Employee Plans News - Special Edition, August 6, 2008

The IRS announced a contract with the American Institute of Retirement Education (AIRE), a partnership formed by the American Society of Pension Professionals & Actuaries (ASPPA) and the National Institute of Pension Administrators (NIPA), to facilitate examinations for the Enrolled Retirement Plan Agent (EPRA) program:

This Special Edition announces that IRS has contracted with AIRE to conduct the examinations for the Enrolled Retirement Plan Agent (ERPA) program. Testing to begin January 2009 but registration is open on October 23, 2008. Basic questions and answers about the ERPA program are now available on our web site.

More details were published in Employee Plans News - Special Edition, August 6, 2008:

On August 1, 2008, the Internal Revenue Service (IRS) awarded through a competitive bid process, the American Institute of Retirement Education, LLC (AIRE), the contract to conduct the examinations for the Enrolled Retirement Plan Agent (ERPA) program. ERPA tests are slated to begin in January 2009. ERPA candidates may apply to take the ERPA test beginning October 23, 2008.

Generally, a person becomes an ERPA by passing a comprehensive ERPA Special Enrollment Examination relating to retirement plan matters. See www.erpaexam.org for further information on the testing process. After passing the ERPA Special Enrollment Examination, the ERPA candidate must apply for enrollment with the Service and follow renewal and continuing education procedures. ERPAs will be required to demonstrate competency and be held to professional and ethical standards of conduct.

An ERPA is an individual who has earned the privilege of representing clients with respect to issues involving the following programs: the Employee Plans Determination Letter program; the Employee Plans Compliance Resolution System; and the Employee Plans Master and Prototype and Volume Submitter programs. In addition, ERPA's may represent clients with respect to 5500 and 5300 series forms, but not with respect to actuarial forms or schedules.

In 2005, the Advisory Committee on Tax Exempt and Government Entities (ACT) recommended that the IRS develop the ERPA program in order to offer ERPA status to individuals who service retirement plans but are not authorized to practice before the IRS. The ACT estimates that in the first five years as many as 3,000 to 6,000 practitioners could avail themselves of this new enrollment opportunity.

AIRE LLC, the contracted ERPA exam administrator, is a partnership formed by the American Society of Pension Professionals & Actuaries (ASPPA) and the National Institute of Pension Administrators (NIPA). AIRE is working with Prometric and the University of Michigan to help administer the ERPA examination.

Enrolled Retirement Plan Agent (ERPA)

The IRS defines an ERPA as “an individual who has been approved by the IRS to practice before the IRS on certain retirement plan issues” as provided for in Circular 230. The IRS ERPA information page answers the following questions:

• What is an Enrolled Retirement Plan Agent ("ERPA")?
• What does an ERPA do?
• What does an ERPA need to know?
• How do I become an ERPA?
• How do I apply to become an ERPA?
• When can I take the test?
• After I become an ERPA, what are the requirements for renewal and Continuing Professional Education?
• Where can I find out more information on the ERPA Program?

Related Links:

• Employee Plans News - Special Edition, August 6, 2008
  
• Circular 230
  
• ERPA information page
  

• And the ERPA Contract Goes To……..

Employee Plans News - Special Edition, July 1, 2008

The IRS published Employee Plans News - Special Edition, July 1, 2008:

Sample Plan Language under Code §409(p) for the Transfer of an ESOP's S Corporation Shares

Code §409(p) was enacted as part of the Pension Protection Act of 2006. It requires that an ESOP holding S corporation stock cannot have a prohibited allocation during a nonallocation year. That is, no portion of plan assets attributable to employer securities may accrue or be allocated for the benefit of a disqualified person. Code §409(p)(3) provides that a nonallocation year occurs when disqualified persons (as defined in §409(p)(4)) own or are deemed to own 50% of the outstanding stock of the S corporation, taking into consideration synthetic equity as defined in Code §409(p)(6)(C) and Regulations §1.409(p)-1(f). During a nonallocation year, prohibited allocations are deemed to be distributed and excise taxes are imposed on the S corporation pursuant to §4979A. Additional consequences of a nonallocation year relate to plan qualification and the tax status of the corporation.

Regulation §1.409(p)-1(b)(v) provides that a nonallocation year may be prevented by transferring assets from the accounts of disqualified persons to the non-ESOP portion of the plan. Sample plan language to provide for such transfers is posted on our web site: www.irs.gov/ep. Under this plan provision, the Plan Administrator calculates the number of shares that need to be transferred in order to prevent the occurrence of a nonallocation year. The employer needs to provide the Plan Administrator all the information needed to perform this calculation, including information on synthetic equity.

Comments on this language should be sent by August 15, 2008. However, this sample language can be used now pending the comment period.

Related Links:

• Sample Plan Language for Section 409(p) Transfers
• Final Regulations (2006) – Final Regulations were issued on December 16, 2006 and generally applicable with respect to plan years beginning on or after January 1, 2006.
• Proposed and Temporary Regulations (2004) – Proposed and Temporary Regulations were issued December 16, 2004 and are generally effective for plan years beginning on or after January 1, 2005.
• Proposed and Temporary Regulations (2003) – Proposed and Temporary Regulations were issued July 21, 2003 and are generally applicable with plan years ending after October 20, 2003.
• IRC Section 409(p) - Qualifications for tax credit employee stock ownership plans - Prohibited allocations of securities in an S corporation (2001) – Section 409(p) was added to the code in 2001. For S corporation ESOPs in existence on March 14, 2001, Section 409(p) is effective for plan years beginning after December 31, 2004.
• IRS Announcement 2005-80, 2005-2 I.R.B. 967 – Settlement Initiative – Management S Corporation ESOP Transactions (Transactions where the taxpayer has claimed that it is entitled to exclude income of an operating business by asserting, incorrectly, that the taxpayer had established, on or before March 14, 2001, an employee stock ownership plan entitled to an exemption from unrelated business income and an S corporation that is a management corporation, and whatever actions that were taken to attempt to establish an employee stock ownership plan and a management S corporation were taken on or before March 14, 2001
• IRS Revenue Ruling 2004-4, 2004-6 I.R.B. 414 – Prohibited Allocations of Securities in an S Corporation – Transactions that involve segregating the business profits of an employee stock ownership plan (ESOP)-owned S corporation in a qualified subchapter S subsidiary, so that rank-and-file employees do not benefit from participation in the ESOP
• IRS Revenue Ruling 2003-6, 2003-3 I.R.B. 286 – Prohibited Allocations of Securities in an S Corporation – Certain arrangements involving the transfer of ESOPs that hold stock in an S corporation for the purpose of claiming eligibility for the delayed effective date of § 409(p)
  
• IRC Section 409(p) Anti-Abuse Testing, History of Regulations, and Private Letter Ruling (PLR) 200804023
• Missouri Building LLC v. Clark (In re Seferyn), B.A.P. 10th Cir., No. KS-07-094 (May 15, 2008)
• California's Franchise Tax Board (FTB) Notice 2008-4 – Resolution of Certain ESOP Transactions

Employee Plans News - Summer 2008 Edition

The IRS released Employee Plans News - Summer 2008 Edition. It contains the following articles:

• Steven T. Miller, TE/GE Commissioner, Speaks at Mid-Atlantic Benefits Conference;
• Form 5307 Has Been Revised; We're Glad You Asked!;
• The Corner of Forms & Pubs;
• Critical Priorities...With Monika Templeman;
• Maintaining Electronic Records for Employee Plans Team Audit (EPTA) Plans;
• Form 5500 Filing Tips - Are You a Multiemployer Plan?;
• Things to Remember - 2007 Forms 5500/5500EZ;
• Web Spins;
• Highlights of the Retirement News for Employers;
• Employee Plans Published Guidance;
  
• We Want You...to complete our Survey;
  
• DOL Corner;
  
• PBGC Insights;
  
• Calendar of EP Benefits Conferences

Retirement News for Employers - Spring 2008 Edition

The IRS released Retirement News for Employers - Spring 2008 edition. It contains the following articles:

• EP Connections: Interview with Joyce Kahn - New Law...Help for the Small Employer
• Desk Side Chat with Monika Templeman - What Do I Do if My Plan is Selected for an Examination?
• New on the Web; We're Glad You Asked!
• ERPA is Picking Up Speed
• Product Profile - 401(k) Fix-It Guide - Online Resource
• Written Plan Requirement for 403(b) Plans
• This Way to the Forums
• Recent Guidance
• DOL News
• Fixing Common Plan Mistakes - Hardship Distributions in a 401(k) Plan
• Mark Your Calendar
• Timing is Everything Flyer.
  

Governmental Plans Roundtable (April 22, 2008)

The IRS released Employee Plans News - Special Edition, May 2008 which discussed the Governmental Plans Roundtable held on April 22, 2008:

IRS Employee Plans hosted a Governmental Plans Roundtable on April 22, 2008 for members of the governmental plans community to begin a dialogue on how to best ensure that these plans satisfy the applicable qualification requirements while also identifying and addressing those unique issues that raise special challenges for governmental plans. See March 2008 Special Edition of the Employee Plans News announcing the Roundtable and the Spring 2008 Edition of the Employee Plans News for comments from the TE/GE Division Commissioner on the Roundtable.

The following sessions were presented at the Roundtable:

• Navigating the Staggered Remedial Amendment Period
• Requirements Relating to Section 414(d) Governmental Plans
• EPCU and Examinations Efforts
• Federal State and Local Governments (FSLG)
• EPCRS & Governmental Plans

Related Links:

• Governmental Plans web page

Treasury Regulation - REG-108508-08 - Determination of Minimum Required Pension Contributions

26 CFR Parts 1 and 54

[REG-108508-08]

RIN 1545-BH71

Treasury Regulation - REG-108508-08 - Determination of Minimum Required Pension Contributions

Proposed regulations under section 4971 of the Code provide guidance on the excise tax for failure to make certain required pension funding contributions. The regulations reflect changes made to section 4971 by the Pension Protection Act of 2006. A public hearing is scheduled for August 4, 2008.

The Treasury Department and the IRS issued proposed regulations to provide employers with funding guidance for single-employer defined benefit plans:

April 11, 2008
HP-918

Treasury, IRS Issue Funding Guidance for Single-Employer Defined Benefit Plans

Washington, DC--The Treasury Department and the Internal Revenue Service issued today proposed regulations under section 430 of the Internal Revenue Code that provide employers sponsoring single-employer defined benefit plans with guidance regarding the determination of minimum required contributions under the new funding rules enacted as part of the Pension Protection Act of 2006.

The proposed regulations, together with three earlier sets of proposed regulations, enable plan sponsors to determine the contribution requirements that apply to their defined benefit plans under the new funding regime, including the application of the quarterly contribution requirements.

Although the new funding rules are generally effective for plan years beginning on or after January 1, 2008, these regulations are proposed to be effective for plan years beginning on or after January 1, 2009. Plan sponsors, however, can rely on the proposed regulations for purposes of satisfying the minimum funding requirements for plan years beginning in 2008.

On December 19, 2007, the Senate passed an amended version of the Pension Protection Technical Corrections Act of 2007 and on March 13, 2008, the House of Representatives passed similar legislation. These proposed regulations, like the earlier proposed regulations, do not reflect those technical corrections. After technical corrections are enacted, the regulations will be modified to reflect the new provisions.

The IRS released Employee Plans News - Special Edition, April 2008, which also announced the proposed regulations:

The Treasury Department and the Internal Revenue Service issued today proposed regulations under section 430 of the Internal Revenue Code that provide employers sponsoring single-employer defined benefit plans with guidance regarding the determination of minimum required contributions under the new funding rules enacted as part of the Pension Protection Act of 2006.

The proposed regulations, together with three earlier sets of proposed regulations, enable plan sponsors to determine the contribution requirements that apply to their defined benefit plans under the new funding regime, including the application of the quarterly contribution requirements.

IRC Section 430 and Related Regulations

Here are links to the series of regulations issued by the IRS to provide guidance regarding IRC Section 430 - Minimum Funding Standards for Single-Employer Defined Benefit Pension Plans:

• Treasury Regulation - REG-108508-08 - Determination of Minimum Required Pension Contributions - Proposed regulations under section 4971 of the Code provide guidance on the excise tax for failure to make certain required pension funding contributions. The regulations reflect changes made to section 4971 by the Pension Protection Act of 2006. A public hearing is scheduled for August 4, 2008.
  
• Treasury Regulation - REG-139236-07 - Measurement of Assets and Liabilities for Pension Funding Purposes - Proposed regulations under section 430 of the Code provide guidance on the valuation of plan assets and the determination of benefit liabilities for purposes of the funding requirements that apply to single employer defined benefit plans pursuant to changes made by the Pension Protection Act of 2006. This guidance covers the determination of the plan’s funding target and normal cost, rules regarding the plan’s valuation date, the determination of the actuarial value of plan assets, rules regarding interest rates applied for minimum funding purposes, and special rules for at-risk plans.
  
• Treasury Regulation - REG-113891-07 - 72 Fed. Reg. 50544 (August 31, 2007) - Notice of Proposed Rulemaking Benefit Restrictions for Underfunded Pension Plans - Proposed regulations under section 436 of the Code provide guidance regarding benefit restrictions for certain underfunded defined benefit pension plans and regarding the use of certain funding balances maintained for defined benefit pension plans. [HTML] [PDF]
  
• Treasury Regulation - REG-143601-6 - 72 Fed. Reg. 29456 (May 29, 2007) – Notice of Proposed Rulemaking Mortality Tables for Determining Present Value - Proposed regulations under section 430 of the Code provide generally applicable mortality tables to be used in determining present value or making any computation for purposes of applying the minimum funding requirements for single employer qualified defined benefit pension plans pursuant to changes made by the Pension Protection Act of 2006 (Pub. L. No. 109-280). The regulations also provide guidance regarding an employer’s request to use its own plan-specific mortality tables. [HTML] [PDF]

Related Links:

• Treasury Regulation - REG-108508-08 - Determination of Minimum Required Pension Contributions [PDF]
• 2008-19 I.R.B. 923 (May 12, 2008)

• IRS Issues Plan Valuation Regulations For Single-Employer Defined Benefit Plans
• Getting PPA Funding Right
• Use of Credit Balance to Satisfy Quarterly Contribution Requirements May Have Unintended Consequences
• Effective Dates for Code Section 430 and the Code Section 430 Regulations
• More Proposed Regs Released for New Code section 430
• Quarterly contribution requirements and credit balances
• IRS Proposes Regs On Minimum Funding Contributions For Single-Employer Plans
• IRS issues proposed regs on minimum required contributions under PPA

Employee Plans News - Spring 2008 Edition

The IRS published Employee Plans News - Spring 2008 Edition. This edition contains the following articles:

• Recent Guidance that May Require Interim or Discretionary Amendments
• Determination Letters Coming Your Way - Announcement 2008-23
• Steve Miller Discusses Governmental Plans Roundtable
• ERPA is Moving Forward
• We're Glad You Asked!
• New PPA Guidance on Distributions
• Critical Priorities...With Monika Templeman
• EP Exam's Risk Modeling Project
• Economic Stimulus Payments: How You Can Help
• Highlights of the Retirement News for Employers
• Web Spins
• Employee Plans Published Guidance
• IRS Employee Plans Videos - Now Available Online
• The Corner of Forms & Pubs
• Written Plan Requirement for 403(b) Plans
• DOL Corner
• PBGC Insights
• "Interesting" Pension Guidance Issued
• Defined Benefit Plans - AFTAP Certification Needed as Early as April 1, 2008
• Calendar of EP Benefits Conferences

Employee Plans News - Special Edition, March 11, 2008

The IRS published Employee Plans News - Special Edition, March 11, 2008:

IRS Employee Plans is hosting a roundtable discussion with the governmental plans community as an initial step in an effort to raise awareness in the government plan sector of the need to comply with the tax qualification requirements. This Special Edition provides the details about this roundtable discussion.