According to U.S. News & World Report, estimates for the cost of Hurricane Harvey’s damage have come in as high as $190 billion, and damage estimates for Hurricane Irma are still rolling in but range up to $100 billion. To assist taxpayers affected by these devastating storms, the Internal Revenue Service, Department of Labor, and Pension Benefit Guaranty Corporation have granted multiple forms of relief to taxpayers impacted by Hurricane Harvey, Hurricane Irma, and other disasters enumerated by the Federal Emergency Management Agency.
The Internal Revenue Service and the Department of Labor relaxed some deadlines for eligible employee benefit plans and expanded the availability of withdrawals and loans for eligible defined contribution plan participants in the disaster area. However, the Pension Benefit Guaranty Corporation announced that some of its required filings will not be extended automatically.
Near the end of 2016, the Department of Treasury (Treasury) and the Internal Revenue Service (IRS) published two significant sets of proposed regulations on issues pertaining to defined benefit pension plans, including mortality table updates that likely would increase pension funding liabilities for many plan sponsors.
The Internal Revenue Service (IRS) recently issued two significant notices for employers that sponsor defined benefit pension plans, particularly those considering lump-sum windows as a “de-risking” option for their plans. In Notice 2015-49, the IRS notified plan sponsors that they are no longer permitted to offer retirees in pay status the option to take a lump-sum payment in lieu of ongoing annuity payments. Plan sponsors may, however, continue to offer a lump-sum payment option to deferred vested participants not in pay status. In Notice 2015-53, the IRS released updated mortality tables for 2016 and delayed the issuance of new regulations, which could incorporate new mortality assumptions recommended by the Society of Actuaries that many believe would increase pension funding liabilities and minimum lump-sum payments.