Tag Archives: PBGC

Regulatory roundup

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

Comments requested regarding potential expansion of determination letter program for individually designed plans
The IRS released Notice 2018-24, requesting comments on the potential expansion of the scope of the determination letter program for individually designed plans during the 2019 calendar year, beyond provision of determination letters for initial qualification and qualification upon plan termination.

In reviewing comments submitted in response to this notice, the Department of the Treasury, the IRS will consider the factors regarding the scope of the determination letter program set forth in section 4.03(3) of Revenue Procedure 2016-37, 2016-29 I.R.B. 136. The Treasury Department and the IRS will issue guidance if they identify any additional types of plans for which plan sponsors may request determination letters during the 2019 calendar year. Comments are due to the IRS by June 4, 2018.

For more information, click here.

PBGC releases data tables for single-employer and multiemployer pension plans
The Pension Benefit Guaranty Corporation (PBGC) has published the first installment of tables for the 2016 Data Book. Information in the claims and summary tables has been updated.

For more information, click here.

IRS issues tax withholding and estimated tax publication
The IRS released Publication 505, Tax Withholding and Estimated Tax, for use by employees to determine how much income an employer should withhold for tax payments.

The publication had been referenced by IRS as a key resource for employees to use when deciding on allowance amounts to apply on Form W-4, Employee’s Withholding Allowance Certificate. Form W-4, used by employers in calculating withheld tax amounts, was updated to reflect changes under the new tax law (Pub. L. 115-97). Forms W-4 are completed by employees to inform employers of marital status and the number of withholding allowances to be claimed for federal income tax purposes. The amount of one withholding allowance on an annual basis increased to $4,150 in 2018 from $4,050 in 2017.

For more information, click here.

Guidance for multiemployer plan alternative terms and conditions to satisfy withdrawal liability
The PBGC has issued guidance on alternative terms and conditions that multiemployer plans can use to satisfy withdrawal liability claims. The guidance describes the types of information PBGC finds helpful in evaluating plan proposals, and the factors the agency considers in its evaluation.

For more information, click here.

Regulatory roundup

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

Proposed rule amending regulations on guaranteed benefits and asset allocation
The Pension Benefit Guaranty Corporation (PBGC) proposed amendments to its regulations on guaranteed benefits and asset allocation. These amendments would incorporate statutory changes to the rules for participants with certain ownership interests in a plan sponsor.

To learn more, click here.

2018 Publication 15-B: Employer’s Tax Guide to Fringe Benefits released
The Internal Revenue Service (IRS) has released 2018 Publication 15-B Employer’s Tax Guide to Fringe Benefits. This publication was updated to reflect the changes made by the Tax Cuts and Jobs Act, an act to provide for reconciliation pursuant to Titles II and V of the concurrent resolution on the budget for fiscal year 2018.

For more information, click here.

Searching for missing plan participants per the U.S. Department of Labor

The U.S. Department of Labor (DOL), the Internal Revenue Service (IRS), the Social Security Administration (SSA), and the Pension Benefit Guaranty Corporation (PBGC) all review whether retirement plans have paid their participants on time. Last year, the Philadelphia office of the DOL conducted a pilot program that recovered $274 million owed to missing plan participants. Because of this success, DOL offices nationwide added “missing participant search compliance” to their plan audits. Plans failing to locate and contact plan participants regarding unpaid benefits could be found in breach of their ERISA duty to act on behalf of participants. Before receiving a letter of inquiry from the local DOL office, plan sponsors should review the protocols used to locate and pay their plans’ list of unpaid participants.

How do the various agencies learn of unpaid vested participants? Any terminated plan participant with an unpaid benefit at year-end is added to a plan’s running list of unpaid participants, one time, via IRS Form 8955. Terminated participants include alternate payees and beneficiaries. The IRS shares this information with both the SSA and the DOL, each of which maintains a running list of unpaid benefits from a plan. Once a vested participant starts a benefit, or cashes it out, an update via Form 8955 informs the IRS, SSA, and the DOL. Depending on whether the plan administrator removed participants as they were paid, the agencies may have an inflated list of unpaid participants.

When is a participant’s payment considered late? Just before age 65, the SSA sends letters to participants informing them that they “may have a benefit from their former employer.” The IRS considers payments late after a participant’s required minimum date. The DOL, however, reviews a plan’s overall list of vested participants regardless of age. Based on the participant’s earliest retirement age, the DOL could determine that a plan sponsor is not notifying and then paying participants in a timely manner. Please note that beneficiary or alternate payee required start dates can vary due to either 401(a)(9) rules or the participant’s, not the alternate payee’s, actual age.

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Regulatory roundup

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

Pension plan limitations not affected by Tax Cut and Jobs Act
The Internal Revenue Service (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 U.S. Department of the Treasury 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 recently released final rule from the Pension Benefit Guaranty Corporation (PBGC) 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 plans 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 January 1, 2018, and gives DC plan sponsors the option to transfer the assets to the PBGC, rather than to establish individual retirement accounts at financial institutions 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 January 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.