Time is top of mind right now—soon we’ll manipulate the clocks again and “gain” an hour of sleep. But time figures heavily in regulation as well; aspects of time and its passage are relevant to some recent and impending regulations relevant to retirement plans and those who serve them, as well as those who participate in them and their beneficiaries. 
In an Oct. 24 session at the 2023 ASPPA Annual conference, Carol Weiser, Benefits Tax Counsel at the Department of the Treasury, made remarks concerning a variety of activities Treasury and the IRS are considering and taking that are relevant to the retirement industry—and that included two areas for which time is directly relevant. Following is a quick look at some of her comments, as well as the insights of Kelsey Mayo, the American Retirement Association’s Director of Regulatory Affairs, on those matters.
Long-Term, Part-Time Regs
Weiser said that the Treasury Department considers issuing regulations on long-term, part-time (LTPT) employees a “very high priority.” She said those regulations would be “very significant” and that the update of those regulations will be “significant and comprehensive.”
Weiser said the timing of the release of the LTPT regulations was affected by the fact that the group working on them is also the group that was working on Roth catch-ups. “So they had a few things they had to deal with,” she said. But that delay is over, Weiser indicated, remarking that “we now have those regulations on track.” She would not, however, predict how soon they will be issued.
Weiser was careful at the Oct. 24 session to point out that the LTPT regulations will be issued in proposed—not final—form. And that, Mayo cautions, could be a problem.
Since the LTPT regulations will be in the form of proposed regulations, there likely will be some key pieces missing Mayo suggests. More specifically, she notes that as a result of their being in proposed—not final—form, there won’t be final guidance for 2024, nor will there be guidance about how service providers should proceed in light of the new information.
Mortality Regs
Weiser noted at the ASPPA Annual that the IRS had issued new mortality tables effective for plan years starting in 2024 to be used for most qualified defined benefit plans.
Mayo remarks, “The main difference that I see is that the SECURE 2.0 limit on assumptions re: future mortality improvement are incorporated. This change applies to generational mortality tables, which is now required for plans with more than 500 participants, but small plans can still use static mortality tables.”
The IRS also has issued proposed regulations that would update the requirements a plan sponsor of a single-employer DB plan must meet to obtain IRS approval to use mortality tables specific to the plan in calculating present value for minimum funding purposes (as a substitute for the generally applicable mortality tables). These regulations would affect (1) participants, (2) beneficiaries, (3) employers, and (4) administrators of certain retirement plans.
Adjustments for COVID-19. Weiser observed that the version just proposed contains adjustments for COVID-19.
The IRS says that the proposed regulations generally would retain the methodology for developing substitute mortality tables included in the 2017 substitute mortality table regulations, but also would provide additional rules regarding the use of mortality experience data for the COVID–19 pandemic period. In the explanation of provisions, it says:
In order to develop a mortality ratio that is more accurately predictive of future mortality experience for a plan population, these proposed regulations would provide that the expected deaths for the plan population used in determining the denominator in the mortality ratio are calculated by adjusting the mortality rates in the generally applicable mortality tables.
Mayo explains, “There are special rules to ensure that plans using actual mortality experience do not have their mortality results swayed too greatly by COVID-19 experience—which could result in misalignment of future expectations.”
Non-Binary. Weiser also said the IRS seeks to account for those who identify as non-binary. Mayo says this would allow plans to use any reasonable method when a person’s gender isn’t known (because of non-binary identification or other reasons).
Significance. Mayo says that she does not expect that the variations from the previous proposed regulations will have a significant effect. Nonetheless, she said that “the clarification is helpful as these situations do arise.” She adds that they provide actuaries “with clarity on how to proceed.”
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