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Cautionary Observations from the Proposed 457 Regulations

July 14, 2016

Authors

Richard Arenburg and Lisa Van Fleet

Cautionary Observations from the Proposed 457 Regulations

July 14, 2016

by: Richard Arenburg and Lisa Van Fleet

Governmental Buildings and MoneyAfter more than nine years of deliberations, the IRS has finally released proposed regulations governing all types of deferred compensation plans maintained by non-profit organizations and governmental entities.

In issuing these regulations, the IRS reiterates its long-standing theme that these regulations are intended to work in harmony with, and be supplemental to, the 409A regulations. However, the IRS provides little guidance on how these regulations interact with each other.  The following discussion focuses on 3 key aspects of the new guidance: the severance exemption, the substantial risk of forfeiture requirement, and leave programs.

As with the 409A regulations, the 457 regulations exempt severance pay plans from the rules and taxes applicable to deferred compensation. The 457

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2014 Qualified Plan Limits – Now in Tabular Form!

January 22, 2014

Authors

benefitsbclp

2014 Qualified Plan Limits – Now in Tabular Form!

January 22, 2014

by: benefitsbclp

As a follow up to our post on November 1, 2013, regarding changes to the qualified plan limits for 2014, we’ve issued a Client Alert providing the qualified plan limits for 2014 (as well as 2011 – 2013) in tabular form.

We’ve also reproduced the limits table below for ease of reference:

Type of Limitation

2014

2013

2012 

2011

Elective Deferrals (401(k), 403(b), 457(b)(2) and 457(c)(1))

$17,500

$17,500

$17,000

$16,500

Section 414(v) Catch-Up Deferrals to 401(k), 403(b), 457(b), or SARSEP Plans (457(b)(3) and 402(g) provide separate catch-up rules to be considered as appropriate)

$5,500

$5,500

$5,500

$5,500

SIMPLE

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IRS Audit Trends & Issues

February 25, 2013

Authors

Chris Rylands and Lisa Van Fleet

IRS Audit Trends & Issues

February 25, 2013

by: Chris Rylands and Lisa Van Fleet

Continuing our series of posts reporting on the recent TE/GE meetings, today we focus on the audit trends and issues that the IRS officials in attendance identified.  In addition to providing insight on the IRS’s focus, the list serves as a good compliance checklist for plan sponsors.  Are you making these errors?  If so, you can (and should) fix them now before the IRS comes knocking.

Areas of Focus. At the outset, it’s helpful to know where the IRS is looking for trouble, so you can have some idea where agents are coming from when you get the dreaded audit letter.  The officials at TE/GE gave these insights:

  • Most audits are focused on 3 or 4 particular issues depending on the market segment (i.e., the business of the employer) and the size of the plan (generally less than 100 participants is a small plan while other plans
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IRS Updates Retirement Plan Correction Program

January 14, 2013

Authors

benefitsbclp

IRS Updates Retirement Plan Correction Program

January 14, 2013

by: benefitsbclp

After a long wait, an updated Revenue Procedure for the Employee Plans Compliance Resolution System (EPCRS) was released in the form of Rev. Proc. 2013-12.  The new Revenue Procedure makes some important changes to the EPCRS.

As many plan sponsors know, the EPCRS includes the self-correction program (SCP), which requires prescribed corrections but does not require submission to the IRS; the voluntary correction program (VCP), which requires both prescribed corrections and submission to and approval by the IRS; and correction of problems discovered on audit (Audit CAP).

The purpose of the updated Revenue Procedure is to improve some features of the EPCRS and clarify others, based in large part on comments from the employee benefits community.  The IRS expects to make more changes of this type in the future, also based on comments from the employee benefits community.  Generally speaking, the IRS was responsive to many of the

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News & Notes – December 7, 2012

December 7, 2012

Authors

Chris Rylands

News & Notes – December 7, 2012

December 7, 2012

by: Chris Rylands

Below is our most recent list of News & Notes from the week that was.  Let us know what you think.  Should we continue this feature?

  • Continuing with our unplanned New York theme, the New York Times recently reported how some non-traditional medical practitioners were lobbying to be included as “essential health benefits” under health care reform.  Is acupuncture essential?
  • Going completely to the other coast, CBS Los Angeles reported that LA County officials were scrambling to retain “paying patients” ahead of 2014.

Year-End Qualified Retirement Plan Checklist

October 31, 2012

Authors

benefitsbclp

Year-End Qualified Retirement Plan Checklist

October 31, 2012

by: benefitsbclp

It’s time to ensure year-end qualified plan deadlines are satisfied. Below is a checklist designed to help employers with this process.

A.      QUALIFIED PLAN AMENDMENTS

The deadline for adopting the amendments listed below is the last day of the plan year beginning on or after January 1, 2012.  For calendar year plans, the deadline is December 31, 2012.  Note that some of the provisions became effective and required operational compliance prior to 2012.  Plan sponsors should review their plans’ administration to ensure that the plans have been operated in compliance with the applicable provision.

          1.      DEFINED BENEFIT PLANS

□        Code § 436 Funding Based Benefit Restrictions.  The Pension Protection Act of 2006 (“PPA”) added Section 436, which imposes restrictions on distributions and benefit accruals based on the funding status of a defined benefit plan, to the Internal Revenue Code (“Code”).  Plans that do not

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Governmental Plans: Are Your Plan Fees Reasonable?

October 15, 2012

Authors

benefitsbclp

Governmental Plans: Are Your Plan Fees Reasonable?

October 15, 2012

by: benefitsbclp

Have you recently received fee disclosures from your plan service providers?  Do you know the total compensation your service providers receive for their services?  Are you aware how these costs impact plan participants?  Are these fees reasonable?

All plan fiduciaries, including governmental plan fiduciaries, have the duty to make sure fees paid for services are reasonable. However, until now, there hasn’t been any formal regulatory disclosure requirement governing service provider compensation. In 2012, the Department of Labor (DOL) finalized fee disclosure rules applicable to ERISA plans.  Generally, these rules were issued to assist plan sponsors and fiduciaries in determining whether plan-related fees are reasonable for and to provide transparency for plan fiduciaries and participants.  Although these fee disclosure rules only apply to ERISA-governed private sector plans, governmental plans should consider following these new rules as a fiduciary best practice.

The DOL fee disclosure rules consists of

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Recent Guidance on Normal Retirement Age Regulations for Governmental Plans

May 8, 2012

Authors

benefitsbclp

Recent Guidance on Normal Retirement Age Regulations for Governmental Plans

May 8, 2012

by: benefitsbclp

The IRS and Treasury Department recently issued Notice 2012-29, which provides new guidance for the final “normal retirement age” regulations relating to governmental plans. The Notice provides that the IRS and the Treasury intend to further extend the effective date for governmental plans to comply with the final regulations to annuity starting dates that occur in plan years beginning on or after the later of:

  • January 1, 2015, or
  • the close of the first regular legislative session of the legislative body with the authority to amend the plan that begins on or after the date that is three months after the final regulations are published in the Federal Register.

The Notice also provides that the IRS and Treasury will make two important clarifications in the final regulations:

  • The final regulations will clarify that governmental plans that do not provide for in-service distributions before age 62
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IRS Releases Proposed Rules on New Comparative Effectiveness Fee for Health Plans

April 16, 2012

Authors

benefitsbclp

IRS Releases Proposed Rules on New Comparative Effectiveness Fee for Health Plans

April 16, 2012

by: benefitsbclp

On April 12, the IRS released proposed regulations regarding the collection of the fee for the Patient-Centered Outcomes Research Trust Fund (the “Fund”) under the Patient Protection and Affordable Care Act (“PPACA”). The Fund will be used to pay for the Patient-Centered Outcomes Research Institute which has the goal of helping health care providers and consumers make informed health decision by synthesizing research comparing the outcome effectiveness of various treatments.

Who Pays for This

Here’s the kicker: insurers and self-insured health plans get to pay for this, along with multiemployer plans, state and local governmental plans, stand-alone VEBAs and other health plans. We focus primarily on private employer plans, but many of the rules apply similarly to other types of plans.

How Much

Initially, the fee is $1 per covered life. It will first apply for plan or policy years ending between October 1, 2012 and October 1,

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