TRI Pension Services/ What's New/ Current Developments in 2008

TRI Pension Services/ What's New/Current Developments in 2008

The following list tracks important guidance that was released in 2008. These items are summarized in detail, with appropriate commentary, in our quarterly newsletter, eRISA Update. For ordering information, Click here and follow the instructions to print out an order form.

Cross-references to sections of The ERISA Outline Book that are affected by significant current developments are available,organized by chapter. For ordering information for The ERISA Outline Book click here.

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LIST OF CURRENT DEVELOPMENTS

Legislative Developments

New law modifies rights for military servicemembers [Citation: H.R. 6081, Heroes Earnings Assistance and Relief Tax Act of 2008 (June 17, 2008)]

EESA extends special rollover/loan relief to certain victims of 2008 Midwest Storms [Citation: Emergency Economic Stabilization Act of 2008 (P.L.110-343), §702, enacted on October 3, 2008]

Technical corrections legislation amendments PPA 2006 to make clarifications to minimum funding rules, provide minimum distribution relief for 2009, and adopt miscellaneous changes [Worker, Retiree, and Employer Relief Act of 2008, P.L. 110-458, enacted on December 23, 2008]

Treasury Regulations

Proposed regulations issued under IRC §401(a)(35), effective for post-2008 plan years [Citation: Prop. Treas. Reg. §1.401(a)(35)-1, 73 F.R. 421 (January 3, 2008)]

Proposed regulations clarify notice requirements for retroactive amendments, treat certain notice requirements in other tax code and ERISA sections as satisfying 204(h) notice [Citation: Prop. Treas. Reg. §§1.411(d)-3 and 54.4980F-1, Q&As-1, -8, -9, -10, -11 and -18, 73 F.R. 15101 (March 21, 2008)]

Proposed regulations on calculation of the minimum required contribution, contribution deadlines, quarterly contribution requirements, and excise taxes on late contributions for post-2007 plan years (reflecting PPA 2006 requirements) [Citation: Prop. Treas. Reg. §§1.430(a)-1, 1.430(j)-1 and 54.4971(c)-1, 73 F.R. 20203 (April 15, 2008)]

Regulations provides guidance on the comparability requirement of IRC §4980G where an employee does not establish an HSA by December 31 [Citation: Treas. Reg. §54.4980G-4, Q&A-14 through Q&A-16, 73 F.R. 20794 (April 17, 2008)]

Proposed regulations provide exception for certain plans using "greater of" formulas that will allow the plan to satisfy 133-1/3% accrual method without aggregating the formulas [Citation: Prop. Treas. Reg. §1.411(b)-1(b)(2)(ii)(G), 73 F.R. 34665 (June 18, 2008)]

Procedures simplified for unincorporated taxpayers to obtain filing extension; extension period for partnerships reduced from 6 months to 5 months [Citation: Treas. Reg. §§1.6081-2T and 1.6081-4, 73 F.R. 37362 (July 1, 2008)]

Proposed regulations would implement PPA 2006 provision for good faith standard to apply to governmental plans [Citation: Prop. Treas. Reg. §§1.401(a)(9)-1, Q&A-2(d), 1.401(a)(9)-6, 1.403(b)-8(e)(2) and (6), 73F.R. 39630 (July 10, 2008)]

Additional guidance on comparability requirement for HSA contributions proposed; special rule for testing contributions made for nonhighly compensated employees; guidance on paying excise tax [Citation: Prop. Treas. Reg. §§54.4980G-1, 54.4980G-3, 54.4980G-4, 54.4980G-6, 54.5980G-7, 73 F.R. 40793 (July 16, 2008)]

Rules prescribed for valuing non-Roth IRA annuity in a conversion of the IRA to a Roth IRA [Citation: Treas. Reg. §1.408A-4, Q&A-14, 73 F.R. 43860 (July 29, 2008)]

Mortality tables for post-2007 plan years; guidelines established for developing substitute mortality tables [Citation: Treas. Reg. §§1.430(h)(3)-1, 1.430(h)(3)-2, and 1.431(c)(6)-1, 73 F.R. 44632 (July 31, 2008)]

Proposed regulations would amend regulations to reflect the 180-day notice maximum period and the requirement to explain the effect of failing to defer payment, as enacted by the PPA 2006 [Citation: Prop. Treas. Reg. §§1.411(a)-11(c)(2)(i), (iii)(B)(3) and (vi), and 1.411(a)-11(h), 73 F.R. 59575 (October 9, 2008)]

Proposed regulations provide guidance on calculating the amounts includible in income under IRC §409A(a) and the additional taxes imposed by that tax code section [Citation: Prop. Treas. Reg. §1.409A-4, 73 F.R. 74380 (December 8, 2008)]

IRS Guidance

Transition rule in Notice 2006-107 (pertaining to the diversification requirements under IRC §401(a)(35)) continues until regulations become effective [Citation: Notice 2008-7, 2008-3 I.R.B.]

Loss disallowed, pursuant to IRC §1091, from sale of stock where substantially identical stock is purchased by IRA or Roth IRA [Citation: Rev. Rul. 2008-5, 2008-3 I.R.B.]

Expanded tax return preparer penalty can be triggered with respect to preparers of certain employee benefits related forms [Citation: Notice 2008-13, 2008-3 I.R.B.]

IRS explains the application of the minimum accrual rules to a conversion from a traditional benefit formula to a lump-sum based benefit formula [Citation: Rev. Rul. 2008-7, 2008-7 I.R.B.]

Uniform delay of IRC §§430 and 436 regulatory effective dates to 2009; guidance for plans with a valuation date on the last day of the plan year [Citation: Notice 2008-21, 2008-7 I.R.B.]

Guidance on PPA amendment to allow non-Roth funds in eligible retirement plans to be rolled over to Roth IRAs [Citation: Notice 2008-30, Q&A-1 through Q&A-7, 2008-12 I.R.B.]

Timing of amendments to reflect the requirement to distribute gap period earnings [Citation: Notice 2008-30, Q&A-19 through Q&A-21, 2008-12 I.R.B.]

Guidance on qualified optional survivor annuity (QOSA) requirements [Citation: Notice 2008-30, Q&A-8 through Q&A-15, 2008-12 I.R.B.]

Interaction between new PPA assumptions under IRC §417(e) and the QJSA rules [Citation: Notice 2008-30, Q&A-16 through Q&A-18, 2008-12 I.R.B.]

Mortality table for disabled participants: continued reliance on Rev. Rul. 96-7 [Citation: Notice 2008-29, 2008-12 I.R.B.]

Guidance on contribution limits to HSAs, reflecting amendments made by the HOPE Act [Citation: Notice 2008-52, 2008-25 I.R.B. (June 23, 2008)]

Guidance with respect to certain recurring part-year compensation [Citation: Notice 2008-62, 2008-29 I.R.B. (July 21, 2008)]

Transfers from qualified plans to nonqualified foreign trust or to Puerto Rico trust [Citation: Rev. Rul. 2008-40, 2008-30 I.R.B. (July 28, 2008)]

Additional guidance on eligible individuals, HDHPs, HSA contributions, HSA distributions, prohibited transactions, and establishing an HSA [Citation: Notice 2008-59, 2008-30 I.R.B. (July 28, 2008)]

Transfer of sponsorship of plan to unrelated taxpayer with no connection to non-plan business transaction violates exclusive benefit rule [Citation: Rev. Rul. 2008-45, 2008-34 I.R.B. (August 25, 2008)]

U.K.-U.S. tax treaty does not authorize the rollover of distributions from U.K. plans to U.S. plans [Citation: Chief Counsel Advice Memorandum AM2008-009 (August 29, 2008)]

Latest revision of the EPCRS procedure adds new prescribed correction methods, expands the use of the streamlined application procedure and provides other important clarifications [Citation: Rev. Proc. 2008-50, 2008-35 I.R.B. (September 2, 2008)]

Modification of transitional rule for plans with a valuation date on the last day of the plan year; reasonable interpretation guidance in performing 2008 AFTAP determinations [Citation: Notice 2008-73, 2008-38 I.R.B. (September 22, 2008), IRS Employee Plans News (Special Edition: September 18, 2008)

IRS modifies certain submission procedures for Pre-Approved Plans [Citation: Rev. Proc. 2008-56, 2008-40 (October 6, 2008)]

Guidance on qualified HSA funding distributions [Citation: Notice 2008-51, 2008-25 I.R.B. (June 23, 2008)]

Static mortality tables released for valuation dates occurring in 2009 through 2013; revision of procedures for requesting approval of substitute mortality tables [Citation: Notice 2008-85, Rev. Proc. 2008-62, 2008-42 I.R.B. (October 20, 2008)]

Relaxation of no-ruling proscription regarding nonqualified plans [Citation: Rev. Proc. 2008-61, 2008-42 I.R.B (October 20, 2008)]

IRS position on using rollovers to start up a business [Citation: Guidelines Regarding Rollovers as Business Start-ups, Memorandum from Michael Julianelle, Director, Employee Plans, SE:T:EP, IRS Employee Plans Bulletin (Special Edition: November 5, 2008)]

2008 list issued for Cycle D plans [Citation: Notice 2008-108, 2008-50 I.R.B. (December 15, 2008)]

Procedures for obtaining relief for certain operational failures under IRC §409A [Citation: Notice 2008-113, 2008-51 I.R.B. (December 22, 2008)]

Reporting and wage withholding requirements for calendar year 2008 and subsequent years before effective date of final regulations with respect to deferrals of compensation and amounts includible in gross income under IRC §409A [Citation: Notice 2008-115, 2008-52 I.R.B. (December 29, 2008)]

IRS Private Letter Rulings

Use of 401(k) plan assets to pay for long-term care insurance results in distribution, not only for tax purposes but also for qualification purposes [Citation: PLR 200806013]

Modified benefit options do not cause governmental plan to lose grandfather status under IRC §401(a)(9) for existing options [Citation: PLR 200807023]

Failure to make first two years' distributions under life expectancy method for post-death distributions does not preclude use of such method for remainder of beneficiary's life expectancy [Citation: PLR 200811028]

Qualified replacement plan under IRC §4980 may not use transferred surplus assets to fund matching contributions [Citation: PLR 20083604 (June 11, 2008)]

The phrase "as stated in wills" in IRA beneficiary designation results in decedent being treated as having no designated beneficiary for minimum distribution purposes [Citation: PLR 200846028]

DOL and PBGC Guidance

Safe harbor deadline (7 business days) for depositing participant contributions to plans with fewer than 100 participants [Citation: Prop. DOL Reg. §2510.3-102(a) and (f), 73 F.R. 11072 (February 29, 2008)]

PBGC proposed modifications to regulations under ERISA §4010 to implement PPA 2006 changes [Citation: Prop. PBGC Reg. §§4010.1-4010.9, 4010.11-4010.13, 73 F.R. 9243 (February 20, 2008)]

Final regulations prescribe methodology and due dates for paying variable rate premiums (VRPs) for post-2007 plan years [Citation: PBGC Reg §§4006.2, 4006.4, 4006.5, 4007.3, 4007.7, 4007.8, 4007.10, 4007.11, 73 F.R. 15065 (March 21, 2008)]

Waiver of reporting of missed quarterly contributions for 2008 plan year for certain small plans [Citation: PBGC Technical Update 08-2 (March 24, 2008)]

Clarifying amendments adopted to final QDIA regulations [Citation: DOL Reg. §2550.404c-5, 73 F.R. 23349 (April 30, 2008)]

Proposed regulation would implement section 404 of the PPA 2006 regarding substitution of an employer's bankruptcy filing date for the plan's termination date to make certain determinations [Citation: Prop. PBGC Reg. §§4001.2, 4022.2, 4022.3, 4022.4, 4022.6, 4022.21, 4022.22, 4022.23, 4022.24, 4022.25, 4022.51, 4022.62, 4022.63, 4022.82, 4044.2, 4044.13, 73 F.R. 37390 (July 1, 2008)]

Administrative review of PBGC decisions: referral of certain decisions to other departments or Appeals Board staff [Citation: PBGC Reg. §4003.58, 73 F.R. 38117 (July 3, 2008)]

Proposed regulations would impose fiduciary requirements for disclosure in participant-directed plans [Citation: Prop. DOL Reg. §§2550.404a-5, 2550.404c-1, 73 F.R. 43014 (July 23, 2008)]

DOL issues FAQs on Schedule C revisions being made to the 2009 Form 5500 series [Citation: FAQs About The 2009 Form 5500 Schedule C, available at the DOL website (www.dol.gov/ebsa)]

Proposed regulations prescribe requirements for statutory exemption under ERISA §408(b)(14) and IRC §4975(d)(17) with respect to investment advice rendered by a fiduciary adviser [Citation: Prop. DOL Reg. §§2550.408g-1 and 2550.408g-2, 73 F.R. 49896 (August 22, 2008)]

Proposed class exemption would expand the types of investment advice arrangements that would have exemptive relief [Citation: Proposed Exemption for the Provision of Investment Advice to Participants and Beneficiaries of Individual Account Plans, 73 F.R. 49924 (August 22, 2008)]

Fiduciary safe harbor for automatic rollovers made by terminated defined contribution plans (including abandoned plans) is amended to require benefits of missing nonspouse beneficiaries to be rolled over to inherited IRAs [Citation: DOL Reg. §2550.404a-3(d) and (e), DOL Reg. §2578.1(d)(2)(vi)(A), 73 F.R. 58459 (October 7, 2008)] Amendments adopted to PTE 2006-06.

Regulations prescribe fiduciary standards for selection of annuity providers for defined contribution plans; "safest annuity standard" in Interpretive Bulletin 95-1 amended to restrict its application to defined benefit plans [Citation: DOL Reg. §2509.95-1, 73 F.R. 58445 (October 7, 2008); DOL Reg. §2550.404a-4, 73 F.R. 58447 (October 7, 2008)]

Economically targeted investments - DOL updates its position [Citation: DOL Reg. §2509.08-1 (Interpretive Bulletin 08-1), 73 F.R. 61735 (October 17, 2008)]

Interpretive bulletin outlines DOL positions on proxy voting, investment policies, and shareholder activism [Citation: DOL Reg. §2509.08-2 (Interpretive Bulletin 08-2), 73 FR 61731 (October 17, 2008)]

Regulations implement additional disclosure requirements under section 506 of the PPA 2006 pertaining to distress and involuntary terminations under Title IV [Citation: PBGC Reg. §§4041.51, and 4042.1-4042.5, 73 F.R. 68333 (November 18, 2008)]

Waiver of reporting requirement if aggregate underfunding does not exceed $15 million [Citation: PBGC Technical Update 08-3 (December 19, 2008)]

PBGC releases 2009 present values of the Title IV maximum guaranteed benefit for purposes of determining the partial restrictions on distributions for plans below 80% but not below 60% funding [Citation: Notice of Present Value of PBGC Maximum Benefit Guarantee (December 22, 2008)]

Applicable interest/mortality rates where plan terminates in post-2007 plan year but make distributions in a later plan year [Citation: PBGC Technical Update 08-4 (December 31, 2008)]

EBSA Advisory Opinions and Field Assistance Bulletins

DOL outlines how to determine which fiduciary is responsibe for the collection of delinquent employer and employee contributions [Citation: Field Assistance Bulletin (FAB) 20008-01 (February 1, 2008)]

DOL outlines how to determine which fiduciary is responsible for the collection of delinquent employer and employee contributions [Citation: Field Assistance Bulletin (FAB) 2008-01 (February 1, 2008)]

ERISA preempts state law that would interfere with operation of a default election feature in a group health plan that triggers payroll deductions [Citation: Advisory Opinion 2008-02A (February 8, 2008)]

DOL provides Q&As that clarify certain aspects of the QDIA regulations [Citation: Field Assistance Bulletin 2008-03 (April 29, 2008)]

Investment vehicles involving foreign jurisdictions satisfy ERISA requirement to maintain indicia ownership within jurisdiction of US courts [Citation: Advisory Opinion 2008-04A]

ERISA's fiduciary rules prohibit the use of plan assets to promote union organizing campaigns and union goals in collective bargaining negotiations [Citation: DOL Advisory Opinion 2008-05A (June 27, 2008)]

DOL provides field guidance on the bonding requirements [Citation: Field Assistance Bulletin 2008-04 (FAB 2008-04) (November 25, 2008)]

Top hat registration statement for single plan maintained by a controlled group [Citation: Advisory Opinion 2008-08A (December 19, 2008)]>

ERISA Litigation

Group insurance plan could not be amended retroactively under the doctrine of equitable reformation to fix a scrivener's error that would eliminate beneficiary's right to death benefit provided under the policy's original terms [Citation: Blackshear v. Reliance Standard Life Insurance Co., No. 06-2126 (4th Cir. December 7, 2007)]

Participant may recover losses incurred by his account due to fiduciary's failure to implement the investment strategy he had selected for the account [Citation: LaRue v. DeWolff, Boberg & Associates, 128 S.Ct. 1020 (2008)]

Supreme Court reaffirms Firestone holding; provides analysis regarding impact of conflicts of interest [Citation: Metropolitan Life Ins. Co. v. Glenn, 128 S.Ct. 2343 (43 EBC 2921) (2008)]

Moench case establishes a working presumption for dealing with fiduciary duties relating to the holding of company stock where plan documents compel such investments [Citation: Kirschbaum v. Reliant Energy, Inc., 526 F.3d 243 (43 EBC 2281) (5th Cir. 2008)]

Calculation of disposable income in Chapter 13 proceeding where participant loan from 401(k) plan is involved [Citation: In re Lasowski (Coop v. Lasowski), 384 B.R. 205 (B.A.P. 8th Cir. March 31, 2008)]

State disability plan was not age discriminatory even though deemed service credit was linked to an age-based normal retirement age [Citation: Kentucky Retirement Systems v. EEOC, 128 S.Ct. 2361 (2008)]

Release forms regarding ERISA claims were valid regarding challenges against method of determining offset under defined benefit plan for amounts distributed from profit sharing plan [Citation: Frommert v. Conkright, 535 F.3d 111 (44 EBC 1461) (2nd Cir. 2008)]

Participant entitled to equitable relief to have benefits calculated on earlier service crediting date because he reasonably relied to his detriment on repeated representations from employers' agents that his benefits were to be based on such date [Citation: Pell v. Dupont, 539 F.3d 292 (44 EBC 1944) (3rd Cir. 2008)]

LaRue case dictates that former employees who were cashed out of the plan have standing to bring suit under ERISA §502(a)(2) that would result in additional benefits payable if successful [Citation: In re Mutual Funds Investment Litigation (Wangberger v. Janus Capital Group), 529 F.3d 207 (4th Cir. June 16, 2008); Evans v. Akers, 534 F.3d 65 (44 EBC 1385) (1st Cir. 2008)]

Plan administrator must petition court to seek reformation of plan document to correct alleged scrivener's error; drafting mistake may not be dealt with as an ambiguity [Citation: Young v. Verizon's Bell Atlantic Cash Balance Plan, 575 F.Supp.2d 892 (N.D.Ill. 2008)]

Miscellaneous Guidance

No entries

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Opdateret d. 22/2/10