On November 3, 2015, the American Society of Pension Professionals & Actuaries (“ASPPA”) submitted a comment letter in response to an IRS request in Revenue Procedure 2015-27 for recommendations with respect to the treatment of overpayments, as defined in sections 5.01(3)(c) and 5.02(4) of Revenue Procedure 2013-12, under the Employee Plans Compliance Resolution System (“EPCRS”).
ASPPA’s comment letter recommended that the Service continue to provide employers with flexibility to correct errors that result in overpayments. ASPPA specifically recommended the following:
- Employers should always be permitted to request recoupment from participants, but the Service should implement safeguards to protect participants;
- Employers should be permitted (but in no way required) to utilize a correction method similar to the rules on the recoupment of overpayments issued by the PBGC in 29 C.F.R. §4022.82, but such correction method should permit the recoupment of earnings and exclude the PGBC’s limits on the amount that may be recouped;
- The Service should provide safe harbor rates that employers may use to calculate interest on overpayments; and
- The Service should clarify the following items involving overpayments:
- Overpayments may be corrected by reducing future benefits from the plan if a participant does not repay an overpayment, and, in certain circumstances, the overpayment may continue to be treated as an eligible rollover distribution; and
- The circumstances that may be taken into account in determining whether the plan has been made whole for the overpayments and the amount of the employer’s corrective contribution to the plan.
In addition, ASPPA recommended that the Service expand EPCRS to permit an employer to correct overpayments through the Self Correction Program (SCP) by adopting a retroactive amendment if the overpayments are eligible for self-correction under EPCRS and the plan could have been amended to provide the benefits actually paid without violating any Code requirement (such as Code sections 401(a)(4) and 415). [Letter]
On October 1, 2015, the American Retirement Association (“ARA”) submitted a comment letter in response to IRS Announcement 2015-19 in which the IRS requested comments regarding changes to the Employee Plans Determination Letter Program. In the release, the IRS announced significant changes to the Employee Plans Determination Letter (“DL”) program. Effective January 1, 2017, individually designed plans may generally be submitted for DLs only on initial plan qualification and upon plan termination. In addition, effective July 21, 2015, off-cycle submissions are no longer permitted. ARA has been actively involved with the IRS in discussions to improve both the DL program and the pre-approved plan program. The comments in the letter were made with the expectation the IRS will continue to work with ARA to improve both of these programs. [Comment]
On September 23, 2015, the American Retirement Association filed a supplemental comment letter with the Department of Labor with respect to the Department’s re-proposed rule concerning the definition of fiduciary and conflicts of interest. The supplemental letter provided additional comments with regard to the proposed Level Compensation to Level Compensation Exemption discussed in the initial comment letter filed on July 20, 2015. [Comment]
On September 16, 2015, the American Society of Pension Professionals and Actuaries Government Affairs Committee filed a comment letter with the U.S. Department of the Treasury and the Internal Revenue Service (IRS) requesting that the IRS permit filers to complete the 2015 Form 5500-SUP (and/or the equivalent items appearing on the 2015 Form 5500 series, including the paid preparer disclosure) on a completely voluntary (i.e., optional) basis. [Comment]
On July 20, 2015, the American Retirement Association (ARA) filed a comment letter with the Department of Labor with respect to the Department’s re-proposed rule concerning the definition of fiduciary and conflicts of interest. The ARA supports the idea of putting plan participants, beneficiaries, and IRA owners’ interests front and center under a “best interest” standard. Consistent with this support, the ARA believes that certain changes to the proposed guidance will facilitate attaining the Department’s goals of creating a practical “best interest” standard that protects the interests of participants, beneficiaries, and IRA owners while also supporting and enhancing the diverse range of products and services available in the ERISA marketplace. [Comment]
On June 8, 2015, The American Society of Pension Professionals & Actuaries (ASPPA) Government Affairs Committee (GAC) filed a comment letter with the Office of Management and Budget (OMB) to express concern about representations made by the Internal Revenue Service (IRS) in its submission to OMB regarding changes to the 2015 Form 5500 series reports, including the new Form 5500-SUP. In particular, the ASPPA GAC comment letter asserted that the burden associated with collecting data for the new Form 5500 questions had been materially understated by the IRS in its submission. On February 23, 2015, ASPPA submitted written comments to the IRS regarding the new form and ASPPA’s concerns about the agency’s approach to the additional data collection that it would require. [Letter]
On April 30, 2015, ASPPA filed comments in response to IRS Notice 2015-27. The letter provides input to the IRS on the retirement benefits items (and relative priority of such items) that should be included on the 2015-2016 Guidance Priority Plan. ASPPA will be providing further comments as the guidance items are released. [Comment]
On April 20, 2015, NTSA submitted comments to the DOL on the proper treatment of distributed contacts and custodial accounts in the context of a 403(b) plan termination. [Comment]
On March 19, 2015, ASPPA filed a comment letter with the IRS providing specific recommendations regarding operational failures related to participant loans that should be eligible for correction under the Self-Correction Program (“SCP”) component of the Employee Plans Compliance Resolution System (“EPCRS”), and what correction methods should be prescribed for each loan failure. [Letter]
On March 3, 2015, ASPPA’s Government Affairs Committee filed a comment letter with the IRS requesting an extension of the June 30th deadline for submitting the master language for pre-approved defined benefit plans. The reason for the request is the continuing delay in the release by the IRS of specimen language for cash balance provisions which will now be permitted in pre-approved defined benefit plans. [Letter]
On February 23, 2015, ASPPA filed comments with the IRS regarding certain changes to Form 5500 proposed for the 2015 plan year filings including a new IRS Form 5500-SUP. [Comment]