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Industry & Regulatory News
DOL Releases Interpretive Bulletin on Auditor Independence
The Department of Labor (DOL) has released Interpretive Bulletin 2022-01 (IB) relating to independence requirements for accountants who audit employee benefit plans. Under ERISA, plan administrators of benefit plans requiring an audit are required to retain an “independent qualified public accountant” to conduct an examination of the plan’s financial statements and render an opinion as to whether the financial statements and required schedules are presented fairly in accordance with generally accepted accounting principles (GAAP).
Industry & Regulatory News
PBGC Proposes Changes to Annual Reporting of Defined Benefit Plan Information
The Pension Benefit Guaranty Corporation is proposing modifications to reporting information it asks for on supporting schedules related to annual Form 5500 series returns. The proposal modifies line 19a and correlating instructions of the 2023 Schedule R, Retirement Plan Information, by updating the categories of assets used in identifying investments held by the plan and requiring the breakdown to be reported as of the end of the plan year rather than beginning of the plan year. Additionally, the proposal would modify line 19b and eliminate line 19c. With regard to the Schedule SB, Single-Employer Defined Benefit Plan Actuarial Information, the proposal modifies line 6 (Target Normal Cost) and correlating instructions to address an unlikely reporting inconsistency where a plan requires mandatory employee contributions and the mandatory contributions for the plan year exceed the present value of benefits accruing during the plan year. In addition, PBGC is proposing a change to line 26b attachment instructions to clarify that where a plan assumes benefits are paid in a lump sum but uses the annuity substitution rule to determine the funding target, the attachment may show projected benefits payable in the annuity form instead of the form assumed for valuation purposes.
Industry & Regulatory News
DOL’s Proposed Restated Voluntary Fiduciary Correction Program at OMB
The Office of Management and Budget has received a proposed rule from the Department of Labor (DOL) titled “Adoption of Amended and Restated Voluntary Fiduciary Correction Program”. The Voluntary Fiduciary Correction Program (VFCP) is a voluntary enforcement program that allows plan officials to identify and correct certain transactions, such as delinquent participant contributions, sales and exchanges, improper loans, and improper plan expenses. The VFCP was last updated in 2006.
Industry & Regulatory News
IRS Final Rule on Electronic Filing Requirements at OMB
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.
Industry & Regulatory News
IRS Announces Applicable Federal Rates for September 2022
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.”
Industry & Regulatory News
Proxy Vote Changes for Index Funds Proposed in House
Representatives Bill Huizenga (R-MI) and Blaine Luetkemeyer (R-MO) have introduced HR 8521, the Investor Democracy is Expected (INDEX) Act. The bill mirrors S. 4241, which was introduced and announced in May. The bill would require investment advisors of passively managed funds to vote proxies in accordance with the fund investors’ instructions—not at the adviser’s discretion. The adviser would be responsible for passing through the proxies, collecting the instructions, and voting according to the investors’ wishes. Except for routine matters, the investment adviser could not vote on the proportion of shares for which voting instructions were not received. The proposal provides for a safe harbor whereby investment advisers would not be in violation of duties by choosing not to solicit voting instructions or voting the particular proxy.
Industry & Regulatory News
IRS Issues Deadline Relief for Island of St. Croix, U.S. VI Water Shortage
The IRS has announced the postponement of certain tax-related deadlines for victims of a water shortage and health impact from unprecedented sargassum seagrass influx on the island of St. Croix, U.S. Virgin Islands. The tax relief postpones various tax-filing deadlines that began July 15, 2022. Affected individuals and households who reside or have a business on the Island of St. Croix, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.
Industry & Regulatory News
Federal Prime Interest Rate Increased to 5.50 Percent
Effective July 27, 2022, the Federal prime interest rate increased from 4.75 percent to 5.50 percent. The prime interest rate is largely determined by the federal funds rate, as set by the Federal Reserve’s Federal Open Market Committee (FOMC). As Department of Labor regulations require a retirement plan loan interest rate to be comparable to interest rates charged by entities that are in the business of lending money in similar circumstances, plan sponsors typically use a benchmark such as the prime rate to set the interest rate on plan loans. The next FOMC meeting is scheduled for September 20 and 21, 2022.
Industry & Regulatory News
Temporary Waiver of RMDs Proposed in House
July 19, 2022 - Representative Warren Davidson (R-OH) has introduced HR 8331, a bill that would provide for a suspension of required minimum distributions (RMDs) from retirement plans and IRAs for the 2022 calendar year.
Industry & Regulatory News
DOL Proposed Amendment for QPAM Exemptions Has Left OMB
A Proposed Rule titled “Proposed Amendment to PTE 84-14 for Plan Asset Transactions Determined by an Independent Qualified Plan Asset Manager” (QPAM) has left the Office of Management and Budget—suggesting that official release may come soon.
ERISA generally prohibits a number of transactions between a plan and a “party in interest”—including fiduciaries and those providing services to the plan—unless an exemption is granted. PTE 84-14 is a class exemption regarding certain transactions between a party in interest with respect to an employee benefit plan and an investment fund that is managed by a QPAM. An employee benefit plan includes an employee welfare benefit or pension benefit plan, a trust defined under IRC. Secs. 401(a) or 403(a), IRAs, HSAs, MSAs, and ESAs. QPAMs are independent fiduciaries that are a bank, savings and loan, insurance company, or registered investment advisor meeting certain asset/net worth thresholds.