More retirement-related regulatory news for plan sponsors, including links to detailed information.
IRS private letter ruling on lump sum window for those in pay status will not violate MDR
The Internal Revenue Service (IRS) recently released a private letter ruling (PLR 201431034) stating that a lump sum window for participants in pay status will not violate minimum distribution requirements (MDR).
According to the PLR:
Under the amendment, the Covered Individuals would have a specified limited window period of no more than 180 days during which they could elect to receive in lieu of their current annuity what Company A represents is the actuarial present value of their remaining benefits under the aforementioned Plans, in the form of a single lump sum payment. The window period may consist of multiple phases, such as an opt-in phase during which Covered Individuals would have the opportunity to proceed through the remainder of the window program and an election phase during which Covered Individuals could elect to receive, in lieu of their current annuity, the actuarial present value of their remaining annuity payments in the form of an immediate lump sum, and the extent the law requires, a qualified joint and survivor annuity (including a single annuity for retirees who are not married), or a qualified optional survivor annuity.
To read the entire private letter ruling, click here.
Social Security trustees retain projected year of trust fund reserve depletion
The Social Security Board of Trustees recently released its annual report on the long-term financial status of the Social Security Trust Funds. The combined asset reserves of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033, unchanged from last year, with 77% of benefits still payable at that time. The DI Trust Fund will become depleted in 2016, also unchanged from last year’s estimate, with 81% of benefits still payable.
To read the entire report, click here.
PBGC creates online resource guide on choosing between lump sum or annuity
The Pension Benefit Guaranty Corporation (PBGC) recently created an online resource that provides information to assist with “Making a choice: Lump sum or annuity?”
The new resource page allows the public to get some insight on key questions that should be answered when making this important decision and offers other hypothetical scenarios.
To read the entire guide, click here.
401(k) plans: Improvements can be made to better protect participants in managed accounts
The U.S. Government Accountability Office (GAO) has issued the report “401(k) plans: Improvements can be made to better protect participants in managed accounts.” The report reviews eight managed account providers that represented an estimated 95% of the industry involved in defined contribution plans in 2013, showing that the providers varied in how they structured managed accounts, including the services they offered and their reported fiduciary roles.
To read the entire report, click here.
IRS posts three FAQs regarding EGTRRA determination letter program for preapproved plans
The IRS has posted three new frequently asked questions (FAQs) regarding the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) determination letter program for preapproved plans.
• Question #4: “If I file a determination letter application for my pre-approved defined benefit plan by April 30, 2012, and the Service determines that additional remedial amendments are needed, will I have time to adopt the amendments?”
• Question #6: “I am an adopter of a volume submitter plan and I wish to make certain changes to the pre-approved document. When I file a determination letter application, must I incorporate these changes in the pre-approved plan document or may I make the changes as separate amendments to the plan?”
• Question #8: “I am filing Form 5310 to terminate my EGTRRA-approved M&P or volume submitter plan. Must I include copies of interim amendments with my application?”