Tag Archives: PBGC

Disaster relief for employee benefit plans

The IRS, the Department of Labor (DoL), and the Pension Benefit Guaranty Corporation (PBGC) have released guidance to ease some of the rules applicable to benefit plan sponsors and participants affected by Hurricanes Harvey, Irma, and Maria. The new pieces of guidance provide relief separate from the IRS’s normal tax-related disaster relief (e.g., IRS Revenue Ruling 2003-12, which permits employers to provide tax-free cash or benefits to help employees in a presidentially declared disaster; or IRS announcements postponing tax return filing or payment deadlines for individuals and businesses). In general, the new relief is similar to that provided in 2012 under Hurricane Sandy (see Client Action Bulletin 12-10).

This Client Action Bulletin provides an overview of the federal agencies’ employee benefit plan-related guidance to date, along with a summary chart. Although the guidance offers relief to those directly in the covered disaster areas, it also applies some relief to retirement plans with participants in other parts of the country with relatives in the disaster areas.

Regulatory roundup

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

PBGC issues Hurricane Maria disaster relief
In Disaster Relief Announcements 17-14 and 17-15, the Pension Benefit Guaranty Corporation (PBGC) is waiving certain penalties and extending certain deadlines in response to Hurricane Maria in the U.S. Virgin Islands and Puerto Rico.

For more information, read Disaster Relief Announcement 17-14 and Disaster Relief Announcement 17-15.

Congress approves bill with hurricane tax relief for retirement plan withdrawals
The U.S. House of Representatives approved the “Disaster Tax Relief and Airport and Airway Extension Act” as amended and approved by the Senate, sending H.R.3823 to the president. The temporary tax relief provisions cover Hurricanes Harvey, Irma, and Maria. The provisions allow hurricane victims to withdraw funds from retirement accounts without penalties and provide for employer tax credits of up to $6,000 for wages paid to an employee from the central disaster area.

PBGC publishes new insurance coverage webpage
The PBGC posted a new web page for employers and practitioners summarizing which pension plans are covered by the PBGC insurance program and which are not. For the vast majority of plans, it’s fairly obvious whether PBGC coverage applies, but because of complicated rules in the law that is not always the case. This is especially true for small plans that cover only professional individuals (e.g., attorneys, architects), plans based in Puerto Rico, and plans affiliated with churches. The web page provides an overview of the rules and highlights the types of plans that should consider requesting a coverage determination.

To visit the web page, click here.

PBGC seeks approval of modified information collection in single-employer plan termination regulations
The PBGC intends to request that the Office of Management and Budget (OMB) extend approval with modifications of its regulations on termination of single-employer plans and missing participants, and implementing forms and instructions.

To learn more, click here.

Regulatory roundup

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

PBGC seeks OMB approval with modification of annual reporting
The Pension Benefit Guaranty Corporation (PBGC) intends to request that the Office of Management and Budget (OMB) extend approval with modifications of its collection of information for annual reporting, which expires on August 31, 2020. This notice informs the public of the PBGC’s intent and solicits public comment on the collection of information.

PBGC is proposing two modifications to the 2017 Schedule MB (Multiemployer Defined Benefit Plan Actuarial Information) instructions and one modification to the Schedule SB (Single Employer Defined Benefit Plan Actuarial Information) instructions. These modifications affect multiemployer defined benefit plans and single-employer defined benefit plans covered by Title IV of ERISA.

For more information, click here.

Congressional Research Service reports on Social Security trust funds
The Congressional Research Service (CSR) released two reports related to Social Security. They focus on how the Social Security program is financed and how the program’s trust funds work.

To download the report “Social Security: The Trust Funds,” click here.

To download the report “Social Security: What Would Happen If the Trust Funds Ran Out?,” click here.

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 DOL 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 what is 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 that is due to attrition must be reported to the 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.

DOL releases conflict of interest FAQ
The U.S. Department of Labor (DOL) has published “Conflict of Interest FAQs” (408b-2 Disclosure Transition Period, Recommendations to Increase Contributions and Plan Participation). This guidance, like the Fiduciary Rule and related exemptions, is generally limited to advice concerning investments in IRAs, ERISA-covered plans, and other plans covered by section 4975 of the Internal Revenue Code.

To download the FAQ, click here.

PBGC releases annual projections report
According to the FY 2016 Projections Report of the Pension Benefit Guaranty Corporation (PBGC), the insurance program for multiemployer pension plans, which covers more than 10 million Americans, is likely to run out of money by the end of 2025.

Projections for the PBGC’s insurance program for single-employer pension plans, which covers about 28 million people, show that its financial condition may continue to improve. The program is highly unlikely to run out of money in the next 10 years, and is likely to eliminate its deficit within the next three to seven years.

The projections report is the PBGC’s annual actuarial evaluation of its future operations and financial status. The report provides a range of estimates of the future status of insured pension plans and their effect on the PBGC’s financial condition, based on hundreds of different economic scenarios.

To read the entire report, click here.

Regulatory roundup

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

PBGC releases final rule on examination and copying of records
The Pension Benefit Guaranty Corporation (PBGC) is amending its regulation on Examination and Copying of PBGC Records to incorporate statutory changes to the Freedom of Information Act (FOIA).

The majority of the regulatory changes are specifically required by the FOIA Improvement Act of 2016. Section 3 of the 2016 Act requires federal agencies to review their FOIA regulations and to make conforming amendments, as necessary, to incorporate the 2016 Act’s changes to the FOIA. In addition to the changes required under the 2016 Act, the PBGC is making one other amendment to its FOIA regulation that incorporates a previous statutory change under the Open Government Act of 2007.

As amended, the FOIA requires each agency to affirmatively release certain records that the agency determines are likely to be the subject of future requests, as well as certain others that have been the subject of three or more requests. The FOIA also requires agencies to redact such records to the extent necessary to protect personal privacy interests before adding them to the electronic reading room.

The PBGC is amending its FOIA regulation by increasing the appeal deadline from 30 to 90 days, in conformity with the 90-day minimum time period established by the 2016 Act.

To read the entire final rule, click here.