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Posts Tagged ‘IRS’

Regulatory roundup

July 28th, 2014 No comments

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

IRS updates FAQs on retirement plan terminations and plan participant rights and plan events
The Internal Revenue Service (IRS) has updated its frequently asked questions (FAQs) regarding retirement plan terminations. An employer can terminate a plan for various reasons including bankruptcy, merger, or voluntarily terminating it. Questions and answers are provided on terminating a retirement plan and partial plan terminations.

The second updated posting provides an explanation of plan events that may trigger retirement plan participant rights, what notices retirement plan participants should receive based upon these plan events, and when these notices should be issued.

To read the updated webpage about retirement plan terminations, click here.
To read the updated webpage about retirement plan participant rights, click here.

Senate HELP Committee approves bill making ERISA clarifications
Senator Tom Harkin (D-IA), chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, issued S.2511 after the committee approved the bill on July 23.

S.2511 will bring clarity to the pension downsizing liability rules and will ensure that there is a workable mechanism to protect pension benefits when employers show symptoms of financial distress. The bill will now be considered by the full Senate.

To read the entire provision, click here.

Regulatory roundup

July 7th, 2014 No comments

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

IRS issues final rules on the use of longevity annuity contracts
The Internal Revenue Service (IRS) issued a final rule relating to the use of longevity annuity contracts in tax-qualified defined contribution plans under section 401(a) of the Internal Revenue Code (Code), section 403(b) plans, individual retirement annuities and accounts (IRAs) under section 408, and eligible governmental plans under section 457(b).

These regulations will provide the public with guidance necessary to comply with the required minimum distribution rules under section 401(a)(9) applicable to an IRA or a plan that holds a longevity annuity contract. The regulations will affect individuals for whom a longevity annuity contract is purchased under these plans and IRAs (and their beneficiaries), sponsors and administrators of these plans, trustees and custodians of these plans and IRAs, and insurance companies that issue longevity annuity contracts under these plans and IRAs.

To read the entire final rule, click here. For the Treasury news release, click here.

PBGC report shows improvement in single-employer plans, but underscores increased risks to some multi-employer plans
Despite substantial economic and market gains, multiemployer pension plans covering about 1.5 million people are severely underfunded, threatening benefit cuts for current and future retirees, according to the FY 2013 Projections Report recently released by the Pension Benefit Guaranty Corporation (PBGC). By comparison, the financial situation for private single-employer plans, which cover about 30 million participants, is projected to improve.

To read the entire report, click here. To read the entire news release issued by the PBGC, click here.

IRS updates webpage on top mistakes in VCP submissions
The IRS has updated its webpage regarding the top mistakes made in voluntary correction program (VCP) submissions.

To view the updated web page, click here.

Categories: Benefit News Tags: , ,

Regulatory roundup

June 30th, 2014 No comments

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

High Court rules in retirement plan fiduciary presumption of prudence in stock drop case
The U.S. Supreme Court has unanimously ruled that the fiduciaries of an ERISA-covered retirement plan that includes employer stock as an investment option are not entitled to any “presumption of prudence” in the investment decisions made by the plan administrator (Fifth Third Bancorp v. Dudenhoeffer, (no. 12-751, 6/25/2014)). In overturning the 2012 ruling by the U.S. Court of Appeals for the Sixth Circuit, the high court said that the fiduciaries are subject to the same duty of prudence that generally applies to fiduciaries under ERISA.

The Court remanded the case, directing the Sixth Circuit to reconsider whether the participants stated a claim under precedents established by the high court. The Court said that a fiduciary’s conduct should be evaluated in the context of publicly available information and that fiduciaries cannot be found imprudent for failing to buy or sell stock in violation of insider-trading securities laws. In addition, the high court said that a complaint must plausibly allege an alternative action that the defendant could have taken when plaintiffs state a claim for fiduciary imprudence.

Retirement plan and other provisions moving in transportation/highway trust fund bill
Senate Finance Committee Chairman Ron Wyden (D-OR) has modified his proposed transportation/highway funding legislation, which now includes changes to the retirement plan required distribution (“stretch IRA”) provision. The revised bill alters the beginning date for employees who become 5% owners after age 70 1/2 and eliminates rules in the earlier proposal relating to rollovers of distributions from employer-sponsored plans with a delayed effective date – i.e., governmental plans and collectively bargained plans.

Currently, the Internal Revenue Service has indicated that a plan under which a participant’s normal retirement age changes to an earlier date upon completion of a stated number of years of service typically will not satisfy vesting and accrual rules. According to the Joint Committee on Taxation’s description of this provision:

An applicable plan is a defined benefit plan that currently provides such a normal retirement age. A plan is generally an applicable plan only with respect to an individual who (1) is a participant in the plan on or before January 1, 2017, or (2) is an employee at any time on or before January 1, 2017, of any participating employer and who becomes a participant in the plan after January 1, 2017.

A plan does not fail to be an applicable plan solely because the normal retirement age described above currently applies only to certain plan participants or certain employers participating in the plan. In addition, subject to the limitation described above relating to participation or employment on or before January 1, 2017, if application of this normal retirement age is expanded to additional participants or participating employers, the plan will be treated as an applicable plan with respect to those participants and participating employers.

Finance Committee members have proposed dozens of amendments in advance of the markup. Among them are changes that would:

• Extend the parity for employer-provided transit benefit with parking benefits
• Allow for the continuation of an NRA of 30 years in service for currently existing defined benefit pension plans
• Require appropriate worker/independent contractor classifications in professional services organizations
• Temporarily repeal the Davis-Bacon “prevailing wage” rates for highway projects

Census Bureau: Summary of quarterly survey of public pensions for the first quarter 2014
This quarterly survey of public pensions provides national summary data on the revenues, expenditures, and composition of assets of the largest defined benefit public employee retirement systems for state and local governments. This survey currently consists of a panel of 100 retirement systems, which comprise 89.4 percent of financial activity among such entities, based on the 2007 Census of Governments.

To access the survey, click here.

Regulatory roundup

June 16th, 2014 No comments

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

IRS issues guidance on nonqualified deferred compensation from certain tax indifferent parties
The Internal Revenue Service (IRS) issued Revenue Ruling 2014-18, providing that a nonstatutory stock option or a stock appreciation right (each, a stock right) granted by a nonqualified entity for purposes of section 457A is treated as exempt from section 457A, provided that the stock right is exempt from section 409A, and further provided that the stock appreciation right at all times by its terms must be settled, and is settled, in service recipient stock for purposes of section 409A. Notice 2009-8 has been amplified.

Revenue Ruling 2014-18 will be published in Internal Revenue Bulletin 2014-26 on June 23, 2014. For more information, click here.

IRS publishes new edition of Retirement News for Employers
The IRS has released its latest edition of Retirement News for Employers, which offers guidance on the following topics:

• Penalty relief
• Safe harbor 401(k) and 401(m) plans
• Rollovers
• How to request a copy of a determination letter application file
• Avoiding mistakes
• Correcting mistakes
• Retirement plan deadlines
• Updates from the U.S. Department of Labor

To read the entire newsletter, click here.

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Regulatory roundup

May 27th, 2014 No comments

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

IRS issues announcement that penalty relief for small plans begins in June
The Internal Revenue Service (IRS) will begin a one-year pilot program in June to help small businesses with retirement plans that owe penalties for not filing reporting documents. By filing current and prior year forms during this pilot program, they can avoid penalties. The IRS is reaching out to certain small businesses that maintain retirement plans and may have been unaware that they had a filing requirement.

To read the entire IRS news release, click here.

IRS issues private letter ruling on church plan
The IRS has released Private Letter Ruling (PLP) 201420028 regarding the church plan status of a retirement plan of an affiliated religious organization not under direct control of an identifiable church.

To read the entire PLP, click here.

2010 IRPAC reports make recommendations on Form W-2, health valuation reporting, and more
The Information Reporting Program Advisory Committee (IRPAC) of the IRS has provided recommendations to assist the agency in developing resolutions to issues related to the new Form W-2, Wage and Tax Statement, in health valuation reporting, and in communicating information to taxpayers.

To learn more about IRPAC’s recommendations, click here.

IRPAC also released a report titled “2010 IRPAC report: Ad hoc subgroup.” Recommendations by a subgroup of the IRPAC include:

• Electronic furnishing of Forms 1098, 1099, 5498, and W-2
• Form 5498 and fair market value reporting for deceased beneficiaries and successor beneficiaries
• Information regarding nonresident alien taxation and tax reporting
• Reporting guidelines for the return of mistaken health savings account (HSA) contributions to an employer
• Form 1099-R reporting under Employee Plans Compliance Resolution System (EPCRS) guidelines for simplified employee pension (SEP), salary reduction SEP (SARSEP), and Savings Incentive Match Plans for Employees (SIMPLE) excesses returned to employers
• Form 5498-SA, HSA, Archer medical savings account (MSA), or Medicare Advantage MSA information due date change

To read the entire IRPAC report, click here.

IRS updates posting regarding recent developments of governmental plans under Section 401(a)
The IRS has posted recent developments regarding governmental plans under Internal Revenue Code Section 401(a). The posting provides information under the following topics:

• Determination letters
• Group trusts
• Normal retirement age
• Vesting
• Possible approaches to governmental plan guidance
• Governmental plans updates

To read the updated webpage, click here.

IRS posts retirement plans FAQs regarding USERRA and SSCRA
The spring 2003 edition of Employee Plans News presented an article describing the Uniformed Services and Reemployment Rights Act (USERRA) and the Veterans and Sailors Civil Relief Act of 1940 (SSCRA). The article included several frequently asked questions concerning the reemployment of veterans and the restoration of retirement plan benefits. Because of the interest generated by the article, supplemental FAQs on this topic have been addressed by the IRS.

To read the entire list of FAQs, click here.

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Regulatory roundup

May 19th, 2014 No comments

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

IRS issues notice providing amendments to safe harbor plans after “Windsor”
The Internal Revenue Service (IRS) released Notice 2014-37 with guidance on mid-year amendments to safe harbor plans described in tax code sections 401(k)(12) or (13) or sections 401(m)(11) or (12) following the U.S. Supreme Court’s decision in United States v. Windsor. The notice will be published June 2 in Internal Revenue Bulletin 2014-23.

To read Notice 2014-37, click here.

IRS posts changes to IRS penalty relief for DOL DFVC filers of late annual reports
Since 2002, the IRS has waived its late filing penalties for Form 5500 series filers who satisfy the requirements of the U.S. Department of Labor (DOL) Delinquent Filer Voluntary Compliance (DFVC) Program requirements. However, because of changes to the DOL’s electronic filing system, filings under DFVC no longer include all information required by the IRS. The Form 8955-SSA entitled “Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits,” which replaced the Schedule SSA (Form 5500), must be filed directly with the IRS.

The IRS has therefore modified the requirements for qualifying for IRS penalty relief. The IRS is now waiving its late filing penalties only for filers who:

1. Satisfy the DFVC requirements for either:
• Forms 5500, Annual Return/Report of Employee Benefit Plan
• Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan
2. File a paper Form 8955-SSA with the IRS for the same delinquent tax year filings.
3. Meet the requirements of Notice 2014-35.

For more information, click here.

IRS posts information on advantages of setting up a retirement plan
The IRS has posted information highlighting the advantages of setting up a retirement plan. The posting is set up in a question and answer (Q&A) format.

To read the entire posting, click here.

IRS posts mini course on 403(b) tax-sheltered annuity programs for employers
The IRS has posted a mini course on 403(b) tax-sheltered annuity programs for employers. The mini course is divided into 21 sections, including:

• General effective date
• Written program requirements
• General salary deferral
• Nonelective contributions
• Salary deferrals

For more information, click here.

IRS updates FAQs on retirement plan investments
The IRS has updated its “Retirement Plan Investments FAQs” webpage concerning prohibited transactions. Prohibited transactions are certain transactions between a retirement plan and a disqualified person. If you are a disqualified person who takes part in a prohibited transaction, you must pay a tax.

For more information, click here.

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Regulatory roundup

May 12th, 2014 No comments

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

IRS updates posting: Updating frozen DB plans for current law and other compliance issues

The Internal Revenue Service (IRS) has updated its web page titled “Updating frozen DB plans for current law and other compliance issues.” During the frozen plan amendments project, the Employee Plans Compliance Unit looked at whether sponsors of frozen defined benefit plans had amended their plans for the Economic Growth and Tax Relief Reconciliation Act of 2001.

Employee Plans designed the frozen plan amendments project to learn:

1. If plan sponsors amended their frozen plans for current law by the required deadlines.
2. Whether the sampled plans were actually frozen defined benefit plans.
3. Reasons the plans were frozen.
4. The effective date of the freeze.
5. What sponsors intended to do with their frozen plans in the short term.

Overall, the project showed that sponsors of the sampled frozen defined benefit plans amended their plans for current law by the required deadlines, but other issues were found.

To access the updated web page, click here.

PBGC issues final rule on phase-in of unpredictable contingent event benefit guarantees
The Pension Benefit Guaranty Corporation (PBGC) released a final rule on the phase-in of guaranteed benefits in the event of an “unpredictable contingent event” (such as a plant shutdown) in a single-employer plan, as provided under the 2006 Pension Protection Act (PPA).

In general, the PPA phases in the period for the guarantee of such benefits, starting no earlier than the date of the shutdown or other unpredictable contingent event. The final rule incorporates the definition of an unpredictable contingent event benefit; provides that the guarantee of such a benefit is phased in from the latest of the date the benefit provision is adopted, the date the benefit is effective, or the date on which the event that makes the benefit payable occurs; and includes eight examples that show how the phase-in rules apply in various situations.

To read the entire final rule, click here.

IRS issues two pieces of guidance on Form 5500 and Form 5500 EZ
The Internal Revenue Service (IRS) has issued Revenue Ruling 2014-32, which establishes a one-year pilot program to provide relief to plan administrators who fail to file Form 5500 EZ in time. Revenue Procedure 2014-32 will be published in Internal Revenue Bulletin 2014-23 on June 2, 2014.

The IRS also issued Notice 2014-25 applying administrative relief to late filers of Form 5500 who satisfy the requirements of this notice and the Delinquent Filer Voluntary Compliance (DFVC) Program administered by the U.S. Department of Labor (DOL) Employee Benefits Security Administration. Notice 2014-35 will be published in Internal Revenue Bulletin 2014-23 on June 2, 2014.

To read a temporary copy of Revenue Ruling 2014-32, click here.
To read a temporary copy of Notice 2014-25, click here.

IRS updates FAQs for 403(b) preapproved plan program: Duties of plan sponsors and application procedures

The IRS has updated its frequently asked questions (FAQs) for 403(b) preapproved plan program, duties of plan sponsors.

To access the updated FAQ page, click here.

IRS posts article on retirement plans internal controls
The IRS has published an article entitled “Internal controls are essential in retirement plans.” In the article Monika Templeman, director of Employee Plans Examinations, responds to questions and offers insights on retirement plan topics uncovered during audits.

To read the article, click here.

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Regulatory roundup

May 6th, 2014 No comments

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

Annual survey of public pensions: State- and locally administered defined benefit plan data

The U.S. Census Bureau has published its latest “Survey of Public Pensions: State- and Locally-Administered Defined Benefit Data.” The survey provides revenues, expenditures, financial assets, and membership information for the defined benefit (DB) public pension systems. Data are shown for individual pension systems as well as at the national, state, and local level. There were 227 state-administered and 3,771 locally administered defined benefit public pension systems, all of which are represented here.

The 2012 survey covered fiscal years that ended between July 1, 2011, and June 30, 2012, and does not reflect data for the entire calendar year of 2012.

To access the entire data, click here.

IRS updates posting regarding a failed 401(k) ADP and ACP nondiscrimination test
The Internal Revenue Service (IRS) has updated its posting regarding failed 401(k) actual deferral percentage (ADP)/actual contribution percentage (ACP) nondiscrimination tests. The posting provides explanations and examples by discussing: the mistake, how to find the mistake, how to fix the mistake, and how to avoid the mistake in the future.

For more information, click here.

IRS updates FAQs on the determination letter process
The IRS has updated its frequently asked questions (FAQs) on the determination letter process for retirement plans. The posting provides answers to several questions, including:

  • Where do I file my application or request for a letter?
  • How do I get assistance?
  • What happens to my application once it is received?
  • Is it important to retain copies of applications, demonstrations, and related information that were submitted to the IRS?
  • How do I obtain a copy of my prior determination letter?
  • If I electronically sign my plan adoption agreement, do I need to submit any additional information with the application?
  • Does the IRS require me to submit a highlighted copy of the plan document changes with a determination submission?
  • Will the IRS review amendments or restatements adopted after a determination letter application was filed?

For more information, click here.

Regulatory roundup

April 28th, 2014 No comments

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

PBGC requests OMB approval with modifications of 2014 schedule MB and SB and related instructions
The Pension Benefit Guaranty Corporation (PBGC) is requesting that the U.S. Office of Management and Budget (OMB) approve modifications to the 2014 Schedule MB (multiemployer defined benefit plan actuarial information) and the 2014 Schedule SB (single-employer defined benefit plan actuarial information) and related instructions.

The modification to the Schedule MB requires plan administrators of multiemployer defined benefit plans in critical status to provide information about the plan year in which the plan is projected to emerge from critical status and, if the rehabilitation plan is based on forestalling possible insolvency, the plan year in which insolvency is expected. The modification to the Schedule SB requires plan administrators of single-employer defined benefit plans to report the funding target (vested and total) for each type of participant (active, retired, terminated vested).

Comments are expected 30 days after publication in the Federal Register.

PBGC posts standard and distress terminations and missing participants forms and instructions
The OMB has approved revisions to the standard termination, distress termination, and missing participants forms and instructions. The new forms and instructions can be found on the plan terminations page of PBGC’s website. The new forms must be used for terminations for which the first Notice of Intent to Terminate is issued on or after June 1, 2014. If the first Notice of Intent to Terminate is issued before June 1, 2014, either the new or old forms may be used.

Private Pensions: Pension Tax Incentives Update
The U.S. Government Accountability Office (GAO) has published its third issue of “Private Pensions: Pension Tax Incentives Update.”

For more information, click here.

Employee plans project summary reports: Nonqualified 401(k) plans
The Internal Revenue Service’s (IRS) Employee Plans Compliance Unit (EPCU) Nonqualified 401(k) Plans project began in February 2013. The IRS sent contact letters to a sample of plan sponsors whose 401(k) plans were shown as nonqualified. The intent was to learn whether they made a mistake when selecting pension feature codes 2J and 3C on their Form 5500 series returns to describe their plan’s characteristics.

Pension feature code 2J means:
“Code section 401(k) feature – A cash or deferred arrangement described in [Internal Revenue] Code section 401(k) that is part of a qualified defined contribution plan that provides for an election by employees to defer part of their compensation or receive these amounts in cash.”

Pension feature code 3C means:
“Plan not intended to be qualified – A plan not intended to be qualified under [Internal Revenue] Code sections 401, 403 or 408.”

To read the results, click here.

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Regulatory roundup

April 21st, 2014 No comments

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

PBGC posts 2014 premium filing information
The U.S. Office of Management and Budget (OMB) has approved the 2014 premium filing instructions consistent with the Pension Benefit Guaranty Corporation’s (PBGC) recent final rule making its premium regulations more effective and less burdensome.

The web pages showing premium due dates and interest rates used to determine the variable-rate premium have been updated to reflect the new regulations.

For more information, click here.

PBGC announces My PAA ready for 2014 premium filings
The My Plan Administration Account (My PAA) website has been updated to reflect recent changes to the premium regulation (first effective for 2014 plan years) as described in the 2014 premium filing instructions. Comprehensive filings for plan years beginning in 2014 may now be electronically submitted via My PAA. Information about how to e-file via My PAA (e.g., demos and FAQs) is on the “Online Premium Filing With My PAA” page of the PBGC website.

A reminder that the new rules have no impact on premium filings for plan years beginning in 2013 (e.g., small calendar plans whose 2013 premium filing is due April 30, 2014).

IRS issues PLR stating that VEBA can extend benefits to domestic partners of participants
The Internal Revenue Service (IRS) has issued Private Letter Ruling (PLR) 201415011 stating that a voluntary employees’ beneficiary association (VEBA) can extend benefits to domestic partners of participants.

To read the entire letter, click here.

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