This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in March 2011; the 24-month average segment rates; the funding transitional segment rates applicable for March 2011; and the minimum present value transitional rates for February 2011.
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Monday, March 28, 2011
IRS Notice 2011-22 - Weighted average interest rate update; corporate bond indices; 30-year Treasury securities; segment rates.
Monday, March 21, 2011
IRS Announcement 2011-21 - Replacement of Schedule SSA (Form 5500) with Form 8955-SSA
This announcement designates Form 8955-SSA, Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits, as the form to be used to satisfy the reporting requirements of section 6057(a) of the Code for plan years beginning on or after January 1, 2009, and sets forth the due dates for filing the Form 8955-SSA for the 2009 plan year and subsequent plan years.
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Monday, March 7, 2011
IRS Revenue Ruling 2011-7 - Section 403(b) plan termination
Final regulations under section 403(b) of the Code were published in 2007. Under the regulations a section 403(b) plan is permitted to contain provisions that provide for plan termination and that allow accumulated benefits to be distributed on termination. This ruling provides guidance clarifying how the section 403(b) plan termination provisions apply.
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Monday, February 28, 2011
IRS Notice 2011-19 - Definition of Readily Tradable On An Established Securities Market.
This notice provides guidance regarding when securities of the employer are readily tradable on an established securities market or readily tradable on an established market for purposes of certain provisions of the Internal Revenue Code relating to employer securities held by certain qualified retirement plans. Related Links: Part III –Administrative, Procedural and Miscellaneous Definition of Readily Tradable On An Established Securities Market Notice 2011-19 Purpose This notice provides guidance regarding when securities of the employer are readily tradable on an established securities market or readily tradable on an established market for purposes of certain provisions of the Internal Revenue Code relating to employer securities held by certain qualified retirement plans. Background Section 4975(e)(7) defines an employee stock ownership plan (ESOP) as a defined contribution plan (1) which is a stock bonus plan which is qualified under § 401(a), or a stock bonus and a money purchase plan both of which are qualified under § 401(a), and which are designed to invest primarily in qualifying employer securities as defined in §4975(e)(8), and (2) which is otherwise defined in regulations prescribed by the Secretary. Section 4975(e)(7) also states that an employee stock ownership plan must satisfy certain requirements in §409, including the requirements of § 409(h). In addition, §401(a)(23) generally provides that a stock bonus plan is not a qualified plan under §401(a) unless the plan meets certain requirements, including the requirements of §409(h). Section 401(a)(22) generally provides that a defined contribution plan (other than a profit sharing plan) must meet the requirements of §409(e) (which relates to passthrough of voting rights) if it is established by an employer whose stock is not readily tradable on an established market, and after acquiring securities of the employer, more than 10 percent of the total assets of the plan are securities of the employer. Section 409(h) provides generally that a plan satisfies the requirements of §409(h) if the plan offers a participant who is entitled to a distribution the right to demand payment in the form of employer securities and, if the employer securities are not readily tradable on an established market, the participant must also have the right to require that the employer repurchase the employer securities under a fair valuation formula (put option). Section 401(a)(35)(A) provides that a trust which is part of an applicable defined contribution plan is not a qualified trust under §401(a) unless the plan satisfies certain diversification requirements set forth in §401(a)(35)(B), (C), and (D). Subject to certain exceptions, an applicable defined contribution plan under §401(a)(35) is a defined contribution plan that holds any publicly traded employer securities. A publicly traded employer security is defined in §401(a)(35)(G)(v) as an employer security under section 407(d)(1) of ERISA which is readily tradable on an established securities market. Section 401(a)(28) provides that an ESOP, and a tax credit employee stock ownership plan under §409(a), is not a qualified plan under §401(a) unless the plan meets the requirements of §401(a)(28)(B) and (C). Section 401(a)(28)(B) imposes certain diversification requirements with respect to certain participants. Section 401(a)(28)(B) was amended by the Pension Protection Act of 2006, Pub. L. 109-280, 120 Stat. 780 (PPA '06) to not apply to a plan to which §401(a)(35) applies. For employer securities that are not readily tradable on an established securities market, §401(a)(28)(C) requires all valuations with respect to activities carried on by the plan to be made by an independent appraiser that meets requirements similar to the requirements of regulations under §170(a)(1). Section 404(k) generally permits an income tax deduction for the amount of any applicable dividend paid in cash by a C corporation with respect to applicable employer securities. For this purpose, applicable employer securities are generally defined to mean employer securities as defined in §409(l) held by an ESOP. Section 4975(e)(8), as amended by the Technical Corrections Act of 1979, P.L. 96-22 (1980), provides that qualifying employer securities must meet the definition set forth in §409(l). Section 409(l)(1) defines employer securities as common stock issued by the employer (or by a corporation that is a member of the same controlled group) which is readily tradable on an established securities market and provides special rules for an employer that has no class of stock which is readily tradable on an established securities market. In the absence of any guidance of general applicability, some plans may have applied the definition of "publicly traded" at §54.4975-7(b)(1)(iv) of the Excise Tax Regulations (issued before enactment of the Technical Corrections Act of 1979) to determine whether employer securities are readily tradable on an established securities market within the meaning of §409(l)(1). Section 1042 generally provides that, if the taxpayer or executor so elects, gain on the sale of qualified employer securities which would be recognized as long-term capital gain is recognized only to the extent the gain exceeds the cost of qualified replacement property acquired within the replacement period. This treatment applies only if the sale is to an ESOP or eligible worker-owned cooperative that holds at least 30 percent of the corporation's stock after the sale, and various other conditions in §1042(b) are satisfied. In addition, under §1042(c), the only securities eligible for this treatment are employer securities defined under §409(l) and issued by a domestic C corporation that has no stock outstanding that is readily tradable on an established securities market. Final regulations under §401(a)(35) were issued on May 18, 2010 (75 FR 27927). Under §1.401(a)(35)-1(f)(5), a security is readily tradable on an established securities market if the security is traded on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f). The regulations also treat a security as readily tradable on an established securities market if the security is traded on a foreign national securities exchange that is officially recognized, sanctioned, or supervised by a governmental authority and where the security is deemed by the Securities and Exchange Commission (SEC) as having a ready market under SEC Rule 15c3-1 (17 CFR 240.15c3-1). Under the current SEC rules, a security that is included on the FTSE Group (FTSE) All-World Index is deemed to have a ready market. Section 1.401(a)(35)-1 is effective for plan years beginning on or after January 1, 2011. Readily tradable on an established securities market or established market Under this notice, the terms readily tradable on an established securities market and readily tradable on an established market, with respect to employer securities, each mean employer securities that are readily tradable on an established securities market within the meaning of §1.401(a)(35)-1(f)(5) for purposes of the following provisions: (1) §401(a)(22); (2) §401(a)(28)(C); (3) §409(h)(1)(B); (4) §409(l); and (5) § 1042(c)(1)(A). Effective Date This notice is effective for plan years beginning on or after January 1, 2012. However, this notice is not effective until plan years beginning on or after January 1, 2013 for any plan that is sponsored by an employer with respect to which, on March 14, 2011, neither the employer nor any member of its controlled group (within the meaning of § 409(l)) has any common stock that is readily tradable on an established securities market within the meaning of §1.401(a)(35)-(1)(f)(5)(A) (relating to securities that are traded on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934), but the employer or a member of its controlled group has common stock that is readily tradable on an established securities market within the meaning of §1.401(a)(35)-(1)(f)(5)(B) (relating to securities that are traded on a foreign national securities exchange that is officially recognized, sanctioned, or supervised by a governmental authority Drafting Information: The principal author of this notice is Robert Gertner of the Employee Plans, Tax Exempt and Government Entities Division. For further information regarding this notice, please contact the Employee Plans taxpayer assistance answering service at 1-877-829-5500 (a toll-free number) or e-mail Mr. Gertner at RetirementPlanQuestions@irs.gov.
and is deemed by the SEC as having a "ready market" under SEC Rule 15c3-1, within the meaning of §1.401(a)(35)-(1)(f)(5)(B)). Taxpayers (including any employer sponsoring a plan described in the preceding sentence) can rely on this notice for periods after March 14, 2011.
IRS Notice 2011-13 - 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 2011; the 24-month average segment rates; the funding transitional segment rates applicable for February 2011; and the minimum present value transitional rates for January 2011.
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Monday, February 14, 2011
Announcement 2011-16 - Correction to Revenue Ruling 2011-3 — 2011 covered compensation tables; permitted disparity
Revenue Ruling 2011-3 as it appears in the Internal Revenue Bulletin (IRB) that was published on January 24, 2011 (2011-4 I.R.B. 326) contains a typographical error in Attachment I. Revenue Ruling 2011-3 as it appears in the IRB has been corrected.
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Friday, February 11, 2011
Electronic Payment of Retirement Plan Withholding through EFTPS
Beginning in 2011, the Financial Management Service (FMS), a Bureau of the Treasury Department, is eliminating the system that enabled the processing of Federal Tax Deposit Coupons (Form 8109). Accordingly, beginning January 1, 2011, all deposits must be made using the Electronic Federal Tax Payment System (EFTPS). This includes federal tax withholding on retirement plan distributions.The Electronic Federal Tax Payment System (EFTPS) is a free service from the U.S. Department of the Treasury. This system allows the taxpayer to schedule payments over the Internet or by phone. Plans with less than $2,500 of federal tax withholding on an annual basis can continue to make their payment to the IRS when filing the Form 945, but penalties may be assessed if the withholding amounts exceeds the $2,500 limit.
The time for depositing the withheld taxes has not changed. Monthly depositors have 15 days after the close of the calendar month in which the tax was withheld. If the deposit will be made with Form 945, the form and payment are due January 31st.
Plan sponsors may receive a letter from the IRS regarding the EFTPS process and provides them the PIN needed to activate the plan's enrollment in EFTPS. Plan sponsors can also apply for EFTPS by calling 800-555-4477 or enrolling online at www.eftps.gov.
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Monday, January 31, 2011
Announcement 2011-8
This announcement contains a correction to Revenue Procedure 2011-8, 2011-1 I.R.B. 237, which contains an error in the user fee schedule that applies to a non-mass submitter of a master or prototype (M&P) plan. Rev. Proc. 2011-8 corrected.
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Notice 2011-7 - 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 January 2011; the 24-month average segment rates; the funding transitional segment rates applicable for January 2011; and the minimum present value transitional rates for December 2010.
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Monday, January 24, 2011
Rev. Rul. 2011-3 - 2011 covered compensation tables; permitted disparity
The covered compensation tables under section 401 of the Code for the year 2011 are provided for use in determining contributions to defined benefit plans and permitted disparity.
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Monday, January 17, 2011
Retirement News for Employers – January 12, 2011 Special Edition
The IRS released Retirement News for Employers – January 12, 2011 Special Edition. It contains the following articles:
Employee Plans News - Issue Number: 2011-1 – January 12, 2011
The IRS released Employee Plans News - Issue Number: 2011-1 – November 26, 2010. It contains the following articles:
- Qualified Charitable Distributions for 2010 and 2011
- New Requirements for Tax Return Preparers
- Exclusive Benefit Rule for Governmental Plans Participating in Group Trusts
- Upcoming Correction on User Fees
Monday, January 10, 2011
Notice 2011-3 - Funding Relief for Single-Employer Pension Plans under PRA 2010
Special rules relating to funding relief for single-employer pension plans under PRA 2010. This notice provides guidance on the special rules relating to funding relief for single-employer defined benefit pension plans (including multiple employer defined benefit pension plans) under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010).
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Notice 2011-2 - Guidance on the Application of Section 162(m)(6)
This notice provides guidance on the application of section 162(m)(6) of the Code. Section 162(m)(6) limits the allowable deduction for remuneration for services provided by individuals to certain health insurance providers. Section 162(m)(6) was enacted as part of the Patient Protection and Affordable Care Act (2010).
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Notice 2011-1 - Affordable Care Act Nondiscrimination Provisions Applicable to Insured Group Health Plans
This notice addresses the timing of the application of the Affordable Care Act provisions prohibiting insured group health plans from discriminating in favor of highly compensated individuals. It states that the Treasury Department and the IRS, as well as the Departments of Labor and Health and Human Services, have determined that compliance with these requirements should not be required (and thus, any sanctions for failure to comply do not apply) until after regulations or other administrative guidance of general applicability has been issued. The notice includes a request for public comments.
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Rev. Rul. 2011-1
This ruling modifies the rules for group trusts described in Rev. Rul. 81-100, 1981-1 C.B. 326, as clarified and modified by Rev. Rul. 2004-67, 2004-2 C.B. 28. The modifications revise the generally applicable rules for these group trusts and, if certain requirements are met, permit the participation in group trusts of custodial accounts under section 403(b)(7), retirement income accounts under section 403(b)(9), and governmental retiree benefit plans under section 401(a)(24). This ruling also modifies the transition relief provided in Rev. Rul. 2008-40, 2008-2 C.B. 166, relating to plans qualifying under section 1165 of the Puerto Rico Internal Revenue Code (Puerto Rico Code). In addition, this ruling provides related model language that may be used by group trusts to comply with these new provisions. Rev. Ruls. 81-100, 2004-67, and 2008-40 modified.
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Monday, January 3, 2011
Rev. Proc. 2011-8 - 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. 2010-8 superseded.
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Rev. Proc. 2011-6 - 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. 2010-6 superseded.
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Rev. Proc. 2011-5 - Technical advice
Revised procedures are provided for furnishing technical advice to area managers and appeals offices by the Office of the Division Commissioner, Tax Exempt and Government Entities, regarding issues in the employee plans area (including actuarial matters) and in the exempt organizations area. Rev. Proc. 2010-5 superseded.
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Rev. Proc. 2011-4 - Rulings and information letters; issuance procedures.
Revised procedures are provided for furnishing ruling letters, information letters, etc., on matters related to sections of the Code currently under the jurisdiction of the Office of the Division Commissioner, Tax Exempt and Government Entities. Rev. Proc. 2010-4 superseded.
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