This document describes the procedure by which the plan sponsor of a multiemployer pension plan may request and obtain approval of an extension of an amortization period in accordance with section 431(d) of the Code. Rev. Proc. 2008-67 superseded. Rev. Proc. 2010-4 modified.
Related Links:
Monday, December 27, 2010
Rev. Proc. 2010-52
Notice 2010-93 - 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 December 2010; the 24-month average segment rates; the funding transitional segment rates applicable for December 2010; and the minimum present value transitional rates for November 2010.
Related Links:
Notice 2010-90 - 2010 Cumulative List of Changes in Plan Qualification Requirements
This notice contains the 2010 Cumulative List of Changes in Plan Qualification Requirements (2010 Cumulative List) described in section 4 of Rev. Proc. 2007-44, 2007-2 C.B. 54. The 2010 Cumulative List is to be used by plan sponsors and practitioners submitting determination, opinion, or advisory letter applications for plans during the period beginning February 1, 2011, and ending January 31, 2012.
Related Links:Wednesday, December 22, 2010
Public Hearing on DOL Proposed Definition of Fiduciary Regulation
The DOL has announced a public hearing on the DOL Proposed Regulation – Definition of the Term "Fiduciary": WASHINGTON – The U.S. Department of Labor's Employee Benefits Security Administration today announced it will hold a public hearing on March 1, 2011 and if necessary, March 2, 2011, in Washington, D.C. on the proposed rule amending the definition of the term "fiduciary." The proposed rule was published in the Oct. 22, 2010 Federal Register for public comment. The department expects to issue a formal notice with details on the public hearing and the submission of requests to testify in early January 2011. The department will not consider requests to testify in advance of the publication of the formal notice in the Federal Register. To ensure that all interested persons have the opportunity to prepare and submit comments on the proposed rule, EBSA will be accepting public comments until Feb. 3, 2011, two weeks after the close of the Jan. 20, 2011 comment period provided in the proposed regulation. "We recognize the significance of the proposed rule for plans, participants, beneficiaries and many plan service providers and therefore believe the steps we are announcing today will ensure broad consideration of all the issues and interests in this regulation," said EBSA Assistant Secretary Phyllis C. Borzi. "For this process to work efficiently, however, all comments must be submitted no later than February 3."
Monday, December 20, 2010
IRS Notice 2010-83 - Funding Relief For Multiemployer Defined Benefit Plans Under PRA 2010
This notice provides additional relief for nonqualified deferred compensation plans covered under section 409A. This notice also expands the types of plans eligible for relief under Notice 2010-6, provides an additional method of correction and transition relief under Notice 2010-6 for certain plan document failures relating to payments at separation from service, and modifies the correction reporting requirements in Notice 2008-113 and Notice 2010-6. Notices 2008-113 and 2010-6 modified.
Related Links:
IRS Notice 2010-80 - Modification to the Relief and Guidance on Corrections of Certain Failures of a Nonqualified Deferred Compensation Plan to Comply with § 409A(a)
This notice provides additional relief for nonqualified deferred compensation plans covered under section 409A. This notice also expands the types of plans eligible for relief under Notice 2010-6, provides an additional method of correction and transition relief under Notice 2010-6 for certain plan document failures relating to payments at separation from service, and modifies the correction reporting requirements in Notice 2008-113 and Notice 2010-6. Notices 2008-113 and 2010-6 modified.
Related Links:
Notice 2010-77 - Extension of Deadline to Adopt Certain Retirement Plan Amendments
This notice further extends the deadline for amending qualified defined benefit plans to meet certain requirements of the Code that were added by the Pension Protection Act of 2006 (PPA '06) and subsequently modified by the Worker, Retiree, and Employer Recovery Act of 2008 (WRERA) and the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010). The deadline for adopting an interim or discretionary plan amendment under sections 401, 436, and 411 is extended to the last day of the first plan year that begins on or after January 1, 2011. A plan must continue to satisfy the operational compliance requirements of section 1107 of PPA '06 as a condition of the extension of the deadline for adopting plan amendments provided by this notice. Notice 2009-97 and Rev. Proc. 2007-44 modified.
Related Links:
Monday, December 6, 2010
IRS Notice 2010-78 –2011 Limitations Adjusted As Provided in Section 415(d), etc.
Part III --- Administrative, Miscellaneous, and Procedural Related Links:
2011 cost-of-living adjustments; retirements plans, etc. This notice sets forth certain cost-of-living adjustments effective January 1, 2011, applicable to the dollar limitations on benefits and contributions under qualified retirement plans. The limitations that are adjusted by reference to § 415(d) generally will remain unchanged for 2011. Other limitations applicable to deferred compensation plans are also unchanged for 2011. This notice also contains cost-of-living adjustments for several pension-related amounts in restating the data in IR-2010-108 issued October 28, 2010. The limitation for defined contribution plans under § 415(c)(1)(A) remains unchanged for 2011 at $49,000.The limitation under § 402(g)(1) on the exclusion for elective deferrals described in § 402(g)(3) remains unchanged at $16,500.The annual compensation limit under §§ 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $245,000.The dollar limitation under § 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $160,000.The dollar amount under § 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5-year distribution period remains unchanged at $985,000, while the dollar amount used to determine the lengthening of the 5-year distribution period remains unchanged at $195,000.The limitation used in the definition of highly compensated employee under § 414(q)(1)(B) remains unchanged at $110,000.The dollar limitation under § 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under § 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in § 401(k)(11) or 408(p) for individuals aged 50 or over remains unchanged at $2,500.The deductible amount under § 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,000.
Tuesday, November 30, 2010
IRS Notice 2010-84 –Guidance on In-Plan Roth Rollovers
Part III --- Administrative, Miscellaneous, and Procedural This notice provides guidance under § 402A(c)(4) of the Internal Revenue Code, relating to rollovers from § 401(k) plans to designated Roth accounts in the same plan ("in-plan Roth rollovers"), as added by § 2112 of the Small Business Jobs Act of 2010 ("SBJA"), P.L. 111-240. The guidance in this notice also generally applies to rollovers from § 403(b) plans to designated Roth accounts in the same plan. Answers for the following questions are provided in the notice: Related Links:
Employee Plans News - Issue Number: 2010-11 – November 26, 2010
The IRS released Employee Plans News - Issue Number: 2010-11 – November 26, 2010. It contains the following articles:
Monday, November 8, 2010
IRS Revenue Ruling 2010-27 – What constitutes an Unforeseeable Emergency Distribution under section 457(b) of the Code and regulations section 1.457-6(c).
This ruling provides guidance, in the form of examples, on what constitutes an unforeseeable emergency distribution under section 457(b) of the Code and regulations section 1.457-6(c). The ruling also applies the same standards to distributions from a nonqualified deferred compensation plan subject to section 409A. Related Links:
Thursday, October 21, 2010
DOL Proposed Regulation – Definition of the Term “Fiduciary”
29 CFR Part 2510 RIN 1210-AB32 DOL Proposed Regulation – Definition of the Term ``Fiduciary''
The DOL announced proposed regulations that more broadly define the circumstances under which a person is considered to be a fiduciary:
Washington – The U.S. Department of Labor's Employee Benefits Security Administration today announced a proposed rule to update the definition of "fiduciary" to more broadly define the term as a person who provides investment advice to plans for a fee or other compensation.
The department's proposed rule would amend a 1975 regulation that defines when a person providing investment advice becomes a fiduciary under the Employee Retirement Income Security Act. The proposed amendment would update that definition to take into account changes in the expectations of plan officials and participants who receive advice, as well as the practices of investment advice providers.
According to the proposal, the 1975 rule's approach to fiduciary status may inappropriately limit the department's ability to protect plans, participants and beneficiaries from conflicts of interest that may arise from today's diverse and complex fee practices in the retirement plan services market. The proposed rule is designed to remedy this limitation, and protect plan officials and participants who expect unbiased advice, by giving a broader and clearer understanding of when individuals providing such advice are subject to ERISA's fiduciary standards.
"The proposal will ensure that plans receive advice based on reliable information that protects the interests of plan participants and beneficiaries," said Phyllis C. Borzi, assistant secretary of labor for EBSA. "We believe that this proposal more closely reflects the statutory language of ERISA and the realities of the current investment marketplace, and therefore will ensure those who provide investment advice are held accountable as fiduciaries under the law."
Here is the text of the DOL summary:
SUMMARY: This document contains a proposed rule under the Employee Retirement Income Security Act (ERISA) that, upon adoption, would protect beneficiaries of pension plans and individual retirement accounts by more broadly defining the circumstances under which a person is considered to be a ``fiduciary'' by reason of giving investment advice to an employee benefit plan or a plan's participants. The proposal amends a thirty-five year old rule that may inappropriately limit the types of investment advice relationships that give rise to fiduciary duties on the part of the investment advisor. The proposed rule takes account of significant changes in both the financial industry and the expectations of plan officials and participants who receive investment advice; it is designed to protect participants from conflicts of interest and self-dealing by giving a broader and clearer understanding of when persons providing such advice are subject to ERISA's fiduciary standards. For example, the proposed rule would define certain advisers as fiduciaries even if they do not provide advice on a ``regular basis.'' Upon adoption, the proposed rule would affect sponsors, fiduciaries, participants, and beneficiaries of pension plans and individual retirement accounts, as well as providers of investment and investment advice related services to such plans and accounts.
DATES: Written comments on the proposed regulations should be submitted to the Department of Labor on or before January 20, 2011.
Related Links:
Monday, August 16, 2010
IRS Notice 2010-56 – Special Funding Rules for Multiemployer Plans Under PRA 2010
Part III --- Administrative, Miscellaneous, and Procedural IRS Notice 2010-56 – Special Funding Rules for Multiemployer Plans Under PRA 2010 This notice provides guidance on filing Form 5500 and Schedule MB for multiemployer defined benefit plans for plan sponsors who are considering use of the special funding rules under section 431(b)(8) of the Code, as added by the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010), for a plan year for which the Form 5500 (and Schedule MB) is filed. This notice also describes anticipated future guidance that will apply for sponsors of multiemployer defined benefit pension plans with respect to the special funding rules. Related Links:
Thursday, August 5, 2010
Employee Plans News - Issue Number: 2010-06 - August 2, 2010
The IRS released Employee Plans News - Issue Number: 2010-06 - August 2, 2010. It contains the following articles:
Thursday, July 15, 2010
DOL Final Regulation - Reasonable Contract or Arrangement Under Section 408(b)(2)--Fee Disclosure
The DOL issued an interim final rule on the disclosure of fees and conflicts of interest for retirement plans: WASHINGTON — The U.S. Department of Labor today announced an interim final rule that will enhance disclosure to fiduciaries of 401(k) and other retirement plans. The rule will assist fiduciaries in determining both the reasonableness of compensation paid to plan service providers and any conflicts of interest that may impact a service provider's performance under a service contract or arrangement. The interim final rule comes on the heels of considerable work on the part of House of Representatives and Senate legislators to improve the current disclosure system. "The steps we are announcing today would not have been possible without the leadership and vision of House Education and Labor Committee Chairman George Miller and Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin. By highlighting the negative consequences that undisclosed fees can have for workers' retirement security, they made possible the type of dialogue between policymakers and the regulated community that has allowed for the development of meaningful regulatory standards on such a complex issue," said U.S. Secretary of Labor Hilda L. Solis. "This regulation will give fiduciaries valuable information about compensation and revenue sharing, and the disclosure of this information will benefit millions of participants and their families." "Improving disclosure will mean that plan fiduciaries can make more informed decisions about important plan services, the cost of the services and the potential conflicts of interests that their service providers may have," said Phyllis Borzi, assistant secretary for the Labor Department's Employee Benefits Security Administration. The interim final rule will enhance disclosure to pension plan fiduciaries by requiring the disclosure of the direct and indirect compensation certain service providers receive in connection with the services they provide. The rule applies to plan service providers that expect to receive $1,000 or more in compensation and that provide certain fiduciary or registered investment advisory services; make available plan investment options in connection with brokerage or recordkeeping services; or otherwise receive indirect compensation for providing certain services to the plan. Related Links:
Thursday, June 24, 2010
Employee Plans News – Summer 2010 Edition
The IRS released Employee Plans News – Summer 2010 Edition. It contains the following articles:
Thursday, May 20, 2010
Treasury Regulation [TD 9484] – Diversification Requirements for Certain Defined Contribution Plans
DEPARTMENT OF THE TREASURY TD 9484 contains final regulations under section 401(a)(35) of the Internal Revenue Code (Code) relating to diversification requirements for certain defined contribution plans holding publicly traded employer securities. These regulations will affect administrators of, employers maintaining, participants in, and beneficiaries of defined contribution plans that are invested in employer securities. IRC Section 401(a)(35) was added by the Pension Protection Act of 2006 (PPA) (Public Law 109–280—Aug. 17, 2006). The rules apply to plans holding "publicly traded employer securities" and will therefore not apply to most closely held ESOPs. In our Analysis of the IRC Section 401(a)(35) Proposed Regulations we discussed how the definition of "publicly traded" impacts many ESOP definitions which could create problems for thinly traded companies. IRS Notice 2009-97 – Extension of Deadline to Adopt Certain Retirement Plan Amendments provided an extended amendment deadline. Related Links:
Internal Revenue Service
26 CFR Part 1
RIN 1545-BH04 The final regulations are effective on May 19, 2010 and applicable for plan years beginning on or after January 1, 2011.Prior Guidance:
Transition guidance was provided in IRS Notice 2006-107, 2006-51 I.R.B. 1114 - Diversification Requirements for Qualified Defined Contribution Plans Holding Publicly Traded Employer Securities. The transition guidance was extended in IRS Notice 2008-7 - Extension of Transitional Relief for Diversification Requirements for Certain Defined Contribution Plans. Proposed Treasury Regulation - REG–136701–07 - Diversification Requirements for Certain Defined Contribution Plans is effective for plan years beginning on or after January 1, 2009. For 2008, plans may rely on IRS Notice 2006-107 or the proposed regulations.
Wednesday, May 19, 2010
Retirement News for Employers – Spring 2010 Edition
The IRS released Retirement News for Employers – Spring 2010 Edition. It contains the following articles:
- 401(k) Questionnaire Coming to 1,200 Employers
- Upcoming 5500 Filing Deadline
- Small Business Week
- We're Glad You Asked!
- Fixing Common Plan Mistakes: Improper Forfeiture Suspense Accounts
- IRS Employee Plans Videos - Helping Small Business Owners and Employees
- Save the Date for Our Nationwide Tax Forums!
- New Profit Sharing Publication
- The Filing Cabinet
- Desk Side Chat…With Monika Templeman - Who Can Represent a Plan Sponsor During an Employee Plans Examination?
- IRS Summer Phone Forums
- DOL News
- Employee Plans Published Guidance
- Mark Your Calendar
- Timing Is Everything Flyer.
Thursday, May 6, 2010
DOL Spring 2010 Semi-Annual Regulatory Agenda: QDIA Target Date Fund Disclosure
The DOL has released the DOL Spring 2010 Semi-Annual Regulatory Agenda. One of the topics is the QDIA Target Date Fund Disclosure : QDIA Target Date Fund Disclosure (EBSA) EBSA plans to enhance retirement security by proposing an amendment to its qualified default investment alternative (QDIA) regulation to ensure that comprehensive information about the benefits and risks of investing in target date funds is disclosed to participants in the required QDIA notice.
EBSA plans to enhance retirement security by proposing an amendment to its qualified default investment alternative (QDIA) regulation to ensure that comprehensive information about the benefits and risks of investing in target date funds is disclosed to participants in the required QDIA notice, ultimately supporting the Secretary's good jobs for everyone policy.
Key Action: Publication – Proposed Amendment to QDIA Regulation
The Department's EBSA plans to publish a proposed amendment to the QDIA regulation in August 2010. This guidance will ensure that plan participants are provided with comprehensive information to evaluate target date or similar funds that have been selected as their plan's default investment.
Key Concern and Issues to be addressed
The popularity of target date funds in 401(k)-type plans is growing, in part due to their inclusion as a category of permissible investments in the Department's QDIA regulation. According to a recent survey, almost 58 percent of 401(k)-type plans offered target date funds as an investment option in 2008. And out of the approximately 40% of 401(k)-type plans that contained an automatic enrollment feature, almost 60% of these plans used target date funds as a qualified default investment alternative.
Recent attention has focused on the importance of understanding the unique characteristics that distinguish target date funds from other types of investments, the differences among the various target date funds available, and how these differences can affect the retirement savings of employees. The Department anticipates that this proposed amendment will better assist plan participants in evaluating target date funds that have been selected as default investments. The Department intends that the information in the QDIA notice will be consistent with that which is disclosed to participants who actively make decisions among their plans' investment options.
Background
The Department published its final QDIA regulation in October 2007. Target date and similar funds were included in the regulation as one of the categories of investments that plan fiduciaries may use to invest on behalf of participants who do not give investment directions. One of the requirements that must be satisfied for a plan fiduciary to obtain relief under the QDIA regulation is a notice describing the plan's default investment must be furnished to participants.
In recent years, attention has been given to the adequacy of information that is disclosed, both to plan fiduciaries and to plan participants, about the benefits and risks of investing in target date funds. The Department's ERISA Advisory Council studied several aspects of target date funds in 2008, and in 2009 the Department and the U.S. Securities and Exchange Commission held a joint public hearing to examine several issues related to target date funds, including how they are selected by plan fiduciaries and by investors. Based on these studies and on testimony presented at the hearing, the Department decided to enhance and provide more specificity concerning the information about target date or similar funds that must be disclosed pursuant to the QDIA regulation.
You may also be interested in Field Assistance Bulletin No. 2008-03 – Guidance Regarding Qualified Default Investment Alternatives (29 CFR § 2550.404c-5) and the Qualified Default Investment Alternatives (QDIA) – DOL Final Regulations.
DOL Spring 2010 Semi-Annual Regulatory Agenda: Amendment to Claims Procedure Regulation
The DOL has released the DOL Spring 2010 Semi-Annual Regulatory Agenda. One of the topics is the Amendment to Claims Procedure Regulation: Amendment to Claims Procedure Regulation (EBSA) EBSA plans to update and clarify the claims procedure requirements to enhance retirement and health benefit security and to protect workers rights and benefits, ultimately supporting the Secretary's good jobs for everyone policy.
EBSA plans to update and clarify the claims procedure requirements to enhance retirement and health benefit security and to protect workers rights and benefits, ultimately supporting the Secretary's good jobs for everyone policy.
Key Action: Proposed Regulation
The Department's EBSA plans to publish a proposed regulation in April 2011 that will amend the current claims procedure regulation and enhance the claims review process.
Key Concern and Issues to be addressed
Due to the significance of the rules that govern the filing and review of 1.4 billion health, disability, and pension claims and 531,000 appeals annually, the Department will review the adequacy of the notice and timing and other requirements of the claims procedure regulation and propose changes necessary to ensure that workers receive timely, complete and understandable explanations of benefit claim denials, as well as a full and fair review of any denied claims when a claim determination is appealed to a plan fiduciary. This initiative also will update the claims procedure rules to comport with the requirements of the recently enacted Patient Protection and Affordable Care Act of 2010.
Background
Section 503(2) of the Employee Retirement Income Security Act requires that participants be provided a full and fair review of claims. The Department published the current claims procedure regulation on November 21, 2000. After almost 10 years of experience in implementing the current regulation, the Department believes there is a need to review the extent to which the claims procedure regulation is working, given its impact on the retirement and health benefit security and benefit determinations of so many Americans.
There are an estimated 2.8 million health plans covering 138 million participants and beneficiaries and 708,000 pension plans covering 124 million participants and beneficiaries subject to the current claims procedure regulation.
DOL Spring 2010 Semi-Annual Regulatory Agenda: Voluntary Fiduciary Correction Program (VFCP)
The DOL has released the DOL Spring 2010 Semi-Annual Regulatory Agenda. One of the topics is the Voluntary Fiduciary Correction Program (VFCP): Voluntary Fiduciary Correction Program (VFCP) (EBSA) The VFCP enhances retirement security and protects workers by encouraging compliance with the Employee Retirement Income Security Act (ERISA) and restoring plan assets and the payment of additional benefits.
In 2006, the Department of Labor published in the Federal Register an Update of the Voluntary Fiduciary Correction Program (VFCP), which simplified and expanded the original VFCP published in 2002. The VFCP enhances retirement security and protects workers by encouraging compliance with the Employee Retirement Income Security Act (ERISA) and restoring plan assets and the payment of additional benefits, ultimately supporting the Secretary's good jobs for everyone policy.
Key Concern and Issues to be addressed
The 2006 Update of the VFCP includes 19 categories of plan transactions that may be corrected under the Program and an online calculator for determining amounts to be restored to plans. The updated VFCP serves to both encourage and facilitate the use of the Program as a means by which to correct covered fiduciary violations.
Background
The VFCP is designed to encourage employers to voluntarily comply with ERISA by self-correcting certain violations of the law. Many workers can benefit from the VFCP as a result of the increased retirement security associated with restoration of plan assets and payment of additional benefits. It also helps plan officials understand the law. The 2006 Update of the VFCP describes how to apply the 19 categories of transactions covered, acceptable methods for correcting violations, and examples of potential violations and corrective actions. The Department issued the Update in response to public and internal comments on the preliminary revision of the VFCP published in April 2005. The 2006 Update of the VFCP was effective May 19, 2006. The Department also provides applicants conditional relief from payment of excise taxes for certain VFCP transactions under a class exemption related to the VFCP. The amended class exemption was also effective on May 19, 2006.
DOL Spring 2010 Semi-Annual Regulatory Agenda: Target Date Fund Selection Compliance Assistance Checklist
The DOL has released the DOL Spring 2010 Semi-Annual Regulatory Agenda. One of the topics is the Target Date Fund Selection Compliance Assistance Checklist: Checklists for Pension and Health (EBSA) EBSA plans to enhance retirement security by publishing compliance assistance guidance to plan sponsors regarding the evaluation and selection of target date funds as retirement plan investment options and investment choices for employees.
EBSA plans to enhance retirement security by publishing compliance assistance guidance to plan sponsors regarding the evaluation and selection of target date funds as retirement plan investment options and investment choices for employees, ultimately supporting the Secretary's good jobs for everyone policy.
Key Action: Publication – Fiduciary Checklist
The Department's EBSA plans to publish a compliance assistance checklist in Spring 2010. This guidance will assist plan sponsors in their evaluation and selection of target date funds as plan investment options and investment choices.
Key Concern and Issues to be addressed
The popularity of target date funds in 401(k)-type plans is growing. However, target date funds are not uniformly-designed investment products. Recent attention has focused on the importance of understanding the unique characteristics that distinguish target date funds from other types of investments, the differences among the various target date funds available, and how these differences can affect the retirement savings of employees. The Department anticipates that its guidance will assist plan fiduciaries in evaluating and selecting from the different target date funds that are available.
Background
Under the Employee Retirement Income Security Act (ERISA), plan fiduciaries responsible for selecting plan investment options must act prudently and solely in the interest of the plan's participants and beneficiaries. In 2008, the Department's ERISA Advisory Council studied several aspects of target date funds, include challenges faced by plan fiduciaries in selecting and monitoring appropriate target date funds for their plans, and recommended that the Department provide additional guidance to plan fiduciaries. In 2009, the Department and the U.S. Securities and Exchange Commission held a joint public hearing to examine several issues related to target date funds, including how they are selected by plan fiduciaries and by investors. Several witnesses at the hearing also indicated that plan fiduciaries would benefit from additional guidance on the evaluation and selection of target date funds.
Surveys and studies suggest that target date funds are growing in popularity in 401(k)-type plans, both as investment options generally and as qualified default investment alternatives for participants who do not provide investment direction. For example, according to a recent survey, almost 58 percent of 401(k)-type plans offered target date funds as an investment option in 2008. Also, out of the approximately 40% of 401(k)-type plans that contained an automatic enrollment feature, almost 60% of these plans used target date funds as a qualified default investment alternative. With the growing popularity of target date funds as plan investment options and choices, the Department believes that providing additional guidance to plan fiduciaries will help enhance retirement security for employees.
DOL Spring 2010 Semi-Annual Regulatory Agenda: Delinquent Filer Voluntary Compliance Program (DFVCP)
The DOL has released the DOL Spring 2010 Semi-Annual Regulatory Agenda. One of the topics is the Delinquent Filer Voluntary Compliance Program: Delinquent Filer Voluntary Compliance Program (DFVCP) (EBSA) The Delinquent Filer Voluntary Compliance Program (DFVCP) is designed to encourage voluntary compliance with the annual reporting requirements under the Employee Retirement Income Security Act (ERISA).
The Delinquent Filer Voluntary Compliance Program (DFVCP) is designed to encourage voluntary compliance with the annual reporting requirements under the Employee Retirement Income Security Act (ERISA). The DFVCP gives delinquent plan administrators a way to avoid potentially higher civil penalty assessments by voluntarily correcting the failure to file an annual report on time, satisfying the program's requirements and voluntarily paying a reduced penalty amount.
Key Concern and Issues Addressed
Eligibility for the DFVCP is limited to plan administrators with filing obligations under Title I of ERISA who comply with the provisions of the program and who have not been notified in writing by the Department of a failure to file a timely annual report under Title I of ERISA. Participation in the DFVCP is a two-part process. First, file a complete Form 5500 Series Annual Return/Report, including all required schedules and attachments, for each year relief is requested. Special simplified rules apply to "top hat" plans and apprenticeship and training plans. Second, submit to the DFVCP a copy of the 5500, without the schedules and attachments, and the applicable penalty amount. The plan administrator is personally liable for the applicable penalty amount, and, therefore, amounts paid under the DFVCP shall not be paid from the assets of an employee benefit plan. An online calculator is available to assist filers in computing the penalty. Additionally, after completing the calculator, located at www.efast.dol.gov, filers may choose to pay the penalty electronically.
Background
The procedures governing participation in the program are intended to make the program easy to use. The program description is being updated to conform to guidance on filing delinquent 5500s under the Department's new EFAST2 wholly electronic filing system. Questions about the DFVCP should be directed to EBSA by calling 202.693.8360 or www.dol.gov/ebsa. For additional information about the Form 5500 Series, visit the EFAST Internet site at www.efast.dol.gov, or call the EBSA help desk at 1.866.463.3278.
We have previously discussed the DFVCP in Behind in your IRS Forms 5500 filings? and in DFVCP Penalty Calculator and Online Payment.
Monday, April 12, 2010
IRS Announcement 2010-20 – Issuance of Opinion and Advisory Letters and Opening of the EGTRRA Determination Letter Program for Pre-Approved Defined Benefit Plans
Part IV. Items of General Interest IRS Announcement 2010-20 – Issuance of Opinion and Advisory Letters and Opening of the EGTRRA Determination Letter Program for Pre-Approved Defined Benefit Plans This document announces that the Service will soon issue opinion and advisory letters for pre-approved (i.e., master and prototype (M&P) and volume submitter (VS)) defined benefit plans that were restated for the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") and other changes in plan qualification requirements listed in Notice 2007-3 ("the 2006 Cumulative List") and that were filed with the Service. The Service expects to issue the letters on March 31, 2010, or, in some cases, as soon as possible thereafter. A plan that receives a favorable letter with respect to its restatement for EGTRRA and the 2006 Cumulative List is referred to as an "EGTRRA-approved plan." Employers using these pre-approved plan documents to restate a plan for EGTRRA and the 2006 Cumulative List will be required to adopt the EGTRRA-approved plan document by April 30, 2012. The Service will accept applications for individual determination letters submitted by adopters of these pre-approved plans starting on May 1, 2010. Related Links:
Monday, March 22, 2010
Employee Plans News – Spring 2010 Edition
The IRS released Employee Plans News – Spring 2010 Edition. It contains the following articles:
March 31, 2010
Monday, March 15, 2010
Treasury Regulation [REG–148681-09] – Notice of Proposed Rulemaking Request for Information Regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plans
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
RIN 1545-BJ04
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Parts 2509, 2520 and 2550
RIN 1210-AB33
Treasury Regulation [REG–148681-09] – Notice of Proposed Rulemaking Request for Information Regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plans
The Department of Labor and the Department of the Treasury (the “Agencies”) are currently reviewing the rules under the Employer Retirement Income Security Act (ERISA) and the plan qualification rules under the Internal Revenue Code (Code) to determine whether, and, if so, how, the Agencies could or should enhance, by regulation or otherwise, the retirement security of participants in employer-sponsored retirement plans and in individual retirement arrangements (IRAs) by facilitating access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement. The purpose of this notice is to solicit views, suggestions and comments from plan participants, employers and other plan sponsors, plan service providers, and members of the financial community, as well as the general public, on this important issue...Comments must be submitted on or before May 3, 2010.
Here is the DOL news release seeking public comments on lifetime income options:
Washington – The U.S. Departments of Labor and the Treasury today announced the publication of a request for information (RFI) soliciting public comments to assist the agencies in determining what steps to take to enhance retirement security for workers in employer-sponsored retirement plans through lifetime annuities or other arrangements that provide a stream of income after retiring. The RFI appears in today’s edition of the Federal Register.
“Today’s initiative is particularly important given the shift from defined benefit plans that offer employees lifetime annuities to 401(k) and other defined contribution plans that typically distribute retirement savings in a lump sum payment,” said Phyllis C. Borzi, assistant secretary for the Labor Department’s Employee Benefits Security Administration.
The RFI seeks comments on a broad range of topics, including:
- The advantages and disadvantages of distributing benefits as a lifetime stream of income both for workers and employers, and why lump sum distributions are chosen more often than a lifetime income option.
- The type of information participants need to make informed decisions in selecting the form of retirement income.
- Disclosure of participants’ retirement income in the form of account balances as well as in the form of lifetime streams of payment.
- Developments in the marketplace that relate to annuities and other lifetime income options.
Related Links:
- Treasury Regulation [REG–148681-09] – Notice of Proposed Rulemaking Request for Information Regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plan [HTML]
Federal Register - 2010-11 I.R.B. (March 15, 2010)
- DOL News Release
- DOL Request for Information Regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plans
Friday, February 26, 2010
U.S. Labor Department rules to improve retirement security announced as part of White House Middle Class Task Force's year-end report
The DOL announced two new rules. One rule is designed to help workers obtain unbiased advice about how to invest in their IRAs and 401(k) plans and the other establishes new guidelines on disclosures for multiemployer retirement plans:
Washington – Today, at a White House forum hosted by Vice President Joe Biden, the U.S. Department of Labor announced two new rules designed to enhance retirement security and transparency for the millions of workers covered by 401(k), pension and other retirement arrangements. The announcement was part of the White House Middle Class Task Force's year-end report, which the vice president released at this morning's event.
During the past year, the Middle Class Task Force has focused on solutions to the challenges facing America's middle class - including retirement security and the need for high-quality jobs for middle class workers. The report details the year's work of the task force, and it includes a proposed rule on investment advice. The department also is announcing the publication of a final rule on multiemployer plan transparency.
"A secure retirement is essential to workers and the nation's economy. Along with Social Security and personal savings, secure retirement allows Americans to remain in the middle class when their working days are done. And, the money in the retirement system brings tremendous pools of investment capital, creating jobs and expanding our economy," said U.S. Deputy Secretary of Labor Seth Harris. "These rules will strengthen America's private retirement system by ensuring workers get good, objective information. When that happens, workers make the kind of decisions that are good for their families and the nation as the whole."
The first of the two rules would ensure workers receive unbiased advice about how to invest in their individual retirement accounts or 401(k) plans. If the rule is adopted, it would put in place safeguards preventing investment advisors from slanting their advice for their own financial benefit. Investment advisors also would be required to disclose their fees, and computer models used to offer advice would have to be certified as objective and unbiased. The department estimates that 2 million workers and 13 million IRA holders would benefit from this rule to the tune of $6 billion.
The second rule announced today establishes new guidelines on the disclosure of funding and other financial information to workers participating in multiemployer retirement plans - those collectively bargained by unions and groups of employers. It will ensure transparency by guaranteeing workers can better monitor the financial condition and day-to-day operations of their retirement investments. The rule will go into effect in April 2010.
Related Links:
Monday, February 22, 2010
Retirement News for Employers – Winter 2010 Edition
The IRS released Retirement News for Employers – Winter 2010 Edition. It contains the following articles:
Tuesday, February 2, 2010
IRS Notice 2010-15 – Miscellaneous HEART Act Changes
Part III --- Administrative, Miscellaneous, and Procedural IRS Notice 2010-15 – Miscellaneous HEART Act Changes Notice 2010-15 provides guidance in the form of questions and answers with respect to certain provisions of the Heroes Earnings Assistance and Relief Tax Act of 2008 ("HEART Act"). The notice also requests comments regarding any additional issues relating to the sections of the HEART Act that are addressed in the notice. Related Links: Related Blog Posts:
IRS Announcement 2010-03 – Automatic Approval of Changes in Funding Method for Takeover Plans and Changes in Pension Valuation Software
Part IV. Items of General Interest IRS Announcement 2010-03 – Automatic Approval of Changes in Funding Method for Takeover Plans and Changes in Pension Valuation Software Automatic approval of changes in funding method for takeover plans and changes in pension valuation software. This announcement provides, for plan years beginning on or after January 1, 2009, automatic approval for certain changes in funding method with respect to single-employer defined benefit plans that result either from a change in the valuation software used to determine the liabilities for such plans or from a change in the enrolled actuary and the business organization providing actuarial services to the plan. This guidance is being provided in response to numerous requests from actuaries and plan sponsors, many of whom are continuing to modify their valuation software in order to implement the changes to the funding rules made by the Pension Protection Act of 2006, the Worker, Retiree, and Employer Recovery Act of 2008, and guidance regarding these legislative changes. Related Links:
IRS Notice 2010-06 - Relief and Guidance on Corrections of Certain Failures of a Nonqualified Deferred Compensation Plan to Comply with § 409A(a)
Part III --- Administrative, Miscellaneous, and Procedural IRS Notice 2010-06 – Relief and Guidance on Corrections of Certain Failures of a Nonqualified Deferred Compensation Plan to Comply with § 409A(a) This notice provides rules governing the taxation of nonqualified deferred compensation plans. Section 409A of the Code requires that a nonqualified deferred compensation plan meet certain plan document requirements, and that the plan be operated in compliance with the plan document. Notice 2010-6 permits taxpayers to correct certain failures of a nonqualified deferred compensation plan to comply with the plan document requirements of section 409A, or in certain circumstances, to limit the amount includible in income and additional taxes under section 409A as a result of a plan document failure. Notices 2008-113 and 2008-115 modified. Related Links:
Wednesday, January 20, 2010
IRS Revenue Procedure 2010-08 - Rulings and determination letters
26 CFR 601.201: Rulings and determination letters. IRS Revenue Procedure 2010-08 - Rulings and determination letters User fees for employee plans and exempt organizations. Up-to-date guidance for complying with the user fee program of the Service as it pertains to requests for letter rulings, determination letters, etc., on matters under the jurisdiction of the Office of the Division Commissioner, Tax Exempt and Government Entities Division, is provided. Rev. Proc. 2009-8 superseded. Related Links: IRS Revenue Procedure 2010-08, 2010-01 I.R.B. 234 - Rulings and determination letters (January 4, 2010) [PDF]
IRS Revenue Procedure 2010-06 - Rulings and determination letters
26 CFR 601.201: Rulings and determination letters. IRS Revenue Procedure 2010-06 - Rulings and determination letters Employee plans determination letters. Revised procedures are provided for issuing determination letters on the qualified status of employee plans under sections 401(a), 403(a), 409, and 4975 of the Code. Rev. Proc. 2009-6 superseded. Related Links: IRS Revenue Procedure 2010-06, 2010-01 I.R.B. 193 - Rulings and determination letters (January 4, 2010) [PDF]
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