Tag Archives: IRS

IRS expands Self-Correction Program for retirement plans

The Internal Revenue Service (IRS) has expanded the Self-Correction Program (SCP) to enable retirement plan sponsors to more easily fix certain common plan document and operational failures, effective beginning April 19, 2019. Revenue Procedure 2019-19 updates the Employee Plans Compliance Resolution System (EPCRS), which covers the SCP, the Voluntary Correction Program (VCP), and the Audit Closing Agreement Program (Audit CAP). The expanded SCP permits: self-correction options for specified participant loan failures and possible deemed distribution relief under Internal Revenue Code (IRC) section 72(p); self-correction of certain plan document failures; and additional self-correction opportunities for certain operational failures by a retroactive plan amendment. This Client Action Bulletin provides some more perspective.

Regulatory roundup

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

Updated mortality improvement rates and static mortality tables for defined benefit plans
The Internal Revenue Service (IRS) released updated mortality improvement rates and static mortality tables for defined benefit pension plans for 2020. Notice 2019-26 sets forth the updated mortality improvement rates and static mortality tables that are used for purposes of determining: 1) the minimum funding requirements under § 430(h)(3) for 2020; and 2) the minimum present value under § 417(e)(3) for distributions with annuity starting dates that occur during stability periods beginning in the 2020 calendar year.

For more information, click here.

Proposed overtime rule published
The Wage and Hour Division of the U.S. Department of Labor (DoL) published a proposed rule on overtime pay in the Federal Register. Public comments should be submitted on or before May 21, 2019. Commenters should transmit comments early to ensure timely receipt prior to the close of the comment period.

For more information, click here.





IRS permits lump-sum window option for pension annuitants pending further study

The Internal Revenue Service (IRS) has suspended its four-year regulatory project that was expected to limit a defined benefit (DB) retirement plan’s ability to offer retirees and beneficiaries a short-term opportunity for lump sums in lieu of annuities. Notice 2019-18, released on March 6, states the agency no longer intends to amend the required minimum distribution rules to prohibit lump-sum windows to current annuitants in a DB plan. The IRS, however, notes it will continue to study the issue of retiree lump-sum windows.

The IRS notice supersedes Notice 2015-49 (see Client Action Bulletin 15-8).

Until the IRS issues further guidance, the agency will not assert that a plan amendment providing for a retiree lump-sum window program results in a violation of the minimum distribution rules, but will continue to evaluate whether the plan, as amended, satisfies the other requirements (e.g., nondiscrimination, vesting, maximum benefit limits) of the tax code.

The IRS also will not issue private letter rulings on this matter. However, if a taxpayer is eligible to apply for and receive a determination letter, the IRS will no longer include a caveat expressing “no opinion” regarding the tax consequences of a pension plan document that includes such a window.

Although certain plan sponsors—such as those pursuing means to curtail their DB plan liabilities and obligations through “de-risking” strategies or those considering terminating frozen plans—might find the notice of particular interest, they also should review non-tax considerations for possible implications. In particular, fiduciary responsibilities under ERISA should be contemplated, as well as potential exposure to ERISA-based litigation.

For additional information about the impact of IRS Notice 2019-18 on your DB plan or to discuss lump-sum window options and plan amendments to adopt such changes, please contact your Milliman consultant.





Regulatory roundup

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

VCP submission kit on preapproved defined contribution plan adoption failure
The Internal Revenue Service (IRS) has updated its Voluntary Correction Program (VCP) submission kit web page. The page addresses failures to adopt a new preapproved defined contribution plan by the deadline of April 30, 2016.

For more information, click here.

PBGC pilot mediation program now permanent
In January 2019, the Mediation Program of the Pension Benefit Guaranty Corporation (PBGC) became a permanent program. In response to business community comments and concerns, the program offers plan sponsors the opportunity to facilitate resolution of negotiations in three key PBGC program areas: early warning cases, termination liability cases, and fiduciary breach cases.

For more information, click here.





2019 key administrative dates and deadlines for calendar-year defined contribution retirement plans

Milliman’s 2019 defined contribution retirement plan calendar with key administrative dates and deadlines is now available. The calendar lists relevant 2019 administrative dates encountered by most defined contribution retirement plans, including deadlines for government filings and participant disclosures. The calendar also provides short descriptions of the actions required to meet each deadline.

To download the calendar, click here.





Regulatory roundup

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

IRS updates revenue procedures for 2019
The Internal Revenue Service (IRS) published Internal Revenue Bulletin 2019-1, which includes the various revenue procedures, revised for 2019, for issuing letters, rulings, determination letters, and technical advice on specific issues related to employee benefits.

• Rev. Proc. 2019-1: Letter rulings, information letters, and determination letters—the schedule of user fees for letter rulings is included in Appendix A and reveals certain requests for letter rulings.
• Rev. Proc. 2019-2: Explains when and how technical advice is furnished by the various associate chief counsels and the division counsel/associate chief counsel to a director or an area director, and also appeals.
• Rev. Proc. 2019-3: Provides a revised list of tax code provisions under the jurisdiction of the various associate chief counsels and the division counsel/associate chief counsel on which the IRS will not issue rulings or determination letters.
• Rev. Proc. 2019-4: Provides procedures for furnishing ruling letters, information letters, etc. on matters related to tax code sections currently under the jurisdiction of the Commissioner of the Tax Exempt and Government Entities (TE and GE) Division.

For an electronic version of Internal Revenue Bulletin 2019-1 that contains these revenue procedures and user fee schedules, click here.

PBGC annual report of the participant and plan sponsor advocate
The Pension Benefit Guaranty Corporation (PBGC) released the 2018 Annual Report of the Participant and Plan Sponsor Advocate. This statutorily required report discusses the activities of the Office of the PBGC Participant and Plan Sponsor Advocate.

Notably, the report provides the second part of its study on single employer pension plan de-risking. Unlike the quantitative approach of the first part of the de-risking study, Part II took a qualitative approach, which consisted of a focus group from a small but diverse group of plan sponsors on varying paths toward de-risking. The small group format allowed for a deeper probe into the reasoning behind de-risking decisions, which can be helpful to inform and shape retirement policy for all Americans. The report also offers numerous recommendations for multiemployer plans.

To download the entire report, click here.

GASB implementation guide exposure draft on fiduciary activities
The Governmental Accounting Standards Board (GASB) has issued a proposed Implementation Guide that contains question and answers about the GASB’s new standards on accounting and financial reporting for fiduciary activities. The exposure draft proposes answers to dozens of questions about GASB Statement No. 84, Fiduciary Activities.

For more information, click here.

Notice providing interim guidance on excess remuneration and parachute payments
The IRS released Notice 2019-09, which provides interim guidance on the provisions of the new § 4960 added by the Tax Cuts and Jobs Act, and announces the intent of Treasury and the IRS to issue proposed regulations. Section 4960 provides that excess remuneration and excess parachute payments paid by an applicable tax-exempt organization to a covered employee are subject to an excise tax (currently 21%). This notice provides interim guidance defining (1) “applicable tax-exempt organization,” (2) “excess remuneration,” (3) “covered employee,” and (4) “excess parachute payment.” In addition, the notice instructs taxpayers on how to report and pay the excise tax.

For more information, click here.