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Alan D. Nesburg advises public and private businesses on a wide range of employee benefit matters, including qualified pension and 401(k) plans, deferred compensation, executive compensation and group benefits programs. Read Alan Nesburg's full bio.

The new Disaster Tax Relief and Airport and Airway Extension Act of 2017 provides additional relief and flexibility for retirement plan participants impacted by recent hurricanes, including relaxed rules for plan distributions, withdrawals and loans.

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Since the announcement by the Internal Revenue Service (IRS) that sponsors of individually designed retirement plans may no longer receive a periodic determination letter, plan sponsors have faced uncertainty about how to demonstrate compliance for their retirement plans. Our McDermott Retirement Plan Compliance Program, a new opinion letter and operational review program for individually designed 401(a) and 403(b) retirement plans, will allow plan sponsors to document their plans’ compliance with tax code requirements in response to the curtailment of the IRS’ determination letter program.

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The US Department of Labor increased the penalties for specified violations of the Employee Income Retirement Security Act of 1974.  Most of the penalty increases involve reporting and disclosure failures related to benefit plans and will be effective for penalties assessed after August 1, 2016, if the violation occurred after November 1, 2015.

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The Department of Treasury and Internal Revenue Service issued final regulations addressing the minimum present value requirements for pension benefits payable partly as an annuity and partly in an accelerated form, usually a lump sum. With these regulations, Treasury and IRS take another step in promoting lifetime income alternatives for retirement plan participants with simplified calculations for partial annuity payments.

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The US Department of Labor increased the penalties for specified violations of the Employee Income Retirement Security Act of 1974.  Most of the penalty increases involve reporting and disclosure failures related to benefit plans and will be effective for penalties assessed after August 1, 2016, if the violation occurred after November 1, 2015.

Under the Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 Inflation Adjustment Act), the US Department of Labor (DOL) increased the penalties for specified violations of the Employee Income Retirement Security Act of 1974 (ERISA), published in an interim final rule (IFR). Most of the penalty increases involve reporting and disclosure failures related to benefit plans. After the 45-day comment period on the IFR lapses, the DOL will publish final regulations.

Penalty Adjustments for Inflation

The IFR adjusts ERISA reporting and disclosure penalties for inflation. The IFR’s adjustments apply only to penalties assessed after August 1, 2016, if the violation occurred after November 2, 2015. If the violation occurred on or before November 2, 2015, the current penalty amounts apply.

Annual Penalty Adjustments for Inflation

The 2015 Inflation Adjustment Act directs the DOL to adjust penalties annually for inflation. Beginning in 2017, DOL will adjust penalty amounts no later than January 15 of each year. By January 15, 2017, DOL will adjust penalty amounts to reflect any increase in inflation that occurred between October 2015 and October 2016. Future annual inflation adjustments are not subject to regulatory notice and rulemaking requirements. The DOL will post any changes to penalty amounts on its website.

Continue Reading DOL Significantly Increases Some Penalties for ERISA Violations

The Internal Revenue Service (the IRS) recently issued Notice 2016-03 (the Notice) addressing three topics and expanding on its earlier announcement of major changes in the determination letter program for individually designed retirement plans. The Notice will likely be followed by additional guidance from the IRS, addressing features of the determination letter program.

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The U.S. Court of Appeals for the Seventh Circuit recently addressed the notice requirement of the federal successor liability doctrine where withdrawal from a multiemployer pension plan occurred after a sale of assets.

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On July 21, 2015, the Internal Revenue Service (IRS) issued Announcement 2015-19 (the Announcement), which ends the five-year remedial amendment cycles for individually designed plans effective January 1, 2017.  For remedial amendment cycles beginning after 2016, plan sponsors will no longer be able to apply for determination letters on their individually designed defined contribution and defined benefit plans, except for initial qualification and qualification upon termination. Effective on the Announcement date, off-cycle requests for determination letters will no longer be accepted. The IRS intends to publish additional guidance periodically, and seeks comments on the upcoming changes.

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The Internal Revenue Service (IRS) recently issued two updates which modify the Employee Plans Compliance Resolution System (EPCRS), which is the comprehensive system for correction of retirement plan failures. EPCRS now allows plans with automatic contribution features to use a new safe harbor to correct certain deferral failures, provides more flexible correction provisions on overpayments and excess annual additions, and reduces certain correction filing fees.

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