Did Hardship Distributions Just Get Easier?

In a previous blog, we addressed an issue of Employee Plans News in which the IRS took the position that 401(k) plan administrators must maintain hardship distribution records and should not rely on electronic participant self-certification for hardship distributions.

On February 23, 2017, the IRS issued a memorandum to its Employee Plans Examiners that sets forth substantiation guidelines for the examination of 401(k) hardship distributions.  The memorandum provides that a plan administrator may maintain either of the following to establish a participant’s need for a hardship distribution: (1) source documents that support the need for the hardship distribution or (2) a summary of the information contained in the source documents. Read More ›

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IRS Issues First Required Amendments List for Qualified Plans

In a previous blog, we discussed the IRS’ elimination of its five year staggered determination letter cycle for individually designed plans.  The IRS recently provided guidance to help sponsors of individually designed plans keep their plans in compliance with applicable law.  Notice 2016-80 contains the first Required Amendments List (the “RA List”) for individually designed qualified retirement plans.  In general, the RA List is a list of changes in the plan qualification requirements for changes that became effective in 2016.  The list is divided into two parts—(A) changes in qualification requirements that would generally require an amendment to most plans  or to most plans of the type affected by the change and (B) changes that the IRS and Treasury anticipate will not require an amendment in most plans, but might require an amendment due to an unusual provision in a particular plan.  Read More ›

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IRS Makes Late Rollovers Easier

Generally, distributions from a qualified retirement plan that are eligible for rollover must be rolled over within 60 days of the date on which the distribution occurs.  If a taxpayer did not complete the rollover within 60 days, the taxpayer previously had to request a private letter ruling from the IRS to receive additional time to complete the rollover.  In Revenue Procedure 2016-47, the IRS makes it easier for a taxpayer to rollover a qualified retirement plan distribution if the taxpayer misses the 60-day rollover window.

Under the new guidance, instead of applying for a private letter ruling, a taxpayer may complete a self-certification and provide it to the plan administrator or IRA trustee if the rollover was not completed due to one of reasons listed in the guidance.  Read More ›

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IRS Issues Additional Guidance on Determination Letter Program

As was previously announced in 2015, effective as of January 1, 2017, the Internal Revenue Service (“IRS”) is eliminating its five year staggered determination letter cycle for individually designed retirement plans. Plans in the current cycle (Cycle A) still may submit their plans for determination letters on or before January 31, 2017.  Pursuant to Revenue Procedure 2016-37, going forward, individually designed plans will only be permitted to submit a determination letter application on initial plan qualification, plan termination and in certain other circumstances as announced by the IRS.

The IRS did not provide much guidance on the other circumstances in which existing plans would be permitted to seek determination letters in the future, other than to provide that it will give consideration to significant changes in the law, new approaches to plan design and the IRS’ current case load and resources. Read More ›

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Five Lawsuits Filed Against DOL’s Fiduciary Rule (so far)

As we previously discussed in our May 19, 2016 SW Benefits Update, the Department of Labor (“DOL”) recently issued final regulations on fiduciary conflicts of interest in retirement programs.  Since 2010 when the DOL first proposed regulations addressing self-interested advice to retirement plan and IRA participants, the rule has been widely criticized by some in the financial services industry as being overly broad.

Both Congress and industry and trade groups have been unhappy with the DOL’s rulemaking in this area and have threatened further action since the rule was first proposed. On May 24, the Senate passed a resolution to block the fiduciary rule, which President Obama vetoed on June 8. Read More ›

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IRS: Don’t Answer All the 5500 Questions!

The 2015 Form 5500 added some new optional compliance questions for the 2015 Forms 5500 and 5500-SF. In December 2015, the IRS issued frequently asked questions on the new compliance questions and strongly encouraged plan sponsors to answer the questions.

On February 18, the IRS changed course and announced that plan sponsors should not complete the compliance questions on the 2015 Form 5500 and Form 5500-SF and related schedules because the questions were not approved by the Office of Management and Budget before the forms were published.

For additional information including a list of the questions that may be skipped on the Forms 5500 and 5500-SF, please go to https://www.irs.gov/Retirement-Plans/IRS-Compliance-Questions-on-the-2015-Form-5500-Series-Returns. Read More ›

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Supreme Court Provides Additional Clarity on Pleading Requirements for ERISA Stock Drop Cases

The Supreme Court has provided additional clarity on the Fifth Third Bancorp v. Dudenhoeffer decision.  In Dudenhoeffer, the Supreme Court held that a fiduciary decision to invest in employer stock is not deemed to be prudent; however, in bringing a claim for a fiduciary breach, plaintiffs must allege an alternative action that a plan fiduciary could have taken that would be consistent with the securities laws and that a prudent fiduciary would not have viewed as more likely to harm the stock fund than help it.  For additional information on the Dudenhoeffer decision, please see our July 15, 2014 blog. Read More ›

Posted in Employee Benefits, Qualified Retirement Plans

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Treasury Department and IRS Publish Final Hybrid Plan Regulations and Announce Extension of Required Amendment Date for Certain Hybrid Plan Provisions

The Treasury Department and the IRS recently issued final regulations (the “2015 Final Regulations”) relating to hybrid retirement plans, including cash balance pension plans.

The 2015 Final Regulations provide anti-cutback relief to allow hybrid plans to be amended to change the interest crediting rate to an interest crediting rate that is a market rate of return as described in the hybrid plan final regulations issued in 2014 (the “2014 Final Regulations”).

The 2015 Final Regulations allow plan sponsors additional time to amend hybrid plans to comply with the 2015 Final Regulations as well as certain provisions of the 2014 Final Regulations.  Read More ›

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Form 5500 Deadline is Quickly Approaching

As a reminder, the annual Form 5500 deadline is quickly approaching.  Calendar year employee benefit plans that applied for an extension must file Forms 5500 by Thursday, October 15, 2015.

The Form 5500 Annual Return/Report of Employee Benefit Plan is a consolidated annual report developed by the Department of Labor (DOL), Internal Revenue Service and the Pension Benefit Guaranty Corporation.

Generally, a Form 5500, plus any required schedules and attachments, must be completed and filed electronically each year for every pension benefit plan, welfare benefit plan and every entity that files as a Direct Filing Entity (DFE).  There are certain filing exceptions for small, unfunded and/or fully insured welfare plans. Read More ›

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IRS Announces Changes to Determination Letter Process for Individually Designed Retirement Plans

In Announcement 2015-19, the IRS announced the elimination of the five year remedial amendment cycle for individually designed retirement plans effective as of January 1, 2017.  This means that after January 1, 2017, individually designed retirement plans will no longer be eligible to receive favorable determination letters every five years.  The Announcement leaves the current remedial amendment period, Cycle E that ends on January 31, 2016 (which generally includes employers with Employer Identification Numbers ending in 5 or 0), unchanged.  It also leaves the next remedial amendment period (which generally includes employers with Employer Identification Numbers ending in 1 or 6) “Cycle A”, unchanged, meaning that Cycle A plans may submit determination letter applications until January 31, 2017. Read More ›

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