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.
The Supreme Court of the United States’ recent ruling in Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan holds that an ERISA plan cannot enforce an equitable lien against a participant’s general assets when the full amount of the settlement is spent on non-traceable items. This decision should encourage plan fiduciaries to take action on reimbursement and subrogation rights more quickly after learning of a third-party recovery, in order to preserve their right to assert an equitable remedy against an identifiable, traceable fund.
The Internal Revenue Service (IRS) has announced new general compliance fees for voluntary correction program (VCP) submissions under the Employee Plans Compliance Resolution System (EPCRS), effective February 1, 2016.
President Barack Obama signed into law the Bipartisan Budget Act of 2015 (the Budget Act), which raised Pension Benefit Guaranty Corporation (PBGC) premium rates beginning in 2017.
Background
Single-employer defined benefit pension plans must pay annual premiums to the Pension Benefit Guaranty Corporation (PBGC), the U.S. government agency that insures these plans. All single-employer defined benefit pension plans pay an annual fixed premium. Those plans with unfunded vested benefits at year-end must pay an additional variable rate premium. The due date for payment of these premiums has generally been the fifteenth day of the tenth full calendar month of the premium payment year.
In 2016, the fixed premium is set at $64 per participant. The variable rate premium is based on the amount of potential liability that the plan creates for the PBGC. Calculated on a per-participant basis, the variable rate premium is a specified dollar amount for each $1000 of unfunded vested benefits under the plan as of the end of the preceding year, subject to a $500 per-participant cap. For 2016, it will equal $30 per $1000 of underfunding, subject to the cap. Both premiums are indexed for inflation.
Changes to PBGC Rates
The Budget Act makes the following changes:
For more information regarding the PBGC premium increases described above or the other employee benefits provisions included in the Budget Act, please contact your regular McDermott lawyer or one of the authors.
Effective January 1, 2016, the Pension Benefit Guaranty Corporation (PBGC) altered the reportable event rules for defined benefit pension plans. Although new PBGC regulations make electronic filing of all reportable event notices mandatory, the regulations also substantially reduce the reporting requirements for pension plan administrators, sponsors and contributing employers.
Now, faced with an aging baby-boomer generation and increased costs related to disability litigation, the U.S. Department of Labor’s Employee Benefit Security Administration (DOL) has proposed new rules that would revise and strengthen the current rules for claims adjudication of disability claims under welfare and retirement plans.
The United States Supreme Court’s recent landmark rulings on same-sex marriage have significantly changed employers’ options and obligations with respect to benefit coverage for employees’ same-sex spouses and partners. Until recently, some employers voluntarily extended benefits to same-sex partners in recognition of the fact that same-sex couples had limited ability to marry. However, now that same-sex marriage is legal in all 50 states and recognized under federal law, employers must extend certain spousal benefits to same-sex spouses and can do so without additional administrative complexity. In addition, some employers are phasing out unmarried partner benefits by requiring partners to marry in order to be eligible for spousal benefit coverage.
Click to read the full article from Pension & Benefits Daily.
(c)2015 by The Bureau of National Affairs, Inc., reprinted with permission.
The recently enacted Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 includes provisions that will extend the deadlines for filing future Form 5500 and Form 990 series information returns. In addition, the legislation modifies rules relating to the ability of veterans to participate in health savings accounts (HSAs), allows employers to disregard employees receiving certain veterans benefits when determining whether they are subject to the shared responsibility requirements of the Affordable Care Act (ACA), and further extends the ability of employers to use excess pension assets to pay for retiree health and group-term life insurance.
The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2016. Although some of the dollar limits currently in effect for 2015 will change, the majority of the limits will remain unchanged for 2016.
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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