|
|
TRI Pension ServicesThe ERISA Outline Book Errata Page In this section we update you on errors we have found in the 2009 Edition of The ERISA Outline Book. Each entry includes the date it was added to this page. The entries are listed in chapter order. Chapter 1, Part H of the remedial amendment period definition (added May 28, 2009). The discussion regarding verification of prior plan documentation still reflects the IRS' Quality Assurance Bulletin issued in 2001. The IRS has updated its bulletin in Qualified Assurance Bulletin 2006-5 in order to incorporate the latest remedial amendment cycles under EGTRRA and the interim amendment requirements under Rev. Proc. 2007-44, as discussed in Part D of the remedial amendment period definition. The text of QAB 2006-5 can be obtained at the IRS's website (www.irs.gov), by going to the section for "Practitioners" and searching for quality assurance bulletins. To go to he current link for quality assurance bulletins is http://www.irs.gov/retirement/article/0,,id=122690,00.html. Chapter 6, Section III, Part C.2.f.1) (added April 30, 2009). The language in this paragraph will be revised as follows to clarify the intent of the paragraph: "Although some of the tables described in the prior paragraph provide gender-based factors, a plan is not permitted to use different mortality assumptions for males than it uses for females to calculate present values. Female factors reflect a longer life expectancy. Accordingly, if the same dollar amount annuity were paid to a male and a female of the same age, the present value of the female's annuity would have a higher present value because it is actuarially assumed that the annuity for the female would be paid over a longer period. Examined from the standpoint of comparing similar present values, if the same present value were to be paid to a female and a male of the same age, the present value for the female would represent a smaller annuity at the assumed annuity starting date than the present value for the male, because the female's longer life expectancy would require a great present value dollar amount to produce the same annuity. The Supreme Court has ruled that this is a violation of Title VII the Civil Rights Act. See Arizona Governing Committee v. Norris, 463 U.S. 1073 (1988). Therefore, if the plan uses one of the gender-based tables, it must apply the table on a gender-neutral basis to determine actuarial equivalence. For example, the plan could use the male factors for all participants, or the female factors for all participants. The plan also may apply a set forward or a set back to one of the gender-based factors to make the factors more appropriate for unisex use. A set forward means that the person's age is advanced by the set forward period to determine the applicable mortality assumption on the table. For example, if the set forward is 2 years, a person age 65 would be treated as age 67 under the table being used. The effect of the set forward is to lower the person's life expectancy under the mortality table because the person is treated as being older. Thus, a set forward would more likely be used if the plan is using female factors, to "blend in" the male population, which has a lesser life expectancy than the female population. A set back means that the person's age is reduced by the set back period to determine the applicable mortality assumption on the table. For example, if the set back is 2 years, a person age 65 would be treated as age 63 under the table being used. The effect of the set back is to increase the person's life expectancy under the mortality table because the person is treated as being younger. Thus, a set back would more likely be used if the plan is using male factors, to "blend in" the female population, which has a greater life expectancy than the male population. A blended table that is based on a weighting of male and female factors to be used uniformly for all participants also would be permissible. The UP-1984 table is a unisex table, but the plan might still provide for a set back or set forward to take into account a different male/female ratio than what was assumed in the construction of the table. See 2.f.3) below. Also, the IRS reworked certain mortality tables into a gender-neutral format. See Rev. Rul. 2001-62 (relating to the 94 GAR) and Rev. Rul. 95-6 (relating to the 1983 GAM table)." Chapter 6, Section IV, Part C.1.b.2) (added June 24, 2009). The paragraph suggests that IRS will give only cursory review to a normal retirement age (NRA) that is less than age 62, but at least age 55. Apparently, the IRS has done an about-face on this issue. Informal statements made by Treasury and IRS officials at a number of conferences held in 2008 indicated that it would be "the exception to the rule" that the IRS would question the setting of an NRA that is at least age 55, and the deference rule was intended to be applied broadly, with more deference given as the NRA gets closer to 62. In 2009, Treasury and IRS officials are taking a much narrower stance, indicating that independent data justifying a pre-age-62 NRA is required in all cases, and the fact that data regarding a "typical retirement age" for employees of a small business in a specific industry simply is not available does not change that position. It is likely that the IRS will ask for supporting data, either in a determination letter proceeding or in an examination proceeding, for any pension plan that has an NRA that is less than age 62. The bottom line is that, unless the employer has solid empirical data to support its use of an NRA earlier than age 62, the plan should be amended (or designed, in the case of a new plan) to provide an NRA of at least age 62. Note the amendment deadlines in Notice 2007-69, which are discussed in Part C.1.b.6)b) of the text. Chapter 7, Section XVI, Part K.2.a.3) (added January 26, 2009). The first sentence of this paragraph should read as follows: "Until IRS issues guidance on this issue, a better approach may be to have partnership X contribute 25% of its employees' compensation, or $40,000, and each corporation contribute 25% of its employee's compensation, or $37,500." Chapter 10, Section IV, Part B.2.b. (added July 31, 2009). The reference to "$100,000" in this paragraph should read "$150,000" Chapter 11, Section VIII, Part C.2.c.2) (added April 25, 2009). The end of this paragraph still contains language referring to the failure of the PPA 2006 to repeal the gap period earnings rule for corrective distributions of excess deferrals under IRC §402(g). Actually, the Worker, Retiree, and Employer Recovery Act of 2008, amended the PPA 2006 to provide for the repeal of gap period earnings for IRC §402(g) corrective distributions, effective for post-2007 years. This change is reflected in the discussion of IRC §402(g) in Section XI of Chapter 11 but was not reflected in this particular paragraph of Section VIII. Chapter 11, Section XII, Part A.1. (added March 9, 2009). The text refers to an HCE participating is more than one 401(k) or 401(m) arrangement. To clarify, the mandatory aggregation rule applies if the HCE is eligible for more than one such arrangement for a plan year, regardless of whether the HCE actually participates in both plans during a plan year. Chapter 11, Section XIV, Part B.4.e.1) (added July 30, 2009). Paragraph (2) of 4.e.1) should read as follows: "The suspension or reduction of the match must not be effective earlier than 30 days after the employees are provided the supplemental notice, and also no earlier than the date the amendment is adopted." The text in the 2009 Edition suggests that a 30-day period also runs from the date the amendment is adopted to determine the earliest permissible effective date. Thus, the suspension or reduction can be effective as early as 30 days after the supplemental notice is provided as long as the amendment has actually been adopted by such date. Chapter 13A, Section III, Part A.3.a.1) (added March 9, 2009). The cross-reference to "3.c. below" should read: "3.b.below." Chapter 13A, Section IV, Part C.2. (added January 30, 2009). The text suggests that all defined benefit plans are exempt from the SAR requirement in post-2007 plan years. In fact, only plans subject to the funding notice requirement under ERISA §101(f) are exempt from the SAR requirement, and ERISA §101(f) applies only to defined benefit plans that are covered under Title IV of ERISA. Thus, non-PBGC-covered defined benefit plans, such as plans maintained by professional organizations that have never had more than 25 active participants, are not exempt from the SAR requirement in post-2007 plan years. Chapter 15, Section IV, Part M (added April 14, 2009). The first entry in the Reporting and Disclosure table, relating to the Form 5500, indicates in the first column that the Form 5500-SF is available for 2008 plan years or later. Actually, this form will not be available for the first time until the 2009 plan year report. Chaper 15, Section VI, Part B.¶1.d. (added August 28, 2009). Add "still apply" after "4971." Seminars | The ERISA Book | Newsletter | Consulting | Plan Documents | Whats New Copyright by Cyber FX Communications and TRI Pension Services 1998-2002
|
