Retirement plan sponsors should already be well on their way to complying with key year-end regulatory deadlines. Still, here are 9 items to look at to ensure your plans remain compliant into the new year, courtesy of Sibson Consulting.
Funding-related benefit restrictions. Defined benefit plans with funding ratios under certain percentages are required to restrict some benefits, such as lump-sum distributions and future benefit accruals. These restrictions are required to be provided for in the plan document. The typical deadline for amendments to calendar-year plans is Dec. 31, 2013.
Discretionary plan changes. Discretionary plan changes that were not legally mandated must also be adopted by the last day in the plan year that it went into effect, Sibson notes. Amendments must be adopted by Dec. 31, 2013, for calendar-year plans with discretionary amendments going into effect this year. Employers with plans that have open determination letter requests must put forth all discretionary amendments adopted since the submission date. This ensures the amendments are covered in the pending letter. If an employer fails to do so, amendments adopted after the submission date yet before the determination letter could risk being left out for review until the next determination letter is requested.
Hurricane Sandy loans and hardship distributions. According to IRS guidance, even plans without loan provisions can still provide funds to those affected by Hurricane Sandy, as long as the plans were eventually changed to reflect the loans. Calendar-year plans that took advantage of these provisions must be amended to povide for the loans and/or hardship distributions by Dec. 31.
Determination letters. When a plan’s determination letter submission includes proposed amendments, the proposed amendments must be adopted within 91 days from the determination letter’s date, Sibson states. This 91-day adoption timeline is applicable to all amendments required by the IRS reviewer.
Same-sex spouses. Based on the Supreme Court’s decision in U.S. v. Windsor and IRS guidance, same-sex spouses who are legally married are protected by Internal Revenue Code provisions that provide spouses favorable treatment, such as qualified joint-and-survivor annuities and qualified preretirement survivor annuities. Future guidance will be available from the IRS to address employee benefit plans regarding the retroactive enforcement of the Windsor decision. Once the guidance is published, plan sponsors are expected to have plenty of time to make their amendments or corrections.
Cycle C filing deadline. For plan sponsors that file their determination letters in Cycle C, they must do so by Jan. 31, 2014. Meanwhile, Jan. 31, 2014, or the last day of the plan year marks the deadline for funding-related benefit restrictions of Cycle C defined benefit plans with 2013 plan years ending after Dec. 31, 2013. Plan sponsors in Cycle D are open between Feb. 1, 2014, and Jan. 31, 2015.
Plans covering residents of Puerto Rico. As required by the Puerto Rico IRC of 2011, plans seeking tax-qualified status in Puerto Rico must receive a determination letter from the Puerto Rico Department of the Treasury. Employers in Puerto Rico with calendar tax years must amend their plans and file their determination letter submissions by April 15, 2014. Should an employer file for an extension, it would have until July 15, 2014. The extension must also include proof of the requested tax-filing extension and a $150 fee.
Voluntary correction program for 403(b) plans. Employers with 403(b) plans that failed to implement a written plan document by the end of the 2009 plan year can take advantage of the voluntary correction program by Dec. 31, 2013. If missing the initial deadline was the only infraction, the compliance fee is cut by 50%.
DC plan fee disclosure. Defined contribution plans with participant-directed investments are required to offer a comparative fee-disclosure chart to participants each year. The first chart for calendar-year plans was due Aug. 30, 2012, while the second chart was required by Aug. 30, 2013, though there is some flexibility. The Department of Labor allows plans a one-time offer to reset the chart’s disclosure date. This is part of an effort to allow plans to coordinate distribution of the fee chart with other required participant disclosures. Based on this guidance, the 2013 chart can be provided within 18 months of the 2012 chart’s date.
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