Retirement Plans Archives | Page 40 of 71

New Foreign Financial Asset Reporting Requirement with Deadline of April 17, 2012

by McDermott Will & Schulte | Mar 29, 2012 | Fiduciary and Investment Issues, Retirement Plans

by Ira B. Mirsky, Karen A. Simonsen, Todd A. Solomon and Adrienne Walker Porter

The Foreign Account Tax Compliance Act (FATCA) requires certain U.S. taxpayers holding foreign financial assets, including an interest under a foreign pension or deferred compensation plan and foreign equity awards, to report those interests beginning with this tax filing season. Taxpayers who fail to meet their obligation to file Form 8938 are subject to significant penalties.

To read the full article, click here.

Retirement Plans With Puerto Rico Employees Can File Form 5500 Rather than Puerto Rico Annual Return

by McDermott Will & Schulte | Mar 27, 2012 | Retirement Plans

by Nancy S. Gerrie and Jeffrey M. Holdvogt

The Puerto Rico Treasury Department recently issued guidance (Circular Letter No. 12-02) allowing certain retirement plans qualified under the Puerto Rico Internal Revenue Code, including dual-qualified plans that are also qualified under the U.S. Internal Revenue Code, to file a copy of Form 5500 or Form 5500-SF as the plan’s annual Puerto Rico return in lieu of filing Puerto Rico Form 480.7(OE). The new procedures, effective beginning with the annual filing for the 2011 tax year, will allow retirement plans sponsors with employees in Puerto Rico to satisfy their annual Puerto Rico filing requirement with Form 5500.

The Puerto Rico Internal Revenue Code generally requires employers that maintain a retirement plan qualified in Puerto Rico to file, on an annual basis, Form 480.7(OE), Information Return of Income Tax-Exempt Organizations. However, for tax years beginning on and after January 1, 2011, employers that maintain plans that are subject to the provisions of Title I of the Employee Retirement Income Security Act (ERISA), and that have previously submitted an application to the Puerto Rico Treasury Department for a determination that the plan is qualified under the Puerto Rico Internal Revenue Code, may comply with the annual Puerto Rico filing requirement by filing a copy of the corresponding Form 5500 or Form 5500-SF as the plan’s annual return in lieu of filing Puerto Rico Form 480.7(OE).

Plan sponsors that elect to file Form 5500 to satisfy the Puerto Rico annual return requirement must still complete the part of Form 480.7(OE) containing the biographical data of the plan on the first page of Form 480.7(OE) and attach a copy of Form 5500 as the annual filing. Either Form 5500 or Form 480.7(OE) must be filed by July 31 following the calendar year close or the last day of the seventh month following the fiscal year close of the trust (if Form 480.7(OE) is filed) or the plan year (if Form 5500 is filed), unless a request is filed for an automatic extension to October 15 following the close of the year for a calendar plan year. Plan sponsors that request an extension of time to file the Form 5500 with the U.S. Department of Labor still must request an extension of time for the Puerto Rico filing separately by filing Model SC 2644 prior to the filing deadline of the Form 480.7(OE). The Puerto Rico Internal Revenue Code imposes a penalty of $500 per form for failure to timely file the annual report.

Treasury Department and IRS Release Initial Lifetime Income Guidance; Additional Guidance Expected Shortly

by McDermott Will & Schulte | Feb 27, 2012 | Retirement Plans

by Joseph S. Adams, Stephen Pavlick and David Diaz

Two years after the Internal Revenue Service (IRS) and U.S. Department of Labor (DOL) jointly issued a high-profile Request for Information regarding how defined contribution plans can better provide lifetime income, the IRS and Department of the Treasury have issued some initial guidance. DOL guidance, expected to further underscore the importance of the issue, is anticipated “in the near future.”

To read the full article, please click here.

Proposed IRS Regulations on Partial Lump Sum Pensions Require Comparison With Plans’ Benefit Calculation Methods

by McDermott Will & Schulte | Feb 22, 2012 | Retirement Plans

by Stephen Pavlick, Daniel Senecoff and Alan Nesburg

Under some defined benefit plans, participants receive a portion of the benefit as an annuity and a portion as a lump sum. Sponsors of such plans should review the method used for calculating these benefits, particularly annuity benefits, to determine whether the combined value of both portions meets the minimum present value requirements for lump sums. Recent proposed IRS regulations include an interpretation of current law that may differ from the way some plans have been administered.

To read the full article, click here.

DOL Issues Electronic Guidelines for New 2012 Participant Investment and Fee Disclosures

by McDermott Will & Schulte | Feb 15, 2012 | Fiduciary and Investment Issues, Retirement Plans

by Diane Morgenthaler, Susan Schaefer and Lisa Loesel

The U.S. Department of Labor recently issued guidelines for the electronic distribution of mandatory investment and fee disclosures for participants in self-directed account plans subject to ERISA. This guidance may help plan administrators implement the new rules for the disclosure of quarterly and annual plan-related information, but still contains affirmative participant approval requirements for the electronic distribution of all initial disclosure notices and mandated investment-related information to participants. Prior to August 2012, plan sponsors and administrators of calendar-year plans should familiarize themselves with the new guidelines to determine what mandatory disclosures will be made in electronic format (if any), and whether their plans have sufficient systems and administrative capabilities to provide the mandatory disclosures in an electronic format.

To read the full article, please click here.

Deadline Approaching for Filing New IRS Form 8955-SSA

by McDermott Will & Schulte | Jan 12, 2012 | Retirement Plans

by Natalie M. Nathanson, Stephen Pavlick and Adrienne Walker Porter

New Internal Revenue Service (IRS) Form 8955-SSA (the Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits) replaces the Schedule SSA of the Form 5500 annual report. Section 6057(a) of the Internal Revenue Code requires plan administrators of retirement plans subject to the vesting standards under the Employee Retirement Income Security Act of 1974 to report information on separated participants with deferred vested benefits that have not commenced. Starting with the 2009 plan year, plan administrators are required to provide information on separated participants with deferred vested benefits on the new IRS Form 8955-SSA. Form 8955-SSA will generally be required to be filed by the last day of the seventh month after the plan year ends, but the IRS extended the general filing deadline for the 2009 and 2010 plan years until the later of January 17, 2012, or the due date that generally applies for filing Form 8955-SSA for the 2010 plan year.

To read the full article, please click here.

IRS Extends Transition Relief for Puerto Rico Qualified Plans to Participate in U.S. Group Trusts and Deadline to Transfer Assets

by McDermott Will & Schulte | Dec 28, 2011 | Retirement Plans

by Nancy S. Gerrie and Jeffrey M. Holdvogt

On December 21, 2011, the U.S. Internal Revenue Service (IRS) issued Notice 2012-6, which provides welcome relief for U.S. employers with qualified employee retirement plans that cover Puerto Rico employees. Notice 2012-6 provides that the IRS will extend the deadline for employers sponsoring plans that are tax-qualified only in Puerto Rico (ERISA Section 1022(i)(1) Plans) to continue to pool assets with U.S.-qualified plans in group and master trusts described in Revenue Ruling 81-100 (81-100 group trusts) until further notice, provided the plan was participating in the trust as of January 10, 2011, or holds assets that had been held by a qualified plan immediately prior to the transfer of those assets to an ERISA Section 1022(i)(1) Plan pursuant to a spin-off from a U.S.-qualified plan under Revenue Ruling 2008-40.

Notice 2012-6 also extends the deadline for sponsors of retirement plans qualified in both the United States and Puerto Rico (dual-qualified plans) to spin off and transfer assets attributable to Puerto Rico employees to ERISA Section 1022(i)(1) Plans, with the resulting plan assets considered Puerto Rico-source income and not subject to U.S. tax.

There are now two separate deadlines:

First, in recognition of the fact that Puerto Rico adopted a new tax code in 2011 with significant changes to the requirements for qualified retirement plans, the IRS has extended the general deadline to December 31, 2012, for dual-qualified plans to make transfers to Puerto Rico-only plans, in order to give plan sponsors time to consider the effect of the changes made by the new tax code.
Second, in recognition of the fact that the IRS has not yet issued definitive guidance on the ability of an ERISA Section 1022(i)(1) Plan to participate in 81-100 group trusts, the IRS has extended the deadline for dual-qualified plans that participate in an 81-100 group trust to some future deadline, presumably after the IRS reaches a conclusion on the ability of a dual-qualified plan to participate in an 81-100 group trust, as described in Revenue Ruling 2011-1.

For more information on the issues related to participation of ERISA Section 1022(i)(1) Plans in 80-100 group trusts, see “IRS Permits Puerto Rico-Qualified Plans to Participate in U.S. Group and Master Trusts for Transition Period, Extends Deadline for Puerto Rico Spin-Offs.”

For more information on the issues plan sponsors should consider with respect to a dual-qualified plan spin-off and transfer of assets attributable to Puerto Rico employees to ERISA section 1022(i)(1) plans, see “IRS Sets Deadline for Transfers from Dual-Qualified to Puerto Rico-Only Qualified Plans.”

IRS Extends Year-End Deadline for Pension Plan Amendments Under Code Section 436

by McDermott Will & Schulte | Dec 22, 2011 | Retirement Plans

by Diane M. Morgenthaler, Natalie M. Nathanson and Maureen O’Brien

The IRS recently extended the deadline for defined benefit plan sponsors to adopt amendments to comply with Section 436 of the Internal Revenue Code of 1986, as amended (the Code). Code Section 436 was added by the Pension Protection Act of 2006 (PPA) and contains limitations on benefit payments and accruals for defined benefit plans that do not meet the funding targets required by PPA.

Please click here for a discussion of the new deadlines.

DOL to Re-Propose “Fiduciary” Definition Regulation in Wake of Considerable Criticism

by McDermott Will & Emery | Nov 21, 2011 | Fiduciary and Investment Issues, Retirement Plans

by Jonathan J. Boyles, Karen A. Simonsen and Ashley McCarthy

The U.S. Department of Labor recently withdrew a proposed regulation that would have substantially expanded the definition of “fiduciary” under federal employee benefits law. The regulation will be re-proposed in early 2012, although it is unclear whether any proposal will be finalized prior to the 2012 presidential election.

To read the full article, click here.

Understanding Which Deadlines Are Extended by the Recent IRS Guidance for Hybrid Plans

by McDermott Will & Schulte | Nov 16, 2011 | Retirement Plans

by Joseph S. Adams, Anne S. Becker and Stephen Pavlick

In October 2011, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued Notice 2011-85 (Notice), announcing their intent to extend certain requirements applicable to hybrid pension plans such as cash balance plans. Given the highly technical nature of cash balance plans and the related government guidance, it is important to carefully understand the scope of the relief. In a separate matter affecting cash balance plans, the Pension Benefit Guaranty Corporation also recently published a proposed rule on terminating cash balance and hybrid plans. The proposed rule is intended to implement changes made by the Pension Protection Act of 2006. Comments on the proposed rule are due December 30, 2011.

Please click here for more information on this recent guidance.

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