reform Act of 2014 (MEPRA) was part of the Consolidated and Further Continuing Appropriations Act of 2015, which was signed by President Obama in December. One of the major changes MEPRA has made is the creation of a new status for very poorly funded plans called “critical and declining status.” In this Multiemployer Review, Milliman consultants Robert Behar, Nina Lantz, and Victor Harte define this new status and outline major rules and procedures related to plan mergers, plan partitions, and benefit suspensions.

Regulatory roundup

February 17th, 2015 No comments

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

IRS schedules phone forums on retirement plan loans and second Cycle E determination letter application process

The Internal Revenue Service (IRS) has announced it will be holding two phone forums:

1. Retirement plan loans to participants (March 26, 2015)
• What type of plans can make loans to participants?
• What are the conditions a plan must follow to make loans?
• What are the required terms of a plan loan?
• How may plan loans be taxable under IRC Section 72(p)?
• When do plan loans violate the prohibited transaction rules of IRC Section 4975?
• How to fix plan errors involving loans.

To register, click here.

2. Highlights of the second Cycle E determination letter application process (March 5, 2015):
• Who may submit during the second Cycle E?
• What you must include with your application.
• How we will process your application.
• What are the new reference lists?
• What changes you must make to your plan (Notice 2014-77 – 2014 cumulative list).

To register, click here.

Request for comments on MEPRA’s benefit suspension provisions
The U.S. Department of the Treasury invites public comments with regard to future guidance required to implement provisions of the Multiemployer Pension Reform Act of 2014, Division O of the Consolidated and Further Continuing Appropriations Act, 2015, Public Law No. 113-235 (MEPRA). MEPRA generally permits a sponsor of a multiemployer defined benefit plan that is in critical and declining status to suspend certain benefits following the provision of specified notice, consideration of public comments, approval of an application for suspension, and satisfaction of other specified conditions (including a participant vote).

The request for comments is scheduled to be published in the February 18 Federal Register. Comments are due 45 days after publication.

To read the request, click here.