EXAMINING A RANGE OF EMPLOYEE BENEFITS
AND EXECUTIVE COMPENSATION ISSUES
In response to confusion regarding the “10-Year Rule” that was added to the required minimum distribution (RMD) rules by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), the US Internal Revenue Service (IRS) has provided relief to defined contribution plan beneficiaries and individual retirement account beneficiaries. In Notice 2022-53, the IRS provides two forms of relief: (1) the proposed RMD regulations, including the application of the 10-Year Rule, if finalized, will not apply earlier than 2023, and (2) the failure to distribute “Specified RMD” payments in 2021 and 2022 will not be treated as a plan qualification failure or trigger the 50% excise tax for the Specified RMDs.

Anti-ESG state legislation continues to focus on public retirement plan investing and asset management. Over the last year, 18 states have proposed or adopted state legislation or regulation limiting the ability of the state government, including public retirement plans, to do business with entities that are identified as “boycotting” certain industries based on environmental, social, and governance (ESG) criteria. Since our last update, four states have either adopted or proposed legislation or other forms of regulation that would restrict ESG activities using state assets.

As described in our prior blog post, the US Internal Revenue Service (IRS) recently extended many impending amendment deadlines for legislative changes made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act), Bipartisan American Miners Act of 2019 (MINERS Act), and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). However, for reasons that were not entirely clear, the IRS did not extend the amendment deadline for certain CARES Act changes at the time. Now, in Notice 2022-45, the IRS is extending the amendment deadline for the remaining CARES Act changes.

Although variable annuity pension plan (VAPP) designs have been permissible for decades, they have not yet seen widespread adoption—particularly in the Taft-Hartley multiemployer plan space.

Recently, however, we have seen a trend of employers and unions (or existing multiemployer plan boards of trustees) agreeing to set up VAPPs as an alternative to the traditional multiemployer defined benefit plan design (hereafter, “Traditional DB Plan”).

The American Rescue Plan Act (ARPA) provided relief from certain annual notice and funding requirements to multiemployer plans reeling from COVID-19–related investment and experience losses. IRS Notice 2021-57, issued on October 8, 2021, gives plan sponsors a roadmap for electing relief.
The US Senate on March 6 passed the Butch Lewis Emergency Pension Plan Relief Act of 2021 (EPPRA) as part of the American Rescue Plan of 2021 (H.R. 1319), the Biden administration’s $1.9 trillion COVID-19 stimulus package.
The ongoing effort to provide relief for troubled multiemployer pension plans took many twists and turns in 2020, and the year ended once again without an agreed-upon solution.
As we noted in a post last year at this time, pension plans that are not fully funded for PBGC purposes have two parts to their PBGC premium. One part is a flat rate premium of $83 per participant in 2020 ($86 for 2021, as just announced by the PBGC). The other is a variable rate premium that looks to the value of the plan’s “unfunded vested benefits,” which is the excess, if any, of the plan’s Premium Funding Target over the fair market value of plan assets.
Our employee benefits and executive compensation practice is available to help employers evaluate and troubleshoot potential issues arising from the changing work environment and economic situation caused by the COVID-19 pandemic.