Final and Proposed IRC §417(e) Regulations
The IRS has finalized regulations for qualified plans that partially pay benefits in optional forms of benefit subject to IRC §417(e) (“§417(e) options” such as lump sums and Social Security Level Income Options) and partially in non-§417(e) options (i.e., “bifurcated benefits”). The IRS has also proposed regulations that affect all contributory plans that pay §417(e) options, including refunds of employee contributions. Finally, the IRS has provided additional information on its interpretation of the final regulations (in the form of a recorded presentation posted on its website) that changed many practitioners’ understanding of the final regulations. Speakers cover the §417(e) regulations applicable to bifurcated benefits and the varying interpretations of them, as well as the proposed regulations on contributory plans. The panelists also discuss practical issues and how plans and practitioners are addressing them.
Plan Administration Issues with New Mortality Basis
In recent years, interest rates have come down and new mortality studies have confirmed that life expectancies have increased. We know the IRS is developing regulations incorporating the new RP2014 mortality tables for funding and lump sum payment purposes, which may still be effective for 2018 plan years. If regulations are finalized, we will review the impact of the new requirements on pension administration. The release of updated mortality tables for lump sum payments presents a good opportunity for plan sponsors to review their plans’ actuarial equivalence basis for other optional forms, early retirement reductions and other purposes that may have been developed in a very different environment. This panel explores the related issues with respect to ERISA compliance, relative value disclosures, and IRC §411(d)(6) protections if the actuarial equivalence basis is changed.
Dominic DeMatties will be a speaker for the following session:
Recently, there has been increased focus on terminated vested participants who cannot be located when they reach the age at which a plan requires benefits to begin, or when a plan terminates. Plan administrators, the Department of Labor, the Pension Benefit Guaranty Corporation and other parties are dealing with the issues that arise when participants cannot be found in a timely manner. In this session, a PBGC representative addresses the missing participants program. Panelists also discuss the steps plan sponsors should take to attempt to locate missing participants (including the methods that have been most successful in practice), DOL enforcement actions, and benefit calculations for terminated vested participants who are not timely paid.
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