The retirement plan community can expect guidance imminently on issues related to frozen defined benefit plans, a Treasury Department official said during a webcast.
Over time, defined benefit plans that were frozen or closed to participants became predominantly populated with highly compensated employees, because as employees age their salaries tend to increase, George H. Bostick, benefits tax counsel in the Office of Tax Policy at Treasury, said Dec. 11 during a webcast hosted by the American Law Institute Continuing Legal Education.
“What we're really talking about here is plans that were closed to new entrants years back when people shifted from [defined benefit plans] to [defined contribution] plans or from traditional DB [plans] to hybrids,” Bostick said during the webcast, Employee Benefits Law and Practice Update: Winter 2013.
Treasury has had conversations with retirement groups about potential problems surrounding frozen plans and all parties agree there are some issues that need to be addressed, he said.
Bostick said “in the next few days” there should be guidance out with some “temporary relief” for companies with frozen plans, as well as a request for comments on what “the permanent fix should look like.”
The issue was included on Treasury and the Internal Revenue Service's 2013-2014 Priority Guidance Plan, released in August, which said the department intended to work on guidance on “frozen defined benefit plans and related matters.”
Bostick also said that further guidance is expected “fairly imminently” on the application of the U.S. Supreme Court's decision in United States v. Windsor (U.S., No. 12-307, 6/26/13), which struck down a key part of the Defense of Marriage Act.
The guidance will cover retirement plans and welfare plans and will be released as two separate pieces, possibly at different times, he said.
Other Guidance Expected
Bostick also said to expect guidance in the first half of 2014 on a host of retirement plan-related issues, including guidance on employee stock ownership plans (ESOPs), which has been a long-term project.
“The ESOP regs are woefully out of date and anybody who wasn't around at the creation and tracked it all the way through must have an awful time figuring out what the ESOP rules are,” he said, adding that he hopes Treasury will get guidance out on that issue in 2014.
Bostick also said he hopes that guidance on hybrid plans will be released in 2014.
“My personal hope was that we would get it out this year, that was certainly our target, probably not going to make that, but I think we hope to have guidance out, this would be final regs, under [tax code Sections] 411(a)(13) and 411(b)(5), as well as guidance on how you make plan amendments in connection with conforming to the final regulations,” he said.In addition, guidance related to Treasury's lifetime income project on embedded annuities and target date funds should come out in the first half of 2014, he said.
Excerpted from a story that ran in Pension & Benefits Daily (12/11/2013).
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)