Tag Archives: Congressional Budget Office

Regulatory roundup

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

New report on long-term projections for Social Security
The Congressional Budget Office (CBO) released the report “CBO’s 2017 Long-Term Projections for Social Security: Additional Information.” This year, in lieu of publishing a separate report providing additional information on the agency’s long-term projections for Social Security, the CBO is publishing the data that it would have presented in that report.

For more information, click here.

Changes to long-term Social Security projections since 2016
A report from the Congressional Research Service explains the changes to the CBO’s long-term Social Security projections since last year. Compared with those made in July 2016, the CBO’s latest projections indicate a slight improvement in the financial outlook for Social Security.

For more information, click here.

Revised factor for adjusting a participant’s high-3 compensation limitation under Section 415(b)(1)(B)
The Internal Revenue Service (IRS) issued Notice 2017-64, providing a listing of dollar limitations applicable to qualified retirement plans as adjusted for cost-of-living adjustments for 2018. This document provides a revised factor for adjusting a participant’s high-3 compensation limitation under section 415(b)(1)(B) of the Code for plan years beginning on or after January 1, 2018. The revision is necessary due to the adjustment by the U.S. Bureau of Labor Statistics (BLS) of the Consumer Price Index for All Urban Consumers (CPI-U) for the months of July 2016 and August 2016, used in the calculation of the factor. After taking into consideration the adjustments made by the BLS, the factor is 1.0197.

For more information, click here.

Regulatory roundup

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

BLS article explores defined contribution retirement plans
A new article from the Bureau of Labor Statistics (BLS) takes a look at five types of employer-sponsored defined contribution retirement plans in private industry. The Beyond the Numbers article shows the overall employee participation rates, employee participation rates by type of plan, and overall employer costs and worker participation costs for all types of plans. All defined contribution plans described in this article have some form of employer cost. Plans are categorized by type on the basis of Internal Revenue Code requirements and variations in contribution methods. The data are from the BLS National Compensation Survey (NCS) and are presented by selected worker and establishment characteristics and geographic areas.

To read the entire article, click here.

CBO releases options for reducing the deficit, 2017 to 2026
The Congressional Budget Office (CBO) released “Options for reducing the deficit: 2017 to 2026,” presenting 115 options that would decrease federal spending or increase federal revenues over the next decade. The options included in this volume come from various sources. Some are based on proposed legislation or on the budget proposals of various administrations; others come from Congressional offices or from entities in the federal government or in the private sector. The options cover many areas—ranging from defense to energy, Social Security, and provisions of the tax code.

To download the report, click here.

GASB issues guidance on certain asset retirement obligations
The Governmental Accounting Standards Board (GASB) issued guidance for state and local governments addressing liabilities known as “asset retirement obligations.” An asset retirement obligation (ARO) is a legally enforceable liability associated with the retirement of a tangible capital asset. GASB Statement No. 83, Certain Asset Retirement Obligations, establishes guidance for determining the timing and pattern of recognition for liabilities and corresponding deferred outflows of resources related to AROs.

Existing laws and regulations require state and local governments to take specific actions to retire certain capital assets, such as the decommissioning of nuclear reactors and the dismantling and removal of sewage treatment plants. Other obligations to retire certain capital assets may arise from contracts or court judgments.

To read the entire GASB statement, 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.

CBO releases new long-term projections for Social Security
The Congressional Budget Office (CBO) has published a new report entitled “CBO’s 2014 long-term projections for Social Security – additional information.” The CBO projects that under current law, the Disability Insurance (DI) trust fund will be exhausted in fiscal year 2017, and the Old-Age and Survivors Insurance (OASI) trust fund will be exhausted in 2032. If a trust fund’s balance fell to zero and current revenues were insufficient to cover the benefits specified in law, the Social Security Administration would no longer have legal authority to pay full benefits when they were due.

To read the entire report, click here.

IRS releases changes to employee plans determination letter processing
The Internal Revenue Service (IRS) released Announcement 2015-01, describing changes to the processing of employee plans determination letters that will take effect in 2015. These changes are being adopted as a result of a process improvement strategy designed to promote case processing efficiency.

The changes to the determination letter procedures described in this announcement will be reflected in Rev. Proc. 2015-6, which will be published in IRB 2015-1 and will be effective on February 1, 2015. Rev. Proc. 2015-6 will set forth the IRS’s procedures for issuing determination letters on the qualified status of employee plans.

To read the entire announcement, click here.

DOL issues information letter on myRAs facilitated by employers
The U.S. Department of Labor (DOL) has released an information letter stating that employers facilitating retirement savings accounts known as “myRAs” will not be establishing an ERISA-covered “employee pension benefit plan.” The DOL’s letter responds to a Treasury Department inquiry that asked whether the accounts would be covered by ERISA Title I.

The Treasury recently released a final rule on the savings bonds that are only available through the program announced by the president in January. Until the program is expanded, in order for an employee to make contributions to a myRA account, the employer must agree to forward the employee’s payroll deduction contributions. Employers would not make contributions to the myRAs and they would have no investment or other funding obligations, or have any custody or control over account assets.

To read the entire information letter, click here.

DOL releases advance copies of 2014 Form 5500 and 5500-SF
The DOL’s Employee Benefits Security Administration has updated its website with advance informational copies of the 2014 Form 5500 and 5500-SF and final copy of the 2014 Form M-1 of Form 5500.

To download Form 5500 and 5500-SF, click here.
To download Form M-1, click here.

For more information, click here.

Regulatory roundup

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

CBO projects PBGC’s multiemployer revolving fund to be exhausted by 2021
The U.S. Congressional Budget Office (CBO) has issued a table providing projections for the Pension Benefit Guaranty Corporation (PBGC). The CBO projects that the multiemployer revolving fund will be exhausted in 2021. The CBO expects that after the fund is exhausted, the PBGC will reduce financial assistance to a level that could be supported with premium increases.

To view the table providing PBGC projections, click here.

IRS issues sample article for organizations and employers on Roth accounts
The Internal Revenue Service (IRS) has issued a sample article providing a one-page overview of Roth accounts in 401(k), 403(b), and 457(b) plans, including links to relevant IRS publications and web pages.

For more information, click here.

IRS issues proposed rule on UBTI calculation for exempt organizations including VEBAs
The IRS issued proposed rules on the calculation of unrelated business taxable income (UBTI) for certain exempt organizations. The document contains proposed income tax regulations (26 CFR part 1) under section 512(a) of the Code.

Organizations that are tax exempt under section 501(a) are subject to tax on UBTI. Section 512(a) generally defines UBTI of exempt organizations and provides special rules for calculating UBTI for organizations such as social and recreational clubs, voluntary employees’ beneficiary associations (VEBAs), supplemental unemployment benefit trusts (SUBs), and group legal services organizations (GLSOs).

The proposed regulation contains some changes to improve clarity and respond to comments received in 1986, but otherwise has the same effect as the 1986 proposal.

Issues addressed in the explanation of provisions:

• Covered entity
• Limitation on amounts set aside for exempt purposes
• Special rules relating to Sections 419A(f)(5) and 419A(f)(6), collectively bargained plans and collectively bargained welfare plans

To read the entire proposed rule, click here.

SEC issues investor bulletin: Variable annuities – An introduction
The Office of Investor Education and Advocacy of the U.S. Securities and Exchange Commission (SEC) has issued an investor bulletin “Variable annuities – An introduction” which provides some basic facts about variable annuities and how they work. Variable annuities are complex products, and this Investor Bulletin focuses solely on the basics.

For more information, click here.

IRS updates web posting with chart providing submission procedures for individually designed plans
The IRS has updated its chart providing submission procedures for individually designed plans, initial five-year cycle (EGTRRA).

To view the updated web page, click here.

Regulatory roundup

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

GAO: Social Security’s long-term strategy needed to address key management challenges
According to a report by the U.S. Government Accountability Office (GAO), the Social Security Administration (SSA) will experience management challenges in four key areas over the next decade.

Human capital. SSA has not updated its succession plan since 2006 although the agency faces an ongoing retirement wave and hiring freeze which will make it difficult to respond to growing workload demands.
Disability program issues. SSA faces ongoing challenges incorporating a more modern concept of disability into its programs, while balancing competing needs to reduce backlogs of initial and appealed claims and ensure program integrity.
Information technology (IT). SSA has made strides in modernizing its IT systems to address growing workload demands, but faces challenges with these modernization efforts and correcting internal weaknesses in information security.
Physical infrastructure. SSA is moving toward centralized facilities management, but the agency lacks a proactive approach to evaluating its office structure that will identify potential efficiencies, such as consolidating offices.

To read the entire GAO report, click here.

Social Security and Medicare trustees report for 2013
The U.S. Social Security Board of Trustees has released its annual report on the long-term financial status of the Social Security Trust Funds. The combined assets of the Old-Age and Survivors Insurance, and Disability Insurance (OASDI) Trust Funds are projected to become depleted in 2033, unchanged from last year, with 77% of benefits still payable at that time. The Disability Insurance Trust Fund will become depleted in 2016, also unchanged from last year’s estimate, with 80% of benefits still payable.

To read the entire report, click here.

The Medicare Trustees has projected that the trust fund that finances Medicare’s hospital insurance coverage will remain solvent until 2026, two years beyond what was projected in last year’s report.

A number of factors have contributed to the improved outlook, including lower-than-expected Part A spending in 2012, and lower projected Medicare Advantage program costs. Recent data from the Medicare Advantage program indicate that certain provisions of the Patient Protection and Affordable Care Act (ACA) will help reduce the growth of spending in this program by more than was previously projected. Partially offsetting these lower spending projections are somewhat lower projected levels of tax revenue.

The benefits of this slower growth accrue to both taxpayers and beneficiaries. For example, although the Part B premium for 2014 will not be determined until later this year, the preliminary estimate in the report indicates that it will remain unchanged from the 2013 premium.

Read the entire report here.

CBO report: The distribution of major tax expenditures in the individual income tax system
A number of exclusions, deductions, preferential rates, and credits in the U.S. federal tax system cause revenues to be much lower than they would be otherwise for any given structure of tax rates. Some of those provisions—in both the individual and corporate income tax systems—are termed “tax expenditures” because they resemble federal spending by providing financial assistance to specific activities, entities, or groups of people. Tax expenditures, like traditional forms of federal spending, contribute to the federal budget deficit; influence how people work, save, and invest; and affect the distribution of income.

A report by the Congressional Budget Office (CBO) examines how 10 of the largest tax expenditures in the individual income tax system in 2013 are distributed among households with different amounts of income.

To read the CBO entire report, click here.