Tag Archives: DoL

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 Department 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 that which it 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 due to attrition must be reported to 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.

Regulatory roundup

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

IRS extends temporary nondiscrimination relief for closed pension
The Internal Revenue Service (IRS) released Notice 2017-45, which extends temporary relief under Notice 2014-5 from section 401(a)(4) nondiscrimination testing for closed defined benefit pension plans through plan years beginning before 2019. Taxpayers may continue to rely on the proposed regulations for the same period.

To read the entire notice, click here.

DOL proposes fiduciary rule delay
The Department of Labor (DOL) issued a proposal to extend the special transition period under sections II and IX of the Best Interest Contract Exemption and section VII of the Class Exemption for Principal Transactions in Certain Assets between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs. The document also proposes to delay the applicability of certain amendments to Prohibited Transaction Exemption 84-24 for the same period.

To learn more about this the DOL’s proposal, click here.

DOL states fiduciary rule’s arbitration ban won’t be enforced
The DOL released Field Assistance Bulletin 2017-3, “Enforcement Policy on Arbitration Limitation in the Best Interest Contract Exemption and Principal Transaction Exemption.” The bulletin states that the DOL will not pursue a claim against any fiduciary based on failure to satisfy the BIC Exemption or the Principal Transactions Exemption, or treat any fiduciary as being in violation of either of these exemptions, if the sole failure of the fiduciary to comply with either the BIC Exemption or the Principal Transactions Exemption, is a failure to comply with the Arbitration Limitation in Section II(f)(2) and/or Section II(g)(5) of the exemptions.

This policy will continue to apply as long as the exemptions include the Arbitration Limitation now found in Section II(f)(2) and/or Section II(g)(5). To the extent that circumstances give rise to the need for other relief, including prohibited transaction relief, EBSA will consider taking such additional steps as necessary.

For more information, click here.

OregonSaves and other state-run retirement programs may require employer action

President Trump recently signed into law (P.L.115-35) a bill “disapproving” a U.S. Department of Labor (DoL) final rule that permitted states to create retirement savings programs for nongovernmental workers whose employers do not sponsor a retirement plan. The August 30, 2016, final rule specified the conditions to qualify for a “safe harbor” that would exempt certain state-run individual retirement arrangements from ERISA, the federal law that governs retirement plans sponsored by employers in the private sector.

Despite the disapproval, several states (and municipalities) remain committed to creating or studying retirement savings vehicles for workers whose employers do not offer a plan. Oregon became the first to launch such a program, called OregonSaves™. This Client Action Bulletin provides some perspective.

Regulatory roundup

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

IRS issues model amendments for DB plans offering bifurcated benefit distribution options
The Internal Revenue Service (IRS) released Notice 2017-44, which provides model amendments that a sponsor of a qualified defined benefit (DB) plan may use to amend its plan document to offer bifurcated benefit distribution options to participants in accordance with final regulations issued under § 417(e) of the Internal Revenue Code.

The model amendments set forth in the Appendix may be used to implement either of the two methods set forth in § 1.417(e)-1(d)(7) for computing the amount to be paid to a participant who elects to receive his or her accrued benefit in an optional form of payment consisting partially of an annuity and partially of a more accelerated form of payment. Note that the Implicit Bifurcation Amendment may not be used with respect to distributions for which § 1.417(e)-1(d)(7)(iii)(C) prohibits the use of implicit bifurcation.

To read the entire notice, click here.

DoL removes guide proposal meant to help understand fee disclosures
The U.S. Department of Labor (DoL) released a notice modifying its semiannual regulatory agenda. According to the notice, the Employee Benefits Security Administration (EBSA) is removing from its agenda a regulations project that was proposed during the prior administration to require that retirement plan service providers create and deliver a guide to help plan fiduciaries better locate certain information in required fee and service disclosures. These are disclosures required under 408(b)(2) regulations.

To read the notice’s language on this subject, click here.

Regulatory roundup

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

DOL releases conflict of interest FAQ
The U.S. Department of Labor (DOL) has published “Conflict of Interest FAQs” (408b-2 Disclosure Transition Period, Recommendations to Increase Contributions and Plan Participation). This guidance, like the Fiduciary Rule and related exemptions, is generally limited to advice concerning investments in IRAs, ERISA-covered plans, and other plans covered by section 4975 of the Internal Revenue Code.

To download the FAQ, click here.

PBGC releases annual projections report
According to the FY 2016 Projections Report of the Pension Benefit Guaranty Corporation (PBGC), the insurance program for multiemployer pension plans, which covers more than 10 million Americans, is likely to run out of money by the end of 2025.

Projections for the PBGC’s insurance program for single-employer pension plans, which covers about 28 million people, show that its financial condition may continue to improve. The program is highly unlikely to run out of money in the next 10 years, and is likely to eliminate its deficit within the next three to seven years.

The projections report is the PBGC’s annual actuarial evaluation of its future operations and financial status. The report provides a range of estimates of the future status of insured pension plans and their effect on the PBGC’s financial condition, based on hundreds of different economic scenarios.

To read the entire report, click here.

Regulatory roundup

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

Guidance for remedial amendment period for 403(b) plan
The Internal Revenue Service (IRS) issued Revenue Procedure 2017-18 providing the last day of the remedial amendment period for § 403(b) plans, for purposes of section 21 of Rev. Proc. 2013-22, 2013-18 I.R.B. 985.

According to the guidance, the last day of the remedial amendment period described in section 2 of this revenue procedure and in section 21 of Rev. Proc. 2013-22 is March 31, 2020. A plan that does not satisfy the requirements of § 403(b) in form on any day during the remedial amendment period (that is, the period beginning on the later of January 1, 2010, or the plan’s effective date, and ending on March 31, 2020) will be considered to have satisfied those requirements if, on or before March 31, 2020, all provisions of the plan that are necessary to satisfy § 403(b) have been adopted and made effective in form and operation from the beginning of the remedial amendment period.

To read the revenue procedure, click here.

Final Rule to adjust for inflation civil monetary penalties
The Department of Labor (DoL) published a final rule to adjust for inflation the civil monetary penalties assessed or enforced in its regulations, pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act).

The Inflation Adjustment Act requires the DoL to annually adjust its civil money penalty levels for inflation no later than January 15 of each year. The Inflation Adjustment Act provides that agencies shall adjust civil monetary penalties notwithstanding Section 553 of the Administrative Procedure Act (APA). Additionally, the Inflation Adjustment Act provides a cost-of-living formula for adjustment of the civil penalties. Accordingly, this final rule sets forth the DoL’s 2017 annual adjustments for inflation to its civil monetary penalties, effective January 13, 2017.

To read the final rule, click here.

Summary and audit indicators: 403(b) Universal Availability Requirement
The IRS has updated its webpage 403(b) Universal Availability Requirement. A common error occurs when employees, working less than full-time, are automatically excluded from making elective deferrals under the 403(b) plan. A plan that wants to apply the statutory exclusion for part-time employment must determine eligibility for the 403(b) elective deferrals based on whether the employee is reasonably expected to normally work less than 20 hours per week and has actually never worked more than 1,000 hours in the applicable 12-month period.

To visit the webpage, click here.