Tag Archives: Regs and guidance

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 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 Department of the Treasury, 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.

Retirees reminded of deadline to take required retirement plan distributions
The Internal Revenue Service (IRS) has reminded taxpayers who turned age 70½ during 2017 that, in most cases, they must start receiving required minimum distributions (RMDs) from their IRAs and workplace retirement plans by Sunday, April 1, 2018.

The deadline applies to all employer-sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as simplified employee pension (SEP) plans, Salary Reduction SEP (SARSEP) plans, and Savings Incentive Match Plan for Employees IRAs (SIMPLE IRAs). However, they do not apply to Roth IRAs.

To learn more, click here.

Modifications to procedures for issuing opinion and advisory letter
The IRS has issued Revenue Procedure 2018-21, modifying the procedures for issuing opinion and advisory letters for preapproved master and prototype and volume submitter plans as provided in Revenue Procedure 2015-36, 2015-27 I.R.B. 20. In particular, this revenue procedure modifies sections 6.03(7)(c) and 16.03(7)(c) of Revenue Procedure 2015-36 to allow preapproved defined benefit (DB) plans containing a cash balance formula to provide for the actual rate of return on plan assets as the rate used to determine interest credits.

To read the entire Revenue Procedure, 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.

Plan-specific substitute mortality tables

In October 2017, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) released final regulations prescribing new mortality tables that apply to single-employer defined benefit pension plans for the purpose of calculating the actuarial liabilities for minimum funding requirements, benefit restrictions, and Pension Benefit Guaranty Corporation (PBGC) variable-rate premiums. As with the prior regulations, the new regulations give plan sponsors the option to use either the standard mortality tables developed by the IRS, or to develop plan-specific mortality tables.

The new regulations significantly revised the rules regarding plan-specific substitute mortality tables. Under the prior rules, a plan was required to have fully credible mortality experience in order to use substitute mortality tables. The new rules allow for the use of substitute mortality tables for plans with smaller populations that do not have fully credible mortality experience. As a result, Treasury and the IRS expect that significantly more plan sponsors will request approval to use substitute mortality tables.

Using substitute mortality tables should theoretically improve the fit between expected and actual mortality rates, thereby producing smaller experience gains and losses over time. In addition, for plans employing a workforce that exhibits heavier mortality than the standard tables, using substitute mortality tables could potentially lower both minimum required contributions and PBGC variable-rate premiums.

For these reasons, plan sponsors may want to consider the use of substitute mortality tables. A written request must be submitted by the plan sponsor at least seven months before the first day of the first plan year for which the substitute mortality tables are to apply.

Note that the regulations do not allow plan sponsors to use plan-specific tables for determining minimum lump-sum values; standard IRS tables continue to be used for this purpose.

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.