Defined contribution plan

Legislation to promote retirement plan lifetime income options has been reintroduced by Representatives Donald Norcross (D-NJ) and Tim Walberg (R-MI). The Lifetime Income For Employees (LIFE) Act of 2022 would modify the qualified default investment arrangement rules under ERISA to allow annuity investments as part of a default in employer-provided 401(k) plans. The proposal is intended to provide employees with a steady guaranteed income during retirement and allow greater peace of mind that their income will last throughout retirement.

The Pension Benefit Guarantee Corporation (PBGC) has updated the “What’s New for Employers & Practitioners” page of its website to indicate that the audit selection methodology has been revised. The PBGC’s Standard Terminations Q&A states that plans with a participant count of more than 1,050 are selected for audit. Plans with less than 1,050 participants may be randomly selected for audit. Further, plans may be selected for audit if the PBGC has reason to believe that there is a problem or if all plan assets were distributed without filing a Standard Termination Notice (PBGC Form 500) in accordance with the standard termination regulations.

The Department of Labor has published a Request for Information (RFI) seeking what actions, if any, the department should take to protect retirement savings from risks associated with climate change. According to a DOL news release, the RFI follows President Biden’s Executive Order on Climate-Related Financial Risk, which directs the department to identify actions it can take under ERISA and other relevant laws to safeguard the life savings and pensions of U.S. workers and families from threats of climate-related financial risk. The DOL previously issued a proposed rule “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights”, however the RFI deals with a broader set of questions than the proposed rule and is a different initiative. The RFI’s comment period will run for 90 days after publication in the Federal Register.

The Pension Benefit Guaranty Corporation has published in the Federal Register inflation-adjusted penalty amounts for failure to provide certain notices or other material information and for failure to provide certain multiemployer notices.

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for victims of severe storms, straight-line winds, and tornadoes in Tennessee. The tax relief postpones various tax filing deadlines that began December 10, 2021. Affected individuals and households who reside or have a business in Cheatham, Davidson, Dickson, Gibson, Henderson, Henry, Lake, Obion, Stewart, Sumner, Weakley, and Wilson counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

The IRS has issued Notice 2022-06, providing guidance on whether periodic payments from an individual account under a qualified retirement plan are considered a series of substantially equal periodic payments (SEPPs). Notice 2022-6 modifies and supersedes Revenue Ruling 2002-62.

January 19, 2022 – The IRS has issued Revenue Ruling 2022-3, which contains the applicable federal rates (AFR) for February 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 released a new withholding form on January 4, 2022: Form W-4R, Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions. The IRS also issued a revised Form W-4P, Withholding Certificate for Pension or Annuity Payments. As a result, payers and individuals will have a new process for calculating and electing federal income tax withholding on retirement distributions. Although the IRS will not require payers to use the new and revised forms until January 1, 2023, payers may start using them in 2022.

The Department of Labor has published in the Federal Register several inflation-adjusted penalty amounts for certain failures associated with qualified retirement plans.

The IRS has issued a news release announcing the postponement of certain tax-related deadlines for victims of flooding and mudslides in Washington. The tax relief postpones various tax filing deadlines that began November 13, 2021. Affected individuals and households who reside or have a business in Clallam, Skagit, and Whatcom counties, and the Lummi Nation, Nooksack Indian Tribe, and Quileute Tribe, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.