Sunday, December 20, 2009

IRS Notice 2009-93 – Truncating Social Security Numbers on Paper Payee Statements

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-93 – Truncating Social Security Numbers on Paper Payee Statements

Notice 2009-93 creates a pilot program allowing filers of information returns to truncate an individual payee's nine-digit identifying number on paper payee statements for calendar years 2009 and 2010 if the filers meet the requirements set forth in this notice.

Notice 2009-93 will be published in Internal Revenue Bulletin 2009-51 on December 21, 2009.

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Friday, December 11, 2009

IRS Notice 2009-92 – Guidance on the Application of § 409A(a) to Changes to Nonqualified Deferred Compensation Plans to Comply with an Advisory Opinion of the Office of the Special Master for TARP Executive Compensation

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-92 – Guidance on the Application of § 409A(a) to Changes to Nonqualified Deferred Compensation Plans to Comply with an Advisory Opinion of the Office of the Special Master for TARP Executive Compensation

Notice 2009-92 provides that a delay or acceleration of the payment of nonqualified deferred compensation in order to comply with an advisory opinion issued by the Office of the Special Master for TARP Executive Compensation, pursuant to the Emergency Economic Stabilization Act of 2008 and regulations thereunder, including conditioning payment on satisfaction of a requirement related to the Troubled Asset Relief Program (TARP), such as repayment of the financial assistance granted under TARP, will not cause the plan to fail to meet the requirements of § 409A.

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IRS Notice 2009-97 – Extension of Deadline to Adopt Certain Retirement Plan Amendments

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-97 – Extension of Deadline to Adopt Certain Retirement Plan Amendments

Notice 2009-97 extends the deadline for amending qualified retirement plans to meet certain requirements of the Internal Revenue Code that were added by the Pension Protection Act of 2006 (PPA '06), Pub. L. 109-280, and subsequently modified by the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA), Pub. L. 110-458. The deadline is extended to the last day of the first plan year that begins on or after January 1, 2010.

Notice 2009-97: Extension of Limited PPA Amendments for Limited Plan Types — 12/14/2009 discusses how the Notice does not delay the amendment deadline for all most provisions:

Although this delay may be helpful for individually drafted plans that are unsure about language to use in PPA Amendments, Notice 2009-97 will not likely be of assistance for most retirement plans. Plans that make use of the Notice's extended deadlines will still need to be amended for a number of PPA provisions by the end of the 2009 plan year and will then need to amend by the end of the 2010 plan year for those provisions with a delayed amendment deadline.

The relevant PPA/Internal Revenue provisions with an extended amendment deadline include:

  • Internal Revenue Code final 436 regulations (published October 2009; affecting defined benefit plans): Benefit Restrictions (Prohibited Payments) and Benefit Accruals for Single Employer Plans. Funding based limits apply to (i) unpredictable/contingent benefits, (ii) accelerated benefit distribution, and (iii) benefit accruals. Participants must receive notice of funding based limitations within 30 days.
  • Internal Revenue Code section 411(a)(13) and 411(b)(5) (regulations not yet published; affects Cash Balance plans): Employer contributions must vest within three years of service. Affected plans may not cease benefit accruals because Participant attains a certain age.
  • Internal Revenue Code section 401(a)(35) (final regulations not yet published; affects plans invested in publicly traded employer securities):Plans invested in publicly traded employer securities will need to meet the diversification requirements set out in IRC 401(a)(35).

Related Links:

IRS Notice 2009-98 – 2009 Cumulative List of Changes in Plan Qualification Requirements

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-98 – 2009 Cumulative List of Changes in Plan Qualification Requirements

Notice 2009-98 sets forth a list of changes referred to in Rev. Proc. 2007-44, 2007-2 C.B. 54, pertaining to the statutory, regulatory, and guidance changes needed for certain requests to the Service for opinion, advisory, and determination letters for the 12-month period beginning February 1, 2010.

The 2009 Cumulative List is to be used primarily by plan sponsors of individually designed plans that are in Cycle E. An individually designed plan is in Cycle E if it is a single employer plan where the last digit of the employer identification number of the plan sponsor is 5 or 0, or it is a § 414(d) governmental plan for which an election has been made by the plan sponsor to treat Cycle E as the initial EGTRRA remedial amendment cycle for the plan…In accordance with IRS Revenue Procedure 2007-44 – Rulings and determination letters, the Service will start accepting determination letter applications for Cycle E plans beginning on February 1, 2010. The 12-month submission period for Cycle E plans will end January 31, 2011.

The Service will not consider in its review of any determination letter application, for the submission period that begins February 1, 2010, any:

  1. guidance issued after October 1, 2009;
  2. statutes enacted after October 1, 2009;
  3. qualification requirements first effective in 2011 or later; or
  4. statutory provisions that are first effective in 2010, for which there is no guidance identified in this notice.

I. PURPOSE
II.
BACKGROUND
III. APPLICATION OF 2009 CUMULATIVE LIST
IV. S
PECIAL RULES FOR THE HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008
V.
SPECIAL RULES FOR THE WORKER, RETIREE, AND EMPLOYER RECOVERY ACT OF 2008
VI.
2009 CUMULATIVE LIST OF CHANGES IN PLAN QUALIFICATION REQUIREMENTS HEROES EARNINGS ASSISTANCE AND RELIEF TAX ACT OF 2008 PROVISIONS
VII.
WORKER, RETIREE, AND EMPLOYER RECOVERY ACT OF 2009 PROVISION

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Thursday, November 19, 2009

Retirement News for Employers – Fall 2009 Edition

The IRS released Retirement News for Employers – Fall 2009 Edition. It contains the following articles:

  • Roth & Roll: 2010 Roth IRAs & Rollovers
  • 5500 for 2009 and Later Required to be Filed Electronically
  • Establishing a SEP or SIMPLE IRA Plan
  • IRA Investments
  • New Web Tool for SARSEP Plans
  • We're Glad You Asked!
  • New on the Web
  • Employee Plans Published Guidance
  • Desk Side Chat…With Monika Templeman: The Importance of Internal Controls and Plan Self-Correction
  • DOL News
  • Mark Your Calendar
  • Timing is Everything flyer

Friday, October 23, 2009

EBSA issues additional guidance on 2009 Form 5500 Schedule C

The DOL announced the issuance of additional guidance on Schedule C reporting for 2009 Form 5500:

Washington – The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) today released additional guidance to help plan administrators and service providers comply with the expanded requirements for reporting service provider fee and compensation information on the Form 5500 Annual Returns/Reports. The expanded requirements apply for plan years beginning on or after January 1, 2009.

The new guidance is provided in the form of 25 frequently asked questions (FAQs) on the new Schedule C requirements. Some of the issues covered in the new FAQs include reporting of:

  • Gifts, entertainment and other non-monetary compensation
  • Compensation to hedge fund investment managers
  • "Look-through" investment funds
  • Mutual fund redemption fees
  • ERISA fee recapture accounts

Today's FAQs also provide clarification regarding the 2009 plan year transition relief for service providers by explaining that the transition relief also covers plan administrators and Form 5500 preparers who rely on those service providers for information needed to complete the Schedule C. The details about the transition relief were explained in an earlier set of FAQs released in July 2008.

The new FAQs are available on EBSA's Web site at www.dol.gov/ebsa. Questions for the FAQs were developed based on feedback from the employee benefit community. The new FAQs supplement previous guidance FAQs on the Form 5500 Schedule C published in July 2008.

Supplemental FAQs About The 2009 Schedule C

  1. What is the purpose of this FAQ guidance?
  2. Are promotional gifts of little intrinsic value such as a coffee mug, calendar, greeting cards, plaques, certificates, trophies or similar items intended solely for the purpose of presentation and displaying a company logo, reportable Schedule C indirect compensation to the recipient?
  3. Are all free business meals and entertainment received by persons who have business relationships with ERISA plans indirect compensation to the recipient for purposes of Schedule C?
  4. An entity that provides services to employee benefit plans conducts educational conferences designed to educate and explain employee benefit issues and products at no cost to employee pension or welfare plan personnel (e.g., plan sponsor's human resources staff and finance personnel). In holding the conference, the entity provides conference rooms, speakers, audio-visual equipment, and refreshments during conference breaks, meals, travel, and lodging. Do all of those expenses have to be reported as non-monetary compensation?
  5. In the context of a plan's investment in a "look-through" investment fund is Schedule C reporting required for fees received by persons at the lower tier funds?
  6. For purposes of reporting indirect compensation on Schedule C, must a limited partnership hedge fund that is not holding plan assets pursuant to the "less than 25% benefit plan investor exception" under section 3(42) of ERISA be treated as an investment fund?
  7. Can mutual fund 12b-1 fees, sub-transfer agent fees, and shareholder servicing fees received by a retirement plan record keeper be classified as eligible indirect compensation for purposes of the Schedule C alternative reporting option, regardless of whether such fees were received from a mutual fund agent or directly from a mutual fund?
  8. Revenue sharing payments often travel through the hands of several different service providers before getting to their ultimate intended recipient in a "chain" of plan service providers. Does only the ultimate recipient of the compensation need to be identified as having received the compensation?
  9. Are costs and expenses incurred by an insurance company in connection with a general account investment contract that promises a guaranteed rate of return reportable compensation for purposes of the Schedule C?
  10. The July 2008 guidance in FAQ 40 provides limited transition relief where a service provider makes reasonable, good faith efforts to develop systems to track information regarding its reportable indirect compensation in a timely fashion but, despite such efforts, is unable to collect the necessary information for the 2009 plan year reports. Will the Department reject the Form 5500 or impose penalties if the Schedule C does not include information that was not provided to the plan administrator or the plan's Form 5500 preparer by a service provider that gives the plan administrator the statement described in Q40?
  11. Are "contingent deferred sales charges," market value adjustments for annuity contracts, or surrender/termination charges reportable compensation and if so, are they to be reported as direct or indirect compensation?
  12. Some mutual funds have imposed short-term trading fees as a result of SEC Rule 22c-2. These are commonly known in the industry as "redemption fees." Other investment products (collective trust funds, separate accounts, etc.) may impose similar fees to curb short-term trading. Such fees are generally assessed when a participant transfers out of an investment fund within a certain timeframe (often 30-60 days) after investment in the fund. The fees flow back into the fund, trust, or account through a reporting and remittance process developed between the record keeper or intermediary and the fund or investment company. Should these fees be reported as redemption fees using code 57 on Schedule C as direct compensation to the fund company?
  13. Record keepers may receive revenue sharing payments from fund companies in the form of shareholder servicing fees. In some cases, the plan and the record keeper may agree to an "ERISA fee recapture account" where the revenue sharing exceeds a fee level negotiated between the record keeper and the plan sponsor. How are the following two common approaches treated for Schedule C purposes?
  14. any recordkeeping service arrangements apply some portion of a shareholder servicing fee charged by an investment fund in which its client plans invest toward the payment of the record keeper's fees. In cases where such revenue sharing payments from the investment fund do not cover the full amount of the record keeper fee, an additional direct payment is made by the plan to the record keeper to cover the total recordkeeping fee. Under such circumstances, can part of the recordkeeping fee be reported as indirect compensation and part direct compensation for purposes of Schedule C reporting?
  15. If plan service providers or plan administrators make a good faith attempt to classify their services and the fees they receive using the codes in the Schedule C instructions, will the Department reject Form 5500s in 2009 due to inadvertent misclassifications?
  16. Provider A has an "alliance" with Provider B. Provider B has developed a program to assist participants in fund selection. Provider A pays Provider B a flat fee of $20,000 to have access to the Provider B program, regardless of whether any of Provider A's plan clients use it. Plan Z pays a direct fee to Provider A of $5,000 that allows Plan Z participants to access Provider B's service. Provider A shares $1,000 with Provider B.
  17. By what date must the disclosure materials necessary to satisfy the "written disclosures" requirement for treating indirect compensation as eligible indirect compensation be presented to the plan administrator?
  18. If it is difficult to ascertain the Employer Identification Number (EIN) for some service providers that are part of a group of affiliated companies, would it be sufficient to provide the EIN of a "parent" company?
  19. May reporting of fees and expenses for plans with assets invested in a Master Trust Investment Account (MTIA) be reported on the Form 5500 filing for the MTIA rather than the Form 5500 filing for each plan involved?
  20. If a trade confirm is sent to the plan or to the participant with each participant directed trade made through a 401(k) plan brokerage window, does that meet the requirements of the eligible indirect compensation rule that requires disclosure to the plan administrator?
  21. If a broker identifies, for each plan with respect to which it receives 12b-1 fees, shareholder service fees, subtransfer agency fees charged against an investment fund and reflected in the value of the plan's investment, the name of each fund and range of payments it receives: (e.g. "from all these funds we get between 25 and 45 basis points and/or up to 15 dollars per position") will that satisfy the disclosure requirements for the eligible indirect compensation alternative reporting option?
  22. If an investment advisor has a standard disclosure on soft dollar compensation that meets the requirements of the securities laws, but would not meet the requirements of the alternative reporting option for eligible indirect compensation because it does not provide estimates or descriptions of eligibility criteria or the names of the brokers paying the soft dollar compensation, do additional disclosures need to be provided?
  23. Are group health plans and other welfare benefit plans that are required to file a Schedule C subject to the indirect compensation reporting requirements?
  24. In the health plan context, and specifically with regard to health care claims, what fees will be considered as charged on a per transaction basis?
  25. Assume that a plan sponsor pays all direct expenses relating to the administration and funding of benefits of an unfunded, self-insured welfare plan, such as the third-party claims administration expenses under an employer-pay-all disability plan. No plan assets are used to pay any direct expenses, nor are plan assets used to reimburse the plan sponsor for the payment of direct expenses. Would revenue sharing payments among the plan's service providers be required to be reported on a Schedule C?

Related Links:

Tuesday, October 13, 2009

Employee Plans News - Special Edition, October 2009

The IRS published Employee Plans News - Special Edition, October 2009:

Final Funding Regulations and Benefit Restriction Notices for Single Employer Defined Benefit Plans; Phone Forum on Retirement Plan Distributions - October 28, 2009

This Special Edition covers the final regulations on the measurement of assets and liabilities for pension funding, benefit restrictions for underfunded pension plans, benefit restriction notices and more.

IRS Notice 2009-82 – Guidance on 2009 Required Minimum Distributions

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-82 – Guidance on 2009 Required Minimum Distributions


Guidance on 2009 required minimum distributions. This notice provides guidance and transition relief relating to the waiver of 2009 required minimum distributions, described in section 401(a)(9) of the Code, from certain plans under the Worker, Retiree, and Employer Recovery Act of 2008 ("WRERA"), P.L. 110-458. The notice also provides two sample plan amendments that give recipients a choice as to whether to receive waived required minimum distributions and certain related payments and that specify the application of the direct rollover rules to the distributions. The sample amendments can be used by plan sponsors that are uncertain as to the treatment under plan terms of waived required minimum distributions and certain related payments or that otherwise desire to give recipients a choice as to whether to receive such distributions. Notice 2007-7 modified.

Notice 2009-82 explains that those who have received a 2009 required minimum distribution have until the later of Nov. 30 2009, or 60 days after the date the distribution was received to roll it over. The notice also provides guidance for retirement plan sponsors.

Waived Required Minimum Distributions for 2009

WASHINGTON ― The Internal Revenue Service today provided guidance for retirement plan administrators, plan participants and retirees regarding recent legislation affecting required minimum distributions. The Worker, Retiree, and Employer Recovery Act of 2008 waives required minimum distributions for 2009 from certain retirement plans.

Generally, a required minimum distribution is the smallest annual amount that must be withdrawn from an IRA or an employer’s plan beginning with the year the account owner reaches age 70½. The 2008 law waives required minimum distributions for 2009 for IRSs and defined contribution plans (such as 401(k)s) and allows certain amounts distributed as 2009 required minimum distributions to be rolled over into an IRA or another retirement plan.

Notice 2009-82 provides relief for people who have already received a 2009 required minimum distribution this year. Individuals generally have until the later of Nov. 30, 2009, or 60 days after the date the distribution was received, to roll over the distribution.

The notice also provides guidance for retirement plan sponsors. It contains two sample plan amendments that plan sponsors may adopt or use to amend their plans to either stop or continue 2009 required minimum distributions. Both sample amendments provide that participants and beneficiaries can choose to receive or not to receive 2009 required minimum distributions. Also, both sample amendments allow the employer to offer direct rollover options of certain 2009 required minimum distributions.

Plan sponsors may need to tailor the sample amendment to their plan’s particular terms and administration procedures and must adopt the amendment no later than the last day of the first plan year beginning on or after Jan. 1, 2011 (Jan. 1, 2012 for governmental plans).

IRS Provides 2009 RMD Guidance discusses how the Notice defined two new terms:

  • 2009 RMDs. These are Required Minimum Distributions which a plan would have been required to distribute (or an IRA owner or beneficiary would have been required to take), if Congress had not adopted WRERA. It includes all RMDs for the 2009 distribution calendar year, including those which could otherwise be distributed as late as April 1, 2010.

  • Extended 2009 RMDs. These are one or more payments in a series of substantially equal distributions (that include the 2009 RMDs) made at least annually and expected to last for the life/life expectancy of the participant, or the joint lives/life expectancy of the participant and a designated beneficiary, or for a period of at least 10 years. This definition is significant because an individual cannot normally roll over one or more of a series of substantially equal distributions, as described in the previous sentence, whether or not those distributions are RMDs. For example, if a plan distributes a participant’s benefit in 15 equal annual installments, the distributions are not eligible rollover distributions (ERDs), without regard to the RMD rules.

RMD Guidance Issued by the IRS for 2009 highlights a Q&A section that addressed issues from the public:

  • The deadline for an employee or a beneficiary that had until the end of 2009 to choose between receiving distributions under the 5-year or the life expectancy rule is extended until the end of 2010.

  • In plans that permit a nonspouse designated beneficiary to directly roll over a deceased participant’s account balance, the special rule in Notice 2007-7 is modified so that, if the employee died in 2008, the nonspouse designated beneficiary has until the end of 2010 to make the direct rollover and use the life expectancy rule.

  • Only for 2009, if an individual receives a plan distribution that includes a 2009 RMD, the portion of the distribution that represents the 2009 waived RMD is subject to the optional 10% withholding rules under §3405(b) and any remaining portion is subject to the 20% mandatory withholding rule of §3405(c) (assuming the distribution otherwise qualifies as an ERD). Any distributions made in 2009 are deemed to consist first of any undistributed RMDs from prior years followed by 2009 RMDs.

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Monday, October 5, 2009

DOL Notice of Proposed Individual Exemption Involving Chrysler LLC, Located in Auburn Hills, MI

The DOL announced a proposed exemption to allow a Chrysler LLC health plan for retirees to acquire company securities:

Washington – The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) today announced a proposed exemption that, if granted, would allow the New Chrysler Corp. to transfer approximately $4.59 billion promissory note and company securities to a Voluntary Employees Benefit Association (VEBA) Plan established to provide health benefits for the company's retirees. The retiree health plan would cover about 120,000 retirees and dependents when it becomes effective on Jan. 1, 2010.

New Chrysler requested an exemption under the Employee Retirement Income Security Act (ERISA) to allow the VEBA plan to hold stock and debt of New Chrysler in order to facilitate the sale of the company to Fiat North America LLC. ERISA prohibits certain plans from holding large percentages of plan assets in the form of employer securities. The law gives the department authority, however, to grant exemptions that protect the interests of plan participants and beneficiaries.

On May 31, 2009, the bankruptcy court issued an opinion allowing old Chrysler to sell substantially all of its assets to New Chrysler. New Chrysler is headquartered in Auburn Hills, Mich., and employs 55,000 employees. New Chrysler is owned by the Canadian Government, the U.S. Treasury, Fiat and the VEBA plan.

The exemption would allow the securities transfer, permit New Chrysler and its health plans to reimburse each other for benefit payments mistakenly paid by the wrong entity during the transition to the new plan, and permit the automaker to recover mistaken deposits to the plan.

The assets of the VEBA plan will be held by the same trust that holds the assets of the plans established by Ford and General Motors for their respective retirees. There will be separate accounting for each plan maintained by the three companies that are now funded through a single trust.

The primary condition of the proposal is the appointment of an independent fiduciary to represent the plan with regard to New Chrysler securities transactions. The independent fiduciary will determine in advance of taking any action regarding the securities that the action is in the interests of the plan and its participants and beneficiaries. The proposed exemption also requires the review of benefit payments by an independent third party administrator and auditor for each of the plans and an objective dispute resolution process. In addition, the proposal sets time limits for the return of mistaken deposits and an objective dispute resolution process.

The proposed exemption is scheduled to be published in the Oct. 5, 2009, edition of the Federal Register. Comments on the proposal and any requests for a public hearing should be submitted to Chrysler@dol.gov or by fax to 202-219-0204. Paper-based comments should be sent to the Office of Exemption Determinations, Employee Benefits Security Administration, Room N-5700, U.S. Department of Labor, 200 Constitution Ave. N.W., Washington, D.C. 20210, Attention: Application Number L-11566.

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Monday, September 28, 2009

IRS Notice 2009-68 – Safe Harbor Explanation — Eligible Rollover Distributions

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-68 – Safe Harbor Explanation — Eligible Rollover Distributions

Safe harbor explanations — eligible rollover distributions. This notice contains two safe harbor explanations that may be provided to recipients of eligible rollover distributions from an employer plan in order to satisfy section 402(f) of the Code. The first safe harbor explanation applies to a distribution not from a designated Roth account, as described in section 402A. The second safe harbor explanation applies to a distribution from a designated Roth account. These safe harbor explanations update the safe harbor explanations that were published in Notice 2002-3, 2002-1 C.B. 289, to reflect changes in the law. This notice is part of the "Savings Initiative" guidance issued by the Service. Notice 2002-3 modified and superseded.

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Friday, September 25, 2009

Employee Plans News - Special Edition, September 25, 2009

The IRS published Employee Plans News - Special Edition, September 25, 2009:

Upcoming Funding Regulations; Additional Guidance on 2009 Waiver of Required Minimum Distributions


This Special Edition of Employee Plans News contains the following articles:
  • Upcoming Funding Regulations - states that the IRS and the Department of Treasury expect to issue final regulations in the near future that will cover measurement of assets and liabilities under §430, and the application of benefit restrictions of §436 for single-employer defined benefit plans. It also provides assistance to actuaries in issuing the adjusted funding target attainment percentage (AFTAP) for 2009.
  • Additional Guidance on 2009 Waiver of Required Minimum Distributions – explains key provisions of Notice 2009-82, issued on September 24, 2009, that provides guidance, transitional relief, sample plan amendments and answers to questions related to the waiver of 2009 required minimum distributions.

Wednesday, September 23, 2009

Employee Plans News - Fall 2009 Edition

The IRS released Employee Plans News - Fall 2009 Edition. It contains the following articles:

  • Dos and Don'ts of Hardship Distributions;
  • IRS Retirement Plans Online;
  • When Limits Collide, Which One Wins?;
  • Tax Return Preparer Review Board; Critical Priorities…With Monika Templeman Today's Discussion: Loans and Hardships in 401(k) Plans;
  • A Message from the Advisory Committee on Tax Exempt and Government Entities: Stakeholders: please participate!;
  • Employee Plans Published Guidance;
  • 401(k) Phone Forum Rescheduled to September 30, 2009;
  • We're Glad You Asked!;
  • Ways to Avoid Delays: Determination Letter Application Processing Procedures;
  • Retirement & Savings Initiatives: Helping Americans Save for the Future;
  • The EPCU Insider - Master & Prototype (M&P) Project;
  • Highlights of the Retirement News for Employers;
  • PBGC Insights;
  • DOL Corner;
  • Calendar of EP Benefits Conferences

Friday, September 18, 2009

DOL Notice of Proposed Individual Exemption Involving General Motors

The DOL announced a proposed exemption to allow a General Motors health plan for retirees to acquire company securities:

WASHINGTON — The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) today announced a proposed exemption that, if granted, would allow the General Motors Co. (GM) to transfer company securities including common stock, preferred stock and a $2.5 billion promissory note, to a health plan established for the company's retirees. The retiree health plan will cover approximately 700,000 retirees and dependents when it becomes effective on Dec. 31, 2009.

GM is the successor company that purchased substantially all of the assets of General Motors Corp. (the old GM), which filed for bankruptcy on June 1, 2009. GM is headquartered in Detroit, Mich.

The large transfer of employer securities to the plan violates the Employee Retirement Income Security Act (ERISA). ERISA prohibits certain plans from holding large percentages of plan assets in the form of employer securities. The law gives the department authority, however, to grant exemptions that protect the interests of plan participants and beneficiaries.

The exemption would allow the securities transfer, permit GM and its health plans to reimburse each other for benefit payments mistakenly paid by the wrong entity during the transition to the new plan, and permit GM to recover mistaken deposits to the plan.

A major condition of the proposal is the appointment of an independent fiduciary to represent the plan with regard to GM securities transactions. The independent fiduciary will determine in advance of taking any action regarding the securities that the action is in the interests of the plan and its participants and beneficiaries. The proposed exemption also requires the review of benefit payments by an independent third party administrator and auditor for each of the plans and an objective dispute resolution process. In addition, the proposal set time limits for return of mistaken deposits and an objective dispute resolution process.

The proposed exemption is scheduled to be published in the Sept. 18, 2009, edition of the Federal Register. Comments on the proposal and any requests for a public hearing should be submitted to gm@dol.gov or by fax to 202-219-0204. Paper-based comments should be sent to the Office of Exemption Determinations, Employee Benefits Security Administration, Room N-5700, U.S. Department of Labor, 200 Constitution Ave. N.W., Washington, D.C. 20210, Attention: Application Number L-11568.

Related Links:

Wednesday, September 9, 2009

Retirement News for Employers - Special Edition, September 2009

The IRS published Retirement News for Employers - Special Edition, September 2009:

This Special Edition discusses the release of Notice 2009-3 which extends the deadline for 403(b) plan sponsors to adopt new written plans or amend their existing written plans from January 1, 2009, to December 31, 2009.

This special edition discusses the Retirement & Savings Initiatives, Rollovers From Employer Plans to Roth IRAs, the IRS Retirement Plans Navigator and Life Events That Can Affect Retirement Savings.

Employee Plans News - Special Edition, September 2009

The IRS published Employee Plans News - Special Edition, September 2009:

Retirement & Savings Initiatives: Helping Americans Save for the Future; Rollovers from Employer Plans to Roth IRAs; Now Online

This special edition discusses the Retirement & Savings Initiatives, Rollovers From Employer Plans to Roth IRAs, the IRS Retirement Plans Navigator and Life Events That Can Affect Retirement Savings.

Monday, August 17, 2009

Retirement News for Employers – Summer 2009 Edition

The IRS released Retirement News for Employers – Summer 2009 Edition. It contains the following articles:

  • 7 Steps to Making a Hardship Distribution
  • Know the Rules Before You Break Open Your Retirement Piggy Bank
  • Tax Return Preparer Review Held July 30, 2009
  • New on the Web
  • SIMPLE IRA Plans: The 2-Year Rule on Early Distributions
  • Fixing Common Plan Mistakes: Correcting a Failure to Implement the Plan's Automatic Enrollment Provisions
  • Employee Plans Published Guidance
  • Desk Side Chat...With Monika Templeman - ABCs of Loans and Hardship Distributions
  • We're Glad You Asked!
  • DOL Corner
  • 2009 RMDs from Defined Benefit Plans?
  • Mark Your Calendar
  • Timing Is Everything Flyer.

Tuesday, June 23, 2009

Employee Plans News - Summer 2009 Edition

The IRS released Employee Plans News - Summer 2009 Edition. It contains the following articles:

  • EP Connections:
  • Interview with Sarah Hall Ingram;
  • ACT Issues Eighth Annual Report and Welcomes Ten New Members;
  • Two-Year Adoption/Submission Period for DC Pre-Approved Plans Expires on April 30, 2010;
  • The EPCU Insider;
  • New Federal Income Tax Withholding for Pensions;
  • Free Phone Forums;
  • A New Look for EP Large Case Program Web Page;
  • Web Spins - The Retirement Plans Site;
  • We're Glad You Asked!;
  • PBGC Insights;
  • The Corner of Forms & Pubs;
  • Employee Plans Published Guidance;
  • Highlights of the Retirement News for Employers;
  • DOL Corner;
  • Calendar of EP Benefits Conferences

Tuesday, May 19, 2009

Retirement News for Employers – Spring 2009 Edition

The IRS released Retirement News for Employers – Spring 2009 Edition. It contains the following articles:

  • Do You Have a Safe Harbor 401(k) Plan? Ahhh…Relief
  • New Federal Income Tax Withholding for Pensions
  • We're Glad You Asked!
  • Like What You are Reading?
  • Information Reporting Program Advisory Committee Is Looking for New Members
  • EPCRS Phone Forum – July 27, 2009
  • e-News for Small Businesses: A Time-Saver for You
  • Desk Side Chat…With Monika Templeman – Automatic Enrollment
  • Employee Plans Published Guidance
  • New on the Web
  • DOL News
  • Notice of Approval to Extend Form 5500 Filing
  • Mark Your Calendar
  • Timing Is Everything Flyer

Employee Plans News - Special Edition, May 2009

The IRS published Employee Plans News - Special Edition, May 2009:

Do You Have a Safe Harbor 401(k) Plan? Ahhh…Relief; New Federal Income Tax Withholding for Pensions

This Special Edition discusses the IRS proposed amendments, Suspension or Reduction of Safe Harbor Nonelective Contributions, published on May 18, 2009 and the optional federal income tax withholding procedures that can be used for pension income.

Related Links:

Monday, May 18, 2009

Treasury Regulation [REG–115699–09] – Suspension or Reduction of Safe Harbor Nonelective Contributions

26 CFR Part 1

[REG–115699–09]

RIN:1545–BI64

Treasury Regulation [REG–115699–09] – Suspension or Reduction of Safe Harbor Nonelective Contributions

SUMMARY: This document contains proposed amendments to the regulations relating to certain cash or deferred arrangements and matching contributions under section 401(k) plans and section 403(b) plans. These regulations affect administrators of, employers maintaining, participants in, and beneficiaries of certain section 401(k) plans and section 403(b) plans.

DATES: Written or electronic comments must be received by August 17, 2009. Outlines of the topics to be discussed at the public hearing scheduled for Wednesday, September 23, 2009, at 10 a.m. must be received by August 19, 2009.

Related Links:

Related Blog Posts:

Thursday, April 23, 2009

IRS Notice 2009-31 – Election and Notice Procedures for Multiemployer Plans Under Sections 204 and 205 of WRERA

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-31 – Election and Notice Procedures for Multiemployer Plans Under Sections 204 and 205 of WRERA

Election and notice procedures for multiemployer plans under sections 204 and 205 of WRERA. This notice provides guidance for sponsors of multiemployer defined benefit plans relating to the elections described in sections 204 and 205 of the Worker, Retiree, and Employer Recovery Act of 2008, P.L. 110-458 (WRERA), and on the notice required to be provided if a plan sponsor makes an election under section 204.

Related Links:

IRS Notice 2009-27 – Premium Assistance for COBRA Benefits

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-27 – Premium Assistance for COBRA Benefits

This notice provides guidance under section 3001 of the American Recovery and Reinvestment Act of 2009 relating to the premium reduction for individuals who were involuntarily terminated and are electing COBRA continuation coverage under the group health plan of their former employer.

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IRS Notice 2009-22 – Asset Valuation under Section 430(g)(3)(B) as amended by WRERA

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-22 – Asset Valuation under Section 430(g)(3)(B) as amended by WRERA

Asset valuation under section 430(g)(3)(B) as amended by WRERA. This notice provides interim rules regarding asset valuation methods that are permitted to be used by single employer defined benefit pension plans for minimum funding purposes pursuant to changes made by the Worker, Retiree, and Employer Recovery Act of 2008, Public Law 110-458 (WRERA). This notice also provides automatic approval for a change in asset valuation method for plan years beginning during 2009 to adopt any permissible asset valuation method.

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IRS Notice 2009-20 – Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-20 – Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Weighted average interest rate update; corporate bond indices; 30-year Treasury securities; segment rates. This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in March 2009; the 24-month average segment rates; the funding transitional segment rates applicable for March 2009; and the minimum present value transitional rates for February 2009.

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Wednesday, April 15, 2009

Employee Plans News - Special Edition, April 2009

The IRS published Employee Plans News - Special Edition, April 2009:

Announcement 2009-34 - Request for Comments on Revenue Procedure for §403(b) Prototype Plans and Sample Plan Language

Tuesday, March 31, 2009

Employee Plans News - Special Edition, March 2009

The IRS published Employee Plans News - Special Edition, March 2009:

This Special Edition states that defined benefit plans may use a reasonable interpretation in selecting a yield curve for determining a plan's liabilities for funding purposes.

Wednesday, March 25, 2009

Employee Plans News - Spring 2009 Edition

The IRS released Employee Plans News - Spring 2009 Edition. It contains the following articles:

  • Know a Nonamender? Here's what you need to know NOW...
  • Final Regulations Issued for Automatic Contribution Arrangements
  • Sample Plan Language - Transfer of an ESOP's S Corporation Shares to Prevent a Nonallocation Year
  • The EPCU Insider -The Multiemployer Actuarial Certification Project – Defined Benefit Plan Actuarial Certification Errors
  • ERPA - CPE Sponsor Program
  • Web Spins - The Retirement Plans Site
  • Employee Plans Published Guidance
  • Critical Priorities…With Monika Templeman - Today's Discussion: Update on the Enrolled Retirement Plan Agent Program
  • Attention All 2009 Form 1099-R Issuers
  • Highlights of the Retirement News for Employers
  • The Corner of Forms & Pubs
  • We're Glad You Asked!
  • 403(b) Phone Forum
  • DOL Corner
  • PBGC Insights
  • Calendar of EP Benefits Conferences

Wednesday, February 25, 2009

Treasury Regulation – [TD 9447] – Automatic Contribution Arrangements

26 CFR Parts 1 and 54

[TD 9447]

RIN 1545-BG80

Treasury Regulation – [TD 9447] – Automatic Contribution Arrangements

TD 9447 contains final regulations relating to automatic contribution arrangements. These regulations affect administrators of, employers maintaining, participants in, and beneficiaries of section 401(k) plans and other eligible plans that include an automatic contribution arrangement.

SUMMARY: This document contains final regulations relating to automatic contribution arrangements. These regulations affect administrators of, employers maintaining, participants in, and beneficiaries of section 401(k) plans and other eligible plans that include an automatic contribution arrangement.

DATES: Effective date: These regulations are effective on February 24, 2009.   Applicability date: Except as provided in Sec. Sec.  1.401(k)-3(j)(1)(i) and 1.401(m)-2(a)(6)(ii), the final regulations relating to qualified automatic contribution arrangements (Sec. Sec.  1.401(k)-2, 1.401(k)-3, 1.401(m)-2, and 1.401(m)-3) apply to plan years beginning

on or after January 1, 2008. The regulations relating to eligible automatic contribution arrangements (Sec. Sec.  1.402(c)-2, 1.411(a)-4, 1.414(w)-1, and 54.4979-1) apply for plan years beginning on or after January 1, 2010.
Final regulations under section 401 and other sections of the Code provide guidance relating to certain automatic contribution arrangements, eligible rollover distributions, forfeitures, and excise tax on certain excess contributions and excess aggregate contributions. 

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Tuesday, February 24, 2009

IRS Notice 2009-16 – Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Part III --- Administrative, Miscellaneous, and Procedural

IRS Notice 2009-16 – Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates

Weighted average interest rate update; corporate bond indices; 30-year Treasury securities; segment rates. This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in February 2009; the 24-month average segment rates; the funding transitional segment rates applicable for February 2009; and the minimum present value transitional rates for January 2009.

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Tuesday, February 17, 2009

Retirement News for Employers – Winter 2009 Edition

The IRS released Retirement News for Employers – Winter 2009 Edition. It contains the following articles:

  • Did You Amend Your SIMPLE IRA Plan for EGTRRA?
  • New Law Waives Required Minimum Distributions for 2009
  • We're Glad You Asked!
  • New on the Web
  • Automatic Enrollment 401(k) Plans for Small Businesses
  • Fixing Common Plan Mistakes: Failure to Limit Contributions for a Participant
  • Recent Guidance
  • New Form 990 Requirements
  • The Filing Cabinet
  • Desk Side Chat With Monika Templeman - The Biggest Mistake
  • DOL News
  • Mark Your Calendar
  • Timing Is Everything Flyer.

Saturday, February 14, 2009

Field Assistance Bulletin No. 2009-01 - Defined Benefit Plan Annual Funding Notice - Pension Protection Act of 2006

The DOL announced the release of a Field Assistance Bulletin (FAB) concerning new disclosure requirements mandated by the PPA.

Washington - The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) today released Field Assistance Bulletin (FAB) 2009-01 concerning new disclosure requirements mandated by the Pension Protection Act of 2006 (PPA).

The PPA amended the Employee Retirement Income Security Act of 1974 (ERISA) to require plan administrators of defined benefit pension plans to provide participants and others with information annually about the funding status of their plans. An estimated 1,500 multiemployer plans covering approximately 10 million participants and beneficiaries plus 29,000 single-employer plans covering approximately 33.8 million participants and beneficiaries are subject to the new disclosure requirements. Many of these plans must furnish their first annual funding notice under the new law no later than April 30, 2009.

The FAB addresses a need for interim guidance pending the adoption of regulations or other guidance under section 101(f) of ERISA by announcing a "good faith" enforcement policy. The FAB also includes technical assistance in the form of questions and answers and model annual funding notices.

The FAB provides some background information:

Section 101(f) of the Employee Retirement Income Security Act (ERISA) sets forth requirements applicable to furnishing annual funding notices. Before the Pension Protection Act of 2006 (PPA), section 101(f) applied only to multiemployer defined benefit plans. Section 501(a) of the PPA amended section 101(f) of ERISA, making significant changes to the annual funding notice requirements. These amendments require administrators of all defined benefit plans that are subject to title IV of ERISA, not only multiemployer plans, to provide an annual funding notice to the Pension Benefit Guaranty Corporation (PBGC), to each plan participant and beneficiary, to each labor organization representing such participants or beneficiaries, and, in the case of a multiemployer plan, to each employer that has an obligation to contribute to the plan. An annual funding notice must include, among other things, the plan's funding percentage, a statement of the value of the plan's assets and liabilities and a description of how the plan's assets are invested as of specific dates, and a description of the benefits under the plan that are eligible to be guaranteed by the PBGC.

The PPA amendments to section 101(f) apply to plan years beginning after December 31, 2007, with special rules for disclosing "funding target attainment percentage" or "funded percentage" with respect to any plan year beginning before January 1, 2008. Section 501(c) of the PPA requires the Department to develop a model annual funding notice within one year of the date of enactment of the PPA.

Recently, concerns have been expressed about the imminent compliance date of the new annual funding notice requirements, the absence of regulatory guidance from the Department, and the cost and burdens attendant to annual funding notice compliance efforts prior to the adoption of annual funding notice regulations and the issuance of a model annual funding notice by the Department. In recognition of the foregoing, this memorandum provides guidance to the Employee Benefits Security Administration's national and regional offices concerning good faith compliance with the new annual funding notice requirements.

It provides for good faith compliance and a model annual funding notice for single-employer and multiemployer defined benefit plans. It also contains 17-Q&As:

  1. When must plans first comply with the new annual funding notice requirements?
  2. What is the benefit to plan administrators of using the model notices?
  3. May the plan administrator of a multiemployer plan use the model in the Appendix to 29 C.F.R. 2520.101-4 for purposes of compliance with section 101(f) for plan years beginning on or after January 1, 2008?
  4. Must a plan administrator furnish an annual funding notice to the Pension Benefit Guaranty Corporation?
  5. Are all ERISA-covered defined benefit pension plans subject to the new annual funding notice requirement?
  6. Section 101(f)(2)(B)(i)(I) of ERISA states that an annual funding notice must include, "in the case of a single-employer plan, a statement as to whether the plan's funding target attainment percentage (as defined in section 303(d)(2)) for the plan year to which the notice relates, and for the 2 preceding plan years, is at least 100 percent (and, if not, the actual percentages)[.]" How should plan administrators calculate this percentage for the model?
  7. Section 101(f)(2)(B)(ii)(I)(bb) of ERISA states that an annual funding notice must include, in the case of a single-employer plan, "the value of the plan's assets and liabilities for the plan year to which the notice relates as of the last day of the plan year to which the notice relates determined using the asset valuation under sub clause (II) of section 4006(a)(3)(E)(iii) and the interest rate under section 4006(a)(3)(E)(iv)[.]" How should plan administrators calculate year-end assets and liabilities for the model?
  8. Section 101(f)(2)(B)(i)(II) of ERISA states that an annual funding notice must include, "in the case of a multiemployer plan, a statement as to whether the plan's funded percentage (as defined in section 305(i)) for the plan year to which the notice relates, and for the 2 preceding plan years, is at least 100 percent (and, if not, the actual percentages)[.]" How should plan administrators calculate this percentage for the model?
  9. Section 101(f)(2)(B)(ii)(II) of ERISA, as amended by the Worker, Retiree, and Employer Recovery Act of 2008, Pub. L. No. 110-458, states that an annual funding notice must include, "in the case of a multiemployer plan, a statement, for the plan year to which the notice relates and the preceding 2 plan years, of the value of the plan assets (determined both in the same manner as under section 304 and under the rules of sub clause (I)(bb)) and the value of the plan liabilities (determined in the same manner as under section 304 except that the method specified in section 305(i)(8) shall be used)[.]" How should plan administrators calculate these assets and liabilities for the model?
  10. Section 101(f)(2)(B)(iii) of ERISA states that an annual funding notice must include "a statement of the number of participants who are (I) retired or separated from service and are receiving benefits, (II) retired or separated participants entitled to future benefits, and (III) active participants under the plan[.]" What is the meaning of the terms "active" and "retired or separated" for purposes of section 101(f)(2)(B)(iii) of ERISA? On what day of the plan year must the administrator focus when counting participants for purposes of this statement?
  11. Section 101(f)(2)(B)(iv) of ERISA states that an annual funding notice must include "a statement setting forth the funding policy of the plan and the asset allocation of investments under the plan (expressed as percentages of total assets) as of the end of the plan year to which the notice relates[.]" How should a plan administrator state the asset allocation on the model?
  12. Section 101(f)(2)(B)(vi) states that an annual funding notice must include, "in the case of any plan amendment, scheduled benefit increase or reduction, or other known event taking effect in the current plan year and having a material effect on plan liabilities or assets for the year (as defined in regulations by the Secretary), an explanation of the amendment, scheduled increase or reduction, or event, and a projection to the end of such plan year of the effect of the amendment, scheduled increase or reduction, or event on plan liabilities." When does an amendment, scheduled increase, or other known event have a "material effect" on plan liabilities or assets for purposes of section 101(f)(2)(B)(vi)?
  13. May plan administrators add additional or explanatory information to a model?
  14. May the annual funding notice be furnished to recipients electronically?
  15. For multiemployer plans, how is "each employer that has an obligation to contribute to the plan" defined for purposes of furnishing a model notice?
  16. Section 101(f) of ERISA requires the disclosure of plan funding information not only for the plan year to which the notice relates, but also for the two plan years preceding that year. Thus, for example, an annual funding notice for the 2008 plan year must include PPA funding information pertaining to the 2007 and 2006 plan years (both pre-PPA years). What funding information for these pre-PPA years should the plan administrator include in its model?
  17. Do the new annual funding notice requirements apply to plans for which the effective date of the PPA funding rules is delayed in accordance with sections 104 through 106 of PPA, or that are subject to special funding rules in accordance with section 402 of the PPA? May such plans use the model notice in Appendix A?

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