Industry & Regulatory NewsLegislation to Encourage 529 Plan Savings Introduced
May 3, 2022 - Senators Maggie Hassan (D-NH) and Susan Collins (R-ME) have introduced S. 4103, the Helping Parents Save for College Act. The bill would provide low- and middle-income parents with a tax credit for contributions to 529 education savings accounts by expanding the Saver’s Credit. The credit would be worth up to 50 percent of 529 account contributions, with a maximum credit of $2,000 for low-and-middle income families.
Additionally, the proposal would allow plan beneficiaries to move excess funds from the 529 account to a Roth IRA without penalty, so long as the account was maintained for a 10-year period at the time of the distribution. This would alleviate concerns of adverse tax consequences if funds are not used for college. The amount eligible for rollover to a Roth IRA is limited to the lesser of the annual Roth contribution limit or the aggregate amount contributed to the program before the five-year period ending on the date of the distribution.
Industry & Regulatory NewsProposed Lump-Sum Buyout Disclosure Legislation Reintroduced
Senators Patty Murray (D-WA), Tina Smith (D-MN), and Tammy Baldwin (D-WI) reintroduced the Information Needed for Financial Options Risk Mitigation (INFORM) Act of 2022. The proposal would require pension plan sponsors to provide retirees and participants with certain information when being offered a lump-sum buyout from their defined benefit plan.
Industry & Regulatory NewsIRS Releases Revised 2021 Publication 590-B
April 29, 2022 - The IRS has issued a revised 2021 Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). The updated publication appears to correct several errors in the life expectancy tables found in Appendix B. The 2021 tax year publication reflects new life expectancy and distribution period tables that are applicable to distribution calendar years beginning on or after January 1, 2022.
Industry & Regulatory NewsWashington Pulse: IRS Issues Proposed MEP Rule
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.
Industry & Regulatory NewsDOL Launches Roundtable Discussions on Retirement
The Department of Labor (DOL) has kicked off what is to be a series of roundtable discussions on how to improve retirement security for workers. Labor Secretary Marty Walsh and Kathleen Kennedy Townsend, the Secretary’s representative for pensions and retirement, joined several state officials, trade group representatives, educators, and others in New York City to review current retirement security policies.
In the coming months, Kennedy Townsend will host similar discussions around the country to promote retirement security reform and open a dialogue between various stakeholders. Topics of focus will include encouraging automatic enrollment, improving portability of benefits as workers move from job to job, and leveraging affordable lifetime income options.
Industry & Regulatory NewsIRA Bankruptcy Exemption Increases
Effective April 1, 2022, the maximum aggregate bankruptcy exemption amount for IRAs increased from $1,362,800 to $1,512,350. This exemption amount is subject to cost-of-living adjustments (COLAs), having risen from an initial exemption limit of $1,000,000 as enacted within the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Public Law 109-8. The limitation is reviewed every three years and increased if COLA measures warrant. There is no maximum exemption for assets accumulated in employer-sponsored retirement plans.
Industry & Regulatory NewsIRS Issues Yield Curves and Segment Rates for DB Plan Calculations
The IRS has issued Notice 2022-16, 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 April 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.
Industry & Regulatory NewsIRS Announces Applicable Federal Rates for May 2022
The IRS has issued Revenue Ruling 2022-9, which contains the applicable federal rates (AFR) for May 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 NewsAdditional 403(b) Plan Document Guidance Released
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.