Compliance January 3, 2012

IRS Updates Procedures for Issuing Advice to Employee Plans

January 3, 2012 (PLANSPONSOR.com) – The Internal Revenue Service has issued a number of Revenue Procedures revising procedures for furnishing advice to employee plans.
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The IRS issues advice to plan sponsors via letter rulings, closing agreements, determination letters, information letters and oral advice. Rev. Proc. 2012–4 provides revised procedures for furnishing this advice on matters related to sections of the Code currently under the jurisdiction of the Office of the Division Commissioner, Tax Exempt and Government Entities. The procedure also contains revised procedures for determination letters issued by the Large Business and International Division, Small Business/Self-Employed Division, Wage and Investment Division, and Tax Exempt and Government Entities Division.  

Rev. Proc. 2012–5 provides revised procedures for furnishing technical advice to area managers and appeals offices by the Office of the Division Commissioner, Tax Exempt and Government Entities, regarding issues in the employee plans area (including actuarial matters) and in the exempt organizations area.   

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Rev. Proc. 2012–6 provides revised procedures for issuing determination letters on the qualified status of employee plans under sections 401(a), 403(a), 409 and 4975 of the Code.  

Rev. Proc. 2012–8 offers up-to-date guidance for complying with the user fee program of the IRS as it pertains to requests for letter rulings, determination letters, etc., on matters under the jurisdiction of the Office of the Division Commissioner, Tax Exempt and Government Entities Division.  

The guidance can be found in Internal Revenue Bulletin (IRB) 2012-1, at http://www.irs.gov/pub/irs-irbs/irb12-01.pdf. 

Benefits January 3, 2012

Costs and Regulatory Complexity Top Retirement Plan Governance Challenges

January 3, 2012 (PLANSPONSOR.com) - Four out of 10 employers expect to devote more time addressing retirement plan governance over the next two years.
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Respondents to the Towers Watson 2011 survey on qualified retirement plan governance expect the top governance challenges organizations face in the next two years to be retirement benefit costs (77%) and regulatory complexity (73%). The greatest risks expected are regulatory compliance, investment volatility and vendor service quality.  

However, the research finds while most employers are concerned with compliance, many are not taking all the steps available to manage the financial, organizational and other risks created by ineffective plan governance.  

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Only one in four plan sponsors (26%) conduct regular compliance reviews. The most common reasons for a review are anticipated new risks and a pending Internal Revenue Service or Department of Labor audit.  

Less than half of respondents regularly measure the effectiveness of retirement plan decisions with specific metrics. Many employers do not use any metrics to measure the effectiveness of their decision making regarding their defined benefit (DB) plans (39%) and defined contribution (DC) plans (45%).  

Nearly half (51%) of respondents use a single committee for all retirement plan governance. The chief HR position (73%) and CFO (67%) are the most common governance committee members.  

The survey report, The New Governance Landscape, analyzes the retirement benefit plan governance practices (both DB and DC plans) of over 245 employers, representing a broad range of industries and sizes.  

The survey report is available at http://www.towerswatson.com/assets/pdf/6080/Towers-Watson-US-Pension-Governance-Survey-2011-Implications.pdf.

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