Part III --- Administrative, Miscellaneous, and Procedural IRS Notice 2008-65 – Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates This notice contains updates for interest rates for funding requirements under sections 412(b)(5)(B) and 430(h)(2) of the Code applicable for July 2008, and updates for interest rates for minimum present value determinations under 417(e)(3) of the Code for June 2008. Related Links:
Sunday, July 27, 2008
IRS Notice 2008-65 – Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates
Treasury Regulation - REG–100464–08 - Accrual Rules for Defined Benefit Plans
26 CFR Part 1 [REG–100464–08] RIN 1545–BH50 Treasury Regulation - [REG–100464–08] - Accrual Rules for Defined Benefit Plans Proposed regulations under section 411(b)(1) of the Code provide guidance on the application of the accrual rule for defined benefit plans under section 411(b)(1)(B) in cases where plan benefits are determined on the basis of the greatest of two or more separate formulas. A public hearing is scheduled for October 15, 2008. These proposed regulations are applicable/effective for plan years beginning on or after January 1, 2009, and amend the accrued benefit requirements for hybrid defined benefit plans by adding a new paragraph (b)(2)(ii)(G) to section 1.411(b)-1. On your PPA'06 chart, they should be listed under section 701 of PPA'06 and under section 411(b) of the Code with the terms hybrid defined benefit plans and accrual rules.
Related Links:
- REG-100464-08. 73 Fed. Reg. 34665 (June 18, 2008) [PDF]
- Treasury Regulation - [REG–100464–08], 2008-32 I.R.B. 313 (August 11, 2008) – Accrual Rules for Defined Benefit Plans [PDF]
- Treasury Regulation - [REG–100464–08], 2008-32 I.R.B. 313 (August 11, 2008) – Accrual Rules for Defined Benefit Plans [HTML]
- 2008-32 I.R.B. 313 (August 11, 2008)
Tuesday, July 22, 2008
DOL Proposed Regulation – Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans
29 CFR Part 2550 RIN 1210-AB07 DOL Proposed Regulation – Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans The DOL announced proposed regulations to improve disclosure of fees and expenses:
Washington – The U.S. Department of Labor today announced a proposed rule that will make it easier for an estimated 65 million participants covered by 401(k)-type plans to make informed retirement savings decisions. The proposal would provide workers with useful summary information, including fee and expense information, for investment options available under their plans.
"Our proposal is consistent with public consensus that workers need clear and concise information, not dozens of pages of 'legalese,' about the investment options available under their plans, and that they would benefit greatly from having that information in a comparative format," said U.S. Secretary of Labor Elaine L. Chao. "One of the department's top priorities is improved disclosure to workers that will give them the information they need to make informed investment decisions."
The centerpiece of the proposed regulation is a requirement to provide investment-related information in a comparative chart or similar format. As part of the proposal, the department has developed a model chart for complying with this requirement, while giving plan fiduciaries the flexibility to design their own charts or comparative formats. The proposal would also require plan fiduciaries to disclose basic information about the plan and its investment options, such as what options are available under the plan, how to give investment instructions, investment returns and fees and expenses, and how to obtain more detailed information. This information would be given to participants on a regular and periodic basis.
In addition, the department is proposing conforming changes to its regulation under section 404(c) of the Employee Retirement Income Security Act.
"We want to help workers make the most of their 401(k)-type plans by ensuring that they are provided the information they need to make wise investment decisions," said Bradford P. Campbell, assistant secretary for the Labor Department's Employee Benefits Security Administration.
DOL Releases Proposed Fee Disclosure Regulations discusses the proposed regulations:
The DOL states in the regulations that their intention is to establish uniform, basic disclosures for participants and beneficiaries without regard to whether the plan is covered by Code section 404(c). To reach that goal, the DOL has taken a multi-prong approach. Some disclosures are to be made to participants and beneficiaries in the summary plan descriptions (SPDs). Some disclosures are to be made in the quarterly benefit statements which are already required by the Pension Protection Act. And some disclosures are to be made on separate forms. To faciliate disclosure, the DOL has included a model disclosure notice within these regulations.
Related Links:
- News Release
- DOL Proposed Regulation – Proposed Fee & Expense Disclosure Regulation [HTML]
- DOL Proposed Regulation – Proposed Fee & Expense Disclosure Regulation [PDF]
- Model Comparative Chart
- Fact Sheet
- Death to the Prospectus Requirement! The New 401(k) Participant Disclosures Rules
- Observations on DOL's Proposed Regulations Governing Disclosure Requirements for Participant-Directed Individual Account Plans
- Labor Department Proposes Dollar-Based 401(k) Fee Disclosure
- U.S. Pushes for Clearer Disclosure of 401(k) Fees
- EBSA Finishes Regulatory Package with Participant Disclosure Proposal
- Another Piece of the Extended Puzzle - Proposed DOL Regulations Reach to General Prudence Rules
- DOL Releases Proposed Fee Disclosure Regulations
- 401(k) proposal would clarify fees
Saturday, July 19, 2008
DOL Issues 40-FAQs About IRS Form 5500 – Schedule C
The DOL issued guidance on Schedule C reporting for 2009 Form 5500: Washington – The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) today announced guidance to help plan administrators and service providers comply with the new requirements for reporting service provider fee and compensation information applicable to Form 5500 Annual Returns/Reports filed for plan years beginning on or after January 1, 2009. EBSA released 40 frequently asked questions (FAQs) developed in response to questions from the employee benefit community on the new Schedule C requirements. The FAQs cover such issues as the alternative reporting option for eligible indirect compensation, electronic disclosure of fee information by service providers, fee reporting for brokerage window options in participant directed plans, and reporting on gifts, entertainment and other non-monetary compensation. In response to concerns expressed by service providers trying to make changes to their recordkeeping and information management systems in order to provide their employee benefit plan clients with fee and compensation information required for 2009 reports, the department is not requiring plan administrators to report service providers on the Schedule C as failing to provide fee and compensation information if the service provider furnishes the plan administrator with a written statement that (i) the service provider made a good faith effort to make any necessary recordkeeping and information system changes in a timely fashion, and (ii) despite such efforts, the service provider was unable to complete the changes for the 2009 plan year. The announcement included a link to 40-FAQs About The 2009 Form 5500 Schedule C: Related Links
DOL Testifies About Employer-Sponsored IRAs
The Department of Labor announced in a June 26 press release that it testified before the House Ways and Means subcommittee about employer-sponsored IRAs: Washington – Bradford P. Campbell, assistant secretary of labor for the Employee Benefits Security Administration (EBSA), today testified before the House Ways and Means Subcommittee on Select Revenue Measures about the department's programs to protect and promote retirement security for employer-sponsored individual retirement arrangements (IRAs). In his testimony, Campbell discussed the department's regulatory, enforcement, compliance assistance and outreach activities carried out for employer-sponsor IRAs governed by Title I of the Employee Retirement Income Security Act. These plans were created by Congress to give small employers an affordable and easy retirement plan option for their employees, including Savings Incentive Match Plan for Employees (SIMPLE) IRA and Simplified Employee Pensions (SEPs). He noted that the Labor Department's oversight role employs a comprehensive approach of compliance assistance, interpretive guidance, prohibited transaction exemptions, education and outreach, and enforcement. However, Campbell emphasized that oversight over individual and payroll deduction IRAs is under the jurisdiction of the Internal Revenue Service. "Employer-sponsored IRAs are important retirement savings vehicles for millions of employees of small businesses nationwide," said Campbell. "In the past three years alone, our oversight of employer-sponsored IRAs has yielded $1.2 million in direct enforcement results and an additional $1 million in results for workers through informal resolution of complaints." The testimony can be found here: DOL Testifies About Employer-Sponsored IRAs, and contains the following: Related Links
Wednesday, July 2, 2008
Employee Plans News - Special Edition, July 1, 2008
The IRS published Employee Plans News - Special Edition, July 1, 2008: Sample Plan Language under Code §409(p) for the Transfer of an ESOP's S Corporation Shares Code §409(p) was enacted as part of the Pension Protection Act of 2006. It requires that an ESOP holding S corporation stock cannot have a prohibited allocation during a nonallocation year. That is, no portion of plan assets attributable to employer securities may accrue or be allocated for the benefit of a disqualified person. Code §409(p)(3) provides that a nonallocation year occurs when disqualified persons (as defined in §409(p)(4)) own or are deemed to own 50% of the outstanding stock of the S corporation, taking into consideration synthetic equity as defined in Code §409(p)(6)(C) and Regulations §1.409(p)-1(f). During a nonallocation year, prohibited allocations are deemed to be distributed and excise taxes are imposed on the S corporation pursuant to §4979A. Additional consequences of a nonallocation year relate to plan qualification and the tax status of the corporation. Regulation §1.409(p)-1(b)(v) provides that a nonallocation year may be prevented by transferring assets from the accounts of disqualified persons to the non-ESOP portion of the plan. Sample plan language to provide for such transfers is posted on our web site: www.irs.gov/ep. Under this plan provision, the Plan Administrator calculates the number of shares that need to be transferred in order to prevent the occurrence of a nonallocation year. The employer needs to provide the Plan Administrator all the information needed to perform this calculation, including information on synthetic equity. Comments on this language should be sent by August 15, 2008. However, this sample language can be used now pending the comment period. Related Links:
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