Compliance April 14, 2020

PBGC Extends Certain Premium Payment and Filing Deadlines

The action is in response to an IRS extension of some retirement plans’ Form 5500 filing deadlines.

Reported by

The Pension Benefit Guaranty Corporation (PBGC) announced extended deadlines for upcoming defined benefit (DB) plan premium payments and other filings with the agency.

Due dates for filings or actions that would otherwise have been due on or after April 1, and before July 15, have been extended to July 15.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

The PBGC explains that when the IRS provides relief to employee benefit plans because of a major disaster by delaying the Form 5500 due date, PBGC’s disaster relief policy provides that many PBGC due dates are similarly extended. The IRS issued Notice 2020-23 providing disaster relief, which included a Form 5500 extension. Retirement plan sponsors should note that the July 31 Form 5500 filing date for calendar year plans has not been extended.

The PBGC’s extended due dates do not apply to particularly important or time-sensitive filings on the “Exceptions List” on PBGC’s Disaster Relief webpage that may indicate a high risk of harm to pension plan participants or the insurance program. However, such filers may request individual extensions.

“PBGC understands the far-reaching effects COVID-19 is having on workers, families and companies across the country,” says PBGC Director Gordon Hartogensis. “This move will offer flexibilities to deliver relief that many employers and pension plan service providers need during this unprecedented time.”

Ask the Experts April 14, 2020

Does SECURE Act Make It Easier to Terminate a 403(b)?

Experts from Groom Law Group and Cammack Retirement Group answer questions concerning retirement plan administration and regulations.

Reported by

“I heard that the new SECURE Act retirement plan legislation may have made it easier to terminate a 403(b) plan. If this is the case, can the Experts clarify?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

Absolutely! Your sources are accurate that the Setting Every Community Up for Retirement Enhancement (SECURE) Act provides for increased flexibility for plan providers in connection with 403(b) plan terminations.

Specifically, the legislation directs the IRS to issue guidance by June 20, effective retroactively for tax years beginning on and after December 31, 2008, providing that individual custodial accounts may be distributed to participants in-kind on plan termination, eliminating the requirement of a cash distribution.  This change will allow for distributions of custodial accounts under rules similar to the rules that have been available for annuity contracts under a 403(b) plan.

Further, so long as the custodial account remains compliant with applicable 403(b) rules through the date it is actually paid out, it will maintain its tax-deferred basis until payment to the participant (even after the employer terminates the plan).

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@issgovernance.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.

«