Compliance April 14, 2016

IRS Withdraws Some Proposed Nondiscrimination Rules

Rules affecting cross-tested plans were included in proposed guidance providing nondiscrimination testing relief for certain DB plans.
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The Internal Revenue Service (IRS) has announced it will withdraw certain provisions of proposed regulations published on January 29, 2016.  

The provisions of the proposed regulations that will be withdrawn are the provisions that would modify Internal Revenue Code (IRC) Sections 1.401(a)(4)-2(c) and 1.401(a)(4)-3(c). These provisions were intended to address certain qualified retirement plan designs that take advantage of flexibility in the existing nondiscrimination rules to provide a special benefit formula for selected employees without extending that formula to a classification of employees that is reasonable and established under objective business criteria.

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Cross-tested plans, as well as qualified supplemental executive retirement plans (QSERPs) use these designs.

In Announcement 2016-16, the IRS says it and the Treasury have given additional consideration to the potential effects of those provisions on the adoption and continued maintenance of qualified retirement plans with a variety of designs and have concluded that further consideration will be needed with respect to issues relating to those provisions.  Accordingly, the Treasury Department and the IRS will withdraw the provisions.

The provisions relating to defined benefit (DB) nondiscrimination testing relief are not affected.

Products April 14, 2016

NAGDCA Launches ‘Perspectives in Practice’ Benchmarking

Data collection is underway for the new benchmarking service, with rollout aimed for summer 2016. 

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The National Association of Government Defined Contribution Administrators (NAGDCA) is launching a new benchmarking service, “Perspectives in Practice,” designed to support public-sector defined contribution (DC) plans with key aspects of administration and plan performance monitoring.  

“Data will be collected over the next several weeks and an industry-wide aggregate report will be available on the NAGDCA website this summer,” the group explains. “This new initiative will allow NAGDCA to collect data in a more robust and accurate way that will benefit all of our members,” adds NAGDCA Board President Polly Scott.

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Data collected through the Perspectives in Practice initiative will be used to understand trends and identify issues in order to better serve NAGDCA members, Scott explains. The data will also serve as support for NAGDCA legislative efforts in Washington, D.C., as well as provide members the capability of benchmarking their plans alongside those of their peers.

“Information gained by members through the new benchmarking initiative will enable them to in turn, improve plans and outcomes for their plan participants,” Scott says.

More information about the ongoing launch of the benchmarking service is here.

On its website, NAGDCA further explains “having good data has always been important to [our] members. While we have a long history of conducting surveys, this new service will allow us to collect data in a more robust and meaningful way. Key benefits of the project include the ability to use the data to understand trends and identify issues to better serve NAGDCA members, support our legislative efforts in Washington, D.C., and provide members the capability of benchmark their plans with peers in order to gain knowledge and improve the outcomes for their participants.”

All government primary members of NAGDCA will receive an email with a customized link to complete the survey.

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