Compliance February 13, 2004

Regulatory Agendas Offer Sneak Peek at 2004 Directions

February 13, 2004 (PLANSPONSOR.com) - Plan sponsors hoping for a sneak peek at the 2004 regulatory agenda need look no further than the recently published agendas for the US Treasury Department and US Department of Labor.
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>Federal government agencies publish semiannual regulatory agendas, which serve as a “to do” list of sorts, revealing the regulations that the agencies expect to review or develop in the near term.  

>The Treasury Department’s agenda (including items for the Internal Revenue Service) includes:

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  • Cash or Deferred Arrangements – the finalization of the proposed regulations under Code Section 401(k) and 401(m) is anticipated (see  ERSAs on Comeback Trail ,  IRS, Treasury Unveil “New” 401(k) Regs ).
  • Highly Compensated Employees – proposed regulations are expected regarding the definition of highly compensated employee.
  • Deemed IRAs in Qualified Retirement Plans – temporary and proposed regulations are on the agenda to provide rules under which certain qualified plan accounts will be treated as Roth or traditional IRAs, as applicable (see    IRS Distinguishes ‘Deemed IRA’ From Qualified Plan ).
  • Changes to Protected Retirement Benefits and Elimination of Forms of Distribution in Defined Contribution Plans resulting from EGTRRA – both stem from EGTRRA changes to the anti-cutback rules of Code Section 411(d)(6). The former addresses proposed rules to be issued allowing for elimination of certain early retirement benefits and optional forms of benefit where the benefits are of de minimis value compared to the administrative burden and complexity involved.    The second deals with finalizing proposed regulations that allow defined contribution plans to eliminate certain optional forms of benefit (see  ROLLOVER DIRECTION – Revenue Ruling OKs Direct Rollover as Default  .
  • Reductions of Accruals and Allocations Because of Increased Age – proposed regulations involving the minimum vesting requirements under Code Section 411 are in their final stages.   The regs require that accruals and allocations under qualified retirement plans cannot be reduced because of attainment of any particular age, are in the final rule stage.

>Of interest to plan sponsors on the Department of Labor’s (DOL) list are:

  • Statutory Exemption for Loans to Plan Participants – this year the Employee Benefits Security Administration (EBSA) plans to review the participant loan rules and determine if changes are required.
  • DefaultRollover Safe Harbor. Under EGTRRA, EBSA was directed to come up with regulations by mid 2004 providing for safe harbors under which designating an institution and investments for automatic direct rollovers required under Code Section 401(a)(31)(B) will automatically satisfy ERISA’s fiduciary responsibility requirements (see  IRS Rolls Out Expanded Safe Harbor Guidelines ).

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