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Compliance December 28, 2018
A Look Back at Important 2018 Regulatory Developments
Plan sponsors faced another year of rapid regulatory change in 2018, with important developments coming out of the DOL, IRS and other federal government agencies.
Reported by John Manganaro
Retirement industry professionals with any significant amount of experience will know that regulators such as the Department of Labor (DOL) and the Internal Revenue Service (IRS) regularly update their rules and requirements, sometimes making small tweaks and other times driving rapid wholesale change; 2018 was no exception.
Collected below is a list of the more impactful initiatives announced during 2018 by different federal regulators. From the total reversal of the DOL fiduciary rule expansion to the publication of a draft Securities and Exchange Commission (SEC) best-interest advice proposal, it’s been another busy year on the regulatory front.
The ERISA Advisory Council Asks DOL for Guidance on Cybersecurity
The council is asking the DOL to require sponsors to be familiar with the various security frameworks to protect retirement plan data. Read more.
IRS Offers Relief for 403(b) Plans Excluding Certain Part-Time Employees
Under the once-in-always-in exclusion condition, for a 403(b) plan that excludes part-time employees from making elective deferrals, once an employee is eligible to make elective deferrals, the employee may not be excluded from making elective deferrals in any later exclusion year on the basis that the employee is a part-time employee. Read more.
No Required Amendments on IRS’ Annual List for 2018
When the agency ended its determination letter program, it said it would publish a list of required amendments for individually designed retirement plans to maintain their qualified plan status after October 1 of each year. Read more.
Fiduciary Duties for Auto-Portability Solution Spelled Out by DOL
The DOL has issued an advisory opinion letter in response to a request by Retirement Clearinghouse (RCH), for the Department’s opinion on the status of certain parties as “fiduciaries” as a result of actions undertaken as part of RCH’s Auto-Portability Program. Read more.
Testing of SEC Adviser Relationship Summary Form Yields Troubling Results
A group of investor advocacy organizations is calling on the Securities and Exchange Commission to significantly revise its adviser customer relationship summary form requirements within its broader Regulation Best Interest proposal. Read more.
IRS Announces Contribution and Benefit Limits for 2019
The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $18,500 to $19,000. Read more.
Closer Examination of DOL MEP Proposal
Those industry stakeholders disappointed by the limited scope of the proposed regulations can take heart in the fact that DOL staff calls for detailed commentary on ways the proposal could be expanded, including into the area of “open MEPs” and “corporate MEPs.” Read more.
DOL, SEC Both Have Fiduciary Conduct Standards Slated for Next Year
The DOL said it is considering regulatory options in light of a 5th Circuit opinion vacating its previous fiduciary rule, and has on its timeline that a final rule will be issued in September of 2019. Read more.
DOL Called Out for Lack of ESOP Guidance
A letter to the president from members of Congress asks for protection against the DOL’s practice of “regulation through litigation.” Read more.
IRS Extends Closed DB Plan Nondiscrimination Relief Through 2019
The new extension makes nondiscrimination relief available for plan years beginning before 2020, if the conditions of Notice 2014-5 are satisfied. Read more.
IRS Approves a Plan’s Design for Student Loan Repayment Benefits
IRS Private Letter Rulings are directed only to the taxpayer requesting it; however, they can give retirement plan practitioners an idea of what the IRS thinks about plan sponsor decisions or programs. Read more.
Mandate Issued by 5th Circuit to Officially Vacate DOL Fiduciary Rule
While the deadline had already technically passed for the DOL to appeal the circuit court ruling vacating its fiduciary rule reforms, this highly anticipated move by the court is truly the end of an era. Read more.
IRS Issues How-To Guidance for Prorating Short Plan Years
Two new IRS publications lay out important rules and clarifications for when and how to prorate compensation and benefit limits for short plan years. Read more.