More retirement-related regulatory news for plan sponsors, including links to detailed information.
Single employer defined benefit plans: Changing plan years
The Internal Revenue Service (IRS) has recently received questions from practitioners and pension plan sponsors asking if and how single employer defined benefit pension plan sponsors may change a plan year to delay the effect of Moving Ahead for Progress in the 21st Century (MAP-21) Pension Benefit Guaranty Corporation (PBGC) premium increases for a plan. Sponsors have asked if a change in plan year for this purpose is eligible for automatic approval under Revenue Procedure 87-27.
A plan sponsor thinking of changing a plan year should keep in mind the implications of this decision. In most cases, changing the plan year means making other changes such as:
• Moving the plan’s annual actuarial valuation date (which may require system changes and changes to internal procedures for collecting data)
• Shifting timetables for coordinating with the plan’s actuary, auditor, trustee, and other providers
Changing a plan year also increases the risk that the plan sponsor may miss a key deadline (for example, for contributions, notices, and reporting) because these deadlines change when the plan year changes.
For more information, click here.
Bike share expenses do not qualify for tax exclusion as transportation fringe benefits
The IRS’s Office of the Chief Counsel released a memorandum (Number 2013-0032) that states that bike share expenses do not quality for tax exclusion as transportation fringe benefits. Specifically the memo states:
“Section 132(f)(4), the provision which permits employees to reduce their taxable compensation in order to receive reimbursements for transit expenses on a pre-tax basis, does not apply to qualified bicycle commuting reimbursement. Specifically, section 132(f)(4) provides that ‘no amount shall be included in the gross income of an employee solely because the employee may choose between any qualified transportation fringe (other than a qualified bicycle commuting reimbursement) and compensation that would otherwise be includible in the gross income of such employee’ … Thus, allowing bike share programs to qualify as a pre-tax benefit under section 132 would require legislative action by Congress.”
To read the entire memo, click here.
GASB launches new website
The Governmental Accounting Standards Board (GASB) launched an updated website that features more user-friendly navigation and “plain English” resources that provide extensive background on accounting and financial reporting issues for state and local governments. The site is found at www.gasb.org.
The new GASB website is designed to be the primary source of news and information about the GASB and its activities. The website includes videos and other new content intended for a wide range of users, including those who are unfamiliar with the GASB and its activities.
Read the GASB’s news release here.
OIG recommends EBSA provide guidance and oversight for ERISA plans holding hard-to-value alternative investments
Concerns by various parties, such as the IRS, General Accountability Office (GAO), and the American Institute of Certified Public Accountants over plan assets invested into alternative and hard-to-value investments prompted the U.S. Department of Labor (DOL) Office of the Inspector General, Office of Audit (OIG), to conduct an audit to determine if the Employee Benefits Security Administration (EBSA) is providing adequate oversight of employee benefit plans that hold alternative investments.
In its 47-page report, OIG recommended that the assistant secretary for EBSA take the following actions for plans holding hard-to-value alternative investments:
• Propose and formalize guidance and evaluate the ERISA Council recommendations
• Improve procedures in enforcement reviews
• Improve Form 5500 data collection, analysis, and targeting