Tag Archives: House of Representatives

Regulatory roundup

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

Standard and distress termination forms and instructions posted
The Pension Benefit Guaranty Corporation (PBGC) published standard and distress terminations forms and instructions. Key changes include a new option for submitting these filings by email and the ability to request a prefiling consultation to determine whether a distress filing application is warranted. In addition, because the rules related to missing participants differ depending on whether the date of plan termination is before January 1, 2018, the post-distribution certifications (i.e., Forms 501 and 602, for standard and distress terminations, respectively), have been modified slightly so that they can be used for both pre-2018 and post-2017 terminations.

The new forms and instructions can be found here.

House approves bill for IRS Form 1099 Series Internet platform
The U.S. House of Representatives approved the “21st Century IRS Act” (H.R. 5445), which aims to improve cybersecurity and taxpayer identity protection. It also aims to modernize information technology at the Internal Revenue Service (IRS). The bill includes a provision to develop an internet platform that would allow persons to prepare, file, and distribute IRS Form 1099 series (Information Return), including 1099-R (Distributions From Pensions, Annuities, Retirement, etc.), by January 1, 2023. The bill requires Senate approval.

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.

House committee approves bill to repeal fiduciary rule
The U.S. House Committee on Education and the Workforce recently voted to approve the “Affordable Retirement Advice for Savers Act” (H.R. 2823), which would repeal the U.S. Department of Labor (DOL) rule defining “fiduciary” and restore the regulations and prohibited transaction exemptions that the rule had amended or repealed.

According to a summary released by the committee, the bill would amend ERISA and the tax code to establish a statutory definition of “investment advice” and “ensure that all financial professionals providing personalized advice about retirement investments, distributions, or the use of other advisors are legally required to act in the best interest of their clients.”

To learn more about the bill, click here.

IRS releases draft Form 8717
The Internal Revenue Service (IRS) has released Draft Form 8717, User Fee for Employee Plan Determination Letter Request, updated for September 2017. Specific user fee amounts are no longer listed on Form 8717. You must now enter the appropriate user fee when completing line 5. Notice 2011-86 is obsolete.

To download a copy of the draft, click here.

IRS releases final and temporary regulations on W-2 Series, Form W-3, Form 990 Series, and others
The IRS filed final and temporary regulations that update the due dates and extensions of time to file certain tax returns and information returns. The dates are updated to reflect the new statutory requirements set by section 2006 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 and section 201 of the Protecting Americans from Tax Hikes Act of 2015.

These regulations affect taxpayers who file Form W-2 (series, except Form W-2G), Form W-3, Form 990 (series), Form 1099-MISC, Form 1041, Form 1041-A, Form 1065, Form 1120 (series), Form 4720, Form 5227, Form 6069, Form 8804, or Form 8870.

To read more about the final and temporary regulations, click here. To read more about the proposed regulation, click here.

IRS releases draft W-4P for 2018
The IRS has released a draft copy of Form W-4P, Withholding Certificate for Pension or Annuity Payments, for 2018. The form is for U.S. citizens and resident aliens, or their estates, who are recipients of pensions, annuities (including commercial annuities), and certain other deferred compensation. Use Form W-4P to tell payers the correct amount of federal income tax to withhold from your payment(s). One also may use Form W-4P to choose (a) not to have any federal income tax withheld from the payment (except for eligible rollover distributions or for payments to U.S. citizens to be delivered outside the United States or its possessions) or (b) to have an additional amount of tax withheld.

To download a copy of the draft, click here.

GAO publishes report on older workers and phased retirement programs
The Government Accountability Office (GAO) has released “Older Workers – Phased Retirement Programs, Although Uncommon, Provide Flexibility for Workers and Employers” (GAO-17-536). The report examines:

• Recent trends in the labor force participation of older workers
• The extent to which employers have adopted phased retirement programs and what type of employers offer them
• What challenges and benefits, if any, exist in designing and operating phased retirement programs.

GAO analyzed data from two nationally representative surveys: the Health and Retirement Study (2004-2014) and the Current Population Survey (2005-2016). The agency also reviewed relevant federal laws and regulations, conducted a literature review, and interviewed 16 experts on retirement and nine employers that offer or considered offering phased retirement programs. While phased retirement programs exist in both the private sector and government, the GAO report focuses on private sector programs.

To read the entire report, click here.

Regulatory roundup

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

Final rule lowering rates of penalty charged for late payment of pension premiums
The Pension Benefit Guaranty Corporation (PBGC) is lowering the rates of penalty charged for late payment of premiums by all pension plans, and providing a waiver of most of the penalty for plans with a demonstrated commitment to premium compliance.

The penalty for late payment of a premium is a percentage of the amount paid late multiplied by the number of full or partial months the amount is late, subject to a floor of $25 (or the amount of premium paid late, if less). There are two levels of penalty, which heretofore have been 1% per month (with a 50% cap) and 5% per month (capped at 100%). The lower rate applies to “self-correction”—that is, where the premium underpayment is corrected before PBGC gives notice that there is or may be an underpayment.

This final rule cuts the rates and caps in half (i.e., to 0.5% with a 25% cap and 2.5% with a 50% cap, respectively) and eliminates the floor. The rulemaking also creates a new penalty waiver that applies to underpayments by plans with good compliance histories if corrected promptly after notice from PBGC. PBGC will waive 80% of the penalty assessed for such a plan.

For more information, click here.

Notice extends temporary nondiscrimination relief for closed defined benefit plans
The Internal Revenue Service (IRS) released Notice 2016-57, extending the temporary nondiscrimination relief for closed defined benefit plans provided in Notice 2014-5 and 2014-2, through 2017.

The temporary nondiscrimination relief for closed plans that is provided in Notice 2014-5 is hereby extended to plan years beginning before 2018 if the conditions of Notice 2014-5 are satisfied. This extension is provided in anticipation of the issuance of final amendments to the § 401(a)(4) regulations. Those regulations are expected to be effective for plan years beginning on or after January 1, 2018, and are expected to permit plan sponsors to apply the provisions of the regulations that apply specifically to closed plans for certain earlier plan years.

To read Notice 2016-57, click here.

To read and review Notice 2014-5, click here.

DoL extends deadline for public comments on Form 5500 modernization proposal
The U.S. Department of Labor (DoL) announced a two-month extension of the comment period on the Form 5500 modernization proposals. A range of stakeholder groups asked for an extension of time to submit comments, given the scope and significance of the proposed forms revisions and regulatory amendments. The DoL, IRS, and PBGC decided to extend the public comment period on the proposed forms revisions and regulatory amendments from the original October 4, 2016, deadline to the new December 5, 2016, deadline.

For more information, click here.

Proposal to expand missing participant program
The PBGC administers a program to hold retirement benefits for missing participants and beneficiaries in terminated retirement plans and to help those participants and beneficiaries find and receive the benefits held for them. The program is currently limited to single-employer defined benefit pension plans covered by the pension insurance system under Title IV of ERISA.

The PBGC proposes to make changes to its existing program and, as authorized by the Pension Protection Act of 2006, to establish similar programs for multiemployer plans covered by Title IV, certain defined benefit plans that are not covered by Title IV, and most defined contribution plans. The proposed rule is needed to implement amendments to section 4050 of ERISA.

To read the proposed rule, click here.

For an overview of the proposed missing participants program for defined contribution and other terminated plans, click here.

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Regulatory roundup

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

IRS issues pension funding stabilization guidance under HATFA
The Internal Revenue Service (IRS) has released Notice 2014-53 providing guidance on the changes to the funding stabilization rules for single-employer pension plans under the Internal Revenue Code (Code) and ERISA that were made by section 2003 of the Highway and Transportation Funding Act of 2014 (HATFA).

To read the entire notice, click here.

House Ways and Means announces hearing on private single-employer and multiemployer pension plans
The U.S. House Committee on Ways and Means will be holding a hearing on defined benefit pension plans offered by private sector employers, including both multiemployer plans and single-employer plans. The hearing will take place on Wednesday, September 17, at the 1100 Longworth House Office Building, beginning at 10:15 a.m.

For more information, click here.

Regulatory roundup

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

MAP-21 pension extension moves in highway trust fund bills from congressional panels
The U.S. House Ways and Means Committee has approved by voice vote a bill (H.R.5021) that would provide highway funding through May 2015 in part by using about $6.4 billion from an extension of the Moving Ahead for Progress in the 21st Century (MAP-21) Act pension funding stabilization provision. The House is expected to vote on the “Highway and Transportation Funding Act” next week.

Regarding the pension smoothing provisions, the House bill, as described by the Joint Committee on Taxation, revises the specified percentage ranges (that is, the range from the applicable minimum percentage to the applicable maximum percentage of average segment rates) for determining whether a segment rate must be adjusted upward or downward. Under the proposal, the specified percentage range for a plan year is determined by reference to the calendar year in which the plan year begins as follows:

• 90% to 110% for 2012 through 2017
• 85% to 115% for 2018
• 80% to 120% for 2019
• 75% to 125% for 2020
• 70% to 130% for 2021 or later

In addition, for purposes of the additional information that must be provided in a funding notice for an applicable plan year, an applicable plan year includes any plan year that begins after December 31, 2011, and before January 1, 2020, and that otherwise meets the definition of applicable plan year.

To read the Congressional Budget Office’s report on the bill, click here.

PBGC issues moratorium on 4062(e) enforcement
The Pension Benefit Guaranty Corporation (PBGC) has announced a moratorium, until the end of 2014, on the enforcement of 4062(e) cases. The moratorium will enable PBGC to ensure that its efforts are targeted to cases where pensions are genuinely at risk. The six-month period will also allow the PBGC to work with the business community, labor, and other stakeholders.

During the moratorium, from July 8 to December 31, 2014, PBGC will cease enforcement efforts on open and new cases. Companies should continue to report new 4062(e) events, but PBGC will take no action on those events during the moratorium.

For more information, click here.

GAO report: Private pensions: Targeted revisions could improve usefulness of Form 5500 information
In a two-phase online U.S. Government Accountability Office (GAO) survey, stakeholders identified problems with the usefulness, reliability, and comparability of data from the Form 5500 (see table in report). Despite longstanding concerns with the Form 5500—the annual report that employee benefit plans file with the federal government—agency officials have made only minimal changes over the last three years.

Key challenges identified with Form 5500:

• Weaknesses in the format
Plan asset categories break out plan assets differently from the investment industry, and provide little insight into plan investments, their structures, or the levels of associated risk. In particular, the majority of respondents indicated that the “other” plan asset category in the form is too broad because it can include many disparate types of investments. Respondents also indicated challenges in identifying the underlying holdings of plan assets invested in indirect investments.

• Challenges in finding key information
The form lacks detailed information on plan investments because there is no structured, data-searchable format for attachments to the form and the filing requirements on plan investments are limited for small plans, which have less than 100 participants.

• Inconsistent data
Naming conventions and identification numbers may be inconsistent, making it difficult to collect and accurately match records.

To read the entire GAO report, click here.