Tag Archives: DoL

Regulatory roundup

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

Proposed rule on claims procedure for plan providing disability benefits; extension of applicability date
The Department of Labor (DOL) has proposed a delay to the applicability of the final rule amending the claims procedure requirements applicable to ERISA-covered employee benefit plans that provide disability benefits for 90 days – through April 1, 2018.

The final rule was published in the Federal Register on December 19, 2016, and became effective on January 18, 2017. The rule is currently scheduled to apply to claims for disability benefits under ERISA-covered employee benefit plans that are filed on or after January 1, 2018.

For more information on the proposed rule, click here.

Guidance providing funding methods for single-employer defined benefit plans
The Internal Revenue Service (IRS) has released two pieces of guidance providing funding methods for single-employer defined benefit plans.

Revenue Procedure 2017-56 updates Rev. Proc. 2000-40 to take into account the provisions of § 430 of the Internal Revenue Code, which was enacted as part of the Pension Protection Act of 2006. This revenue procedure provides automatic approval for certain changes in funding method used for single-employer defined benefit plans for calculations described under § 430. The approvals under this revenue procedure are granted in accordance with § 412(d)(1) of the Code and section 302(d)(1) of the Employee Retirement Income Security Act of 1974, as amended.

Revenue Procedure 2017-57 updates Rev. Proc. 2000-41 to take into account the enactment of subsequent legislation. This revenue procedure sets forth the procedure for obtaining approval of the Internal Revenue Service (IRS) for a change in the funding method used for a defined benefit plan, as provided by § 412(d)(1) of the Internal Revenue Code and section 302(d)(1) of the Employee Retirement Income Security Act of 1974, as amended (ERISA). This revenue procedure also sets forth the procedure for obtaining approval of the IRS to revoke an election relating to interest rates pursuant to § 430(h)(2)(D)(ii) or § 430(h)(2)(E) of the Code and the corresponding sections of ERISA.

For more information on Revenue Procedure 2017-56, click here.

For more information on Revenue Procedure 2017-57, click here.

Disaster relief for employee benefit plans

The IRS, the Department of Labor (DoL), and the Pension Benefit Guaranty Corporation (PBGC) have released guidance to ease some of the rules applicable to benefit plan sponsors and participants affected by Hurricanes Harvey, Irma, and Maria. The new pieces of guidance provide relief separate from the IRS’s normal tax-related disaster relief (e.g., IRS Revenue Ruling 2003-12, which permits employers to provide tax-free cash or benefits to help employees in a presidentially declared disaster; or IRS announcements postponing tax return filing or payment deadlines for individuals and businesses). In general, the new relief is similar to that provided in 2012 under Hurricane Sandy (see Client Action Bulletin 12-10).

This Client Action Bulletin provides an overview of the federal agencies’ employee benefit plan-related guidance to date, along with a summary chart. Although the guidance offers relief to those directly in the covered disaster areas, it also applies some relief to retirement plans with participants in other parts of the country with relatives in the disaster areas.

Regulatory roundup

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

Hardship and loan relief for Hurricane Irma victims
The Internal Revenue Service (IRS) announced that 401(k) plans and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Irma and members of their families. This is similar to relief provided last month to victims of Hurricane Harvey. Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features.

In addition, the plan can ignore the reasons that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. If a plan requires certain documentation before a distribution is made, the plan can relax this requirement as described in Announcement 2017-13.

For more information, click here.

DOL to provide immediate grants and assistance for Hurricane Irma recovery efforts
In cooperation with state and local partners, the Department of Labor (DOL) is setting aside funding to make grants to assess workforce needs in the U.S. Virgin Islands, Puerto Rico, Florida, and other states in response to Hurricane Irma. The DOL will continue to work cooperatively with states and territories to assess needs as they develop and respond accordingly.

For more information, click here.

DOL extends Hurricane Harvey compliance guidance and relief to employee benefit plans impacted by Hurricane Irma
The DOL announced employee benefit plan compliance guidance and relief for victims of Hurricane Irma that parallels what is already provided to victims of Hurricane Harvey regarding verification procedures for plan loans and distributions, participant contributions and loan payments, blackout notices, and group health plan compliance.

For more information, click here.

PBGC issues technical update on active participant reduction reportable events
The Pension Benefit Guaranty Corporation (PBGC) is providing an alternative method for determining whether an active participant reduction that is due to attrition must be reported to the PBGC under § 4043.23(a)(2). This is to eliminate possible duplicative reporting for plans that reported an active participant reduction due to a single cause under § 4043.23(a)(1).

For more information, click here.

Regulatory roundup

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

IRS extends temporary nondiscrimination relief for closed pension
The Internal Revenue Service (IRS) released Notice 2017-45, which extends temporary relief under Notice 2014-5 from section 401(a)(4) nondiscrimination testing for closed defined benefit pension plans through plan years beginning before 2019. Taxpayers may continue to rely on the proposed regulations for the same period.

To read the entire notice, click here.

DOL proposes fiduciary rule delay
The Department of Labor (DOL) issued a proposal to extend the special transition period under sections II and IX of the Best Interest Contract Exemption and section VII of the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs. The document also proposes to delay the applicability of certain amendments to Prohibited Transaction Exemption 84-24 for the same period.

To learn more about the DOL’s proposal, click here.

DOL states fiduciary rule’s arbitration ban won’t be enforced
The DOL released Field Assistance Bulletin 2017-3, “Enforcement Policy on Arbitration Limitation in the Best Interest Contract Exemption and Principal Transaction Exemption.” The bulletin states that the DOL will not pursue a claim against any fiduciary based on failure to satisfy the Best Interest Contract (BIC) Exemption or the Principal Transactions Exemption, or treat any fiduciary as being in violation of either of these exemptions, if the sole failure of the fiduciary to comply with either the BIC Exemption or the Principal Transactions Exemption is a failure to comply with the Arbitration Limitation in section II(f)(2) and/or section II(g)(5) of the exemptions.

This policy will continue to apply as long as the exemptions include the Arbitration Limitation now found in section II(f)(2) and/or section II(g)(5). To the extent that circumstances give rise to the need for other relief, including prohibited transaction relief, the Employee Benefits Security Administration (EBSA) will consider taking such additional steps as necessary.

For more information, click here.

OregonSaves and other state-run retirement programs may require employer action

President Trump recently signed into law (P.L.115-35) a bill “disapproving” a U.S. Department of Labor (DoL) final rule that permitted states to create retirement savings programs for nongovernmental workers whose employers do not sponsor a retirement plan. The August 30, 2016, final rule specified the conditions to qualify for a “safe harbor” that would exempt certain state-run individual retirement arrangements from ERISA, the federal law that governs retirement plans sponsored by employers in the private sector.

Despite the disapproval, several states (and municipalities) remain committed to creating or studying retirement savings vehicles for workers whose employers do not offer a plan. Oregon became the first to launch such a program, called OregonSaves™. This Client Action Bulletin provides some perspective.

Regulatory roundup

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

IRS issues model amendments for DB plans offering bifurcated benefit distribution options
The Internal Revenue Service (IRS) released Notice 2017-44, which provides model amendments that a sponsor of a qualified defined benefit (DB) plan may use to amend its plan document to offer bifurcated benefit distribution options to participants in accordance with final regulations issued under § 417(e) of the Internal Revenue Code.

The model amendments set forth in the Appendix may be used to implement either of the two methods set forth in § 1.417(e)-1(d)(7) for computing the amount to be paid to a participant who elects to receive his or her accrued benefit in an optional form of payment consisting partially of an annuity and partially of a more accelerated form of payment. Note that the Implicit Bifurcation Amendment may not be used with respect to distributions for which § 1.417(e)-1(d)(7)(iii)(C) prohibits the use of implicit bifurcation.

To read the entire notice, click here.

DoL removes guide proposal meant to help understand fee disclosures
The U.S. Department of Labor (DoL) released a notice modifying its semiannual regulatory agenda. According to the notice, the Employee Benefits Security Administration (EBSA) is removing from its agenda a regulations project that was proposed during the prior administration to require that retirement plan service providers create and deliver a guide to help plan fiduciaries better locate certain information in required fee and service disclosures. These are disclosures required under 408(b)(2) regulations.

To read the notice’s language on this subject, click here.