ARA Submits Guidance Priorities to IRS

Each year, the IRS asks for input on the retirement benefits items (and relative priority of such items) to be included on the Priority Guidance Plan. Here’s the American Retirement Association’s response regarding the 2021-2022 Priority Guidance Plan—in priority order.

The ARA list of items begins with the guidance projects that are most important or immediate to ARA members. In outlining those issues, the response to Notice 2021-28 explains our belief that guidance for each of the items listed will:

• resolve significant issues relevant to many retirement plan sponsors and practitioners (not just a small group);
• improve economic efficiency by reducing the complexity and burdens on the plan sponsor; and
• promote sound tax administration by helping plan sponsors and practitioners to maintain retirement plans.

The top five are:

1. Guidance on American Rescue Plan Act Implementation

ARA recommends that the IRS provide guidance on certain provisions of the American Rescue Plan Act (ARPA) regarding single-employer pension plan funding relief, specifically immediate guidance on how to make elections under ARPA and whether prior Form 5500s need to be amended. 

2. Guidance Regarding Coronavirus Pandemic Relief

ARA recommends that the IRS provide additional guidance and relief related to plan sponsors that vested accrued benefits prior to the Relief Act following a determination that a partial termination occurred, specifically, that the IRS (immediately) extend the remedial amendment period for these plans to reflect the vesting that was operationally effected before the Relief Act was passed and provide Section 411(d)(6) relief to the extent such retroactive amendment would impact accrued benefits under the plan (such as allocation of forfeitures under the plan). 

3. Guidance on SECURE Act Provisions

ARA asks for guidance on: (1) coverage of long-term part-time employees, which impacts current plan design, administration and cost; (2) other issues related to the vesting and eligibility of long-term part-time employees; (3) relief for closed pension plans under Sections 401(o) and 401(a)(26); (4) model plan language required under the SECURE Act for pooled employer plans (PEPs); (5) confirming that 403(b) plans may be part of a “Group of Plans”; and (6) safe harbor plan notice requirements. 

4. W-4P and W-4R Reporting

ARA recommends that the IRS provide an immediate delay and relief following the early release of Forms W-4P and W-4R.

5. Employee Plans Compliance Resolution System (EPCRS)

ARA recommends that the IRS make certain modifications to EPCRS, including: (1) making permanent the temporary correction options for missed deferrals that expired on Dec. 31, 2020; and (2) providing that a missed preapproved plan restatement may be corrected using the self-correction program.

Other Items

Also on the list are: (1) cash balance testing issues; (2) enhancements to the determination letter program; (3) reduction of regulatory burdens through electronic disclosures; (4) definition of a governmental plan under Section 414(d); (5) additional guidance on how to address missing participants and uncashed checks; and (6) issues that result from mergers and acquisitions impacting 401(k) and 403(b) plans (including the treatment of safe harbor plans, the determination of highly compensated employees, and the determination of years of service credit.

The letter also recommends providing guidance related to church plans, the aggregation rules for affiliated service groups, the “High 25” rule, and issues related to Roth and traditional IRAs, as well as final regulations for nonqualified deferred compensation plans under Sections 409A and 457. 

The letter—with additional details (including links to previous requests for clarity and guidance) is available here.

Questions regarding any of the above may be directed to Kelsey Mayo, ARA’s Director of Regulatory Policy, at [email protected]