Compliance October 1, 2014

Final Rules Issued About Filing Returns on Magnetic Media

October 1, 2014 (PLANSPONSOR.com) – The Internal Revenue Service (IRS) issued final regulations relating to the requirements for filing certain employee retirement benefit plan statements, returns, and reports on magnetic media.
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These regulations provide that a plan administrator (or, in certain situations, an employer maintaining a plan) required by the Internal Revenue Code or regulations to file at least 250 returns during the calendar year that includes the first day of the plan year must use magnetic media to file certain statements, returns, and reports under IRC sections 6057, 6058, and 6059. Magnetic media is defined as electronic filing or other media specifically permitted under applicable regulations, revenue procedures, publications, forms, instructions, or other guidance on the IRS.gov Internet website.

Filers of the Form 5500 and Form 5500-SF are already required to file the returns electronically through EFAST2. In addition, many filers of the Form 8955-SSA already voluntarily file electronically with the IRS and also are required to file the Form 5500 and Form 5500-SF electronically through EFAST2. The IRS and the Treasury Department have determined that taxpayers should be able to comply at a reasonable cost with the requirement to file statements, returns, and reports on magnetic media.

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The determination of whether a filer is required to file at least 250 returns is made by aggregating all returns, regardless of type, the filer is required to file, including for example, income tax returns, information returns required for non-profits under section 6033, other information returns, excise tax returns, and employment tax returns.

Electronic filing requirements may be waived in cases of undue economic hardship. The principal factor in determining hardship will be the amount, if any, by which the cost of filing the registration statements or notifications on magnetic media in accordance with this section exceeds the cost of filing the registration statements or notifications on paper or other media.

The final regulations address comments made regarding proposed regulations last year. The IRS confirms that the Filing Information Returns Electronically (FIRE) system is an acceptable electronic system to file the Form 8955-SSA. The final rules also include clarification about the application of the e-file mandate to one-participant plans.

The regulations apply to employee retirement benefit plan statements and notifications required to be filed under section 6057 for plan years that begin on or after January 1, 2014, but only for filings with a filing deadline (not taking into account extensions) on or after July 31, 2015. For employee retirement benefit plan returns and reports required to be filed under sections 6058 and 6059, the regulations apply for plan years that begin on or after January 1, 2015, but only for filings with a filing deadline (not taking into account extensions) after December 31, 2015.

Text of the final regulations is here.

Administration October 1, 2014

Bristol Myers Squibb Transfers Pension Obligations

October 1, 2014 (PLANSPONSOR.com) - Bristol-Myers Squibb Company announced it will settle $1.4 billion in pension obligations through the purchase of a group annuity contract from The Prudential Insurance Company of America.
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The move affects approximately 8,000 U.S. retirees and their beneficiaries who started receiving their monthly retirement benefit payments on or before June 1. Bristol-Myers Squibb’s U.S. Retirement Plan is in a strong financial position, and the obligations associated with this transaction will require no additional cash contributions by the company. There will be no change to the monthly retirement benefit payments currently received by retirees and their beneficiaries. All other plan participants will stay in the company’s plan.

According to the company, “The transaction reduces risk in the plan and better manages the ongoing variations in cost associated with its maintenance, while entrusting current retirees’ and their beneficiaries’ pensions to a financial institution with expertise in the long-term management of retirement benefits.”

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The company’s pension committee engaged Fiduciary Counselors Inc., an independent fiduciary services firm, to represent the plan and all of its participants and their beneficiaries, including those remaining in the plan, to objectively select the safest available annuity as defined by the U.S. Department of Labor (DOL)’s standards. Fiduciary Counselors selected a Prudential contract that provides an additional safeguard by segregating assets in a separate account dedicated to the payment of benefits to plan retirees and their beneficiaries.

All other participants and their beneficiaries in the company’s plan with accrued benefits will remain in the current plan, including retirees who participate in collectively bargained plans or the Puerto Rico plan, as well as certain retirees with variable benefit payments. The transfer to Prudential is expected to occur in December and is subject to the satisfaction of closing conditions.

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