Tag Archives: IRS

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 Department 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 that which it 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 due to attrition must be reported to 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 this 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 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, EBSA will consider taking such additional steps as necessary.

For more information, click here.

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.

Regulatory roundup

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

House committee approves bill to repeal fiduciary rule
The U.S. House Committee on Education and the Workforce recently voted to approve the “Affordable Retirement Advice for Savers Act” (H.R. 2823), which would repeal the U.S. Department of Labor (DOL) rule defining “fiduciary” and restore the regulations and prohibited transaction exemptions that the rule had amended or repealed.

According to a summary released by the committee, the bill would amend ERISA and the tax code to establish a statutory definition of “investment advice” and “ensure that all financial professionals providing personalized advice about retirement investments, distributions, or the use of other advisors are legally required to act in the best interest of their clients.”

To learn more about the bill, click here.

IRS releases draft Form 8717
The Internal Revenue Service (IRS) has released Draft Form 8717, User Fee for Employee Plan Determination Letter Request, updated for September 2017. Specific user fee amounts are no longer listed on Form 8717. You must now enter the appropriate user fee when completing line 5. Notice 2011-86 is obsolete.

To download a copy of the draft, click here.

IRS releases final and temporary regulations on W-2 Series, Form W-3, Form 990 Series, and others
The IRS filed final and temporary regulations that update the due dates and extensions of time to file certain tax returns and information returns. The dates are updated to reflect the new statutory requirements set by section 2006 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 and section 201 of the Protecting Americans from Tax Hikes Act of 2015.

These regulations affect taxpayers who file Form W-2 (series, except Form W-2G), Form W-3, Form 990 (series), Form 1099-MISC, Form 1041, Form 1041-A, Form 1065, Form 1120 (series), Form 4720, Form 5227, Form 6069, Form 8804, or Form 8870.

To read more about the final and temporary regulations, click here. To read more about the proposed regulation, click here.

IRS releases draft W-4P for 2018
The IRS has released a draft copy of Form W-4P, Withholding Certificate for Pension or Annuity Payments, for 2018. The form is for U.S. citizens and resident aliens, or their estates, who are recipients of pensions, annuities (including commercial annuities), and certain other deferred compensation. Use Form W-4P to tell payers the correct amount of federal income tax to withhold from your payment(s). One also may use Form W-4P to choose (a) not to have any federal income tax withheld from the payment (except for eligible rollover distributions or for payments to U.S. citizens to be delivered outside the United States or its possessions) or (b) to have an additional amount of tax withheld.

To download a copy of the draft, click here.

GAO publishes report on older workers and phased retirement programs
The Government Accountability Office (GAO) has released “Older Workers – Phased Retirement Programs, Although Uncommon, Provide Flexibility for Workers and Employers” (GAO-17-536). The report examines:

• Recent trends in the labor force participation of older workers
• The extent to which employers have adopted phased retirement programs and what type of employers offer them
• What challenges and benefits, if any, exist in designing and operating phased retirement programs.

GAO analyzed data from two nationally representative surveys: the Health and Retirement Study (2004-2014) and the Current Population Survey (2005-2016). The agency also reviewed relevant federal laws and regulations, conducted a literature review, and interviewed 16 experts on retirement and nine employers that offer or considered offering phased retirement programs. While phased retirement programs exist in both the private sector and government, the GAO report focuses on private sector programs.

To read the entire report, click here.

Regulatory roundup

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

Report on DOL’s fiduciary conflict-of-interest rule
The Congressional Research Service has released “Department of Labor’s 2016 Fiduciary Rule: Background and Issues.” The report explores the U.S. Department of Labor (DOL) rule as it applies to pensions, individual retirement accounts, and investments.

To download the report, click here.

IRS updates procedures for multiemployer pension suspension applications
The Internal Revenue Service (IRS) has revised the procedures for multiemployer pension plans applying to suspend benefits to avoid insolvency. IRS Revenue Procedure 2017-43 clarifies that multiemployer plans that are in critical or declining status and applying for a benefit suspension must project withdrawal liability payments as part of the projection of a plan’s available resources. It also specifies who should be provided sample notices as part of the application.

For more information, click here.

Regulatory roundup

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

IRS issues memo on the application of section 409A to back-to-back arrangement
The Office of Chief Counsel of the Internal Revenue Service (IRS) has issued a memorandum (No. 201725027) on the application of section 409A to back-to-back arrangement. According to the memo, “Treas. Reg. Section 1.409A-3(i)(6) provides that the amount of the payment under the ultimate service recipient plan may not exceed the amount of the payment under the intermediate service recipient plan. Therefore, the USR Plan fails to meet the requirements of section 409A because the USR Plan provision providing for a payment to Taxpayer in the event of a Participant’s separation from service before vesting is an impermissible payment event.”

For more information, read the entire memo here.

Higher-paid workers more likely to have access to retirement benefits
According to data published by the Bureau of Labor Statistics (BLS), “Sixty-six percent of private industry workers had access to employer-provided retirement plans in March 2016. Having access means employers offered the benefit, regardless of whether employees chose to participate. Forty-nine percent of private industry workers participated in retirement plans in March 2016. That results in a take-up rate—the percentage of workers with access to a plan who participate in the plan—of 75 percent. Access, participation, and take-up rates were all higher for workers in higher wage groups than for workers in lower wage groups.”

To learn more about the BLS’s data, click here.