The Treasury Department and the IRS recently finalized new hardship distribution rules applicable to defined contribution plans. Plan sponsors should prepare for operational changes to comply with the new regulations, including some beginning January 1, 2020. Access the full article.
The Internal Revenue Service (IRS) has once again extended the temporary nondiscrimination relief for frozen defined benefit plans, now through 2020. Frozen pension plans are pension plans that have been closed to new participants but continue to provide ongoing benefit accruals for certain participants. This extended relief is intended to enable frozen pension plans to satisfy certain nondiscrimination testing requirements. In most cases, the relief allows the frozen defined benefit plan to be aggregated with a defined contribution plan to satisfy the nondiscrimination testing requirements. The relief assists the aggregated plan in passing nondiscrimination requirements that apply to accrued benefits and to certain rights and features relating to those benefits. The original nondiscrimination testing relief for frozen pension plans was provided in a 2013 IRS notice. This relief has now been extended on three prior occasions. Many are advocating for...
In 2018, the Treasury Department and the IRS issued new hardship distribution rules applicable to defined contribution plans, and many plans have begun administering these new rules. While plan sponsors may want to wait for further IRS guidance before amending their plans, they should take steps now to inform employees of changes in hardship distribution administration. Access the full article.
The Financial Accounting Standards Board (FASB) adopted changes to the required financial statement disclosures of employee benefit plans with investments in master trusts. The changes will standardize the content and presentation of information reported in plans’ financial statements. Learn about the six significant items the FASB guidance addresses. Access the full article.
No Stone Unturned: Locating Missing Participants under the PBGC’s Expanded Program for Terminated Plans
The PBGC’s missing participants program, which previously applied only to single-employer defined benefit pension plans, has been expanded to defined contribution plans, multiemployer defined benefit plans and small professional service defined benefit plans that end on or after January 1, 2018. The revised program provides a helpful alternative for plan administrators of terminating defined contribution plans, and also includes welcome clarifications that enhance the program available to defined benefit pension plans. Access the full article.
As employers have moved away from traditional defined benefit plans toward defined contribution plans as the primary retirement savings vehicle for their employees, much has been written about the risks of shifting the retirement savings burden from the employer to the employee. One widely-recognized consequence of this shift in retirement savings methods is that many employees are not contributing enough of their income, or earning high enough returns on their investments, to provide sufficient funds to meet their retirement needs through defined contribution plans. Many plan sponsors have responded to this concern by adding features to their defined contribution plans, such as automatic enrollment, automatic annual increases of employee deferral percentages and increased matching contributions, in order to encourage employees to save more for retirement. Another consequence of this shift to defined contribution plans that has received less attention is that...