IRS’s Employee Plans News Discusses Procedural Guidelines for Pension Equity Plan Determination Letters

In the latest edition of Employee Plans News, the Internal Revenue Service (IRS) discusses its new procedural guidelines for pension equity plan determination letters. The newsletter links to the IRS’s PEP Determinations Worksheet and Explanation of PEP Plan Issues, which are intended for use by IRS employees in processing determination letter applications. The IRS indicates that “These documents explain the issues unique to PEP plans that we will take into account when reviewing plan documents, such as how the provision of hypothetical interest impacts the plan’s compliance with the accrual rules of Internal Revenue Code Section 411(b)(1).” The IRS also includes links to its PEP Memorandum. The IRS indicates that the memorandum “highlights the plan document’s compliance with IRC Section 411(b)(1)(G), which generally provides that a participant’s accrued benefit under a qualified defined benefit plan cannot be reduced on account of any increase in the participant’s age or service”.

To read more, click here.

IRS Amends Safe Harbor Notices on Eligible Rollover Distributions

The Internal Revenue Service on November 24 released Notice 2014-74 updating two safe harbor explanations in Notice 2009-68 that can be used to satisfy the requirement under Internal Revenue Code section 402(f) concerning certain information to be provided to recipients of eligible rollover distributions. The changes to the safe harbor explanations relate to the allocation of pre-tax and after-tax amounts, distributions in the form of in-plan Roth rollovers, and certain other clarifications.

To read more, click here.

IRS Announces Upcoming Retirement Plan Webinars

The Internal Revenue Service (“IRS”) recently announced two new retirement plan webinars. On December 4, 2014, the IRS will hold a webinar titled “Properly Defining Retirement Plan Compensation” which will discuss Internal Revenue Code Sections 414(s) & 415 compensation, identifying which definition may be used for each plan purpose, and common plan failures involving compensation. On December 11, 2014, the IRS will hold a webinar on “Retirement Plan Distributions - What every participant should know” which will include taking a distribution from a retirement plan, a new plan distribution rule allows participants to direct pre and post-tax amounts to multiple destinations, exceptions to the additional 10% tax on early distributions from plans, beneficiary designations, and required minimum distributions.

Information on the December 4th call is available here.
Information on the December 11th call is available here.

IRS Publishes Latest Edition of Employee Plans News

The Internal Revenue Service (“IRS”) has recently published Issue 2014-18 of the Employee Plans News. This edition discusses, a new option for plan sponsors to include income annuities in default target date fund investment options and the Information Reporting Program Advisory Committee (IRPAC) 2014 annual report. The newsletter also discusses the EPCU QJSA project which found that most sponsors complied with the qualified joint and survivor annuity notice and consent requirements.

To read more, click here.

IRS Issues FAQs on Transitional Reinsurance Program

In "ACA Section 1341 Transitional Reinsurance Program FAQs", the Internal Revenue Service (IRS) indicates that:

"Section 1341 of the Affordable Care Act establishes a transitional Reinsurance Program to help stabilize premiums for coverage in the individual market during the years 2014 through 2016. The statute requires all health insurance issuers and third-party administrators on behalf of self-insured group health plans to make contributions under this program to support payments to individual market issuers that cover high-cost individuals (payment-eligible issuers)...The following questions and answers provide information on the treatment of contributions made under the Reinsurance Program."

To read more, click here.

IRS Issues Guidance on Plans Without In-Patient Hospitalization Services

In Notice 2014-69: Group Health Plans that Fail to Cover In-Patient Hospitalization Services, the Internal Revenue Service indicates that:

"The Department of Health and Human Services (HHS) and the Department of the Treasury (including the Internal Revenue Service) (collectively, the Departments) have become aware that certain group health plan benefit designs that do not provide coverage for in-patient hospitalization services are being promoted to employers. A plan that fails to provide substantial coverage for these services would fail to offer fundamental benefits that are nearly universally covered, and historically have been considered integral to coverage, under typical employer-sponsored group health plans. Promoters of these plans contend that the plans satisfy minimum value within the meaning of the Affordable Care Act (including section 36B(c)(2)(C)(ii)of the Internal Revenue Code (Code) and final HHS regulations under section1302(d)(2)(C) of the Affordable Care Act (referred to in this notice as minimum value or MV)), as determined through use of the on-line MV Calculator referred to in final HHS regulations and proposed Treasury regulations."

The Notice is available here.
ERIC members and trial members can read more here.

Agencies Issue More ACA FAQs

In "FAQs about Affordable Care Act Implementation (Part XXII)", the the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury indicate that:

"[T]hese FAQs answer questions from stakeholders to help people understand the new law and benefit from it, as intended...On September 13, 2013, DOL and the Treasury published guidance on the application of the market reforms and other provisions of the Affordable Care Act to health reimbursement arrangements (HRAs), certain health flexible spending arrangements (health FSAs) and certain other employer health care arrangements.(1)HHS issued contemporaneous guidance to reflect that HHS concurs in the application of the laws under its jurisdiction as set forth in the DOL and Treasury Department guidance.(2) Subsequently, on May 13, 2014, two FAQs were made available on the IRS website addressing employer health care arrangements.(3)"

To read more, click here.

IRS Updates Its Retirement Plan Reporting and Disclosure Requirements Guide

The Internal Revenue Service (IRS) has recently updated its Retirement Plan Reporting and Disclosure Requirements Guide. The IRS indicates that the Guide is intended to be used as a quick reference tool and in connection with the Department of Labor’s Retirement Plan Reporting and Disclosure Guide. The 12-page guide summarizes the types of reporting and disclosures that are required, the type of information that must be provided, who must be provided with the information, and when the information must be provided.

The IRS Guide is available here.

Towers Watson Analyzes Rollover Guidance

In “IRS Issues Favorable Guidance on Allocation of Aftertax Benefits in Rollovers,” Towers Watson explains that:

“In Notice 2014-54, the IRS allows retirement plan participants to avoid current taxation on distributions that include aftertax amounts by rolling over pretax amounts directly to an individual retirement account (IRA) or employer plan and directing aftertax amounts into a Roth IRA (or taking them in cash). The rules apply to participants, beneficiaries and alternate payees in defined benefit, defined contribution, 403(b) and governmental 457(b) plans. The allocation procedure avoids the complexities of a pro rata allocation approach the IRS had previously required for direct rollovers that included aftertax amounts.”

To read more, click here.

IRS Updates 2015 Retirement Plan Limits

The Internal Revenue Service (IRS) has announced the cost‑of‑living adjustments for retirement plans for 2015. The IRS explains that “Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment.” The announcement indicated that the limit for elective deferrals for 401(k) plans increased from $17,500 to $18,000 and the limit for catch-up contributions for employees aged 50 increased from $5,500 to $6,000.

To read more, click here.

Buck Consultants Analyzes Excepted Benefits Guidance

In "Final Regulations Address Limited-Scope Vision and Dental Benefits and EAPs," Buck Consultants, a Xerox Company indicates that:

"The Departments issued final regulations addressing limited-scope vision and dental, long-term care benefits, and EAPs as HIPAA-excepted benefits. Based on comments regarding the proposed regulations, these final regulations make minor but significant changes. The regulations provide guidance and relief for employers sponsoring these affected benefits and should be carefully reviewed for implementation in 2015. Guidance discussing “wraparound” benefits, introduced in the proposed regulations, will be issued at a future date."

To read more, click here.

ERIC members and trial members can read more here.

New Analysis of Hybrid Plan Regulations

Richard Shea and Robert Newman Covington & Burling LLP highlight the key provisions of the new hybrid plan regulations in “Hybrid Plan Regulations Could Reinvigorate the Defined Benefit Plan System”. In the article, they indicate that:

“Treasury and the IRS recently issued long-awaited regulations governing cash balance and other hybrid pension plans. Final regulations implement the intent of Congress in the Pension Protection Act of 2006 (the “PPA”) to eliminate the so-called “whipsaw calculation” and permit more generous rates of return for employees and retirees. Proposed regulations issued at the same time set forth a path for non-compliant plans to become compliant. Private sector plans must adopt these changes before the first day of first plan year beginning in 2016. Most significantly, however, is that the regulations − for the first time − specify the way in which employers can marry the efficiency of delivering benefits under through a defined benefit plan with the reduced financial volatility of a defined contribution plan. In short, the regulations make possible a new design for retirement benefits that may prove attractive for employers and employees alike: the shared-risk pension plan.”

To read more from Covington, click here.
ERIC members and trial members can read more about the regulations here.

Agencies Post New FAQs on Cost-Sharing Limits

In "FAQs About Affordable Care Act Implementation, Part XXI", the U.S. Departments of Labor, Health and Human Services (HHS), and the Treasury state that:

"Based on comments received, set forth below is an additional FAQ regarding the [maximum out-of-pocket] requirements. This FAQ addresses only group health plans’ and group health insurance issuers’ obligations under section 2707(b) of the PHS Act. For non-grandfathered health plans in the individual and small group markets that must provide coverage of the essential health benefit package under section 1302(a) of the Affordable Care Act, additional requirements apply."

To read more, click here.

IRS Issues New Health Coverage Reporting Forms for Employers

In a "Statement on Health Coverage Information Reporting by Employers", the Internal Revenue Service (IRS) indicated that:

"On July 24, 2014, the IRS released draft forms that employers will use to report on health coverage that they offer to their employees. In accordance with the IRS’ normal process, these draft forms are being provided to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them. We anticipate that draft instructions relating to the forms will be posted to IRS.gov in August. Both the forms and instructions will be finalized later this year."

The IRS statement is available here.

The draft forms are available here.

IRS Announces Upcoming Phone Forum on Related Employers

The Internal Revenue Service (IRS) has announced that it will hold a phone forum on “Related Employers” on May 22, 2014 at 2 pm ET. The IRS states that they will “cover issues affecting related employers such as controlled and affiliated service groups, how the IRS reviews and evaluates these groups and how applicants can receive reliance on a determination letter.” The IRS requests that all questions be emailed to them by May 15, 2014.

For more information, click here.
The handout for the phone forum is available here.

Agencies Publish FAQs on COBRA Notice and Out-of-Pocket Limits

The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury recently published "FAQs About Affordable Care Act Implementation (Part XIX). The FAQs state:

"Set out below are additional Frequently Asked Questions (FAQs) regarding implementation of various provisions of the Affordable Care Act. These FAQs have been prepared jointly by the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury (collectively, the Departments). Like previously issued FAQs (available at http://www.dol.gov/ebsa/healthreform/ and http://www.cms.gov/cciio/resources/fact-sheets-andfaqs/ index.html), these FAQs answer questions from stakeholders to help people understand the new law and benefit from it, as intended." 

The FAQs address "Updated Department of Labor Model Notices" and "Limitations on Cost-Sharing under the Affordable Care Act".

The FAQs are available here.

IRS Issues New HSA Limits for 2015

In Revenue Procedure 2014-30 , the Internal Revenue Service states that:

"For calendar year 2015, the annual limitation on deductions under § 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan is $3,350. For calendar year 2015, the annual limitation on deductions under § 223(b)(2)(B) for an individual with family coverage under a high deductible health plan is $6,650...For calendar year 2015, a “high deductible health plan” is defined under § 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,450 for self-only coverage or $12,900 for family coverage."

The Revenue Procedure is available here.

IRS to Hold Phone Forum on Plan Terminations

The Internal Revenue Service (IRS) has announced an upcoming phone forum on “Plan Terminations – What You Need to Know Before You Terminate That Plan”. The IRS indicates that in the phone forum:

“ We’ll discuss the important items to review when a retirement plan terminates, like the date of termination, permanency requirement, the need to update the plan for all law requirements and accelerated vesting requirements. We’ll also discuss the different types of terminations for defined benefit plans and what happens if the plan is overfunded or underfunded.”

The phone forum is scheduled for May 6, 2014.
For more information, click here.

IRS Issues Guidance to Encourage Plan-to-Plan Rollovers

In “Treasury And IRS Issue Guidance Facilitating Tax-Free Rollovers To Employer-Sponsored Retirement Plans”, the government states that:

“[T]the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued guidance designed to help individuals accumulate and consolidate retirement savings by facilitating the transfer of savings from one retirement plan to another. This guidance will increase pension portability by making it easier for employees changing jobs to move assets to their new employers’ retirement plans…[The] ruling simplifies the rollover process by introducing an easy way for a receiving plan to confirm the sending plan’s tax-qualified status. The plan administrator for the receiving plan can now simply check a recent annual report filing for the sending plan on a database that is readily available to the public online. This eliminates the need for the two plans to communicate (with the individual as go-between), expedites the rollover process, and reduces associated paperwork.”

For analysis by Buck Consultants on this issue, click here.
The IRS’s press release is available here.
For the IRS guidance, click here.

IRS Issues Additional DOMA Guidance for Retirement Plans

The Internal Revenue Service (IRS) recently issued guidance on the treatment of same-sex marriages for retirement plan purposes. The Treasury Department and Internal Revenue Service released Notice 2014-19, which provides guidance on the application of the decision in U.S. v Windsor on the federal tax treatment of same-sex married couples to retirement plans.

This guidance is important because it clarifies that the plans need to comply with the retirement provisions under section 401(a) as applied to same-sex couples as of the date of the Windsor decision and not before (no retroactive effect). In addition, plans must comply with the rules regardless of state recognition of same-sex marriages as of the date of the Treasury guidance in this regard (September 16, 2013).

The Treasury Department and Internal Revenue Service also posted additional FAQs on the impact of the decision in United States v. Windsor (June 26, 2013) on retirement plans.

ERIC members and trial members can read more here.
For the latest edition of the IRS’s Employee Plans News, which includes Notice 2014-19, the FAQs and other resources, click here.