Tag Archives: Joint Committee on Taxation

Regulatory roundup

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

Report shows Senate tax bill will yield a 10-year revenue loss of $1 trillion
The Joint Committee on Taxation (JCT) published a new analysis indicating that the Senate tax bill would generate enough economic growth to lower its $1.4 trillion revenue cost by only about $458 billion over a decade. After accounting for interest rates, the growth figure would fall to $407 billion, said the JCT. That would leave a 10-year revenue loss of roughly $1 trillion.

To download the report, click here.

Fiduciary rule extended
The Department of Labor (DOL) has extended for 18 months 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 delays the applicability of certain amendments to Prohibited Transaction Exemption 84-24 for the same period. The primary purpose of the amendments is to give the DOL the time necessary to consider public comments under the criteria set forth in the presidential memorandum of February 3, 2017, including whether possible changes and alternatives to these exemptions would be appropriate in light of the current comment record and potential input from, and action by, the U.S. Securities and Exchange Commission (SEC) and state insurance commissioners.

For more information, click here.

DOL’s Office of Inspector General releases Semiannual Report to Congress
Regarding the Employee Benefits Security Administration (EBSA), the Office of Inspector General (OIG) notes it remains concerned with the DOL’s ability to administer and enforce ERISA requirements that protect the benefit plans of approximately 149 million plan participants and beneficiaries, particularly in light of statutory limitations on DOL’s authority.

One challenge facing the EBSA for decades has been that ERISA allows billions in pension assets held in otherwise regulated entities, such as banks, to escape full audit scrutiny. These concerns were renewed by recent audit findings that as much as $3.3 trillion in pension assets, including an estimated $800 billion in hard-to-value alternative investments, received limited-scope audits that provided few assurances to participants regarding the financial health of their plans.

To download the OIG report click here.

Regulatory roundup

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

PBGC releases FY 2014 projections report
The projected insolvency date for the insurance program for multiemployer pension plans, which cover more than 10 million Americans, has been delayed by three years, according to the fiscal year (FY) 2014 projections report released by the Pension Benefit Guaranty Corporation (PBGC). The risk of program insolvency has decreased over the near term, which is due primarily to the new premium revenues anticipated under the Multiemployer Pension Reform Act of 2014 (MPRA). It is more likely than not that the program’s assets will be depleted in 2025, compared with 2022 in last year’s report, and the risk of insolvency grows rapidly thereafter.

Projections for the PBGC’s insurance program for single-employer plans, which cover about 31 million people, show that the program’s financial condition continues to be likely to improve and conclude that it is highly unlikely to run out of funds in the next 10 years. The PBGC modeled 5,000 simulations for the 2014 projections report, and none showed that the program would be unable to pay the benefits it owes in 2025.

To read the PBGC’s entire projections report, click here.

JCT provides background on proposed fiduciary rule
The Joint Committee on Taxation (JCT) has released a report explaining information regarding the fiduciary rule proposed by the U.S. Department of Labor (DOL). The document provides a description of present law relating to prohibited transactions, investment advice, and fiduciary status with respect to retirement plans and individual accounts.

To read the entire report (JCX-131-15), click here.

GAO report on pension advance transactions
The U.S. Government Accountability Office (GAO) has released a report entitled “Pension advance transactions – questionable business practices and the federal response” (GAO-15-846T). The report is based on testimony provided by Stephen Lord, managing director of forensic audits and investigative services at the GAO, before the U.S. Senate Special Committee on Aging. The testimony examines companies attempting to take advantage of retirees using pension advances. The report describes the number and characteristics of pension advance companies and marketing practices; evaluates how pension advance terms compare with those of other products; and evaluates the extent to which there is federal oversight.

To read the entire report, click here.

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Regulatory roundup

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

IRS releases Revenue Procedure concerning preapproved plans
The Internal Revenue Service (IRS) published Revenue Procedure 2015-36, providing IRS procedures for issuing opinion and advisory letters regarding the acceptability under §§ 401, 403(a), and 4975(e)(7) of the Internal Revenue Code (Code) of the form of preapproved plans, i.e., master and prototype (M&P) and volume submitter (VS) plans.

To read the IRS’s official statement, click here.

DOL releases Field Assistance Bulletin related to defined contribution plans
The U.S. Department of Labor (DOL) has issued Field Assistance Bulletin (FAB) 2015-02, “Selection and Monitoring under the Annuity Selection Safe Harbor Regulation for Defined Contribution Plans.” The FAB provides clarification of plan sponsors’ fiduciary obligations concerning annuity product selections for defined contribution (DC) plans.

The purpose of the FAB is to provide guidance regarding these issues, including the application of ERISA’s statute of limitations to claims relating to annuity selection, and to assist the Employee Benefits Security Administration’s national and regional offices in responding to questions from employers and other interested parties.

To read the entire FAB, click here.

JCT issues present law and background information on federal excise taxes
The U.S. Joint Committee on Taxation (JCT) released the report “Present law and background information on federal excise taxes” (JCT Report JCX-99-15). The document provides a description of present-law federal excise taxes and, when applicable, background information on trust funds financed with excise tax revenues.

The document contains information on excise taxes relating to employee pension and benefit plans and excise taxes related to healthcare.

To entire report can be downloaded here.

Regulatory roundup

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

DOL rules on timing of annual disclosures for participant-directed account plans
The U.S. Department of Labor (DOL) has released a direct final rule and a companion proposed rule on the timing of annual disclosures that affect fiduciary requirements for disclosure in participant-directed account plans. The direct final rule amends the DOL’s participant-level fee disclosure regulation by making a technical adjustment to a timing requirement of the current regulation. It amends the definition of the term “at least annual thereafter” and substitutes the term “14-month period” for the term “12-month period.” The amendment provides plan administrators with flexibility as to when they must furnish annual disclosures.

The accompanying proposed rule would make the technical amendment necessary to implement the direct final rule’s annual timing requirement. If the DOL receives no significant adverse comments during the 90-day comment period, the direct final rule will go into effect without the agency taking further action. But if it receives significant adverse public comment, the direct final rule will be withdrawn.

To read the entire direct final rule, click here.
To read the entire proposed rule, click here.
Also, for a fact sheet, click here.

IRS extends temporary nondiscrimination relief for closed defined benefit plans
The Internal Revenue Service (IRS) recently published Notice 2015-28, extending the temporary nondiscrimination relief provided in Notice 2014-5 for an additional year. The new guidance applies relief to defined benefit plan years beginning before 2017 if the conditions of Notice 2014-5 are satisfied. During the period for which this extension applies, the remaining provisions of the nondiscrimination regulations under § 401(a)(4), including the rules relating to the timing of plan amendments under § 1.401(a)(4)-(5), continue to apply.

To read Notice 2015-28, click here.

Joint Committee on Taxation issues explanation of tax legislation enacted in the 113th Congress
Twelve tax bills passed the 113th Congress and were signed by the president—including several that have an impact on retirement savings—according to a Joint Committee on Taxation report detailing each piece of legislation.

Read the entire report here.

Regulatory roundup

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

PBGC annual report shows improvement in single-employer program and deterioration in multiemployer program
The Pension Benefit Guaranty Corporation (PBGC) has released its Annual Report, which showed that PBGC’s deficit increased to about $62 billion in fiscal year 2014, which was largely due to the declining condition of a few multiemployer plans. The financial condition of the single-employer program improved with a deficit of about $19.3 billion, down from $27.4 billion in the previous year.

The increase in PBGC’s deficit in the report is consistent with the estimates included in the FY 2013 Projections Report that was released in June. The projections report found that the insolvencies of a minority of multiemployer plans have become both more likely and more imminent.

To read the entire report, click here.

IRS updates rollover chart
The Internal Revenue Service (IRS) has updated its “Rollover Chart” for 2014. It’s a one-page summary in the form of a table, listing the eight kinds of plans and IRAs that can make rollover-eligible distributions, and the corresponding eight kinds of plans and IRAs into which those distributions can (or cannot) be rolled over. The chart was updated November 17, 2014, to reflect revised rollover rules.

To view the chart, click here.

Joint Committee on Taxation publishes analysis of the Tax Reform Act of 2014
The U.S. Joint Committee on Taxation (JCT) has released a Discussion Draft prepared by the Chairman of the House Committee on Ways and Means. This document provides a technical explanation, estimated revenue effects, distributional analysis, and macroeconomic analysis of the Tax Reform Act of 2014. The draft proposes to reform the Internal Revenue Code. Provisions related to pension and retirement begin on page 101, and include:

• Changes to rules for individual retirement arrangements
• Repeal of exception to 10% penalty for first-time home purchases and elimination of first-time home purchase as a qualified distribution from a Roth IRA
• Termination of new simplified employee pensions
• Termination for new SIMPLE 401(k) plans
• Modification of required distribution rules for pension plans
• Reduction in age for allowable in-service distributions
• Modification of rules governing hardship distributions
• Extended rollover period for the rollover of plan loan offset amounts in certain cases
• Coordination of contribution limitations for 403(b) plans and governmental 457(b) plans
• Application of 10% early distribution tax to governmental 457 plans; and inflation adjustments for employer-sponsored retirement plan dollar limitations on benefits and contributions

To read the entire draft, click here.

Regulatory roundup

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

Social Security published article on two benefits provisions
A new article published by the Social Security Administration (SSA) uses health and retirement study data to investigate the effects of the SSA’s Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) on Social Security benefits received by households. The provisions reduce benefits for individuals or the dependents of individuals whose work histories include jobs for which they were entitled to a pension and were not subject to Social Security payroll taxes (“noncovered” employment).

To read the entire article, click here.

IRS updates FAQ on 403(b) preapproved plan program remedial amendment period
The Internal Revenue Service (IRS) has updated a frequently asked question (FAQ) regarding the 403(b) preapproved plan program remedial amendment period. According to the IRS, by adopting a 403(b) preapproved plan by the deadline (to be established and announced by the IRS), the program allows an eligible employer to retroactively correct defects in the form of its written 403(b) plan back to the first day of the plan’s remedial amendment period, which is the later of: January 1, 2010, or the plan’s effective date.

The employer’s adoption of a preapproved 403(b) plan that has a favorable opinion of advisory letter automatically corrects any defects in its prior written 403(b) plan, but not defects in any documents incorporated by reference into the prior plan). Interim amendments are not required for a plan to be eligible for this remedial amendment period.

403(b) plans sponsors who didn’t adopt a written plan before December 31, 2009, can use the 403(b) Voluntary Program Submission Kit to correct this error.

The IRS also indicated that at this time it does not anticipate opening a determination letter program for individually designed 403(b) plans.

For more information, click here.

IRS updates guide to common qualified plan requirements
The IRS has recently updated its web page on common qualified retirement plan requirements. The list highlights some of the more important plan requirements to help employers in implementing practices, procedures, and internal controls to monitor plan operations.

For more information, click here.

JCT releases estimates of federal tax expenditures for fiscal years 2014-2018
The Joint Committee on Taxation (JCT) has released its latest summary of federal tax expenditures entitled “Estimates of federal tax expenditures for fiscal years 2014-2018” (JCX-97-14). The JCT says that the employer health exclusion will cost the government $785.1 billion in forgone revenue from 2014 to 2018 and that the next exclusion of defined contribution plans will cost $399 billion.

To download a copy of the report, click here.

IRS updates posting on Voluntary Correction Program fee schedule and Form 8951
The IRS has updated its web page in regards to the Voluntary Correction Program (VCP) fee schedule and Form 8951 (Compliance Fee for Application for Voluntary Correction Program [VCP]).

To access Form 8951, click here.
To view the updated VCP fee schedule page, click here.