EMPLOYEE BENEFITS BLOG
EMPLOYEE BENEFITS BLOG
Insights on Employee Benefits and Executive Compensation
EMPLOYEE BENEFITS BLOG
Insights on Employee Benefits and Executive Compensation
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New Guidance From the Department of Labor Clarifies Participant Disclosure Requirements

by | May 8, 2012 | ,

by Maureen O’Brien and Karen Simonsen.

In October 2010, the U.S. Department of Labor (DOL) issued final regulations requiring plan administrators to disclose certain plan and investment-related information, including fee and expense information, to participants and beneficiaries in 401(k) plans and other participant-directed individual account plans.  In February 2012, the DOL issued final regulations under section 408(b)(2) of the Employee Retirement Income Security Act of 1974 (ERISA) requiring certain covered service providers to furnish specified information to plan administrators so that they may comply with their disclosure obligations in the participant-level disclosure regulations. On May 7, 2012, the DOL published additional guidance addressing frequently asked questions concerning the participant disclosure regulations and the service provider disclosure regulations.

The new guidance consists of 38 questions and answers addressing, among other topics, revenue sharing disclosures, brokerage window disclosures, designated investment alternatives, transition rules, and form and content of investment-related information.  Plan administrators should review the new guidance now to determine if any changes to participant disclosures are required prior to the initial/annual disclosure deadline of August 30, 2012.

A detailed analysis of the new guidance from McDermott is forthcoming in the near future.  For now, click here to link to the new guidance.  To listen to McDermott’s webinar on participant fee disclosure and service provider disclosures, click here.



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PBGC Announces New Enforcement Approach that Reduces Impact of ERISA Section 4062(e) on Financially Sound Employers

by | Apr 12, 2012 | ,

by Michael T. Graham, Joseph S. Adams and Patrick D. Ryan.

The PBGC announced that it may lessen ERISA Section 4062(e) enforcement for employers in strong or moderately strong financial condition.  However, the PBGC will continue to enforce its prior Proposed Rule on ERISA Section 4062(e) liability.

To read the full article, click here.



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Retirement Plans With Puerto Rico Employees Can File Form 5500 Rather than Puerto Rico Annual Return

by | Mar 27, 2012 |

by Nancy S. Gerrie and Jeffrey M. Holdvogt

The Puerto Rico Treasury Department recently issued guidance (Circular Letter No. 12-02) allowing certain retirement plans qualified under the Puerto Rico Internal Revenue Code, including dual-qualified plans that are also qualified under the U.S. Internal Revenue Code, to file a copy of Form 5500 or Form 5500-SF as the plan’s annual Puerto Rico return in lieu of filing Puerto Rico Form 480.7(OE).  The new procedures, effective beginning with the annual filing for the 2011 tax year, will allow retirement plans sponsors with employees in Puerto Rico to satisfy their annual Puerto Rico filing requirement with Form 5500.

The Puerto Rico Internal Revenue Code generally requires employers that maintain a retirement plan qualified in Puerto Rico to file, on an annual basis, Form 480.7(OE), Information Return of Income Tax-Exempt Organizations.  However, for tax years beginning on and after January 1, 2011, employers that maintain plans that are subject to the provisions of Title I of the Employee Retirement Income Security Act (ERISA), and that have previously submitted an application to the Puerto Rico Treasury Department for a determination that the plan is qualified under the Puerto Rico Internal Revenue Code, may comply with the annual Puerto Rico filing requirement by filing a copy of the corresponding Form 5500 or Form 5500-SF as the plan’s annual return in lieu of filing Puerto Rico Form 480.7(OE).

Plan sponsors that elect to file Form 5500 to satisfy the Puerto Rico annual return requirement must still complete the part of Form 480.7(OE) containing the biographical data of the plan on the first page of Form 480.7(OE) and attach a copy of Form 5500 as the annual filing.  Either Form 5500 or Form 480.7(OE) must be filed by July 31 following the calendar year close or the last day of the seventh month following the fiscal year close of the trust (if Form 480.7(OE) is filed) or the plan year (if Form 5500 is filed), unless a request is filed for an automatic extension to October 15 following the close of the year for a calendar plan year.  Plan sponsors that request an extension of time to file the Form 5500 with the U.S. Department of Labor still must request an extension of time for the Puerto Rico filing separately by filing Model SC 2644 prior to the filing deadline of the Form 480.7(OE).  The Puerto Rico Internal Revenue Code imposes a penalty of $500 per form for failure to timely file the annual report.



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McDermott Webcast Discussing Service Provider and Participant Disclosure Rules and Electronic Delivery Guidance

by | Mar 13, 2012 |

The U.S. Department of Labor (DOL) recently issued final regulations relating to service provider fee disclosures to plan fiduciaries under Section 408(b)(2) of the Employee Retirement Income Security Act of 1974, as amended (ERISA) which affect the participant fee disclosure regulations under Section 404(a) of ERISA finalized by the DOL in October 2010.   Under the new final regulations, service providers must provide initial fee disclosures to plan fiduciaries by July 1, 2012, and plans must provide initial fee disclosures to participants by August 30, 2012.  In addition, the DOL recently issued guidance regarding electronic delivery of disclosures to participants under Technical Release 2011-03R. 
 
McDermott Will & Emery recently offered a complimentary webcast that focused on what employers should expect to receive from service providers and the practical steps they should take to fulfill their fiduciary responsibilities to provide participant fee disclosures in light of the new final regulations and the guidance regarding electronic delivery.

If you missed the webcast, please click here to listen to the discussion and/or view the slides.

McDermott Speakers for the Webcast:
Karen Simonsen, Partner, Chair, Plan Fiduciary and Investment Management Group
Maureen O’Brien, Partner
Elizabeth Savard, Partner



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New Service Provider and Participant Fee Disclosure Rules: What Employers Need to Know

by | Feb 17, 2012 |

Thursday, March 8, 2012
11:00 – 12:00 pm CST 

To register, please click here.

The U.S. Department of Labor (DOL) recently issued final regulations relating to service provider fee disclosures to plan fiduciaries under the Employee Retirement Income Security Act, which affect the participant fee disclosure regulations finalized by the DOL in October 2010.  Under the new final regulations, service providers must provide initial fee disclosures to plan fiduciaries by July 1, 2012, and plans must provide initial fee disclosures to participants by August 30, 2012.

McDermott Will & Emery is pleased to offer a complimentary webcast that tells employers what they should expect to receive from service providers and the practical steps they should take to fulfill their fiduciary responsibilities in light of the new final regulations.

McDermott Speakers
Karen Simonsen, Partner, Chair, Plan Fiduciary and Investment Management Group
Maureen O’Brien, Partner
Elizabeth Savard, Partner

Who should attend?
All human resources executives, in-house counsel, compensation and benefits directors, and others  responsible for overseeing defined contribution and defined benefit pension plans.



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IRS Extends Transition Relief for Puerto Rico Qualified Plans to Participate in U.S. Group Trusts and Deadline to Transfer Assets

by | Dec 28, 2011 |

by Nancy S. Gerrie and Jeffrey M. Holdvogt

On December 21, 2011, the U.S. Internal Revenue Service (IRS) issued Notice 2012-6, which provides welcome relief for U.S. employers with qualified employee retirement plans that cover Puerto Rico employees. Notice 2012-6 provides that the IRS will extend the deadline for employers sponsoring plans that are tax-qualified only in Puerto Rico (ERISA Section 1022(i)(1) Plans) to continue to pool assets with U.S.-qualified plans in group and master trusts described in Revenue Ruling 81-100 (81-100 group trusts) until further notice, provided the plan was participating in the trust as of January 10, 2011, or holds assets that had been held by a qualified plan immediately prior to the transfer of those assets to an ERISA Section 1022(i)(1) Plan pursuant to a spin-off from a U.S.-qualified plan under Revenue Ruling 2008-40.

Notice 2012-6 also extends the deadline for sponsors of retirement plans qualified in both the United States and Puerto Rico (dual-qualified plans) to spin off and transfer assets attributable to Puerto Rico employees to ERISA Section 1022(i)(1) Plans, with the resulting plan assets considered Puerto Rico-source income and not subject to U.S. tax.

There are now two separate deadlines:

  1. First, in recognition of the fact that Puerto Rico adopted a new tax code in 2011 with significant changes to the requirements for qualified retirement plans, the IRS has extended the general deadline to December 31, 2012, for dual-qualified plans to make transfers to Puerto Rico-only plans, in order to give plan sponsors time to consider the effect of the changes made by the new tax code.
  2. Second, in recognition of the fact that the IRS has not yet issued definitive guidance on the ability of an ERISA Section 1022(i)(1) Plan to participate in 81-100 group trusts, the IRS has extended the deadline for dual-qualified plans that participate in an 81-100 group trust to some future deadline, presumably after the IRS reaches a conclusion on the ability of a dual-qualified plan to participate in an 81-100 group trust, as described in Revenue Ruling 2011-1.

For more information on the issues related to participation of ERISA Section 1022(i)(1) Plans in 80-100 group trusts, see “IRS Permits Puerto Rico-Qualified Plans to Participate in U.S. Group and Master Trusts for Transition Period, Extends Deadline for Puerto Rico Spin-Offs.”

For more information on the issues plan sponsors should consider with respect to a dual-qualified plan spin-off and transfer of assets attributable to Puerto Rico employees to ERISA section 1022(i)(1) plans, see “IRS Sets Deadline for Transfers from Dual-Qualified to Puerto Rico-Only Qualified Plans.”



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DOL to Re-Propose “Fiduciary” Definition Regulation in Wake of Considerable Criticism

by | Nov 21, 2011 | ,

by Jonathan J. Boyles, Karen A. Simonsen and Ashley McCarthy

The U.S. Department of Labor recently withdrew a proposed regulation that would have substantially expanded the definition of “fiduciary” under federal employee benefits law.  The regulation will be re-proposed in early 2012, although it is unclear whether any proposal will be finalized prior to the 2012 presidential election.

To read the full article, click here.



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New Notice Requirements for Retirement Plans Seeking IRS Approval of Church Plan Status

by | Oct 24, 2011 |

by Ralph E. DeJong, Todd A. Solomon and Patrick D. Ryan

Revenue Procedure 2011-44 modifies the procedures for submitting a private letter ruling request that a retirement plan constitutes a church plan to include a requirement that the applicant provide a notice to certain interested persons. The guidance provides rules regarding the timing and method for providing the notice as well as a Model Notice that applicants can modify as required.

Letter ruling applicants are required to provide a notice to each plan participant, beneficiary, QDRO alternate payee, and any employee organization representing employees who are plan participants (the interested parties). The notice informs recipients that the plan is not protected by ERISA’s statutory protections, including eligibility rules, vesting rules and minimum funding requirements.

A request for a letter ruling filed on or after September 26, 2011 must include a copy of the notice along with a statement that the notice was provided interested parties. An applicant whose letter ruling request is pending with the Internal Revenue Service (IRS) on September 26, 2011 must submit by November 25, 2011, a copy of the notice along with a cover letter containing a statement that references the pending request and the date the notice was provided to interested persons. The IRS may consider the letter ruling request as withdrawn if the notice is submitted after the November 25, 2011 deadline. If the applicant fails to submit the notice, the IRS will not rule on the pending request.

Plan sponsors with pending letter ruling requests should provide the notice to interested parties as soon as possible, and provide a copy to the IRS no later than November 25, 2011.

To read the full article, click here.



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