IRS Guidance

The IRS has issued Notice 2022-35, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for August used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.

The Office of Management and Budget has received a final rule from the IRS titled “Electronically Filed Returns”.

The IRS released a proposed rule in July 2021 regarding electronic filing requirements for certain information returns, pursuant to the Taxpayer First Act of 2019. The proposed regulations reduce the threshold by which filers must electronically file from 250 to 100 returns for the 2022 calendar year. For filings required after calendar year 2022, the threshold will be further reduced to 10 returns.

The IRS has issued Revenue Ruling 2022-17, which contains the applicable federal rates (AFR) for September 2022. These rates are used for such purposes as calculating distributions from retirement savings arrangements that meet the requirements for substantially equal periodic payments (a 10 percent early distribution penalty tax exception), also referred to as “72(t) payments.”

The IRS issued Notice 2022-33 which extends the deadline for amendments to retirement plans and Individual Retirement Arrangements (IRAs) to adopt provisions enacted under the SECURE Act, the Miners Act, and some provisions under the CARES Act. The Notice provides that qualified plans, IRAs, and non-governmental 403(b) plans must be amended to adopt applicable provisions of each act no later than December 31, 2025. The previous deadline for such amendments under Notice 2020-68 and Notice 2020-86 was December 31, 2022.

The IRS has issued Notice 2022-32, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for July used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.

The IRS has released Revenue Ruling 2022-13 on the applicability of Internal Revenue Code (IRC) Section 432(b)(7) following a merger involving a multiemployer defined benefit (DB) plan that has received special financial assistance (SFA). IRC Sec. 432(b)(7) provides for deemed critical status for eligible multiemployer plans receiving SFA. If a multiemployer DB plan that has received SFA is merged into a multiemployer DB plan that has not received SFA, and the designated plan ongoing is the one that has not received SFA, is the ongoing plan deemed to be in Sec. 432(b)(7) critical status? The IRS holds that, in this case, when the ongoing plan after a merger was not the one that had received SFA prior to the merger, it is not deemed to be in Sec. 432(b)(7) critical status solely as a result of the merger.

The IRS has issued Revenue Procedure (Rev. Proc.) 2022-28, which updates Rev. Proc. 2022-3, on whether the IRS will issue letter rulings or determination letters. The IRS will no longer issue letter rulings on whether an employer reversion of cash and the fair market value of other property received from a qualified plan occurs in connection with a spin-off/termination transaction that involved excess assets. For this Revenue Procedure, a “spin-off/termination transaction that involves excess assets” is defined as a transaction in which:

The IRS has issued Notice 2022-25, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for May used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 

Employers of all types have expressed interest in learning more about multiple employer plans (MEPs). But the unified plan rule, sometimes known as the “one bad apple rule,” has discouraged some employers from pursuing MEP participation.

The IRS has released a revised Section 403(b) Pre-Approved Plans Listing of Required Modifications and Information Package (April 2022), which includes sample plan provisions to assist drafters of 403(b) pre-approved plan documents in satisfying the requirements of Internal Revenue Code Section 403(b) and associated regulations. This revised information package consists of five sections with sample provisions related to 1) all 403(b) plans and elective deferral only arrangements, 2) contributions other than elective deferrals, 3) standardized plan provisions, 4) nonstandardized plan provisions, and 5) retirement income accounts. This guidance has been updated to accommodate the 2022 Cumulative List of Changes in Section 403(b) Requirements for Section 403(b) Pre-approved Plans in Notice 2022-8, which was previously announced.