Tag Archives: PBGC

Regulatory roundup

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

IRS umbrella closing agreement program allows providers of preapproved plan to correct missed deadlines
The April 30, 2016, deadline for preapproved plan adopters to sign a restated plan that complies with the Pension Protection Act has passed. After the first six-year cycle for preapproved plans ended on April 30, 2010, many Voluntary Correction Program (VCP) submissions were received from plan sponsors who didn’t sign a restated plan by the deadline.

While plan sponsors may continue to make VCP submissions for correcting a failure to restate their plans by the deadline, the Internal Revenue Service (IRS) invites financial institutions or other service providers to submit proposals for umbrella closing agreements to correct the same failure on a larger scale by addressing employers affected by the failure as a group.

To learn more, click here.

PBGC issues comment request notice on locating and paying participants
The Pension Benefit Guaranty Corporation (PBGC) requests that the Office of Management and Budget (OMB) extend approval, with modifications, of a notice to enable PBGC to pay benefits to participants and beneficiaries.

This information collection is needed to pay participants and beneficiaries who may be entitled to pension benefits from plans that have terminated. It consists of information participants and beneficiaries are asked to provide in connection with an application for benefits. In addition, in some instances, PBGC requests individuals to provide identifying information so that it may determine whether the individuals may be entitled to benefits. All requested information is needed so that PBGC may determine benefit entitlements and make appropriate payments

To learn more, click here.

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.

Comments requested regarding potential expansion of determination letter program for individually designed plans
The Internal Revenue Service (IRS) released Notice 2018-24, requesting comments on the potential expansion of the scope of the determination letter program for individually designed plans during the 2019 calendar year, beyond provision of determination letters for initial qualification and qualification upon plan termination.

In reviewing comments submitted in response to this notice, the U.S. Department of the Treasury and the IRS will consider the factors regarding the scope of the determination letter program set forth in section 4.03(3) of Revenue Procedure 2016-37, 2016-29 I.R.B. 136. The Treasury Department and the IRS will issue guidance if they identify any additional types of plans for which plan sponsors may request determination letters during the 2019 calendar year. Comments are due to the IRS by June 4, 2018.

For more information, click here.

PBGC releases data tables for single-employer and multiemployer pension plans
The Pension Benefit Guaranty Corporation (PBGC) has published the first installment of tables for the 2016 Data Book. Information in the claims and summary tables has been updated.

For more information, click here.

IRS issues tax withholding and estimated tax publication
The IRS released Publication 505, Tax Withholding and Estimated Tax, for use by employees to determine how much income an employer should withhold for tax payments.

The publication had been referenced by IRS as a key resource for employees to use when deciding on allowance amounts to apply on Form W-4, Employee’s Withholding Allowance Certificate. Form W-4, used by employers in calculating withheld tax amounts, was updated to reflect changes under the new tax law (Pub. L. 115-97). Forms W-4 are completed by employees to inform employers of marital status and the number of withholding allowances to be claimed for federal income tax purposes. The amount of one withholding allowance on an annual basis increased to $4,150 in 2018 from $4,050 in 2017.

For more information, click here.

Guidance for multiemployer plan alternative terms and conditions to satisfy withdrawal liability
The PBGC has issued guidance on alternative terms and conditions that multiemployer plans can use to satisfy withdrawal liability claims. The guidance describes the types of information PBGC finds helpful in evaluating plan proposals, and the factors the agency considers in its evaluation.

For more information, click here.

Regulatory roundup

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

Proposed rule amending regulations on guaranteed benefits and asset allocation
The Pension Benefit Guaranty Corporation (PBGC) proposed amendments to its regulations on guaranteed benefits and asset allocation. These amendments would incorporate statutory changes to the rules for participants with certain ownership interests in a plan sponsor.

To learn more, click here.

2018 Publication 15-B: Employer’s Tax Guide to Fringe Benefits released
The Internal Revenue Service (IRS) has released 2018 Publication 15-B Employer’s Tax Guide to Fringe Benefits. This publication was updated to reflect the changes made by the Tax Cuts and Jobs Act, an act to provide for reconciliation pursuant to Titles II and V of the concurrent resolution on the budget for fiscal year 2018.

For more information, click here.

Searching for missing plan participants per the U.S. Department of Labor

The U.S. Department of Labor (DOL), the Internal Revenue Service (IRS), the Social Security Administration (SSA), and the Pension Benefit Guaranty Corporation (PBGC) all review whether retirement plans have paid their participants on time. Last year, the Philadelphia office of the DOL conducted a pilot program that recovered $274 million owed to missing plan participants. Because of this success, DOL offices nationwide added “missing participant search compliance” to their plan audits. Plans failing to locate and contact plan participants regarding unpaid benefits could be found in breach of their ERISA duty to act on behalf of participants. Before receiving a letter of inquiry from the local DOL office, plan sponsors should review the protocols used to locate and pay their plans’ list of unpaid participants.

How do the various agencies learn of unpaid vested participants? Any terminated plan participant with an unpaid benefit at year-end is added to a plan’s running list of unpaid participants, one time, via IRS Form 8955. Terminated participants include alternate payees and beneficiaries. The IRS shares this information with both the SSA and the DOL, each of which maintains a running list of unpaid benefits from a plan. Once a vested participant starts a benefit, or cashes it out, an update via Form 8955 informs the IRS, SSA, and the DOL. Depending on whether the plan administrator removed participants as they were paid, the agencies may have an inflated list of unpaid participants.

When is a participant’s payment considered late? Just before age 65, the SSA sends letters to participants informing them that they “may have a benefit from their former employer.” The IRS considers payments late after a participant’s required minimum date. The DOL, however, reviews a plan’s overall list of vested participants regardless of age. Based on the participant’s earliest retirement age, the DOL could determine that a plan sponsor is not notifying and then paying participants in a timely manner. Please note that beneficiary or alternate payee required start dates can vary due to either 401(a)(9) rules or the participant’s, not the alternate payee’s, actual age.

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Regulatory roundup

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

Pension plan limitations not affected by Tax Cut and Jobs Act
The Internal Revenue Service (IRS) has announced that the Tax Cut and Jobs Act of 2017 does not affect the tax year 2018 dollar limitations for retirement plans detailed in Notice 2017-64. The tax law provides dollar limitations on benefits and contributions under qualified retirement plans, and it requires the U.S. Department of the Treasury to annually adjust these limits for cost-of-living increases. Those adjustments are to be made using procedures that are similar to those used to adjust benefit amounts under the Social Security Act.

For more information, click here.

Approval with modifications on termination of single-employer plans and missing participants requested
The Pension Benefit Guaranty Corporation (PBGC) has issued a notice requesting that the Office of Management and Budget (OMB) approve, with modifications, under the Paperwork Reduction Act a collection of information in PBGC’s regulations on Termination of Single Employer Plans and Missing Participants and implementing forms and instructions.

For more information, click here.