Tag Archives: PBGC

Regulatory roundup

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

CBO issues cost estimate of House GOP tax bill and scores estimated deficits and debts under Senate tax bill
In the House, H.R. 1, the Tax Cuts and Jobs Act, would amend numerous provisions of U.S. tax law. The staff of the Joint Committee on Taxation (JCT) estimates that enacting the bill would reduce revenues by about $1,438 billion over the 2018-2027 period, and decrease outlays by $2 billion over the same period, leading to an increase in the deficit of $1,437 billion over the next 10 years. For the Senate’s tax bill, the staff of the Joint Committee on Taxation determined that provisions in the Chairman’s Mark would increase deficits over the 2018-2027 period by $1.5 trillion (not including any macroeconomic effects). By the estimate of the Congressional Budget Office (CBO), additional debt service would boost the 10-year increase in deficits to $1.7 trillion. As a result of those higher deficits, debt held by the public would increase from the 91.2% of gross domestic product in CBO’s June 2017 baseline to 97.3%.

For more information, click here and here.

IRS releases new information package
Defined Contribution Listing of Required Modifications and Information Package contains samples of plan provisions that have been found to satisfy certain specific requirements of the Internal Revenue Code, taking into account changes in the plan qualification requirements, regulations, revenue rulings, and other guidance in the 2017 Cumulative List of Changes in Plan Qualification Requirements (Notice 2017-37, 2017-29 I.R.B. 89). The package has been prepared to assist providers who are drafting or redrafting plans to conform to applicable law and regulations, with the goal that it will be a key factor in enabling the Internal Revenue Service (IRS) to process and approve preapproved plans more quickly.

For more information, click here.

Multiemployer program deficit widens to $65.1 billion, single-employer program improves according to PBGC annual report
The Fiscal Year 2017 Annual Report of the Pension Benefit Guaranty Corporation (PBGC) shows that the deficit in its insurance program for multiemployer plans rose to $65.1 billion at the end of fiscal year (FY) 2017, up from $58.8 billion a year earlier. The increase was driven primarily by the ongoing financial decline of several large multiemployer plans that are expected to run out of money in the next decade.

The PBGC’s Single-Employer Insurance Program continued to improve as the deficit dropped to $10.9 billion at the end of FY 2017, compared to $20.6 billion at the end of FY 2016. The primary drivers of the continued improvement include premium and investment income and increases in the interest factors used to measure the value of future liabilities.

For more information, click here.

Equal Employment Opportunity Commission reports twice as many discrimination lawsuits in 2017
The Equal Employment Opportunity Commission (EEOC) filed more than twice as many discrimination lawsuits in FY 2017 as it did in the previous year, while also putting a significant dent in a persistent backlog of pending investigations that had recently drawn the ire of lawmakers, according to an agency report.

For more information, click here.

Regulatory roundup

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

Relief for victims of Hurricane Maria and the California wildfires
Internal Revenue Service (IRS) Announcement 2017-15 provides relief to taxpayers adversely affected by Hurricane Maria and recent wildfires in California (California Wildfires). The announcement allows individuals in qualified employer plans to use retirement assets to alleviate hardships caused by these disasters. The IRS announcement also provides relief from certain verification procedures that may be required under retirement plans with respect to loans and hardship distributions.

For more information, click here.

Memo regarding missing participants and beneficiaries and required minimum distributions
The IRS released a memorandum directing employee plans examiners not to challenge a qualified plan as failing to satisfy the required minimum distribution (RMD) standards under Internal Revenue Code (IRC) § 401(a)(9) in the circumstances set forth below. The memo addresses only the application of IRC §401(a)(9) to certain circumstances involving a plan’s action related to a benefit of a participant or beneficiary whom the plan is unable to locate. It does not address the application of any other qualification requirements or other applicable law, including Title I of ERISA.

For more information, click here.

Guarantee limit for single-employer defined benefit plans for 2018 announced
The Pension Benefit Guaranty Corporation (PBGC) announced that the guarantee limits for single-employer plans that fail in 2018 will be 0.95% higher than the limits that applied for 2017 as a result of the indexing rules provided in ERISA. A table showing the single-employer plan guarantee limits for various ages and payment forms is available on the PBGC’s website. The guarantee limits for multiemployer plans are not indexed and, therefore, have not changed.

To view the table, click here.

Treasury final rule on mortality tables
The Government Accountability Office (GAO) released a report on the final rule published by the U.S. Department of the Treasury, IRS, entitled “Mortality Tables for Determining Present Value under Defined Benefit Pension Plans.”

According to the GAO analysis, the IRS summarized the costs of this final rule by stating that substantially all of the amounts involved (decreased tax revenue, increased plan contributions and PBGC premiums) constitute transfer payments rather than costs. The amounts are monetary payments from one entity to another that do not affect total resources available to society. The IRS believes that the incremental administrative costs to implement this regulation are negligible because plan sponsors would have to incur the same costs to update their plan administration software to reflect the new mortality tables under these regulations as they would incur in implementing the annual update to the mortality tables that would apply in the absence of these regulations. The final rule has tables showing the impact of the rule and revenue collection, contribution requirements, and PBGC premiums.

For more information, click here.

Present value of PBGC maximum guarantee
The PBGC posted a table showing the applicable present values for 2018 plan years. The PBGC also posted a two-column version of the table for convenient copying.

For more information, click here.

Disaster relief for employee benefit plans

The Internal Revenue Service (IRS), the U.S. 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.