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Posts Tagged ‘PBGC’

PBGC requires plan sponsors to report risk transfer activities

March 26th, 2015 No comments

Single-employer and multiemployer defined benefit plan sponsors that undertake “de-risking” activities must now disclose information about annuity purchases or lump-sum window offerings when they pay their premiums to the Pension Benefit Guaranty Corporation, beginning with the filings for the 2015 plan year. For sponsors of plans with calendar year plans, the first filing with the de-risking disclosures is due Oct. 15, 2015. The PBGC’s rationale for this new requirement is that there currently is no available comprehensive, detailed, and reliable source for information on risk transfer activities, which can result in substantially reduced premium payments to the agency. This Client Action Bulletin provides more perspective.

Regulatory roundup

March 9th, 2015 No comments

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

Changes to the employee plans determination letter process begin in 2015
The Internal Revenue Service (IRS) has posted changes to the EP determination letter process for 2015. The changes, effective February 1, 2015, will begin with Cycle E2 applications and are expected to improve the program’s efficiency and consistency.

For more information, click here.

PBGC seeks to extend actuarial reporting collection with modifications (Form 5500 Series)
The Pension Benefit Guaranty Corporation (PBGC) is requesting that the Office of Management and Budget extend approval of a collection of information with modifications on annual financial and actuarial reporting under the Form 5500 series, specifically the 2015 Schedule MB (multiemployer defined benefit plan and certain money purchase plan actuarial information) and instructions and the Schedule SB (single-employer defined benefit plan actuarial information) instructions.

Analysis of the information helps the agency anticipate potential demands on the system and allows the PBGC to direct its resources to situations that would create the largest risk to the system.

To read the entire notice, click here.

GASB issues final statement on fair value measurement and application
The Governmental Accounting Standards Board (GASB) has issued final guidance on accounting and financial reporting issues related to fair value measurements, which primarily applies to investments made by state and local governments.

GASB Statement No. 72, Fair Value Measurement and Application, defines fair value and describes how fair value should be measured, what assets and liabilities should be measured at fair value, and what information about fair value should be disclosed in the notes to the financial statements.

To read the entire guidance, click here.

IRS issues plan feature comparison chart for tax-exempt and governmental entities
The IRS’s Employee Plans publication has issued a comparison of plan types available to employees of tax-exempt and governmental entities. The publication includes a plan feature comparison chart with highlights of eight types of retirement plans—noting the latest tax laws specific to each plan.

To download the entire publication, click here.

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Regulatory roundup

February 23rd, 2015 No comments

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

PBGC seeks comments on Multiemployer Pension Reform Act (MEPRA) of 2014
The Pension Benefit Guaranty Corporation (PBGC) filed a request for information (RFI) to inform future PBGC guidance under section 4231 and 4233 of ERISA. The PBGC is seeking comments from all interested stakeholders, including multiemployer plan participants and beneficiaries, organizations serving or representing such individuals, multiemployer plan sponsors and professional advisors, contributing employers, unions, and other interested parties.

To read the entire RFI, click here.

PBGC posts FAQs on MEPRA
The PBGC has published a set of frequently asked questions (FAQs) regarding the MEPRA. The FAQ consists of 10 questions and answers. The PBGC will continue to update this FAQ web page to reflect changes.

To view the FAQs, click here.

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Regulatory roundup

February 2nd, 2015 No comments

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

DOL issues final rule on DB plan annual funding notice requirements
The U.S. Department of Labor (DOL) has released its final rule on the annual funding notice requirement for defined benefit plans. The rule will become effective 30 days after February 2 with an applicability date of plan years beginning on or after January 1.

To read the entire rule, click here.

PBGC announces OMB approval of standard and distress terminations and missing participants forms and instructions
The Office of Management and Budget (OMB) has approved revisions to the standard and distress termination forms and instructions. The new forms and instructions can be found on the plan terminations page of the Pension Benefit Guaranty Corporation (PBGC) website. Under the revisions, a plan administrator of a plan terminating in a standard termination (or a distress termination that closes out in the private sector) must submit with the post-distribution certification the most recent plan document and proof of benefit distributions for lump sums paid and annuities purchased.

Plan administrators must provide this information with any post-distribution certification filed on or after March 1, 2015. Filers may contact standard@pbgc.gov or distress@pbgc.gov for more information.

IRS updates its rollover-eligible retirement plans and IRA combinations chart for 2015
The Internal Revenue Service (IRS) has published a one-page summary listing the eight plans and IRAs that can make rollover-eligible distributions as well as the corresponding eight plans and IRAs into which those distributions can or cannot be rolled over.

For more information, click here.

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Regulatory roundup

January 26th, 2015 No comments

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

PBGC announces Section 4062(e)—new law is enacted
On December 16, President Obama signed into law H.R. 83, which made major changes to the provision of ERISA that created liability in certain situations where there was a reduction in active participants in a plan as a result of a cessation of operations (Section 4062[e]).

With the new law in effect the Pension Benefit Guaranty Corporation (PBGC) will not continue the six-month moratorium on the enforcement of Section 4062(e) that expired December 31.

The new law generally applies both to future cessations of operations and to those that have already occurred, except where a settlement agreement was entered into before June 1, 2014. The PBGC has outlined some of the major changes in the law and provided a point of contact for questions here. Further guidance will be issued in the future.

PBGC seeks OMB approval of modifications to Forms 10, 10-A, and 200
The PBGC has issued Forms 10 and 10-Advance (10-A) and related instructions under subparts B and C. The PBGC has also issued Form 200 and related instructions under subpart D. The approval of the Office of Management and Budget (OMB) for both of these collections of information expires March 31, 2015. The PBGC intends to request that OMB extend its approval for three years with modifications.

IRS issues relief for certain participants in Section 414(d) governmental plans
The Internal Revenue Service (IRS) has issued Notice 2015-07. The notice announces that the IRS and U.S. Treasury Department anticipate issuing proposed regulations that would permit a state or local retirement system that is a governmental plan (within the meaning of section 414[d]) to cover public charter school employees if certain requirements are satisfied. The notice also announces that broader transition relief will be addressed in the proposed regulations. The notice includes a request for public comments.

To read Notice 2015-07, click here.

IRS posts 2014 reference list of changes in qualification requirements for retirement plans
The IRS has published a 2014 reference list, which contains items that first appeared on the 2014 cumulative list of changes in plan qualification requirements.

• Determination letter applications: For an individually designed plan submitted on Form 5300, complete the five reference lists for the five years of your remedial amendment cycle (RAC). These are the years covered by the cumulative list applicable to your submission. For an employer adopting a volume submitter plan and submitting on Form 5307, complete the six reference lists for the six years in your RAC.
• Interim amendments: Complete each year’s reference list to check whether your plan document is up-to-date. If you missed any relevant amendments, your plan may have a qualification failure and you must correct the error.

To download the reference list, click here.

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Regulatory roundup

January 19th, 2015 No comments

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

PBGC submits draft forms and instructions for premium filings to OMB
On January 12, the Pension Benefit Guaranty Corporation (PBGC) submitted draft forms and instructions for 2015 premium filings under the Paperwork Reduction Act to the Office of Management and Budget (OMB) for review. Included in the OMB submission is a supporting statement addressing, among other things, public comments received on new questions related to certain lump-sum windows and annuity purchases.

Comments are due to OMB by February 11, 2015. For more information, click here.

PBGC posts increase in 2015 flat-rate premium for multiemployer plans
The Multiemployer Pension Reform Act of 2014 increased the 2015 flat-rate premium for multiemployer plans from $13 to $26 per participant. The PBGC has updated its website to reflect this increase.

For more information, click here.

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Regulatory roundup

January 12th, 2015 No comments

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

PBGC requests OMB approval for reporting of pension plan de-risking measures
The Pension Benefit Guaranty Corporation (PBGC) is modifying the collection of information under its regulation on payment of premiums and is requesting that the Office of Management and Budget (OMB) approve the revised collection of information under the Paperwork Reduction Act for three years.

PBGC is revising the 2015 filing procedures and instructions for payment of premiums to require after-the-fact reporting of certain risk transfers through lump-sum windows and annuity purchases. Risk transfers can substantially reduce the premiums that plans otherwise would pay to PBGC. Because PBGC premiums and the investment income earned on them are a major source of income for PBGC, information about risk transfers is critical to its ability to assess its future financial condition. There is currently no available comprehensive, detailed, and reliable source for information on risk transfers.

PBGC is also changing certain premium declaration certification procedures, offering the option for a plan to provide a telephone number specifically for inclusion in the PBGC Search Plan List on its website, updating the premium rates (including reflecting the Consolidated and Further Continuing Appropriations Act, 2015, Pub. L. 113-235), and making conforming, clarifying, and editorial changes.

To read the entire notice, click here.

PBGC issues changes to ERISA Section 4062(e)
This announcement provides information about two important changes regarding ERISA Section 4062(e). First, on December 16, 2014, the president signed into law H.R. 83, which made major changes to section 4062(e). Second, the PBGC is ending the moratorium on enforcement of 4062(e) cases that it announced in July 2014.

For more information on the changes to ERISA Section 4062(e), click here.

IRS updates 2015 revenue procedures for employee plans and exempt organizations
The Internal Revenue Service (IRS) published its January 2, 2015, Internal Revenue Bulletin, which includes the various revenue procedures, revised for 2015, for issuing letters, rulings, determination letters, and technical advice on specific issues related to employee benefits. The documents are:

• Rev. Proc. 2015-1
• Rev. Proc. 2015-2
• Rev. Proc. 2015-3
• Rev. Proc. 2015-4
• Rev. Proc. 2015-5
• Rev. Proc. 2015-6
• Rev. Proc. 2015-7
• Rev. Proc. 2015-8

For an electronic version of Internal Revenue Bulletin 2015-1, which contains these revenue procedures and user fee schedules, click here.

IRS provides guidance on automatic approval of change in funding method for takeover plans
The IRS has released Announcement 2015-03, providing guidance on the automatic approval of a change in funding method for single-employer defined benefit plans under certain circumstances in which the change in method results from a change in a plan’s enrolled actuary.

To read Announcement 2015-03 in its entirety, click here.

PBGC publishes First Annual Report of the Participant and Plan Sponsor Advocate
The PBGC has released the first annual report of the participant and plan sponsor advocate.

To read the entire report, click here.

DOL issues fact sheet on EBSA’s enforcement efforts
Through its enforcement of ERISA, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) is responsible for ensuring the integrity of the private employee benefit plan system in the United States. EBSA’s oversight authority extends to nearly 684,000 retirement plans, approximately 2.4 million health plans, and a similar number of other welfare benefit plans, such as those providing life or disability insurance. These plans cover about 141 million workers and their dependents and include assets of over $7.6 trillion (as of October 29, 2014). In FY 2014, EBSA recovered $599.7 million for direct payment to plans, participants, and beneficiaries.

For more information, click here.

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Regulatory roundup

December 8th, 2014 No comments

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

House approves tax extenders bill with multiemployer pension plan provisions
On December 3, the U.S. House of Representative voted 404-17 to approve the “Achieving a Better Life Experience Act” (ABLE Act, H.R.647), which would allow for the creation of savings accounts to enable certain disabled beneficiaries to help pay for qualified expenses, effective for tax years beginning in 2015. Following the vote, the House combined the bill with the tax extenders legislation (H.R.5771) before sending it to the Senate.

Of interest to some employers are two provisions included in the ABLE Act:

• The Internal Revenue Service (IRS) would be authorized to certify “professional employer organizations” (PEOs). Such PEOs would pay an annual fee of $1,000, satisfy certain requirements (including posting a bond to ensure they satisfy employment tax withholding and payment obligations and submitting audited financial statements), and assume sole responsibility for the customer’s employment taxes. The provision generally would be effective for wages paid by a certified PEO for services performed by an employee after 2015, and the IRS would be required to establish the PEO certification program by July 1, 2015. (The Joint Committee on Taxation estimates this provision would increase revenues by $8 million over 10 years.)

• Certain civil penalties under the tax code would be adjusted for inflation, beginning in 2015, including for failures to file a tax return or to pay tax; failures to file certain information returns, registration statements, and other statements; and failures to file correct information returns and payee statements. (The Joint Committee on Taxation estimates this provision will increase revenues by $115 million over 10 years.)

IRS extends submission deadlines
The IRS released Announcement 2014-41. This announcement extends to June 30, 2015, the deadline for submitting on-cycle applications for opinion and advisory letters for preapproved defined benefit plans for the plans’ second six-year remedial amendment cycle. This announcement also provides a two day extension (from Saturday, January 31, 2015, to Monday, February 2, 2015) for Cycle D on-cycle submissions (primarily individually designed plans including multiemployer plans).

For more information, click here.

DOL report to Congress finds EBSA has not provided guidance and oversight of use of limited-scope audits
The Office of Inspector General (OIG) of the U.S. Department of Labor (DOL) has issued its Semiannual Report to Congress on the DOL’s activities, accomplishments, and concerns for the six-month period ending September 30, 2014. During this reporting period, the OIG issued 19 audit and other reports that identified needed improvements in DOL programs and operations.

Of interest to employee benefit practitioners was an audit of the oversight of the use of limited-scope audits for employee benefit plans by the Employee Benefits Security Administration (EBSA), which found that EBSA has not provided the guidance and oversight needed to adequately protect more than $1 trillion of plan assets invested in complex trust arrangements and hard-to-value assets held and certified by custodians.

To read the entire report, click here.

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Regulatory roundup

December 1st, 2014 No comments

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

PBGC issues final rule on treatment of rollovers from DC to DB plans
The Pension Benefit Guaranty Corporation (PBGC) is publishing a final rule that makes it easier for participants in 401(k) plans with rollover options to get lifetime income by moving their funds into traditional pensions. The agency hopes to encourage people to get lifetime income by removing potential barriers to moving their benefits from defined contribution (DC) plans to defined benefit (DB) plans. The final rule removes the fear that the amounts rolled over would suffer under guarantee limits should PBGC step in and pay benefits. When PBGC first proposed the rule in April it was well-received from various organizations in the pension and retirement community.

Under the final rule, benefits earned from a rollover generally would not be affected by PBGC’s maximum guarantee limits. For a plan terminating in 2015, the agency’s maximum guaranteed benefit for a 65-year-old retiree will be just over $60,000 a year.

Also, rollover amounts generally would remain untouched by PBGC’s five-year phase-in limits. Normally, benefit increases from changes to a plan in the five years before it ends are partially guaranteed. Under the new proposal, these restrictions generally would not apply.

To read the entire final rule, click here.

IRS issues notice amending two safe harbor explanations for eligible rollover distributions
The Internal Revenue Service (IRS) has released Notice 2014-74, which amends the two safe harbor explanations in Notice 2009-68, 2009-2 C.B. 423, that can be used to satisfy the requirement under § 402(f) of the Internal Revenue Code (Code) that certain information be provided to recipients of eligible rollover distributions.

Amendments to the safe harbor explanations reflected in this notice relate to the allocation of pretax and after-tax amounts, distributions in the form of in-plan Roth rollovers, and certain other clarifications to the two safe harbor explanations. The amendments to the safe harbor explanations (and attached model notices) may be used for plans that apply the guidance in section III of Notice 2014-54, 2014-41 I.R.B. 670, with respect to the allocation of pretax and after-tax amounts.

Notice 2014-74 will be published in Internal Revenue Bulletin 2014-50 on December 8, 2014. To read the entire notice, click here.

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Regulatory roundup

November 24th, 2014 No comments

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

PBGC annual report shows improvement in single-employer program and deterioration in multiemployer program
The Pension Benefit Guaranty Corporation (PBGC) has released its Annual Report, which showed that PBGC’s deficit increased to about $62 billion in fiscal year 2014, which was largely due to the declining condition of a few multiemployer plans. The financial condition of the single-employer program improved with a deficit of about $19.3 billion, down from $27.4 billion in the previous year.

The increase in PBGC’s deficit in the report is consistent with the estimates included in the FY 2013 Projections Report that was released in June. The projections report found that the insolvencies of a minority of multiemployer plans have become both more likely and more imminent.

To read the entire report, click here.

IRS updates rollover chart
The Internal Revenue Service (IRS) has updated its “Rollover Chart” for 2014. It’s a one-page summary in the form of a table, listing the eight kinds of plans and IRAs that can make rollover-eligible distributions, and the corresponding eight kinds of plans and IRAs into which those distributions can (or cannot) be rolled over. The chart was updated November 17, 2014, to reflect revised rollover rules.

To view the chart, click here.

Joint Committee on Taxation publishes analysis of the Tax Reform Act of 2014
The U.S. Joint Committee on Taxation (JCT) has released a Discussion Draft prepared by the Chairman of the House Committee on Ways and Means. This document provides a technical explanation, estimated revenue effects, distributional analysis, and macroeconomic analysis of the Tax Reform Act of 2014. The draft proposes to reform the Internal Revenue Code. Provisions related to pension and retirement begin on page 101, and include:

• Changes to rules for individual retirement arrangements
• Repeal of exception to 10% penalty for first-time home purchases and elimination of first-time home purchase as a qualified distribution from a Roth IRA
• Termination of new simplified employee pensions
• Termination for new SIMPLE 401(k) plans
• Modification of required distribution rules for pension plans
• Reduction in age for allowable in-service distributions
• Modification of rules governing hardship distributions
• Extended rollover period for the rollover of plan loan offset amounts in certain cases
• Coordination of contribution limitations for 403(b) plans and governmental 457(b) plans
• Application of 10% early distribution tax to governmental 457 plans; and inflation adjustments for employer-sponsored retirement plan dollar limitations on benefits and contributions

To read the entire draft, click here.