Tag Archives: House of Representatives

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defining “fiduciary” and restore the regulations and prohibited transaction exemptions that the rule had amended or repealed.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 Notice 2011-86 is obsolete.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.

Regulatory roundup

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

House Ways and Means chairman releases tax reform proposal
U.S. House Ways and Means Committee Chairman Dave Camp (R-MI) has released his tax reform proposal, which includes provisions affecting compensation and employment-based benefits.

The proposal would modify or eliminate a number of individual income tax deductions, exclusions, and credits (e.g., state/local income tax payments, mortgage interest deductions, earned income tax credit). Notably, the proposal calls for “converting certain excludable contributions to 401(k) accounts into taxable contributions, with an exclusion at withdrawal.”

Although tax reform is not expected to advance this year, the proposal could serve as a starting point for future negotiations. Camp’s tenure as chairman of the Ways and Means Committee expires at the end of this year, and Rep. Rand Paul (R-KY) is in line to succeed him in that leadership post.

To read the tax reform proposal, click here.

GASB proposes new GAAP hierarchy for state and local governments and exposes entire implementation guide for public comment
The Governmental Accounting Standards Board (GASB) has issued an exposure draft, “The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments.” The hierarchy of GAAP comprises the types of guidance that state and local governments follow when preparing financial statements. The GAAP hierarchy lists the order of priority for pronouncements to which a government should look for guidance.

The GASB also issued an accompanying proposed implementation guide, Implementation Guide No. 20xx-1, which is a culmination of all implementation guidance to date. GASB’s decision to elevate the level of the implementation guidance in the GAAP hierarchy would require that implementation guides be exposed for a period of broad public comment, as with other GASB pronouncements. The change in the authoritative level of implementation guidance necessitated certain changes to the existing guidance; a list and description of changes can be found in Appendix C of the proposed implementation guide.

Stakeholders are encouraged to review the proposals and provide comments by December 31, 2014.

To access the entire exposure draft and implementation guide, click here.
To read the GASB’s news release, click here.

Department of Commerce submits request for information for certification program for access to SSA Death Master File
The U.S. Department of Commerce published a request for information (RFI) from users of the Death Master File (DMF). The RFI is requesting comments from the public regarding the establishment and implementation of a certification program for access to the DMF. The comments will inform the approach of the National Technical Information Service (NTIS) to the development of a certification program, which will be promulgated by NTIS by notice and comment rule-making.

The Commerce Department’s NTIS is actively working with the Social Security Administration (SSA) to draft proposed rules for the establishment of a certification program. The proposed rules will be published in the Federal Register for public comment.

Many defined benefit and defined contribution plans use the Department of Commerce’s DMF. For example, for benefits paid in the form of a joint and survivor annuity, DMF information is needed to ensure that the correct payments are made to the correct recipients. Defined contribution plans need the information to determine when a plan beneficiary becomes eligible for benefits.

To read the entire RFI, click here.
For more information from the National Technical Information Service, click here.

Post-implementation review concludes fair value accounting standard meets its objectives
A 2006 accounting standard that established a framework for measuring fair value within U.S. GAAP generally achieves its purpose. That was the central conclusion of the post-implementation review (PIR) of Financial Accounting Standards Board (FASB) Statement No. 157, Fair Value Measurements.

To read the entire post-implementation review, click here.

Regulatory roundup

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

House passes budget with PBGC single-employer pension plan premium hikes
On December 12, the U.S. House of Representatives voted 332-94 to approve the two-year federal budget agreement negotiated by the House and Senate Budget Committee leaders.

The budget agreement includes an increase in the annual premiums that sponsors of single-employer defined benefit plans pay to the Pension Benefit Guaranty Corporation (PBGC) to insure the plans in the event of a plan termination. The budget agreement includes no changes to the PBGC premiums for multiemployer pension plans.

Under the agreement:

• The flat-rate premium would increase to $57 per participant for plan year 2015 and to $64 per participant for plan year 2016, and then adjust those amounts in subsequent years based on the growth in the national wage index for Social Security (for plan year 2014, the flat-rate premium of $49 per participant that was approved under a prior law will not change).
• The variable-rate premium would increase by $10 per $1,000 of unfunded vested benefits in plan year 2015 and an additional $5 per $1,000 of underfunding in plan year 2016, and then adjust those amounts in subsequent years based on the growth in the Social Security national wage index (for plan year 2014, the $14 per $1,000 of underfunding that was approved under a prior law will not change).
• The cap on the variable-rate premium would be set at $500 times the number of participants for plan year 2015 and later, with adjustments based on the growth in the Social Security national wage index (for plan year 2014, the cap is $412 times the number of participants).

The Senate will act on the measure this week.

IRS issues temporary nondiscrimination relief for certain closed DB plans
The Internal Revenue Service (IRS) IRS has issued Notice 2014-05 providing temporary nondiscrimination relief for certain “closed” defined benefit (DB) pension plans (i.e., defined benefit plans that provide ongoing accruals but that have been amended to limit those accruals to some or all of the employees who participated in the plan on a specified date). Closing a defined benefit plan often occurs in conjunction with an amendment that provides new or greater contributions under a defined contribution (DC) plan intended to replace accruals under the DB plan for new hires or other employees to whom the DB plan is closed.

This notice permits certain employers that sponsor a closed DB plan and a DC plan to demonstrate that the aggregated plans comply with the nondiscrimination requirements of §401(a)(4) on the basis of equivalent benefits, even if the aggregated plans do not satisfy the current conditions for testing on that basis. In addition, this notice requests comments on possible permanent changes to the nondiscrimination rules under §401(a)(4).

Notice 2014-05 will be published in Internal Revenue Bulletin 2014-2 dated January 6, 2014. To read the entire notice, click here.

IRS releases guidance on rollovers to a designated Roth account
The IRS has issued Notice 2013-74, which provides guidance on rollovers within a retirement plan to designated Roth accounts in the same plan (“in-plan Roth rollovers”). The guidance relates to the expansion of these rollovers under new §402A(c)(4)(E) of the Internal Revenue Code (the Code), as added by §902 of the American Taxpayer Relief Act of 2012 (ATRA), P.L. 112-240. This notice also provides guidance that applies to all in-plan Roth rollovers described in §402A(c)(4).

To read the entire notice, click here.

IRS highlights recurring issues found in determination case reviews
The IRS updated its web posting on recurring issues found in determination case reviews. They have identified eight frequently recurring defects in plan language that require corrective amendments and delay case closure.

For more information, click here.