Industry & Regulatory News

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.

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.

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. 

The Securities and Exchange Commission (SEC) has adopted amendments that rescind two rules applicable to proxy voting advice businesses (PVABs) that were adopted in 2020. The 2020 rule imposed conditions on the availability of two exemptions from the proxy rules’ information and filing requirements. Those conditions require that

• Registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner, and
• PVAB clients are provided with a means of becoming aware of any written responses by registrants to proxy voting advice

The IRS has released a draft 2022 tax year Form 8889, Health Savings Accounts (HSAs). Form 8889 is filed by taxpayers to report HSA contributions and associated tax deductions, HSA distributions, and any tax or penalty tax owed for distributions not used for qualified medical expenses.

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.

A plaintiff in a 401(k) plan sponsored by Colgate-Palmolive Co. has filed a lawsuit against several parties after an unknown individual defrauded the plan of her entire $750,000 account. The plaintiff has named the plan sponsor, the recordkeeper Alight Solutions, and the plan trustee Mellon Bank, as defendants in the lawsuit. The plaintiff alleges the parties breached their fiduciary duty by failing to safeguard her assets.

The Pension Benefit Guaranty Corporation (PBGC) has released a final rule outlining terms for underfunded multiemployer plans seeking special financial assistance (SFA) under the American Rescue Plan (ARP) Act of 2021. ARP allows certain financially troubled multiemployer plans to apply for special financial assistance in accordance with rules developed by PBGC. The rule is scheduled to be published on July 8, 2022.

The IRS has released the latest version of Publication 1179 (Revenue Procedure 2022-25), General Rules and Specifications for Substitute Forms 1096, 1098, 1099, 5498, and Certain Other Information Returns.

Some organizations, such as IRA trustees or custodians, may prefer to draft and use substitute forms rather than IRS-provided information return forms. In addition to specifications for properly creating substitute forms, the guidance addresses such issues as inclusion of logos, slogans, and advertisements, as well as penalties for information return filing failures, and delivery requirements.

Most of you have probably experienced the following scenario: An employee comes to you and says that they made a mistake during open enrollment, and they would like to make a change to their elections. If they realize their mistake and notify you before the beginning of the FSA or HRA plan year, you are permitted to make any change that they would like to make.