Tag Archives: PBGC

Regulatory roundup

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

Revisions to the employee plans determination letter program
The U.S. Department of the Treasury and the Internal Revenue Service (IRS) has issued guidance regarding the elimination of the five-year remedial amendment cycle system for individually designed plans under the employee plans determination letter program, effective January 1, 2017. Notice 2016-03 provides guidance on (1) controlled groups and affiliated service groups that have previously made a Cycle A election and are permitted to submit determination letter applications during the Cycle A submission period beginning February 1, 2016, and ending January 31, 2017; (2) expiration dates on determination letters issued prior to January 4, 2016, that are no longer operative; and (3) the period during which certain employers may, on or after January 1, 2016, establish or adopt a defined contribution preapproved plan and, if permissible, apply for a determination letter, which has been extended from April 30, 2016, to April 30, 2017.

For more information, click here.

IRS updates 2016 revenue procedures for employee plans and exempt organizations
The IRS has published its latest Internal Revenue Bulletin. The bulletin includes various revenue procedures for issuing letters, rulings, determination letters, and technical advice on specific issues related to employee benefits.

To read Internal Revenue Bulletin 2016-1, click here.

IRS announces beginning of processing electronic Form 1094 and 1095, B and C
The IRS announced that the processing of electronic Forms 1094 B/C and Forms 1095 B/C will begin on January 21, 2016. The IRS posted a November 2015 revision of Publication 5165, Guide for Electronically Filing ACA Information Returns for Software Developers and Transmitters (processing year 2016). This version represents the most current technical information and should replace previous “Early Look” versions.

For more information, click here.

PBGC ready to accept 2016 premium filings
The Pension Benefit Guaranty Corporation (PBGC) announced that My PAA is now ready to accept electronic premium filings for plan years beginning in 2016.

For additional information, see the following pages: Premium payment instructions and addresses, What’s new in My PAA, Online demos, and Online premium filing with My PAA.

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Will more corporations need to file PBGC Form 4010 for their defined benefit pension plans for the 2016 fiscal year?

Kamenir-JeffThe Pension Benefit Guaranty Corporation (PBGC), the federal agency responsible for insuring unfunded liability for single-employer defined benefit pension plans in the event of a distress plan termination, issued proposed guidance in July 2015 that would likely increase the number of companies required to submit a 4010 filing for the 2016 fiscal year and beyond. An example of a circumstance in which a distress plan termination can occur is when a company files for bankruptcy.

The PBGC is charged under federal law with monitoring poorly funded defined benefit pension plans in part by requiring a special filing under ERISA Section 4010, commonly referred to as a “4010 filing.” This filing requires the employer to submit defined benefit pension plan financial and actuarial information as well as the company’s financial information. The filing is generally due three and a half months after the end of the fiscal year. The PBGC keeps this information shielded from public disclosure, which protects the privacy of closely held companies, which are not required to follow U.S. Securities and Exchange Commission (SEC) regulatory rules for listed companies.

Under current rules, employers with defined benefit pension plans that are less than 80% funded based on prescribed interest rates are required to report under Section 4010 unless they can meet the requirements for certain limited exemptions. Plans with under 500 participants are exempt if they are underfunded by $15 million or less. Companies that sponsor one or more pension plans with a combined participant count of 500 or more are exempt if the combined underfunding of all plans is $15 million or less.

Now the PBGC proposes, beginning with 2016 fiscal year, eliminating the underfunding exemption if the combined pension plan participant count is 500 or more. For example, a plan with 500 or more participants that is less than 80% funded would now need to submit a 4010 filing under the proposed rules even if the amount of underfunding is $15 million or less.

Companies that sponsor pension plans with 500 or more participants that wish to avoid the current and proposed 4010 filing requirements should work with their actuaries to take steps to bring each plan up to at least 80% funded for the 2016 plan year.

Regulatory roundup

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

PBGC to modify collection of information on locating and paying participants
The Pension Benefit Guaranty Corporation (PBGC) is modifying its collection of information on locating and paying participants 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. This notice informs the public of the PBGC’s request and solicits public comment on the collection of information.

For more information, click here.

Employers’ Tax Guide for 2016
The Internal Revenue Service (IRS) has published Publication 15, Employer’s Tax Guide, for 2016. This publication explains the tax responsibilities of an employer. It explains the requirements for withholding, depositing, reporting, paying, and correcting employment taxes. It explains the forms that must be given to employees, those that employees must give to the employer, and those that must be sent to the IRS and U.S. Social Security Administration (SSA). This guide also has tax tables needed to figure the taxes to withhold from each employee for 2016. References to “income tax” in this guide apply only to federal income tax.

To download Publication 15, click here.

Employer’s tax guide for fringe benefits for 2016
The IRS has published Publication 15-B, Employer’s Tax Guide to Fringe Benefits, for 2016. This publication supplements Publication 15, Employer’s Tax Guide, and Publication 15-A, Employer’s Supplemental Tax Guide. It contains information for employers on the employment tax treatment of fringe benefits.

To download Publication 15-B, click here.

U.S. public pension holdings drop to $3.2 trillion in third quarter
According to the U.S. Census Bureau, the holdings of the largest 100 U.S. public pension systems dropped 4.9% from the previous quarter to $3.2 trillion in the third quarter because of negative earnings. Earnings fell from a gain of $32.6 billion in the second quarter of 2015 to a loss of $145.9 billion in the third. Total holdings were also 2.5% lower than the same quarter last year.

To learn more, click here.

Regulatory roundup

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

GASB issues exposure drafts related to retirement plans
The Governmental Accounting Standards Board (GASB) has issued three exposure drafts proposing accounting and financial reporting guidance related to fiduciary activities, certain asset retirement obligations, and pension issues.

The exposure draft on fiduciary activities would establish guidance regarding what constitutes fiduciary activities for financial reporting purposes, the recognition of liabilities to beneficiaries, and how fiduciary activities should be reported. The proposed statement would apply to all state and local governments.

The exposure draft on certain asset retirement obligations would establish guidance for determining the timing and pattern of recognition for liabilities related to asset retirement obligations and corresponding deferred outflows of resources. An asset retirement obligation is a legally enforceable liability associated with the retirement of a tangible capital asset, such as the decommissioning of a nuclear reactor.

The exposure draft on pension issues addresses practice issues raised by stakeholders during the implementation of Statements No. 67, Financial Reporting for Pension Plans, and No. 68, Accounting and Financial Reporting for Pensions.

For more information, click here.

PBGC issues final rule on partitions of eligible multiemployer plans
The Pension Benefit Guaranty Corporation (PBGC) has issued a final rule making minor changes to part 4233 of its regulations. The changes were added from the PBGC’s interim final rule on Partitions of Eligible Multiemployer Plans (80 FR 35220, June 19, 2015). Many of the changes respond to public comments.

Part 4233 prescribes the statutory conditions and the information and notice requirements that must be met before the PBGC may partition an eligible multiemployer plan under section 4233 of ERISA. This final rule makes minor revisions to part 4233 with respect to information requirements, the time period for the PBGC’s initial review of an application for partition, and the coordinated application process for partition and benefit suspension.

To read the entire final rule, click here.

 

Regulatory roundup

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

PBGC posts premium filing instructions
The 2016 comprehensive premium filing instructions have been approved by the Office of Management and Budget (OMB). The instructions are now available on the website of the Pension Benefit Guaranty Corporation (PBGC).

To access the premium filing instructions, click here.

IRS releases cumulative list of changes for plan qualification requirements
The Internal Revenue Service (IRS) has issued Notice 2015-84, providing the 2015 cumulative list of changes in plan qualification requirements. Plan sponsors and practitioners should use the list to submit determination letter applications for plans during the period beginning February 1, 2016, and ending January 31, 2017.

To read the entire notice, click here.

GASB issues new pension guidance designed to assist certain multiple-employer DB plans
The Governmental Accounting Standards Board (GASB) has issued guidance designed to assist governments that participate in certain private or federally sponsored multiple-employer defined benefit pension plans such as Taft-Hartley plans.

This new guidance removes an impediment to complying with the GASB’s financial reporting requirements for governments participating in certain multiple-employer defined benefit pension plans. It also promotes enhanced consistency among those applying the standards. The new guidance in GASB Statement No. 78, Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plans, assists these governments by focusing employer accounting and financial reporting requirements for those pension plans on obtainable information.

To read the full text of GASB Statement 78, click here.

CBO’s 2015 Social Security policy options
The Congressional Budget Office (CBO) has published a report analyzing 36 policy options commonly proposed by policymakers and analysts. Many of them could improve Social Security’s long-term finances, but only a few would significantly postpone the combined trust funds’ exhaustion date.

To read the entire report, click here.

Benefits, retirement, and savings make up larger percentage of government employee compensation
According to a U.S. Bureau of Labor Statistics chart, state and local government employer costs for employee benefits over the last 10 years have increased as a share of total compensation. This can be mostly attributed to increases in retirement and savings, specifically defined benefit plans. Retirement and savings as a share of total compensation increased from 6.6% in March 2005 to 10.4% in September 2015.

To view the chart, click here.

Regulatory roundup

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

IRS issues notice on the application of Obergefell to qualified retirement plans
The Internal Revenue Service (IRS) has issued Notice 2015-86, providing guidance on the application of the decision in Obergefell v. Hodges, 576 U.S. ___, 135 S.Ct. 2584 (2015), to retirement plans qualified under section 401(a) of the Internal Revenue Code (Code) and to health and welfare plans, including cafeteria plans under section 125 of the Code. This guidance relates solely to the application of federal tax law with respect to same-sex spouses. Notice 2015-86 will be in Internal Revenue Bulletin (IRB) 2015-52, dated December 28, 2015.

To read the entire notice, click here.

Multiemployer pension plan application to reduce benefits: Reopening of comment period
On October 23, 2015, the U.S. Department of the Treasury published a notice of availability and request for comments regarding an application to reduce benefits under the Central States, Southeast, and Southwest Areas Pension Plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to reopen the comment period and provide more time for interested parties to provide comments. Comments must be received on or before February 1, 2016.

To read the entire notice, click here.

PBGC launches new e-filing portal
The Pension Benefit Guaranty Corporation (PBGC) has upgraded its e-4010 application and renamed it the PBGC e-filing portal. In addition to preparing and submitting 4010 filings via the e-filing portal, practitioners will have the option of filing information required under PBGC’s new ERISA 4043 regulation via the portal. The new e-filing portal also has a multiemployer plan module from which various applications and notices may (or in some cases, must) be submitted to the PBGC (e.g., applications for financial assistance, annual funding notices, critical and endangered notices). The new e-filing portal has no impact on the PBGC’s My Plan Administration Account (My PAA) interface.

Practitioners who don’t already have an e-4010 account will need to set up an account to be able to use the PBGC e-filing portal. Current e-4010 account holders have been informed via email of the minimal ways in which this change affects them.

To access the e-filing portal, click here.

Regulatory roundup

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

DOL posts 2015 Form 5500 and Form 5500-SF for information purposes only
The U.S. Department of Labor (DOL) has made available advance copies of the 2015 Form 5500, Annual Return/Report of Employee Benefit Plan, on its website, along with instructions that highlight new electronic filing requirements and various form modifications.

The electronic filing requirements for filing the Form 5500 and Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan, to the Internal Revenue Service (IRS) apply to employee benefit plans that are required to file at least 250 returns in a calendar year. They go into effect in 2016 for reporting on plan years that begin in or after 2015. Plans were already required to file electronically to the DOL.

For more information, click here.

OMB approval of revised collections of information for e-filing requirements
The Pension Benefit Guaranty Corporation (PBGC) has issued a notice stating that the Office of Management and Budget (OMB) has approved revisions to five collections of information under the PBGC’s regulations.

On September 17, 2015, the PBGC published a final rule amending its regulations on filing, issuance, computation of time, record retention, termination of multiemployer plans, and duties of plan sponsors following mass withdrawals that require mandatory e-filing of certain multiemployer plan notices starting in 2016. New amendments affect three collections of information:

• Duties of plan sponsor following mass withdrawal
• Notice of insolvency
• Termination of multiemployer plans

For more information, click here.

On September 11, 2015, the PBGC published a final rule amending its regulation on reportable events and certain other notification requirements to modify the system of waivers from reporting, implement provisions of the Pension Protection Act of 2006, and make other changes. The PBGC made changes to two collections of information:

• Reportable events
• Notice of failure to make required contributions

OMB approved the revised collections of information through November 30, 2018.

For more information, click here.

FASB issues proposed accounting standards update on fair value measurement
The Financial Accounting Standards Board (FASB) has issued a proposed Accounting Standards Update (ASU) intended to improve the effectiveness of disclosure requirements on fair value measurements. Stakeholders are asked to review and provide comment on the proposed ASU by February 29, 2016.

The proposed ASU is part of the FASB’s broader disclosure framework project to improve the effectiveness of disclosures in the notes to financial statements by clearly communicating the information that is most important to users of a reporting organization’s financial statements.

The proposed ASU would improve existing disclosure requirements related to fair value measurement and clarify disclosure requirements, as well as identify ways to improve the FASB’s decision process.

Fair value measurement is one of four areas where the FASB will evaluate and improve existing disclosure requirements. Other areas the FASB will address include an employer’s disclosure of defined benefit plans, income taxes, and inventory.

For more information, click here.

PBGC issues Table I-16 used to value benefits in plans with 2016 valuation dates
The Pension Benefit Guaranty Corporation (PBGC) has issued a final rule amending its regulation on allocation of assets in single-employer plans by substituting a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination, with valuation dates falling in 2016. This table is needed in order to compute the value of early retirement benefits and, thus, the total value of benefits under a plan.

The final rule amends Appendix D to replace Table I-15 with Table I-16 in order to provide an updated correlation, appropriate for calendar year 2016, between the amount of a participant’s benefit and the probability that the participant will elect early retirement. Table I-16 will be used to value benefits in plans with valuation dates during calendar year 2016. The final rule is effective on January 1, 2016.

To read the entire final rule, click here.

Regulatory roundup

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

PBGC publishes 2015 Annual Report
According to the Pension Benefit Guaranty Corporation (PBGC) 2015 Annual Report, the agency paid $5.7 billion to more than 800,000 people in failed pension plans, similar to the amount of payments PBGC made in FY 2014.

The PBGC’s multiemployer insurance program reported a deficit of $52.3 billion, compared with $42.4 billion in fiscal year 2014. The larger deficit is due to changes in interest factors that increased multiemployer program liabilities. PBGC’s interest factors are used to measure the value of future benefit payments. The deficit increase was also driven by the identification of 17 additional multiemployer plans that are newly terminated or are projected to run out of money within the next 10 years.

To learn more about the annual report, click here.

Savings arrangements established by states for nongovernmental employees
The Employee Benefits Security Administration has issued a proposed rule under ERISA setting forth a safe harbor, describing circumstances in which a payroll deduction savings program, including one with automatic enrollment, would not give rise to an employee pension benefit plan under ERISA. A program would be established and maintained by a state government, and state law would require certain private-sector employers to make the program available to their employees.

Several states are considering or have adopted measures to increase access to payroll deduction savings for individuals employed or residing in their jurisdictions. By making clear that state payroll deduction savings programs with automatic enrollment that conform to the safe harbor in the proposal do not establish ERISA plans, the objective of the safe harbor is to reduce the risk of such state programs being preempted if they were ever challenged. If adopted, this rule would affect individuals and employers subject to such laws.

To read the entire proposed rule, click here.

Interpretive bulletin: State savings programs
The Employee Benefits Security Administration has issued an interpretive outlining the views of the U.S. Department of Labor concerning the application of ERISA to certain state laws designed to expand the retirement savings options available to private-sector workers through ERISA-covered retirement plans. Concern over adverse social and economic consequences of inadequate retirement savings levels has prompted several states to adopt or consider legislation to address this problem.

To read the entire interpretive bulletin, click here.

IRS schedules hearing regarding multiemployer plan administration
The Internal Revenue Service (IRS) has issued a notice of public hearing on proposed regulations relating to the administration of a multiemployer plan participant vote on an approved suspension of benefits under the Multiemployer Pension Reform Act of 2014 (MPRA). The proposed regulations were issued on September 2, 2015.

The public hearing is being held at 10 a.m. on Friday, December 18, 2015. The IRS must receive outlines of the topics to be discussed at the public hearing by Monday, November 30, 2015.

To read the entire IRS Notice, click here.

 

Regulatory roundup

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

IRS announces pension plan limits for 2016
The Internal Revenue Service (IRS) has announced the dollar limitations applicable to pension plans for 2016. In addition, an IRS news release notes that:

• The Savings Incentive Match Plan for Employees (SIMPLE) retirement accounts limitation remains at $12,500
• The “key employee” definition in a top-heavy plan remains unchanged at $170,000
• The “catch-up” contribution amount remains at $6,000
• The dollar amount for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period remains at $1,070,000, while the dollar amount used to determine the lengthening of the five-year distribution period remains at $210,000
• For a participant who separated from service before 2016, the adjusted high-three-year compensation limitation for defined benefit plans, under Section 415(b)(1)(B), is computed by multiplying the participant’s compensation limitation, as adjusted through 2015, by 1.0011
• The annual compensation limit for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost-of-living adjustments to the compensation limit under the plan to be taken into account, remains at $395,000
• The Simplified Employee Pension (SEP) compensation amount remains at $600
• The compensation amounts concerning the definition of “control employee” for fringe benefit valuation purposes remains unchanged at $105,000, and the compensation amount remains at $215,000

To read the entire news release, click here.

DOL files interpretive bulletin on fiduciary standard under ERISA
The U.S. Department of Labor (DOL) has filed an interpretive bulletin that sets forth supplemental views of the DOL concerning the legal standard imposed by Sections 403 and 404 of Part 4 of Title I of ERISA, with respect to a plan fiduciary’s decision to invest plan assets in “economically targeted investments” (ETIs).

ETIs are generally defined as investments that are selected for the economic benefits they create in addition to the investment return to the employee benefit plan investor. In the document, the DOL withdraws Interpretive Bulletin 08-01 and replaces it with Interpretive Bulletin 2015-01, which reinstates the language of Interpretive Bulletin 94-01.

The new guidance, Interpretive Bulletin (IB) 2015-01, confirms the DOL’s longstanding view from IB 94-01 that fiduciaries may not accept lower expected returns or take on greater risks in order to secure collateral benefits, but may take such benefits into account as “tiebreakers” when investments are otherwise equal with respect to their economic and financial characteristics.

To read the entire interpretive bulletin, click here.

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Regulatory roundup

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

PBGC releases FY 2014 projections report
The projected insolvency date for the insurance program for multiemployer pension plans, which cover more than 10 million Americans, has been delayed by three years, according to the fiscal year (FY) 2014 projections report released by the Pension Benefit Guaranty Corporation (PBGC). The risk of program insolvency has decreased over the near term, which is due primarily to the new premium revenues anticipated under the Multiemployer Pension Reform Act of 2014 (MPRA). It is more likely than not that the program’s assets will be depleted in 2025, compared with 2022 in last year’s report, and the risk of insolvency grows rapidly thereafter.

Projections for the PBGC’s insurance program for single-employer plans, which cover about 31 million people, show that the program’s financial condition continues to be likely to improve and conclude that it is highly unlikely to run out of funds in the next 10 years. The PBGC modeled 5,000 simulations for the 2014 projections report, and none showed that the program would be unable to pay the benefits it owes in 2025.

To read the PBGC’s entire projections report, click here.

JCT provides background on proposed fiduciary rule
The Joint Committee on Taxation (JCT) has released a report explaining information regarding the fiduciary rule proposed by the U.S. Department of Labor (DOL). The document provides a description of present law relating to prohibited transactions, investment advice, and fiduciary status with respect to retirement plans and individual accounts.

To read the entire report (JCX-131-15), click here.

GAO report on pension advance transactions
The U.S. Government Accountability Office (GAO) has released a report entitled “Pension advance transactions – questionable business practices and the federal response” (GAO-15-846T). The report is based on testimony provided by Stephen Lord, managing director of forensic audits and investigative services at the GAO, before the U.S. Senate Special Committee on Aging. The testimony examines companies attempting to take advantage of retirees using pension advances. The report describes the number and characteristics of pension advance companies and marketing practices; evaluates how pension advance terms compare with those of other products; and evaluates the extent to which there is federal oversight.

To read the entire report, click here.

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