Tag Archives: White House

OregonSaves and other state-run retirement programs may require employer action

President Trump recently signed into law (P.L.115-35) a bill “disapproving” a U.S. Department of Labor (DoL) final rule that permitted states to create retirement savings programs for nongovernmental workers whose employers do not sponsor a retirement plan. The August 30, 2016, final rule specified the conditions to qualify for a “safe harbor” that would exempt certain state-run individual retirement arrangements from ERISA, the federal law that governs retirement plans sponsored by employers in the private sector.

Despite the disapproval, several states (and municipalities) remain committed to creating or studying retirement savings vehicles for workers whose employers do not offer a plan. Oregon became the first to launch such a program, called OregonSaves™. This Client Action Bulletin provides some perspective.

President signs transportation bill repealing recently enacted Form 5500 filing extension

Congress has approved, and the president has signed, the Fixing America’s Surface Transportation Act (H.R. 22). The new law, which funds highway and mass transit projects, contains a provision that repeals the three-and-a-half month automatic extension of the Form 5500 filing due date. The extension was part of a law, the Surface Transportation and Veterans Health Care Choice Improvement Act (P.L.114-41), enacted in July that would have applied to filings made in 2017 for plan years beginning after 2015.

The repeal of the automatic extension means that the filing deadlines for Form 5500 (Annual Return/Report of Employee Benefit Plan) will not change from today’s deadlines: Employee benefit plan sponsors must file Form 5500 by the end of the seventh month following the end of the plan year, with a two-and-a-half month extension available. For calendar-year plans, the due date is July 31, with an extension to October 15 for those filing a Form 5558 in a timely manner.

The repeal also means that other filing deadlines, e.g., for Internal Revenue Service (IRS) Form 8955-SSA, and participant notification dates that are coordinated with the Form 5500 filing date, e.g., Summary Annual Report distributions, will not change.

For additional information about this revised and repealed Form 5500 filing deadline, please contact your Milliman consultant.

Regulatory roundup

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

President signs cooperative and small employer charity pension funding bill
On April 7, the president signed the Cooperative and Small Employer Charity Pension Flexibility Act (H.R.4275), which establishes special funding rules for defined benefit (DB) retirement plans sponsored by nonprofit cooperative associations and small charitable organizations.

The bill applies to “cooperative and small employer charity” pension plans that were affected by certain provisions of the 2006 Pension Protection Act (PPA) or that were maintained—as of January 1, 2013—by more than one employer, all of which were tax-exempt charitable organizations. The bill calls for an effective date of years beginning after December 31, 2013. The bill is now P.L.113-97.

To read the entire bill, click here.

IRS posts chart of rollover-eligible retirement plans and IRA combinations
The Internal Revenue Service (IRS) posted a one-page summary, in the form of a table, listing the eight kinds of plans and individual retirement accounts (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.

To view the entire chart, click here.

IRS issues guidance on applying Windsor decision to qualified retirement plans
In addition to releasing Notice 2014-19, the IRS issued a related frequently asked questions (FAQs) document, providing answers related to qualified retirement plans. The FAQs document is available here.

Regulatory roundup

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

President releases FY2015 budget proposal
The president has released his fiscal year 2015 budget proposal, outlining the administration’s policy priorities.

Key areas included in the proposal for employment-based benefits and compensation are:

• Pension Benefit Guaranty Corporation (PBGC) board authority to adjust single-employer and multiemployer premiums, taking into account the risks of sponsors and working with Congress to develop a comprehensive solution to address the multiemployer insurance program
• Creation of automatic individual retirement accounts (IRAs) for employees who do not have access to an employer-sponsored plan
• An increase in the federal minimum wage
• Support for agencies that protect workers’ wages and overtime pay, benefits, health, and safety, and investing in preventing and detecting the misclassification of employees as independent contractors
• Funding assistance for states to launch paid leave programs for workers
• Expansion of the earned income tax credit for low-income, childless workers

The proposal also contains continued funding for Patient Protection and Affordable Care Act (ACA) implementation; it does not contain a provision included in prior years’ budgets for “chained CPI” to adjust Social Security and other federal benefits for older Americans.

To read the entire budget document, click here.
For a copy of the “Green Book” from the Department of Treasury, click here.

IRS updates web posting with information on the new Form 5300
The Internal Revenue Service (IRS) has updated its web posting that discusses the new Form 5300 and instructions, the retired Form 5300 (Schedule Q), and all the revisions for Form 5300. Links for comments on the new forms are also provided.

To read the updated information, click here.

IRS updates Form 990 filing tips: Reporting executive compensation
The IRS has updated its tips and frequently asked questions (FAQs) related to core form Part VII and Schedule J executive compensation reporting.

To read the updated information, click here.

IRS updates 401(k) resource guide for plan sponsors: What if you are audited?
Authority and responsibilities of the IRS and the U.S. Department of Labor (DOL): ERISA, as amended, provides the legal basis for the IRS employee plans (EP) compliance program. The jurisdiction over the rules for 401(k) plans is divided between the IRS and the DOL.

• The IRS has primary jurisdiction over the qualified status of 401(k) plans, which includes examining plans and processing requests for determination letters
• The DOL has primary jurisdiction over the fiduciary standards, reporting and disclosure of requirements, and other rules that do not affect the qualified status of 401(k) plans.

The IRS’s EP examination program is the enforcement arm for the statutory and regulatory compliance requirements that apply to qualified 401(k) plans. The overriding objective of the EP examination program is to develop and integrate appropriate compliance and enforcement programs that will have the greatest positive impact on the retirement system. The EP examination program has a high stake in maintaining a successful private retirement system.

For more information, click here.

Regulatory roundup

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

IRS updates article on employer “pick-up” contributions to benefit plans
Retirement plans that feature a salary reduction or cash-deferred arrangement allow employees to choose to defer some income from tax by electing to place it in a trust account for retirement. By making such an election, the amount deferred is not subject to income tax at the time it was placed in the trust. The deferred amounts are subject to Social Security and Medicare (FICA) tax.

However, other employer retirement plans are funded either through employer contributions only, or by mandatory employee contributions, with no elections to defer salary. These plans can raise questions about whether the contributions are considered paid by the employer or by the employee, and thus whether these amounts are subject to income tax and FICA withholding.

The Internal Revenue Service (IRS) has updated am article intended to address recent guidance on these questions. To read the entire article, click here.

IRS updates its examination process guide on multiemployer plans
The IRS has updated its examination process guide on multiemployer plans and identified the 10 top errors found during audits. The 10 issues are:

1. Errors made in benefit calculations, crediting service, reduction factors, or general administration.
2. Internal Revenue Code Section 412 violations—funding deficiencies.
3. Plans did not make required actuarial adjustments for benefit payments beginning after normal retirement date.
4. Deficient plan language and/or conflict between plan document and other agreements (e.g., collectively bargained, joinder, or participation).
5. Internal Revenue Code Section 401(a)(9) violations (required minimum distributions).
6. Plans fail to follow or do not have participation agreements for each participating employers.
7. Accruals/service credits are dependent on employer contributions being made.
8. Internal Revenue Code Section 411 violations including cash out/forfeitures from lost participants, wrong vesting schedule used, and errors in vesting percentages.
9. Delinquent/late contributions.
10. Misuses/diversions of pension funds.

For more information, click here.

IRS issues quick reference guide for public employees
The IRS has issued “Quick Reference Guide for Public Employees” (Publication 5138 (2-2014). The guide is produced annually by the IRS office of Federal, State, and Local Governments (FSLG). It is intended to provide a brief introduction to basic federal employment tax and reporting information issues for governmental employers.

For more detailed information in these areas, see IRS Publication 963, “Federal/State Reference Guide.” For a general discussion of employment tax responsibilities that apply to all employers, see Publication 15, “Employer’s Tax Guide.” These publications discuss the general rules for reporting wages on Form W-2, Wage and Tax Statement, and on Form 941, Employer’s Quarterly Employment Tax Return. They also address requirements for withholding and depositing of taxes.

This guide is intended to focus on the key points facing public employers and to point to sources for further information. To read the entire guide, click here.

President signs executive order hiking minimum wage for federal contractors
The president has signed an executive order that raises the minimum wage to $10.10/hour for federal contract workers, effective for new and renewed contracts beginning January 1, 2015.

The order also raises the tipped minimum wage, from the current minimum base wage of $2.13/hour to $4.90/hour for new contracts and replacements put out for bid after January 1, 2015. The base amount increases by $0.95 annually until it reaches 70% of the regular minimum wage; if a worker’s tips do not add up to at least $10.10/hour, the employer must pay the difference.

In addition, the order covers individuals with disabilities. (Currently, specialized certificate programs allow workers whose productivity is affected because of their disabilities to be paid less than the others performing the same jobs.)

Regulatory roundup

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

Sen. Harkin proposes bill aimed at small employers, but with other retirement system reforms
Sen. Tom Harkin’s USA Retirement Fund draft bill language has now been released and it contains provisions that extend beyond the “small employer that does not offer a retirement plan” arena. The draft bill (not yet introduced, and no number available) also includes sections on “defined contribution plan reforms,” “defined benefit system reforms,” and “other systemic reforms” that will be of interest to employers that currently offer retirement plans.

For a “snapshot” of the bill, click here.
A summary of the bill is available here.
Also, a frequently asked questions (FAQs) sheet is available here.

GASB issues guidance for implementing pension standards
The Governmental Accounting Standards Board (GASB) has published an implementation guide for the new GASB standards regarding accounting and financial reporting for pensions. The Guide to Implementation of GASB Statement 68 on Accounting and Financial Reporting for Pensions is an authoritative resource designed to assist preparers and auditors of state and local government financial statements as they implement the Statement, which is effective for periods beginning after June 15, 2014.

The implementation guide for Statement 68 answers key questions about putting the new standards into practice. Topics addressed in the guide include:

• The scope and applicability of GASB Statement No. 68, Accounting and Financial Reporting for Pensions
• Considerations regarding the identification of special funding situations
• Measurement of defined benefit pension liabilities of employers and nonemployer contributing entities
• Pension expense and deferred inflows and outflows of resources related to pensions
• Note disclosures and required supplementary information
• Unique issues related to cost-sharing employers and certain nonemployer contributing entities
• Transition to the new standards

To read the entire implementation guide, click here.
Read the GASB’s news release here.

PBGC issues proposed rule on multiemployer plans; valuation and notice requirements
The Pension Benefit Guaranty Corporation (PBGC) has issued a proposed rule to amend its multiemployer regulations to make the provision of information to PBGC and plan participants more efficient and effective and to reduce burden on plans and sponsors. The amendments would:

• Reduce the number of actuarial valuations required for certain small terminated but not insolvent plans
• Shorten the advance notice filing requirements for mergers in situations that do not involve a compliance determination
• Remove certain insolvency notice and update requirements

To read the proposed rule, click here.

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