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.
The Department of Labor (DOL) issued a proposed rule that, if finalized, would expand its existing guidance and liberalize rules for electronic disclosure of retirement plan notices under ERISA. The proposed rule, which sets forth a notice and access safe harbor, would permit electronic disclosure as the default method of delivery while permitting participants to opt out and continue to receive paper disclosures.
The IRS recently issued guidance on the tax treatment, withholding and reporting for required distributions from tax-qualified retirement plans. Plan sponsors should contact their retirement vendors and trustees to ensure that they implement the tax requirements of the new guidance appropriately for their tax-qualified retirement plans.
In the string of pension-plan related, actuarial equivalence lawsuits, the court in DeBuske, et al. v. PepsiCo, Inc., et al. recently handed down the first decision favorable to plan sponsors. The DeBuske court’s narrow decision may, however, have limited impact going forward.
Beginning September 1, 2019, the IRS is expanding its retirement plan determination letter program to apply to certain individually designed statutory hybrid and merged plans. Employers sponsoring hybrid plans not previously reviewed by the IRS for required (or other) plan changes, and employers that have or will merge two or more of their plans together in connection with a corporate transaction, should consider taking advantage of this expanded determination letter program.
The House recently passed the most significant piece of proposed retirement plan legislation in more than a decade: the SECURE Act. Although the Senate must also approve the bill before it becomes law, its proposed changes have considerable bipartisan support in Congress. Plan sponsors should start considering how changes included in the SECURE Act could impact their retirement plans. Employers who do not currently offer retirement plans should also review the new retirement plan incentives included in the proposed legislation.
by Nancy S. Gerrie and Jeffrey M. Holdvogt
The Puerto Rico Treasury Department recently issued Circular Letter No. 13-02, extending the deadline for employers that sponsor qualified retirement plans benefiting Puerto Rico employees to adopt amendments and file for determination letters on the qualified status of their plans under the 2011 Puerto Rico tax code.
Tax-qualified retirement plans benefiting Puerto Rico employees—both dual-qualified (i.e., plans qualified under both the U.S. and Puerto Rico Internal Revenue Codes) and Puerto Rico-only qualified—that have not already been amended or filed to comply with the 2011 Puerto Rico tax code now must be both amended and filed by the due date (not including any extension) for the employer to file its Puerto Rico income tax return for the first taxable year commencing on or after January 1, 2013. For employers with a calendar tax year, the deadline is April 15, 2014.
Puerto Rico employers that file for a three-month extension of time to file their income tax return for the first taxable year commencing on or after January 1, 2013, may have this deadline extended. However, use of this extended deadline requires payment of an additional $150 filing fee for the determination letter filing. Employers with a calendar tax year that use this extension will have a deadline of July 15, 2014.
For more information on the Puerto Rico amendment and filing requirements, see “Puerto Rico Retirement Plans: Issues Employers Should Think About in 2012” (which has not been updated to reflect the new amendment and filing deadlines).
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