Defined benefit plan

Industry & Regulatory News
PBGC Updates Expected Retirement Table for 2023

The Pension Benefit Guarantee Corporation has issued a final rule updating the table used to determine the expected retirement age for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2023. This table is needed to compute the value of early retirement benefits and the total value of benefits under a plan. The new table is effective January 1, 2023.

December 06 2022
Industry & Regulatory News
Additional Form 5500 Guidance Under SECURE Act at OMB

The Office of Management and Budget has received a final rule from the Department of Labor titled “Implement SECURE Act and Related Revisions to Employee Benefit Plan Annual Reporting on the Form 5500.”

According to a description of the rule, it is likely to include guidance on the implementation of group of plans reporting pursuant to Section 202 of the SECURE Act. The DOL released certain form revisions earlier in the year but indicated that it was evaluating public comments on elements of the September 2021 proposal related to 1) DCG reporting under the SECURE Act and related audit issues, 2) Schedule MEP reporting requirements, 3) financial improvements to the Schedule H, 4) changes in participant counts related to plan audit requirements, 5) reporting for multiple employer welfare arrangements (MEWAs) that file Form M-1, and 6) questions on pension plan compliance.

November 22 2022
Industry & Regulatory News
Department of Labor Changes “Employee vs. Contractor” Rule

The Department of Labor’s Wage and Hour Division has once again released guidance on the definition of “employee.” This October 2022 guidance, in the form of proposed regulations, applies primarily to determinations under the Fair Labor Standards Act (FLSA), but may help in other contexts, such as in determining whether a worker should be covered by a retirement or health plan. Although the new rules are not radically different from previous regulations, there are some important changes.

November 17 2022
Industry & Regulatory News
IRS Issues Yield Curves and Segment Rates for DB Plan Calculations

The IRS has issued Notice 2022-60, 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 November 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.

November 17 2022
Industry & Regulatory News
PBGC Issues Comprehensive Premium Filing Instructions for 2023 Plan Year

The Pension Benefit Guaranty Corporation (PBGC) has released the Comprehensive Premium Filing Instructions for 2023 Plan Years. Annual premium filings and payments are required under ERISA and PBGC regulations for PBGC covered DB plans.

November 11 2022
Industry & Regulatory News
PBGC Updates Maximum Guarantee Table For 2023

The Pension Benefit Guarantee Corporation (PBGC) has updated its table titled “Present Value of PBGC Maximum Guarantee” to reflect applicable values for distributions with annuity starting dates during calendar year 2023. The maximum guarantee is expressed as a dollar ceiling on the amount of the monthly benefit that may be paid to a plan participant (in the form of a life annuity beginning at age 65) by the PBGC. The maximum guarantee, which increases each year, is adjusted for benefits commencing at ages other than age 65 in order to make the maximum guarantee equivalent in value regardless of the age at which a participant starts receiving benefits from the PBGC.

The Pension Protection Act of 2006 requires that when the “adjusted funding target attainment percentage” (AFTAP) for a plan is at least 60 percent but less than 80 percent, the plan may not make a distribution in excess of the lesser of

  • 50 percent of the amount of the payment that would have been paid if the restriction did not apply, or
  • the present value, determined under guidance approved by the PBGC, of the maximum guarantee with respect to the participant under ERISA Section 4022.

The PBGC table is useful in determining the maximum payment for this purpose.

November 03 2022
Industry & Regulatory News
Hardship Distributions May Be Permitted for Illinois Severe Storms and Flooding

The Federal Emergency Management Agency (FEMA) has issued a disaster declaration for severe storm and flooding in Illinois, beginning October 14, 2022.

Employers with qualified retirement plans may allow participants to take hardship distributions if

  • they have incurred expenses and losses because of a FEMA-declared disaster, and
  • their principal residence or place of employment at the time of the disaster is located in an area designated by FEMA as eligible for individual disaster assistance.

 

If the employer permits hardship distributions for expenses and losses related to a federally declared disaster, participants can check fema.gov/locations to determine if they are located in a disaster area designated for individual assistance.

The IRS may also issue relief related to this disaster for certain tax-related deadlines. Additional information can be found at irs.gov/newsroom/tax-relief-in-disaster-situations and will be announced here if such relief is granted.

October 18 2022
Industry & Regulatory News
IRS Issues Yield Curves and Segment Rates for DB Plan Calculations

The IRS has issued Notice 2022-54, 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 October 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.

October 18 2022
Industry & Regulatory News
PBGC Posts 2023 Premium Rates

The Pension Benefit Guarantee Corporation has determined premium rates applicable for the 2023 plan year in accordance with indexing rules provided in section 4006 of ERISA. The single-employer plan per-participant flat rate premium for plan years beginning in 2023 is $96, up from $88 in 2022 and more than triple the premium rate in 2007. The single-employer plan variable-rate premium for 2023 increases to $52 per $1,000 of unfunded vested benefits, up from $48 in 2022. The variable-rate premium per participant cap increased to $652 per participant, from $598 in 2022.

October 17 2022
Industry & Regulatory News
DOL Releases Proposed Rule Updating Employee Classification Under FLSA

The Department of Labor (DOL) Wage and Hour Division has released a proposed rule titled Employee or Independent Contractor Classification Under the Fair Labor Standards Act (FLSA) that is scheduled to be published on October 13, 2022. The Department believes that its proposed rule would reduce the risk that employees are misclassified as independent contractors, while providing added certainty for businesses that engage with individuals who are in business for themselves.

Workers classified as independent contractors may not be afforded the protections of the FLSA. These include payment of federal minimum wage for all hours worked, and entitlement to overtime compensation for hours worked over 40 in a workweek.

The DOL is proposing to discontinue the use of “core factors” and instead return to a totality-of the-circumstances analysis of the economic reality test in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity. The proposal details six specific economic reality factors, but indicates that this should not be an exhaustive list for consideration.

(1) Opportunity for profit or loss depending on managerial skill

(2) Investments by the worker and the employer

(3) Degree of permanence of the work relationship

(4) Nature and degree of control

(5) Extent to which the work performed is an integral part of the employer’s business

(6) Skill and initiative

The Department is also proposing to formally rescind the 2021 Independent Contractor (IC) Rule. The effective date of the 2021 IC Rule was March 8, 2021. On March 4, 2021, the Department published a rule delaying the effective date of the 2021 IC Rule (Delay Rule) and on May 6, 2021, it published a rule withdrawing the 2021 IC Rule (Withdrawal Rule). On March 14, 2022, in a lawsuit challenging the Department’s delay and withdrawal of the 2021 IC Rule, a Federal district court in the Eastern District of Texas issued a decision vacating the Delay and Withdrawal Rules. The district court concluded that the 2021 IC Rule became effective on the original March 8, 2021, effective date.

Comments on the proposed rule must be received by November 28, 2022.

October 11 2022