Retirement Plans Archives | Page 38 of 71

IRS Issues 403(b) Plan Fix-It Guide

by McDermott Will & Schulte | Mar 14, 2013 | Retirement Plans

by Mary K. Samsa, Todd A. Solomon and Joseph K. Urwitz

On February 21, 2013, the Internal Revenue Service (IRS) added to its “self-help” resources a new “403(b) Plan Fix-It Guide” to provide guidance more specifically directed at 403(b) plan sponsors that identify qualification or operational plan failures under their 403(b) plans. Additionally, the IRS issued as a companion piece a booklet entitled “Voluntary Correction Program Submission Kit,” which provides more detailed directions to 403(b) plan sponsors on how to complete and file a correction filing with the IRS specifically relating to the failure to adopt a written 403(b) plan document.

This new “fix-it” tool addresses 10 potential errors (likely the most common 403(b) plan errors), including, but not limited to, ineligible organizations offering 403(b) plans, failure to adopt a written plan document as required by the final 403(b) regulations, violation of the universal availability rule, failure to appropriately limit elective deferrals and failure to follow the underlying terms of the plan document. Although these types of failures are not necessarily new (i.e., they could have occurred in prior years), the IRS is slowly bringing 403(b) plans under more scrutiny as the dollars being contributed to these types of plans continue to increase. The IRS is developing more expertise in this area and is training more agents to be able to identify the particular differences between 401(k) plans and 403(b) plans, and the specific nuances and legal requirements of operating 403(b) plans. Since the 403(b) regulations were issued in 2007, this is the first step in which the IRS is taking a more active role to ensure compliance under these types of plans.

Revenue Procedures 2013-12 (Employee Plans Compliance Resolution System, or EPCRS) may be used with respect to any 403(b) plan corrections going forward. It incorporates in greater detail the “403(b) Plan Fix-It Guide.” Although prior EPCRS guidance such as Revenue Procedure 2008-50 was often applied to 403(b) plans by analogy for correcting errors, new Revenue Procedure 2013-12 is drafted to be directly applicable to 403(b) plans. Consequently, given the IRS movement toward greater scrutiny of 403(b) plans, tax-exempt organizations that have not recently conducted any type of internal compliance review are encouraged to review, at a minimum, the mistakes highlighted in the “403(b) Plan Fix-It Guide” to determine whether greater analysis is required with respect the compliance and operation of their 403(b) plans.

IRS Releases Draft Revised Form 5300 and Instructions

by McDermott Will & Emery | Feb 26, 2013 | Employment, Retirement Plans

by Anne S. Becker, Natalie M. Nathanson and Brian A. Benko

The Internal Revenue Service (IRS) recently released a draft revised Form 5300 and its instructions. Form 5300, the Application for Determination for Employee Benefit Plan, is generally used to request an IRS determination that an individually designed retirement plan meets the requirements for tax qualification under Sections 401(a) and 501(a) of the Internal Revenue Code. Because the draft revised Form 5300 contains numerous changes, plan sponsors and their advisors will need to carefully review the revised instructions, once they are finalized, in anticipation of submitting a Form 5300. Although the IRS did not propose an effective date for the revised Form 5300, it could replace the current version effective for determination letter submissions filed as early as February 1, 2013 (i.e., effective for Cycle C filers).

To read the full article, click here.

Second Circuit Narrows ERISA Exhaustion Requirement When Plan Document Is Ambiguous on Need to Follow Claims Procedures

by McDermott Will & Emery | Feb 20, 2013 | Benefit Controversies, Retirement Plans

by Michael T. Graham, Elizabeth A. Savard and Patrick D. Ryan

The U.S. Court of Appeals for the Second Circuit’s holding in Kirkendall v. Halliburton, Inc. reaffirms that a benefit plan’s claims procedures must be drafted clearly and in language to be understood by a reasonable participant. If participants are permitted to avoid a plan’s administrative claims process, there are significant impacts on a plan’s defense of a lawsuit, including application of a de novo standard of review to a benefit determination rather than the deferential arbitrary and capricious standard.

To read the full article, click here.

IRS Updates Employee Plans Compliance Resolution System

by McDermott Will & Schulte | Feb 5, 2013 | Retirement Plans

by Lisa K. Loesel, Mary K. Samsa and Kary Crassweller

The Internal Revenue Service (IRS) recently updated the Employee Plans Compliance Resolution System (EPCRS), the comprehensive system of correction programs for sponsors of qualified retirement plans. The components of EPCRS continue to be the Self-Correction Program, the Voluntary Correction Program (VCP) and the Audit Closing Agreement Program. This newsletter describes some of the significant changes to EPCRS, including revisions to the VCP submission procedures and enhanced access for 403(b) plans.

To read the full article, click here.

New Law Expands “In-Plan” Roth 401(k) Conversions

by McDermott Will & Schulte | Jan 17, 2013 | Retirement Plans

by Nancy S. Gerrie, Elizabeth A. Savard and Joseph K. Urwitz

The American Taxpayer Relief Act of 2012 (the “fiscal cliff” bill) allows employers to amend 401(k), 403(b) and governmental 457(b) plans to permit participants to convert pre-tax account balances to Roth account balances. Previously, such conversions were permitted only when the pre-tax amounts could be distributed.

To read the full article, click here.

IRS Extends Deadline for Defined Benefit Plans to Adopt Code Section 436 Amendments

by McDermott Will & Schulte | Dec 13, 2012 | Retirement Plans

by Stephen Pavlick, Susan Schaefer and Kary Crassweller

The Internal Revenue Service (IRS) issued Notice 2012-70, extending the deadline for plan sponsors of defined benefit plans to adopt amendments to comply with Section 436 of the Internal Revenue Code (the Code), which generally imposes plan benefit payment and amendment restrictions if a defined benefit plan’s funding dips below specified levels.

Background

Code Section 436 sets forth a series of limitations on the accrual and payment of benefits under an underfunded defined benefit plan (see “New Notice Requirements Effective November 1, 2012 for Single Employer Pension Plans with Funding-Related Restrictions” for more information). Under previous IRS guidance, (see “IRS Extends Year-End Deadline for Pension Plan Amendments Under Code Section 436” for more information), the deadline for adopting the Code Section 436 amendment to reflect such funding-based restrictions was generally the last day of the plan year beginning on or after January 1, 2012 (e.g., December 31, 2012, for calendar year plans).

New Deadlines

On November 21, the IRS extended the deadline for adopting the required Section 436 amendment to the latest of the following:

The last day of the plan year beginning on or after January 1, 2013 (e.g., December 31, 2013, for calendar year plans)
The last day of the plan year for which Code Section 436 is first effective for the plan
The due date (including extensions) of the employer’s tax return for the tax year that contains the first day of the plan year for which Code Section 436 is first effective for the plan

However, plan sponsors submitting determination letter applications on or after February 1, 2013, for individually designed plans must adopt the Code Section 436 amendment prior to submitting the application. Determination letter applications that are filed prior to February 1, 2013 (Cycle B plans), do not need to include provisions complying with Code Section 436.

Notice 2012-70 also extends the relief period under the anti-cutback requirements of Code Section 411(d)(6), which generally provide that a tax-qualified defined benefit plan may not be amended to reduce or eliminate a participant’s accrued benefit.

Defined benefit plan sponsors should review the new guidance to determine the proper deadline for Code Section 436 amendments for their plans. For more information on this guidance, please contact your regular McDermott attorney or one of the listed authors.

PBGC Announces Formal Policy Reducing Impact of ERISA Section 4062(e) on Creditworthy Plan Sponsors

by McDermott Will & Schulte | Nov 28, 2012 | Retirement Plans

by Michael T. Graham, Stephen Pavlick and Patrick D. Ryan

The Pension Benefit Guaranty Corporation (PBGC) has announced a new pilot program that should substantially modify its enforcement strategy regarding pension liability for facility closures under ERISA Section 4062(e). Under this new program, PBGC will no longer assess liability against creditworthy companies or small plans, and instead will focus its enforcement efforts on larger companies in questionable financial health.

To read the full article, click here.

Worldwide Employee Benefits Network Chicago Chapter Meeting: Annual Regulatory and Legislative Review

by McDermott Will & Schulte | Nov 15, 2012 | Health and Welfare Plans, Retirement Plans

Wednesday, December 5, 2012
7:30 – 9:30 am CST

UBS Tower
One North Wacker Drive, 2nd Floor
Michigan II Ballroom
(Northeast Corner of Wacker & Madison)

To register, please click here.

This year will be remembered as another year of rapid change in employee benefits. The year-end tasks are plentiful, but if you live in fear of a missed deadline, then let our retirement and welfare experts guide you through the home stretch and assist with your year-end task lists as we review this year’s employee benefits regulatory and legislative developments.

Speakers
Joni Andrioff, Shareholder, Littler Mendelson
Susan Nash, Partner, McDermott Will & Emery

New Notice Requirements Effective November 1, 2012, for Single Employer Pension Plans with Funding-Related Restrictions

by McDermott Will & Schulte | Oct 31, 2012 | Retirement Plans

by Diane Morgenthaler, Maureen O’Brien and Kary Crassweller

Recently the Internal Revenue Service provided the first set of guidance on the new notice requirements for single employer defined benefit plans subject to funding-related restrictions under Section 436 of the Internal Revenue Code. This guidance includes information on notice recipients, content, delivery and timing. Because significant penalties apply to a notice failure, plan sponsors need to carefully review this new guidance.

To read the full article, click here.

IRS Announces Employee Benefit Plan Limits for 2013

by McDermott Will & Emery | Oct 23, 2012 | Health and Welfare Plans, Retirement Plans

by Jeffrey Holdvogt, Diane Morgenthaler and Adrienne Walker Porter

The Internal Revenue Service recently announced cost-of-living adjustments (COLA) to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2013. Although many dollar limits currently in effect for 2012 will change, some limits will remain unchanged for 2013. McDermott Will & Emery has prepared a chart of these 2013 COLA changes.

To read the full article, click here.

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