Tag Archives: Regs and guidance

Regulatory roundup

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

DOL releases conflict of interest FAQ
The Department of Labor (DOL) has published “Conflict of Interest FAQs” (408b-2 Disclosure Transition Period, Recommendations to Increase Contributions and Plan Participation). This guidance, like the Fiduciary Rule and related exemptions, is generally limited to advice concerning investments in IRAs, ERISA-covered plans, and other plans covered by section 4975 of the Internal Revenue Code.

To download the FAQ, click here.

PBGC releases annual projections report
According to the Pension Benefit Guaranty Corporation’s FY 2016 Projections Report, the insurance program for multiemployer pension plans, which covers more than 10 million Americans, is likely to run out of money by the end of 2025.

Projections for PBGC’s insurance program for single-employer pension plans, which covers about 28 million people, show that its financial condition may continue to improve. The program is highly unlikely to run out of money in the next 10 years, and is likely to eliminate its deficit within the next three to seven years.

The Projections Report is PBGC’s annual actuarial evaluation of its future operations and financial status. The report provides a range of estimates of the future status of insured pension plans and their effect on PBGC’s financial condition, based on hundreds of different economic scenarios.

To read the entire report, 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defining “fiduciary” and restore the regulations and prohibited transaction exemptions that the rule had amended or repealed.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.

Report on DOL’s fiduciary conflict-of-interest rule
The Congressional Research Service has released “Department of Labor’s 2016 Fiduciary Rule: Background and Issues.” The report explores the U.S. Department of Labor (DOL) rule as it applies to pensions, individual retirement accounts, and investments.

To download the report, click here.

IRS updates procedures for multiemployer pension suspension applications
The Internal Revenue Service (IRS) has revised the procedures for multiemployer pension plans applying to suspend benefits to avoid insolvency. IRS Revenue Procedure 2017-43 clarifies that multiemployer plans that are in critical or declining status and applying for a benefit suspension must project withdrawal liability payments as part of the projection of a plan’s available resources. It also specifies who should be provided sample notices as part of the application.

For more information, click here.

Regulatory roundup

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

IRS issues memo on the application of section 409A to back-to-back arrangement
The Office of Chief Counsel of the Internal Revenue Service (IRS) has issued a memorandum (No. 201725027) on the application of section 409A to back-to-back arrangement. According to the memo, “Treas. Reg. Section 1.409A-3(i)(6) provides that the amount of the payment under the ultimate service recipient plan may not exceed the amount of the payment under the intermediate service recipient plan. Therefore, the USR Plan fails to meet the requirements of section 409A because the USR Plan provision providing for a payment to Taxpayer in the event of a Participant’s separation from service before vesting is an impermissible payment event.”

For more information, read the entire memo here.

Higher-paid workers more likely to have access to retirement benefits
According to data published by the Bureau of Labor Statistics (BLS), “Sixty-six percent of private industry workers had access to employer-provided retirement plans in March 2016. Having access means employers offered the benefit, regardless of whether employees chose to participate. Forty-nine percent of private industry workers participated in retirement plans in March 2016. That results in a take-up rate—the percentage of workers with access to a plan who participate in the plan—of 75 percent. Access, participation, and take-up rates were all higher for workers in higher wage groups than for workers in lower wage groups.”

To learn more about the BLS’s data, click here.

Regulatory roundup

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

PBGC releases final rule on examination and copying of records
The Pension Benefit Guaranty Corporation (PBGC) is amending its regulation on Examination and Copying of PBGC Records to incorporate statutory changes to the Freedom of Information Act (FOIA).

The majority of the regulatory changes are specifically required by the FOIA Improvement Act of 2016. Section 3 of the 2016 Act requires federal agencies to review their FOIA regulations and to make conforming amendments, as necessary, to incorporate the 2016 Act’s changes to the FOIA. In addition to the changes required under the 2016 Act, the PBGC is making one other amendment to its FOIA regulation that incorporates a previous statutory change under the Open Government Act of 2007.

As amended, the FOIA requires each agency to affirmatively release certain records that the agency determines are likely to be the subject of future requests, as well as certain others that have been the subject of three or more requests. The FOIA also requires agencies to redact such records to the extent necessary to protect personal privacy interests before adding them to the electronic reading room.

The PBGC is amending its FOIA regulation by increasing the appeal deadline from 30 to 90 days, in conformity with the 90-day minimum time period established by the 2016 Act.

To read the entire final rule, click here.

Regulatory roundup

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

Guidance for remedial amendment period for 403(b) plan
The Internal Revenue Service (IRS) issued Revenue Procedure 2017-18 providing the last day of the remedial amendment period for § 403(b) plans, for purposes of section 21 of Rev. Proc. 2013-22, 2013-18 I.R.B. 985.

According to the guidance, the last day of the remedial amendment period described in section 2 of this revenue procedure and in section 21 of Rev. Proc. 2013-22 is March 31, 2020. A plan that does not satisfy the requirements of § 403(b) in form on any day during the remedial amendment period (that is, the period beginning on the later of January 1, 2010, or the plan’s effective date, and ending on March 31, 2020) will be considered to have satisfied those requirements if, on or before March 31, 2020, all provisions of the plan that are necessary to satisfy § 403(b) have been adopted and made effective in form and operation from the beginning of the remedial amendment period.

To read the revenue procedure, click here.

Final Rule to adjust for inflation civil monetary penalties
The Department of Labor (DoL) published a final rule to adjust for inflation the civil monetary penalties assessed or enforced in its regulations, pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act).

The Inflation Adjustment Act requires the DoL to annually adjust its civil money penalty levels for inflation no later than January 15 of each year. The Inflation Adjustment Act provides that agencies shall adjust civil monetary penalties notwithstanding Section 553 of the Administrative Procedure Act (APA). Additionally, the Inflation Adjustment Act provides a cost-of-living formula for adjustment of the civil penalties. Accordingly, this final rule sets forth the DoL’s 2017 annual adjustments for inflation to its civil monetary penalties, effective January 13, 2017.

To read the final rule, click here.

Summary and audit indicators: 403(b) Universal Availability Requirement
The IRS has updated its webpage 403(b) Universal Availability Requirement. A common error occurs when employees, working less than full-time, are automatically excluded from making elective deferrals under the 403(b) plan. A plan that wants to apply the statutory exclusion for part-time employment must determine eligibility for the 403(b) elective deferrals based on whether the employee is reasonably expected to normally work less than 20 hours per week and has actually never worked more than 1,000 hours in the applicable 12-month period.

To visit the webpage, click here.