Tag Archives: Client Action Bulletin

Required minimum distributions: IRS proposes updated tables

The Internal Revenue Service (IRS) has issued a proposed rule that would amend the life expectancy and distribution period tables used to calculate required minimum distributions (RMDs) from qualified retirement plans, profit-sharing and stock bonus plans, IRAs and annuities, 403(b) and 457 plans, and certain other tax-favored employer-provided retirement arrangements. The IRS proposes to apply the updated tables after it issues the rule in final form and no sooner than for distributions beginning on or after January 1, 2021. Therefore, RMDs for 2020 are generally not affected and cannot be calculated using the new proposed tables.

The proposed updated tables reflect longer life expectancies for males and females than under current tables, thereby resulting in smaller RMDs and longer payout periods.

For more perspective, read this Milliman Client Action Bulletin.

DoL proposes new voluntary electronic disclosure rule for retirement plans

The U.S. Department of Labor (DoL) released a proposed rule that, if finalized, will provide an additional “safe harbor” for plan administrators to use electronic media to furnish retirement plan information to participants and beneficiaries. The proposed rule would allow for such disclosures via an internet posting for plan participants and beneficiaries with valid electronic addresses. However, participants and beneficiaries would to be able to request paper disclosures and entirely opt out of electronic delivery.

The proposed safe harbor does not apply to employee welfare benefit plans, such as disability or group health plans. The DoL intends to study the application of this new safe harbor to disclosures required for such plans. The proposed rule states that commenters should feel free to respond to the 21 questions contained in the proposed rule for both retirement and welfare benefit plans.

For more perspective, read this Milliman Client Action Bulletin.

COLAs for retirement, Social Security, and health benefits for 2020

The Internal Revenue Service (IRS) has announced the cost-of-living adjustment (COLA) figures for retirement plan benefits for 2020. The Social Security Administration announced its 2020 changes in October based on the Consumer Price Index for the quarter ended September 2019 from the U.S. Bureau of Labor Statistics. The 2020 adjusted figures for high-deductible health plans (HDHPs) and health savings accounts (HSAs) included in this Client Action Bulletin were released by the IRS earlier this year and are provided here for convenience.

Year-end compliance issues for single-employer retirement plans

By year-end 2019, sponsors of calendar-year single-employer retirement plans must adopt necessary and discretionary plan amendments to ensure compliance with the statutory and regulatory requirements of ERISA and the tax code. This Client Action Bulletin looks at key areas—including administrative compliance issues—that defined benefit (DB) and/or defined contribution (DC) plan sponsors should address by December 31, 2019.

Social Security adjusts taxable wage base and related figures for 2018

On November 27, the Social Security Administration (SSA) updated the 2018 taxable maximum amount, based on a national payroll service provider’s corrected Internal Revenue Service (IRS) Forms W-2 (Wage and Tax Statement) provided to the agency in late October 2017, after the SSA announced cost-of-living adjustments (COLAs) for 2018. The new data lowers the national average wage index for 2016, which in turn reduces the 2018 Social Security taxable maximum amount (also known as the taxable wage base or the contribution and benefit base), the primary insurance amount (PIA) bend points used to calculate benefits, and the family maximum bend points.

The adjusted figures are:

• The 2018 Social Security taxable wage base: $128,400 (corrected from $128,700).
• The 2018 PIA bend points that are used to determine individual beneficiaries’ Average Index Monthly Earnings (AIME): $895 and $5,397 (corrected from $896 and $5,399). Thus, the monthly PIA formula will be 90% of the first $895 of AIME, plus 32% of the AIME over $895 and through $5,397, plus 15% of the AIME over $5,397.
• The 2018 bend points in the family maximum formula: $1,144/$1,651/$2,154 (corrected from $1,145/$1,652/$2,155).
• The 2016 national average wage index: $48,642.15 (corrected from $48,664.73).

Milliman has posted a revised Client Action Bulletin (CAB 17-4R) to reflect the Social Security Administration’s adjusted figures.

For additional information about the 2018 updated Social Security figures, please contact your Milliman consultant.




IRS proposes additional guidance for nonqualified deferred compensation under 409A

Concluding that clarifications and modifications could help taxpayers comply with the requirements applicable to nonqualified deferred compensation plans (NDCPs) under tax code section 409A, the Internal Revenue Service (IRS) issued additional guidance in the form of a proposed rule. Compliance with the 409A requirements enables individuals covered by and employers sponsoring NDCPs to avoid adverse tax treatment of the amounts payable under these arrangements. The proposed rule, which taxpayers may rely upon immediately, is lengthy and complex, covering a diverse range of topics, most of which are beyond the scope of this Client Action Bulletin, which focuses on four key areas that may have the broadest application to NDCP sponsors.