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Sponsors of single employer defined benefit (DB) pension plans could be subject to higher-than-usual minimum funding contribution requirements over the next several years, for at least two reasons.
In the much anticipated decision State of Texas v. United States of America, et al., the US Court of Appeals for the Fifth Circuit upheld a district court ruling that the individual mandate under the Affordable Care Act (ACA) is unconstitutional. Because the Tax Cuts and Jobs Act of 2017 zeroed out the federal tax penalty under the individual mandate, effective January 1, 2019, the Fifth Circuit concluded that since there is no longer a penalty or tax resulting from the individual mandate, the mandate can no longer be sustained constitutionally under Congress’s taxing power.
In recent years, there has been an upward trend of regulators focusing on the issue of retirement plan participants not collecting retirement benefits upon reaching retirement age (and we have previously covered the final rule on the missing participants program on this blog). Although there are many reasons why individuals delay collection, in some cases, the individuals are not starting their benefit payments because they are “missing”—meaning the administrators of their retirement plans cannot locate them or the plans lack critical identifying information to locate them.
The Internal Revenue Service (IRS) has released IRS Notice 2019-63, which provides a 30-day automatic extension to furnish to employees/covered individuals the 2019 IRS Forms 1095-B (Health Coverage) and 1095-C (Employer-Provided Health Insurance Offer and Coverage) from January 31, 2020 to March 2, 2020.
On December 4, the Internal Revenue Service (IRS) issued Notice 2019-64, which contains the 2019 Required Amendments List for individually designed tax-qualified retirement plans. As background, the IRS issues its Required Amendments List each year to identify statutory and administrative changes to the tax qualification rules that may require sponsors of individually designed retirement plans to amend their plans to comply with the changes. In general, the deadline for adopting any required amendments on the list is the end of the second calendar year after the list is issued.
As concerns continue regarding the possibility of an economic downturn, plan sponsors should be aware of the effects that two potential downturn events could have on their qualified plans.
The outsourcing of retirement plan recordkeeping and other administrative responsibilities has increased in recent years for both defined contribution and defined benefit plans.
Closed defined benefit plans—i.e., defined benefit plans that are frozen to new participants but that allow existing “grandfathered” participants to continue to accrue benefits—are nearly certain to face challenges in passing nondiscrimination testing.
Congratulations to employee benefits partner Daniel Salemi, who was recently named to the 2019 40 Under Forty List in the Chicago Daily Law Bulletin.
In final regulations set to take effect for 2020 Forms W-2, the IRS gives employers the option of using truncated Social Security numbers (SSNs) on employee Forms W-2 issued after December 31, 2020.