Tag Archives: DoL

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.

Federal court blocks implementation of DoL’s overtime rule

A federal district court has blocked implementation of the Department of Labor (DoL) overtime pay regulation that was set to take effect on December 1, 2016 (Nevada v. U.S. Department of Labor [U.S.D.C., E.D. Tex., No. 4:16-cv-00731, motion granted 11/22/2016]). In granting the nationwide preliminary injunction, the court agreed with the 21 states and a coalition of business groups in the consolidated suit that the DoL exceeded its authority by issuing a rule that increased the salary level for an exemption from the Fair Labor Standards Act’s overtime pay requirements for most white-collar employees. (See Client Action Bulletin 16-2 for a discussion of the DoL’s final rule and its implications for benefit programs.)

The DoL might appeal the decision, but unless the appeal to overturn the injunction is expedited and successful, the agency cannot implement the final rule starting on December 1. In addition, the new Administration and/or the 115th Congress that convenes in January will have an opportunity to modify or nullify the rule.

Employers that have not altered their overtime pay policies and considered the “job duties” test for the final rule’s overtime pay exemption need not do so before December 1, but they should monitor developments as the suit progresses through the courts. Those that have taken action, including employee benefit plan sponsors with programs that have been affected (e.g., a retirement plan that changed its definition of compensation to include overtime pay), should discuss the implications of the court’s ruling—and appropriate courses of action, including those involving communications with affected employees—with their legal counsel and other professional advisors. Employers should also discuss their decisions with their third-party payroll administrators.

For additional information about the court’s decision on the DoL’s rule, please contact your Milliman consultant.

Regulatory roundup

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

Revised favorable determination letter publication
The Internal Revenue Service (IRS) issued a revised version of Publication 794, “Favorable determination letter.” The publication explains the significance of a favorable determination letter, points out some features that may affect the qualified status of an employee retirement plan and nullify the determination letter without specific notice from the IRS, and provides general information on the reporting requirements for the plan.

To download the entire publication, click here.

PBGC final rule: Appendix D to Part 4044 amended with Table I-17
The Pension Benefit Guaranty Corporation (PBGC) issued a final rule amending Appendix D to Part 4044 with Table 1-17 for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2016.

To read the entire final rule, click here.

Booklet on automatic enrollment in 401(k) plans
The IRS and the Department of Labor (DoL) released “Automatic enrollment 401(k) plans,” which provides an overview of the defined contribution plan feature. The publication contains a checklist to assist an employer when establishing an automatic enrollment.

To download the entire publication, click here.

Regulatory roundup

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

IRS releases guidance on pension equity plans
The Internal Revenue Service (IRS) issued Notice 2016-67, which describes the applicability of the market rate of return limitation rules to defined benefit plans expressing a participant’s accumulated benefit as the current value of an accumulated percentage of the participant’s final average compensation, highest average compensation, or highest average compensation during a limited period of years (a type of plan often referred to as a “pension equity plan” or “PEP”).

To read the entire notice, click here.

Agencies release advance informational copies of the 2016 Form 5500
The Employee Benefits Security Administration of the U.S. Department of Labor (DoL), the IRS, and the Pension Benefit Guaranty Corporation (PBGC) released advance informational copies of the 2016 Form 5500 annual return/report and related instructions.

For more information, click here.

Regulatory roundup

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

IRS announces pension plan limits for 2017
The Internal Revenue Service (IRS) announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017. The IRS issued technical guidance detailing these items in Notice 2016-62.

For more information, click here.

Private pension plan bulletin abstract of 2014 Form 5500 annual report
The U.S. Department of Labor (DoL) published its Private Pension Plan Bulletin featuring highlights from the 2014 Form 5500 report. Over the past four decades, as the U.S. private pension system has shifted from defined benefit (DB) plans toward defined contribution (DC) plans, often 401(k) type DC plans, the financing of retirement benefits has shifted from employers to participants. In 1978, when legislation was enacted authorizing 401(k) type plans that allow employees to contribute to their own retirement plan on a pretax basis, participants made 29% of the contributions to DC plans and only 11% of total contributions to all DB and DC pension plans. In the years following 1978, employee contributions to DC plans steadily rose to a peak of approximately 60% in 1999, where it has remained. Other findings from Form 5500 series reports for 2014 plan years are summarized in the bulletin.

To download the bulletin, click here.

PBGC announces guarantee limit for 2017
The Pension Benefit Guaranty Corporation (PBGC) announced that, as a result of the indexing rules provided in ERISA, the guarantee limits for single-employer plans that fail in 2017 will be 7.1% higher than the limits that applied for 2015 and 2016. 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 maximum monthly guarantee tables, click here.
For more information on multiemployer benefit guarantees, click here.

Proposed Form 5500 revisions seek new retirement plan details

ERISA-covered retirement plan sponsors would be required to provide significantly detailed information about their plans when filing the Form 5500 (Annual Return/Report of Employee Benefit Plan), under a proposed rule from the U.S. Department of Labor (DoL), along with a separate proposed rule issued jointly by the DoL, Treasury/Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC). (For simplicity, this Client Action Bulletin [CAB] refers to both sets of rules as the DoL’s proposed rule.)

The DoL’s proposal, which affects only ERISA-covered plans, would amend the reporting and disclosure requirements applicable to all employee benefits, but this CAB focuses on the key revisions applicable to defined contribution (DC) and defined benefit (DB) retirement plans, including certain small plans (with fewer than 100 participants) with new requirements to file certain information. (See CAB 16-5 for the proposed rule’s effects on group health plans.)

The DoL seeks comments on the proposed rule by December 5, 2016; if adopted, the DoL anticipates applying the new requirements to plan years starting in 2019 (i.e., forms filed in 2020). The IRS, however, proposes that retirement plan sponsors answer certain compliance-related questions about the plans for the 2016 plan year when filing the Form 5500 in 2017.