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Posts Tagged ‘DOL’

DOL provides flexibility in timing of annual defined contribution plan disclosures

May 15th, 2015 No comments

Sponsors of 401(k) and other participant-directed defined contribution retirement plans will have more flexibility in the timing of providing annual plan and investment disclosures to participants, under a direct final rule from the Department of Labor (DOL). Instead of disclosing the required information “at least annually” which the agency had interpreted to mean no more than 365 days after the sponsor provided the prior annual disclosure, sponsors will have up to 14 months to do so. The modification will require disclosures to be made “at least once in any 14-month period, without regard to whether the plan operates on a calendar year or fiscal year basis.”

The change to the timing requirement will ease the administrative burdens faced by many plan sponsors and administrators.

The flexibility provided by the direct final rule is slated to be effective June 17, 2015, and will apply to disclosures made on or after that date, unless the DOL withdraws the rule before then due to adverse comments received.

The DOL’s direct final rule also announces an immediate, temporary enforcement policy (until June 17), so that plan sponsors and administrators may take advantage of the two-month grace period before the June 17 effective date, as long as they reasonably determine that doing so will benefit participants and beneficiaries. The relief granted by the enforcement policy is in addition to the one-time, 18-month “re-set” opportunity provided by the DOL’s Field Assistance Bulletin 2013-02.

For more information about the DOL’s direct final rule or a related proposed rule, please contact your Milliman consultant.

Labor Department proposes new “conflict of interest” fiduciary rule

May 11th, 2015 No comments

The Department of Labor (DOL) has proposed a definition of “fiduciary” that covers individuals who provide investment advice or recommendations for a fee to ERISA-covered and non-ERISA plans and participants (and individual retirement account (IRA) owners). The proposed rule aims to reduce conflicts of interest that may arise when investment advisers make recommendations that favor their own financial well-being over a client’s best interest. The proposal is the DOL’s second attempt at addressing this concern, having withdrawn a 2010 proposed rule that came under heavy criticism.

This Client Action Bulletin provides an overview of the DOL’s proposed rule and related proposed prohibited transaction exemptions (PTEs) as they apply to plan sponsors and participants (and does not cover the requirements relating to advice given to IRA owners). Although the proposed rule focuses on the defined contribution retirement plan arena, it also has implications for defined benefit plan sponsors and their advisers. In addition, the proposed rule affects a broad range of individual account plans (e.g., 403(b) arrangements), including, potentially, nonretirement programs such as health savings accounts.

Regulatory roundup

May 4th, 2015 No comments

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

IRS provides guidance on changes to the EP determination process
The Internal Revenue Service (IRS) has made changes to the determination letter program for retirement plans. The revised procedures generally apply to Form 5300 series determination letter applications received after February 1, 2015. These changes will improve the program’s efficiency and consistency.

For more information, click here.

ERISA to address pension risk transfers and plan sponsor education and lifetime plan participation
The ERISA Advisory Council has issued two statements:

• Statement on model notices and pension risk transfers
The 2015 council will supplement the work of the 2013 council by focusing specifically on the information that participants need to make informed decisions when faced with lump-sum risk transfers and insurance annuity risk transfers, and best practices for plan sponsors in communicating that information. The goal of the 2015 council is to offer the U.S. Department of Labor (DOL) draft model notices and disclosures that can be used by plan sponsors, participants, and the public.

For more information, click here.

• Statement on model notices and plan sponsor education and lifetime plan participation
The council would like to hear recommendations related to the drafting of model notices concerning lifetime participation in ERISA plans. The council would welcome witnesses and others to submit examples of model notices or other communications, including documents that are currently being delivered to participants. The council would like to hear recommendations related to outreach materials the DOL can provide to plan sponsors on the topic of innovative plan features that may encourage lifetime participation. The council requests testimony as it relates to data security issues.

For more information, click here.

IRS issues correction concerning the failure to comply with Section 409A
The IRS’s chief counsel has issued Memorandum 201518013 regarding the correction of a failure to comply with Section 409A. To read the entire memo, click here.

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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 U.S. 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 (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, “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 dates for plan benefits when there is a 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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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

February 2nd, 2015 No comments

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

DOL issues final rule on DB plan annual funding notice requirements
The U.S. Department of Labor (DOL) has released its final rule on the annual funding notice requirement for defined benefit plans. The rule will become effective 30 days after February 2 with an applicability date of plan years beginning on or after January 1.

To read the entire rule, click here.

PBGC announces OMB approval of standard and distress terminations and missing participants forms and instructions
The Office of Management and Budget (OMB) has approved revisions to the standard and distress termination forms and instructions. The new forms and instructions can be found on the plan terminations page of the Pension Benefit Guaranty Corporation (PBGC) website. Under the revisions, a plan administrator of a plan terminating in a standard termination (or a distress termination that closes out in the private sector) must submit with the post-distribution certification the most recent plan document and proof of benefit distributions for lump sums paid and annuities purchased.

Plan administrators must provide this information with any post-distribution certification filed on or after March 1, 2015. Filers may contact standard@pbgc.gov or distress@pbgc.gov for more information.

IRS updates its rollover-eligible retirement plans and IRA combinations chart for 2015
The Internal Revenue Service (IRS) has published a one-page summary listing the eight plans and IRAs that can make rollover-eligible distributions as well as the corresponding eight plans and IRAs into which those distributions can or cannot be rolled over.

For more information, click here.

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Regulatory roundup

January 12th, 2015 No comments

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

PBGC requests OMB approval for reporting of pension plan de-risking measures
The Pension Benefit Guaranty Corporation (PBGC) is modifying the collection of information under its regulation on payment of premiums and is requesting that the Office of Management and Budget (OMB) approve the revised collection of information under the Paperwork Reduction Act for three years.

PBGC is revising the 2015 filing procedures and instructions for payment of premiums to require after-the-fact reporting of certain risk transfers through lump-sum windows and annuity purchases. Risk transfers can substantially reduce the premiums that plans otherwise would pay to PBGC. Because PBGC premiums and the investment income earned on them are a major source of income for PBGC, information about risk transfers is critical to its ability to assess its future financial condition. There is currently no available comprehensive, detailed, and reliable source for information on risk transfers.

PBGC is also changing certain premium declaration certification procedures, offering the option for a plan to provide a telephone number specifically for inclusion in the PBGC Search Plan List on its website, updating the premium rates (including reflecting the Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. 113-235), and making conforming, clarifying, and editorial changes.

To read the entire notice, click here.

PBGC issues changes to ERISA Section 4062(e)
This announcement provides information about two important changes regarding ERISA Section 4062(e). First, on December 16, 2014, the president signed into law H.R. 83, which made major changes to section 4062(e). Second, the PBGC is ending the moratorium on enforcement of 4062(e) cases that it announced in July 2014.

For more information on the changes to ERISA Section 4062(e), click here.

IRS updates 2015 revenue procedures for employee plans and exempt organizations
The Internal Revenue Service (IRS) published its January 2, 2015, Internal Revenue Bulletin, which includes the various revenue procedures, revised for 2015, for issuing letters, rulings, determination letters, and technical advice on specific issues related to employee benefits. The documents are:

• Rev. Proc. 2015-1
• Rev. Proc. 2015-2
• Rev. Proc. 2015-3
• Rev. Proc. 2015-4
• Rev. Proc. 2015-5
• Rev. Proc. 2015-6
• Rev. Proc. 2015-7
• Rev. Proc. 2015-8

For an electronic version of Internal Revenue Bulletin 2015-1, which contains these revenue procedures and user fee schedules, click here.

IRS provides guidance on automatic approval of change in funding method for takeover plans
The IRS has released Announcement 2015-03, providing guidance on the automatic approval of a change in funding method for single-employer defined benefit plans under certain circumstances in which the change in method results from a change in a plan’s enrolled actuary.

To read Announcement 2015-03 in its entirety, click here.

PBGC publishes First Annual Report of the Participant and Plan Sponsor Advocate
The PBGC has released the first annual report of the participant and plan sponsor advocate.

To read the entire report, click here.

DOL issues fact sheet on EBSA’s enforcement efforts
Through its enforcement of ERISA, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) is responsible for ensuring the integrity of the private employee benefit plan system in the United States. EBSA’s oversight authority extends to nearly 684,000 retirement plans, approximately 2.4 million health plans, and a similar number of other welfare benefit plans, such as those providing life or disability insurance. These plans cover about 141 million workers and their dependents and include assets of over $7.6 trillion (as of October 29, 2014). In FY 2014, EBSA recovered $599.7 million for direct payment to plans, participants, and beneficiaries.

For more information, click here.

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Regulatory roundup

December 22nd, 2014 No comments

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

CBO releases new long-term projections for Social Security
The Congressional Budget Office (CBO) has published a new report entitled “CBO’s 2014 long-term projections for Social Security – additional information.” The CBO projects that under current law, the Disability Insurance (DI) trust fund will be exhausted in fiscal year 2017, and the Old-Age and Survivors Insurance (OASI) trust fund will be exhausted in 2032. If a trust fund’s balance fell to zero and current revenues were insufficient to cover the benefits specified in law, the Social Security Administration would no longer have legal authority to pay full benefits when they were due.

To read the entire report, click here.

IRS releases changes to employee plans determination letter processing
The Internal Revenue Service (IRS) released Announcement 2015-01, describing changes to the processing of employee plans determination letters that will take effect in 2015. These changes are being adopted as a result of a process improvement strategy designed to promote case processing efficiency.

The changes to the determination letter procedures described in this announcement will be reflected in Rev. Proc. 2015-6, which will be published in IRB 2015-1 and will be effective on February 1, 2015. Rev. Proc. 2015-6 will set forth the IRS’s procedures for issuing determination letters on the qualified status of employee plans.

To read the entire announcement, click here.

DOL issues information letter on myRAs facilitated by employers
The U.S. Department of Labor (DOL) has released an information letter stating that employers facilitating retirement savings accounts known as “myRAs” will not be establishing an ERISA-covered “employee pension benefit plan.” The DOL’s letter responds to a Treasury Department inquiry that asked whether the accounts would be covered by ERISA Title I.

The Treasury recently released a final rule on the savings bonds that are only available through the program announced by the president in January. Until the program is expanded, in order for an employee to make contributions to a myRA account, the employer must agree to forward the employee’s payroll deduction contributions. Employers would not make contributions to the myRAs and they would have no investment or other funding obligations, or have any custody or control over account assets.

To read the entire information letter, click here.

DOL releases advance copies of 2014 Form 5500 and 5500-SF
The DOL’s Employee Benefits Security Administration has updated its website with advance informational copies of the 2014 Form 5500 and 5500-SF and final copy of the 2014 Form M-1 of Form 5500.

To download Form 5500 and 5500-SF, click here.
To download Form M-1, click here.

For more information, click here.

Regulatory roundup

December 8th, 2014 No comments

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

House approves tax extenders bill with multiemployer pension plan provisions
On December 3, the U.S. House of Representative voted 404-17 to approve the “Achieving a Better Life Experience Act” (ABLE Act, H.R.647), which would allow for the creation of savings accounts to enable certain disabled beneficiaries to help pay for qualified expenses, effective for tax years beginning in 2015. Following the vote, the House combined the bill with the tax extenders legislation (H.R.5771) before sending it to the Senate.

Of interest to some employers are two provisions included in the ABLE Act:

• The Internal Revenue Service (IRS) would be authorized to certify “professional employer organizations” (PEOs). Such PEOs would pay an annual fee of $1,000, satisfy certain requirements (including posting a bond to ensure they satisfy employment tax withholding and payment obligations and submitting audited financial statements), and assume sole responsibility for the customer’s employment taxes. The provision generally would be effective for wages paid by a certified PEO for services performed by an employee after 2015, and the IRS would be required to establish the PEO certification program by July 1, 2015. (The Joint Committee on Taxation estimates this provision would increase revenues by $8 million over 10 years.)

• Certain civil penalties under the tax code would be adjusted for inflation, beginning in 2015, including for failures to file a tax return or to pay tax; failures to file certain information returns, registration statements, and other statements; and failures to file correct information returns and payee statements. (The Joint Committee on Taxation estimates this provision will increase revenues by $115 million over 10 years.)

IRS extends submission deadlines
The IRS released Announcement 2014-41. This announcement extends to June 30, 2015, the deadline for submitting on-cycle applications for opinion and advisory letters for preapproved defined benefit plans for the plans’ second six-year remedial amendment cycle. This announcement also provides a two day extension (from Saturday, January 31, 2015, to Monday, February 2, 2015) for Cycle D on-cycle submissions (primarily individually designed plans including multiemployer plans).

For more information, click here.

DOL report to Congress finds EBSA has not provided guidance and oversight of use of limited-scope audits
The Office of Inspector General (OIG) of the U.S. Department of Labor (DOL) has issued its Semiannual Report to Congress on the DOL’s activities, accomplishments, and concerns for the six-month period ending September 30, 2014. During this reporting period, the OIG issued 19 audit and other reports that identified needed improvements in DOL programs and operations.

Of interest to employee benefit practitioners was an audit of the oversight of the use of limited-scope audits for employee benefit plans by the Employee Benefits Security Administration (EBSA), which found that EBSA has not provided the guidance and oversight needed to adequately protect more than $1 trillion of plan assets invested in complex trust arrangements and hard-to-value assets held and certified by custodians.

To read the entire report, click here.

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