Pension & Benefits News IRS regulatory agenda includes guidance on defined benefit plans, reporting and disclosure rules, and IRAs
Tuesday, February 9, 2021

IRS regulatory agenda includes guidance on defined benefit plans, reporting and disclosure rules, and IRAs

By Pension and Benefits Editorial Staff

The IRS has released its regulatory agenda for Fall 2020, which includes pension and benefit regulations that are currently under development or review.

Prerule stage. The IRS anticipates issuing regulations under Code Sec. 414(m) to define the term “affiliated service group,” including guidance on determining whether two or more separate service entities constitute an affiliated service group under Code Sec. 414(m) and whether two unrelated organizations are in a management-type affiliated service group under Code Sec. 414(m)(5).

Proposed rule stage. Among the items in the IRS’s proposed rule stage are:

  • Regulations regarding the measurement of income inclusion and calculation of applicable taxes under Code Sec. 409A for nonqualified deferred compensation plans.
  • Guidance relating to the determination of whether a plan is a governmental plan.
  • Guidance for nonqualified deferred compensation plans of State and local governments and tax-exempt entities relating to the definitions of a bona fide severance pay plan and substantial risk of forfeiture.
  • Regulations on qualified retirement plan participants’ right, if any, to defer receipt of an immediately distributable benefit and a description of the consequences of failing to defer receipt of the distribution as well as provisions for expansions of applicable election period and period for notices.
  • Additional guidance regarding 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.
  • Guidance relating to IRAs under Code Secs. 408 and 408A.
  • Guidance relating to individual retirement arrangements (IRAs), including spousal IRAs, SEPs, and IRA technical changes.
  • Guidance on the requirement for plan administrators or employers to furnish an individual statement to participants who separate from service with a deferred vested benefit.
  • Application of the Code Sec. 72(t) 10% additional tax to that portion of a distribution received by a taxpayer before attaining age 59 ½ from a qualified retirement plan that is includible in the taxpayer’s gross income.
  • Regulations would lower the electronic-filing threshold for filing certain information returns as provided in the Taxpayer First Act of 2019, would eliminate the no-aggregation rule in determining the threshold for filing certain information returns electronically, and would require that corrected information returns be filed electronically, if the original information returns were required to be filed electronically.
  • Update to existing final minimum vesting standard regulations that generally apply to tax-qualified retirement plans under Code Sec. 411(a).
  • Update existing final regulations on the definition of a church plan under Code Sec. 414(e).
  • Guidance on the application of the nondiscrimination requirements, the backloading limitations, certain plan termination rules, the benefit limitations, and the top heavy rules to cash balance plans, pension equity plans, and variable annuity plans.
  • Regulations that would provide guidance relating to the tax qualification of multiple employer plans (MEPs), including an exception, if certain requirements are met, to the application of the “unified plan rule” for Code Sec. 413(e) MEPs in the event of a failure by one or more participating employers to take actions required of them to satisfy the requirements of Code Sec. 401(a) or 408.
  • Guidance on the timing of the use or allocation of forfeitures in qualified retirement plans.
  • Regulations implementing sections 102, 103, 109, 112, and 113 of the SECURE Act, which modify certain aspects of the rules governing 401(k) plans.
  • Guidance on changes to the required minimum distribution rules applicable to qualified retirement plans and IRAs made by the SECURE Act and to clarify rules on determining the designated beneficiary for purposes of applying the required minimum distribution rules.

Final rule stage. The items in the IRS’s final rule stage include the following:

  • Amendments under Code Sec. 6057, relating to the use of Form 8955-SSA, “Annual Registration Statement Identifying Participants with Deferred Vested Benefits,” to satisfy the requirement that plan administrators of certain retirement plans file registration statements containing information on deferred vested participants.
  • Modification to the rules regarding the minimum present value requirements applicable to certain qualified defined benefit plans in order to reflect statutory and other changes to the applicable requirements.
  • Application of normal retirement age regulations to governmental plans.
  • Amendments of the existing Code Sec. 401(a)(4) and Code Sec. 401(a)(26) regulations applicable to certain defined benefit plans and defined contribution plans that provide additional benefits to a grandfathered group of employees to reflect modifications enacted by section 205 of the SECURE Act.
  • Withholding on certain retirement plan distributions under Code Secs. 3405(a) and Code Secs. 3405(b).
  • Guidance under Code Sec. 162(m) for changes made by the Tax Cuts and Jobs Act, amending the definitions of applicable employee remuneration, publicly held corporation, and covered employee.
  • Regulations under Code Sec. 401(a)(9) will update the life expectancy and distribution period tables that apply for purposes of computing minimum required distributions from qualified retirement plans.
  • Guidance on the extended rollover deadline for qualified plan loan offset amounts under Code Sec. 402(c), as amended by section 13613 of the Tax Cuts and Jobs Act.
  • Updates for income tax withholding rules concerning the default rate of withholding on certain periodic retirement and annuity payments under Code Sec. 3405(a).

Source: Unified Agenda for Fall 2020.

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