Tag Archives: PBGC

Regulatory roundup

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

Pension plan limitations not affected Tax Cut and Jobs Act
The IRS has announced that the Tax Cut and Jobs Act of 2017 does not affect the tax year 2018 dollar limitations for retirement plans detailed in Notice 2017-64. The tax law provides dollar limitations on benefits and contributions under qualified retirement plans, and it requires the Treasury Department to annually adjust these limits for cost of living increases. Those adjustments are to be made using procedures that are similar to those used to adjust benefit amounts under the Social Security Act.

For more information, click here.

Approval with modifications on termination of single-employer plans and missing participants requested
The Pension Benefit Guaranty Corporation (PBGC) has issued a notice requesting that the Office of Management and Budget (OMB) approve, with modifications, under the Paperwork Reduction Act a collection of information in PBGC’s regulations on Termination of Single Employer Plans and Missing Participants and implementing forms and instructions.

For more information, click here.

PBGC’s missing participants program now covers defined contribution plans

The Pension Benefit Guaranty Corporation’s (PBGC) recently released final rule updating the agency’s regulations on missing participants in terminated single-employer defined benefit (DB) plans newly extends the program to retirement plans not previously covered. These include most defined contribution (DC) retirement plans (e.g., 401(k) and profit-sharing plans), PBGC-covered multiemployer pension plans (MEPPs), and small (25 or fewer participants) professional service organizations’ defined benefit plans.

The final rule, which will include a “unified unclaimed pension database,” applies to plans – other than MEPPs – that terminate on or after Jan. 1, 2018, and gives DC plan sponsors the option to transfer the assets to the PBGC, rather than to establish individual retirement accounts at a financial institution for the missing participants. For terminating MEPPs, the rule applies to plans where the actual date of payment (i.e., plan close-out) is on or after Jan. 1, 2018. This Client Action Bulletin provides some more perspective.

Regulatory roundup

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

Final rule adjusting maximum civil penalties for certain multiemployer plan notices issued
The Pension Benefit Guaranty Corporation (PBGC) is required to amend its regulations annually to adjust for inflation the maximum civil penalty for failure to provide certain notices or other material information and for failure to provide certain multiemployer plan notices. The final rule adjusts, as required for 2018, the maximum civil penalties under 29 CFR part 4071 and 29 CFR part 4302 that PBGC may assess for failure to provide certain notices or other material information and certain multiemployer plan notices.

The new maximum amounts are $2,140 for section 4071 penalties and $285 for section 4302 penalties.

Section 4302, added to ERISA by the Multiemployer Pension Plan Amendments Act of 1980, authorizes PBGC to assess a civil penalty of up to $100 a day for failure to provide a notice under subtitle E of title IV of ERISA (dealing with multiemployer plans). Section 4071, added to ERISA by the Omnibus Budget Reconciliation Act of 1987, authorizes PBGC to assess a civil penalty of up to $1,000 a day for failure to provide a notice or other material information under subtitles A, B, and C of title IV and sections 303(k)(4) and 306(g)(4) of title I of ERISA.

This rule is effective as of January 12, 2018.

For more information, click here.

PBGC releases 2018 premium filing instructions
The Comprehensive Premium Filing Instructions for 2018 Plan Years are now available on the PBGC website. The document now features a new section alerting practitioners to the most common premium filing mistakes. In addition, the examples in the section, about how to determine premiums in a year when a plan is involved with a spinoff, merger, or consolidation, have been expanded.

For more information, click here.

IRS compliance project published
The Employee Plans Compliance Unit of the Internal Revenue Service (IRS) has issued a summary of a compliance project related to pension feature code(s) missing, inconsistent, or incomplete on line 8a of the Form 5500, line 9a of the Form 5500-SF, and line 8 of the Form 5500-EZ for certain plan years. The primary goal is to correct and verify the pension feature codes on the selected returns in order to have useful information. Additional goals are to identify the underlying causes for missing pension feature codes and to make recommendations to improve IRS systems.

For more information, click here.

Regulatory roundup

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

Updated mortality improvement rates and static mortality tables for pension plans
The Internal Revenue Service (IRS) has released Notice 2018-02, which establishes the updated mortality improvement rates and static mortality tables that are used for purposes of determining minimum funding requirements under § 430(h)(3) for 2019. The notice also establishes the minimum present value under § 417(e)(3) for distributions with annuity starting dates that occur during stability periods beginning in the 2019 calendar year.

To read the entire notice, click here.

Request for OMB extension of approval for 2018 schedule MB and SB with modifications
The Pension Benefit Guaranty Corporation (PBGC) is requesting that the Office of Management and Budget (OMB) extend approval, with modifications, under the Paperwork Reduction Act of 1995, of its collection of information for Annual Reporting (OMB control number 1212-0057, which expires on August 31, 2020). This notice informs the public of the PBGC’s request and solicits public comment on the collection of information.

For more information, click here.

Regulatory roundup

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

CBO issues cost estimate of House GOP tax bill and scores estimated deficits and debts under Senate tax bill
In the House, H.R. 1, the Tax Cuts and Jobs Act, would amend numerous provisions of U.S. tax law. The staff of the Joint Committee on Taxation (JCT) estimates that enacting the bill would reduce revenues by about $1,438 billion over the 2018-2027 period, and decrease outlays by $2 billion over the same period, leading to an increase in the deficit of $1,437 billion over the next 10 years. For the Senate’s tax bill, the staff of the Joint Committee on Taxation determined that provisions in the Chairman’s Mark would increase deficits over the 2018-2027 period by $1.5 trillion (not including any macroeconomic effects). By the estimate of the Congressional Budget Office (CBO), additional debt service would boost the 10-year increase in deficits to $1.7 trillion. As a result of those higher deficits, debt held by the public would increase from the 91.2% of gross domestic product in CBO’s June 2017 baseline to 97.3%.

For more information, click here and here.

IRS releases new information package
Defined Contribution Listing of Required Modifications and Information Package contains samples of plan provisions that have been found to satisfy certain specific requirements of the Internal Revenue Code, taking into account changes in the plan qualification requirements, regulations, revenue rulings, and other guidance in the 2017 Cumulative List of Changes in Plan Qualification Requirements (Notice 2017-37, 2017-29 I.R.B. 89). The package has been prepared to assist providers who are drafting or redrafting plans to conform to applicable law and regulations, with the goal that it will be a key factor in enabling the Internal Revenue Service (IRS) to process and approve preapproved plans more quickly.

For more information, click here.

Multiemployer program deficit widens to $65.1 billion, single-employer program improves according to PBGC annual report
The Fiscal Year 2017 Annual Report of the Pension Benefit Guaranty Corporation (PBGC) shows that the deficit in its insurance program for multiemployer plans rose to $65.1 billion at the end of fiscal year (FY) 2017, up from $58.8 billion a year earlier. The increase was driven primarily by the ongoing financial decline of several large multiemployer plans that are expected to run out of money in the next decade.

The PBGC’s Single-Employer Insurance Program continued to improve as the deficit dropped to $10.9 billion at the end of FY 2017, compared to $20.6 billion at the end of FY 2016. The primary drivers of the continued improvement include premium and investment income and increases in the interest factors used to measure the value of future liabilities.

For more information, click here.

Equal Employment Opportunity Commission reports twice as many discrimination lawsuits in 2017
The Equal Employment Opportunity Commission (EEOC) filed more than twice as many discrimination lawsuits in FY 2017 as it did in the previous year, while also putting a significant dent in a persistent backlog of pending investigations that had recently drawn the ire of lawmakers, according to an agency report.

For more information, click here.

Regulatory roundup

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

Relief for victims of Hurricane Maria and the California wildfires
Internal Revenue Service (IRS) Announcement 2017-15 provides relief to taxpayers adversely affected by Hurricane Maria and recent wildfires in California (California Wildfires). The announcement allows individuals in qualified employer plans to use retirement assets to alleviate hardships caused by these disasters. The IRS announcement also provides relief from certain verification procedures that may be required under retirement plans with respect to loans and hardship distributions.

For more information, click here.

Memo regarding missing participants and beneficiaries and required minimum distributions
The IRS released a memorandum directing employee plans examiners not to challenge a qualified plan as failing to satisfy the required minimum distribution (RMD) standards under Internal Revenue Code (IRC) § 401(a)(9) in the circumstances set forth below. The memo addresses only the application of IRC §401(a)(9) to certain circumstances involving a plan’s action related to a benefit of a participant or beneficiary whom the plan is unable to locate. It does not address the application of any other qualification requirements or other applicable law, including Title I of ERISA.

For more information, click here.

Guarantee limit for single-employer defined benefit plans for 2018 announced
The Pension Benefit Guaranty Corporation (PBGC) announced that the guarantee limits for single-employer plans that fail in 2018 will be 0.95% higher than the limits that applied for 2017 as a result of the indexing rules provided in ERISA. A table showing the single-employer plan guarantee limits for various ages and payment forms is available on the PBGC’s website. The guarantee limits for multiemployer plans are not indexed and, therefore, have not changed.

To view the table, click here.

Treasury final rule on mortality tables
The Government Accountability Office (GAO) released a report on the final rule published by the U.S. Department of the Treasury, IRS, entitled “Mortality Tables for Determining Present Value under Defined Benefit Pension Plans.”

According to the GAO analysis, the IRS summarized the costs of this final rule by stating that substantially all of the amounts involved (decreased tax revenue, increased plan contributions and PBGC premiums) constitute transfer payments rather than costs. The amounts are monetary payments from one entity to another that do not affect total resources available to society. The IRS believes that the incremental administrative costs to implement this regulation are negligible because plan sponsors would have to incur the same costs to update their plan administration software to reflect the new mortality tables under these regulations as they would incur in implementing the annual update to the mortality tables that would apply in the absence of these regulations. The final rule has tables showing the impact of the rule and revenue collection, contribution requirements, and PBGC premiums.

For more information, click here.

Present value of PBGC maximum guarantee
The PBGC posted a table showing the applicable present values for 2018 plan years. The PBGC also posted a two-column version of the table for convenient copying.

For more information, click here.