Defined contribution plan

The IRS has announced the postponement of certain tax-related deadlines for victims of severe storm, flooding, and landslides in Alaska. The tax relief postpones various tax filing deadlines that began on September 15, 2022.

Effective September 21, 2022, the Federal prime interest rate increased from 5.50 percent to 6.25 percent. The prime interest rate is largely determined by the federal funds rate, as set by the Federal Reserve’s Federal Open Market Committee (FOMC).

The IRS has announced the postponement of certain tax-related deadlines for victims of hurricane Fiona in Puerto Rico. The tax relief postpones various tax filing deadlines that began September 17, 2022. Affected individuals and households who reside or have a business in in all 78 municipalities in Puerto Rico, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

Senators Ron Wyden (D-OR) and Mike Crapo (R-ID), Senate Finance Committee Chair and Ranking Member, have introduced S.4808, the Enhancing American Retirement Now (EARN) Act. As previously announced, the Senate Finance Committee unanimously approved the bill in June based upon an outline released at that time.

Changes in the legislative text from the June outline include:

• Individuals age 60 or older could start making higher catch-up contributions in 2025 (versus 2024).
• Employees with wages below $100,000 could make catch-up contributions on a pretax or Roth basis. Employees with wages exceeding $100,000 would still be required to be make catch-up contributions on a Roth basis.
• The option to treat employer contributions as Roth contributions would be available starting in 2023 (versus 2024).

While it is unclear whether the bill will be brought to a stand-alone vote with the Senate’s limited number of sessions for the remainder of the year, congressional observers anticipate that the EARN Act will be consolidated with the Senate Health, Education, Labor and Pensions (HELP) committee’s RISE & SHINE Act and the Securing a Strong Retirement Act of 2022, which was passed by the House of Representatives. It appears that a final bill will likely receive a vote this year after the November mid-term elections.

The IRS has announced the postponement of certain tax-related deadlines for victims of severe storms in Arizona. The tax relief postpones various tax filing deadlines that began July 17, 2022. Affected individuals and households who reside or have a business in the Salt River Pima-Maricopa Indian Community, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.

In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1). Affected taxpayers with a covered deadline on or after July 17, 2022, and before November 15, 2022, will have until November 15, 2022, to complete the acts. This includes filing Form 5500 series returns that are required to be filed on or after July 17, 2022, and before November 15, 2022.

“Affected taxpayer” automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS to request relief.

The Department of Labor (DOL) is extending the comment period for receiving written comments related to prohibited transaction class exemption 84-14 (the Proposed QPAM Amendment) to October 11, 2022. The DOL also intends to hold a public hearing on November 17, 2022, at which time a supplementary comment period will begin, and close approximately 14 days after the hearing transcript is posted on the EBSA’s web page.

Details of the proposed amendment were previously announced.

The Department of Labor (DOL) has released Interpretive Bulletin 2022-01 (IB) relating to independence requirements for accountants who audit employee benefit plans. Under ERISA, plan administrators of benefit plans requiring an audit are required to retain an “independent qualified public accountant” to conduct an examination of the plan’s financial statements and render an opinion as to whether the financial statements and required schedules are presented fairly in accordance with generally accepted accounting principles (GAAP).

The Pension Benefit Guaranty Corporation is proposing modifications to reporting information it asks for on supporting schedules related to annual Form 5500 series returns. The proposal modifies line 19a and correlating instructions of the 2023 Schedule R, Retirement Plan Information, by updating the categories of assets used in identifying investments held by the plan and requiring the breakdown to be reported as of the end of the plan year rather than beginning of the plan year. Additionally, the proposal would modify line 19b and eliminate line 19c. With regard to the Schedule SB, Single-Employer Defined Benefit Plan Actuarial Information, the proposal modifies line 6 (Target Normal Cost) and correlating instructions to address an unlikely reporting inconsistency where a plan requires mandatory employee contributions and the mandatory contributions for the plan year exceed the present value of benefits accruing during the plan year. In addition, PBGC is proposing a change to line 26b attachment instructions to clarify that where a plan assumes benefits are paid in a lump sum but uses the annuity substitution rule to determine the funding target, the attachment may show projected benefits payable in the annuity form instead of the form assumed for valuation purposes.

The Office of Management and Budget has received a proposed rule from the Department of Labor (DOL) titled “Adoption of Amended and Restated Voluntary Fiduciary Correction Program”. The Voluntary Fiduciary Correction Program (VFCP) is a voluntary enforcement program that allows plan officials to identify and correct certain transactions, such as delinquent participant contributions, sales and exchanges, improper loans, and improper plan expenses. The VFCP was last updated in 2006.

The Office of Management and Budget has received a final rule from the IRS titled “Electronically Filed Returns”.

The IRS released a proposed rule in July 2021 regarding electronic filing requirements for certain information returns, pursuant to the Taxpayer First Act of 2019. The proposed regulations reduce the threshold by which filers must electronically file from 250 to 100 returns for the 2022 calendar year. For filings required after calendar year 2022, the threshold will be further reduced to 10 returns.