Sponsors of Pre-Approved 403(b) Plans Need to Request Opinion or Advisory Letters by March 31, 2020
(Posted on January 30, 2017 by )


Internal Revenue ServiceWith the IRS no longer issuing rulings or determination letters on individually designed qualified plans or § 403(b) plans under most circumstances, the importance of pre-approved plans (master, prototype, and volume submitter plans) has been vastly increased. Adoption of a pre-approved plan is now the sole method for an employer to have assurance that its plan meets IRS requirements. While § 403(b) plans cannot take the form of master plans, they can be structured as prototype or volume submitter plans.

Reflecting this, Revenue Procedure 2013-22 established a program for issuing opinion and advisory letters for § 403(b) pre-approved plans. Starting June 28, 2013, sponsors of plans intended to qualify as pre-approved § 403(b) plans were permitted to apply for such letters. The first letters have not been issued under that program yet, but the expectation is that they will be issued soon.

The IRS has now announced in Rev. Proc. 2017-18, 2017-5 I.R.B. 743, that the last day of the remedial amendment period for § 403(b) plans will be March 31, 2020. After that date, sponsors of pre-approved § 403(b) plans will no longer be able to file for opinion or advisory letters. Revenue Ruling 2013-22 indicated that a six-year cycle would apply to letters for pre-approved § 403(b) plans. While it is not clear whether the second cycle would also end on exactly March 31, there will likely not be another opportunity to file until about 2025 or 2026.

Obtaining an IRS advisory or opinion letter is not legally required, so long as a plan (in form and operation) complies with § 403(b). However, as a practical matter, many employers will not adopt a § 403(b) plan that is intended to be a pre-approved plan unless it has an IRS letter verifying its status, since one of the major advantages of a pre-approved plan is the opportunity to get IRS blessing on the plan. Thus, it is critical for sponsors of such plans to file before the IRS deadline.

What’s Happening with the Affordable Care Act?
(Posted on January 25, 2017 by )


Affordable Care ActThe recent flurry of activity around the Affordable Care Act (ACA) has many people confused about where it stands, and what the employer’s obligations are. The following summarizes the activity so far:

Legislative Repeal Activity

A popular meme suggests that the Senate voted to eliminate virtually all of the provisions of the ACA, including the ability to obtain insurance in spite of pre-existing conditions, the requirement to cover adult children up to the age of 26, etc. This is not the case.

Read more.

Webinar – Phased Retirement Programs: Exploring the Issues
(Posted on December 5, 2016 by )


Lorman Distinguished Faculty MemberPhased retirement has become increasingly popular among two groups of employees: those who would like to begin easing away from work at a younger age, and those who need to continue working at older ages but require a less demanding schedule. We recently conducted a webinar to help employers identify the situations in which phased retirement may be beneficial, and structure phased retirement arrangements in such a way as to avoid the practical and legal pitfalls.

The PowerPoint presentation for the webinar is now available at this link. Or you can purchase the on-demand webinar, audio & reference manual, or MP3 download at this link.

A Trump Presidency: What Does It Mean for Employee Benefits?
(Posted on November 29, 2016 by )


White HouseBased on both campaign promises and Donald Trump’s plans for his first 100 days, a Trump presidency is likely to make major changes in employee benefits law. The most significant ones are likely to be:

  1. Major changes in the Affordable Care Act (although the timing and extent of such changes are unclear), combined with expansion of health savings accounts.
  2. Postponement or elimination of the recently issued Department of Labor fiduciary regulations.
  3. Loosening of executive compensation rules.
  4. Further cutbacks in IRS guidance and audit activity.
  5. Increased hostility to consideration of noneconomic factors in selecting retirement plan investments.
  6. Diminished enforcement of protections for LGBT employees.
  7. Increased activity at the state level, including establishment of state-sponsored retirement plans for private employers.

These issues, and others of less general concern, are discussed below. Read more.

2017 IRS Benefits & Contributions Limits Announced
(Posted on November 14, 2016 by )


irsOn November 14, 2016 the IRS issued IRS Notice 2016-62, 2016-46 I.R.B. 725, announcing the changes in pensions and benefits limits for 2017. The maximum limits on employee pretax contributions to 401(k), 403(b), and 457(b) plans (without catch-ups) remained unchanged at $18,000. However, the maximum limit on annual additions (primarily to defined contribution plans) rose from $53,000 to $54,000, and the maximum limit on benefits (when expressed as an annual benefit) under a defined benefit plan rose from $210,000 to $215,000. Limits on annual compensation taken into account and the compensation used in the definition of a key employee also rose.

A chart showing details, and limits from 1996 to 2017, can be found at this link.

Social Security Wage Base for 2017 Issued
(Posted on October 18, 2016 by )


2017 Supplement to the Governmental Plans Answer Book Published
(Posted on October 3, 2016 by )


The 2017 supplement to the Governmental Plans Answer Book has now been published. It reflects substantial new developments in the area over the past year. To obtain a 15% discount on this book, just follow the links provided, and use promo code BENEFITS15.

New materials include the following:

  • The IRS’s proposals to eliminate or substantially modify the determination letter process (see Q 4:135).
  • Proposed Department of Labor regulations concerning the definition of a fiduciary (see Qs 7:1 through 7:4) and fee disclosure requirements for service providers (see Q 8:22).
  • Revenue Ruling 2014-9, which provided guidance to plans concerning the circumstances under which they could accept rollovers (see Qs 4:22 through 4:27).
  • Notice 2015-07, discussing the extent to which a governmental plan can cover employees of charter schools (see Q 1:17).
  • Update on state funding issues, including the role of state policies requiring payment of the annual required contribution in increasing the chance that employers would make their required contributions (see Qs 6:63 through 6:66).
  • Recent developments concerning same-sex marriage and the Equal Employment Opportunity Commission guidance treating discrimination based on sexual orientation as sex discrimination in violation of Title VII of the Civil Rights Act of 1964 (see Qs 1:38 and 1:45).
  • New explanations in the Beneficiary Designations and the Domestic Relations Orders chapters to follow the Supreme Court’s decision concerning same-sex marriage (see Qs 12:32, 12:39, 12:45, 12:46, 13:31, 13:37, and 13:62).
  • Recent major state legislative changes affecting state and local governmental plans (see Q 2:122).
  • The Supreme Court’s ruling that inherited IRAs are not “retirement funds” and are no longer exempt from the property of the estate under federal law (see Q 14:38).
  • Analysis of why proceedings about child support result in difficult orders (see Q 13:22).
  • Review of the effect of a recent court decision about whether a beneficiary designation must be in its maker’s handwriting (see Q 12:5).
  • Discussion of whether exemptions are a potential concern to debtor participants’ interests in governmental plans (see Q 14:31).
  • Controversy regarding public plan divestment in fossil fuel stocks (see Qs 7:84, 7:85, and 7:100).
  • Impact of a participant’s plan loan on the Chapter (7 or 13) under which the participant can obtain relief (see Q 14:12).
  • Revisions to discussions explaining a plan’s administrator discretionary power to decide whether a participant had made a beneficiary designation (see Chapter 12).
  • Expanded explanation of whether a domestic relations order (DRO) directed to a retirement plan can be used to pay child support (see Q 13:21).
  • Updated explanations about the effect of premarital agreements and marital agreements to follow the recent Uniform Premarital and Marital Agreements Act (see Qs 12:49 through 12:53).
  • A 2014 court decision as an example of domestic relations courts’ orders that treat a person who never was the participant’s spouse and was never even a putative spouse as though the nonspouse is the participant’s nonchild dependent, even if the facts known to the court make clear that the ostensible dependent is no longer in the participant’s household (see Q 13:19).
  • Recent developments in case law affecting governmental plans, including numerous new decisions in constitutional disputes, and new sections labeled “Fiduciary Duty” and “Correction of Errors” with relevant cases (see Appendix E).

Read more.

2017 Supplement to the 457 Answer Book Published
(Posted on August 25, 2016 by )


The 2017 Supplement to the Sixth Edition of the 457 Answer Book was published on August 10, 2014. Carol V. Calhoun is the author of Chapter 1, History of 457 Plans, and Chapter 14, Miscellaneous Issues. To obtain a 15% discount on this books, just follow the links provided, and use promo code BENEFITS15.

The 457 Answer Book is an in-depth resource that provides answers to the questions that tax-exempt organizations, state and local governments, their accountants, tax and legal advisors, 457 administrators, product providers, and investment counselors need to know.

Guiding readers through all aspects of 457 plan administration — from installation through the audit process — the 457 Answer Book describes: the duties and responsibilities of those performing the functions; the required legal, accounting, and administrative tasks; checklists that facilitate control of each administrative process; and suggested forms.

Read more.

Page 1 of 9123456789