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Pension and Employee Benefits: Code, ERISA, & Regulations
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CCH® PENSION AND BENEFITS — 05/28/09

IRS semiannual regulatory agenda includes filing solution for Schedule SSA

The IRS has released its semiannual regulatory agenda for Spring 2009, which includes pension and benefit regulations that are currently under development or review.

Prerule stage

Among the items in the IRS prerule stage are:

• An advanced notice of proposed rulemaking that provides guidance as to whether a plan is a governmental plan under Code Sec. 414(d) ; and
• An advanced notice of proposed rulemaking on the calculation of the applicable premium for COBRA continuation coverage.

Proposed rule stage

Among the items in the IRS proposed rule stage are:

• Regulations under Code Sec. 6057 that would be amended to provide guidance on the requirement that the new Form SSA, which will require much of the same information as the Schedule SSA (Form 5500), be filed in place of the Schedule SSA for plan years that begin after December 31, 2008;
• Regulations that would define the term “highly compensated employee” under Code Sec. 414(q);
• Regulations that would cover the qualifications required for enrollment, continuing education requirements for enrolled actuaries, professional standards for the performance of actuarial services under ERISA, the grounds for disciplinary action against an enrolled actuary, and the procedures to be followed in taking disciplinary actions;
• Guidance on determining the annual benefit under a defined benefit plan for the purpose of applying the limitations of Code Sec. 415 in cases where there has been more than one annuity starting date;
• Regulations that update actuarial tables used in valuing annuities, interests for life or terms of years, and remainder or reversionary interests to reflect the most recent mortality experience available;
• Guidance on the definitions of a bona fide severance pay plan under Code Sec. 457(e)(11) and substantial risk of forfeiture under Code Sec. 457(f)(1)(B) that would affect sponsors, administrators, participants, and beneficiaries of nonqualified deferred compensation plans of state and local governments and tax-exempt entities;
• Regulations that would implement new rules set forth in Code Sec. 432 by providing guidance relating to multiemployer defined benefit plans that are either in endangered or critical status;
• Additional guidance would be provided regarding the rules for hybrid retirement plans that were added by the Pension Protection Act of 2006 (PPA; P.L. 109-280);
• Regulations reflecting the provisions of PPA that would set forth special rules concerning retirement plans of Indian tribal governments and other entities related to Indian tribal governments;
• Guidance on the interaction between the Code Sec. 4980G comparability rules and Code Sec. 125 nondiscrimination rules in instances where not all employees of an employer contribute to a Health Saving Account (HSA) through a cafeteria plan; and
• Additional guidance concerning the determination of plan assets and benefit liabilities for purposes of the funding requirements that apply to single-employer defined benefit plans, the use of certain funding balances maintained for those plans, and the benefit restrictions for certain underfunded defined benefit plans.

Final rule stage

Among the items in the IRS final rule stage are:

• Modifications to Reg. §1.411(c)-1 , providing guidance on calculation of an employee’s accrued benefit derived from the employee’s contributions to a qualified defined benefit plan;
• Guidance on Code Sec. 125 cafeteria plans;
• Regulations regarding the measurement of income inclusion and calculation of applicable taxes under Code Sec. 409A;
• Guidance under Code Sec. 402(a) concerning the tax treatment of payments by qualified plans for medical or accident insurance;
• Regulations providing guidance with respect to Code Sec. 411(a)(13) and Code Sec. 411(b)(5) , relating to vesting and payment of benefits under tax-qualified hybrid defined benefit plans and to age discrimination rules for tax-qualified defined benefit plans, including hybrid defined benefit plans;
• Guidance relating to the interaction of the requirements under Code Sec. 4980F with a plan amendment that is permitted to reduce benefits accrued before the plan amendment’s applicable amendment date. The regulations would also reflect changes made to Code Sec. 4980F by PPA;
• Regulations providing guidance on employer comparable contributions to HSAs under Code Sec. 4980G , as amended by the Tax Relief and Health Care Act of 2006 (P.L. 109-432);
• Guidance regarding the use of certain funding balances maintained for defined benefit pension plans and regarding benefit restrictions for certain underfunded defined benefit pension plans;
• Regulations providing guidance on the implementation of the new investment diversification requirements for certain defined contribution plans pursuant to Code Sec. 401(a)(35) , as added by PPA;
• Guidance on the determination of benefit liabilities and assets for purposes of new funding requirements applying to single-employer defined benefit plans that were enacted under the PPA;
• Regulations providing guidance relating to a multiemployer plan that is either in endangered or critical status, effective for plan years beginning after 2007;
• Guidance on the application of accrual rules for defined benefit plans in cases where plan benefits are determined on the basis of the greater of two or more separate formulas;
• Regulations providing that governmental plans will be treated as having complied with the required minimum distribution rules if the plans apply a reasonable good faith interpretation of Code Sec. 401(a)(9);
• Regulations under Code Sec. 423 concerning employee stock purchase plans are being updated in response to the update of the regulations under Code Sec. 421, Code Sec. 422, and Code Sec. 424;
• Guidance on the determination of minimum required contributions for purposes of the funding requirements that apply to single-employer defined benefit pension plans;
• Regulations providing guidance to a participant of his or her right, if any, to defer receipt of an immediately distributable benefit and the consequences of failing to defer receipt of the distribution; and
• Temporary regulations relating to the use of actuarial tables in valuing annuities, interests for life or terms of years, and remainder or reversionary interests update the actuarial tables to reflect the most recent mortality experience available.

Completed actions

Among the items in the IRS completed actions are:

• Final regulations under Code Sec. 7508A clarifying rules relating to the postponement of certain tax-related deadlines either due to service in a combat zone or due to a federally declared disaster;
• Final regulations implementing the Code Sec. 6039I mandate to require information reporting on employer-owned life insurance contracts; and
• Final regulations providing guidance on how a qualified cash or deferred arrangement can become a qualified automatic contribution arrangement and avoid the ADP test of Code Sec. 401(k) (3)(A)(ii).

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