Rules & Regulations.
Deferral Limits for 2016
The Internal Revenue Service (IRS) published its annual cost-of-living adjustments (COLAs) affecting dollar limitations for retirement plan contributions as well as other retirement-related tax provisions for the upcoming tax year. The IRS will not adjust most current contribution limitations for qualified retirement plans heading into 2016, although some retirement-related tax breaks and other items have been adjusted. Next year, many key numbers will stay the same, according to the IRS, including the headline-grabbing $18,000 limit on annual contributions to 401(k) and 403(b) plans, most 457 plans and the federal government's Thrift Savings Plan. The catch-up contribution limit of $6,000 also remains the same. See www.PLANSPONSOR.com for specific differences between the 2015 and 2016 limits.
From ESG to ESI Investing
The Department of Labor (DOL) issued Interpretive Bulletin (IB) 2015-01, a piece of guidance Labor Secretary Thomas Perez says will significantly expand the use of environmental, social and governance (ESG) investing principals under the Employee Retirement Income Security Act (ERISA). The guidance essentially returns the ESG investing paradigm to the way things worked between 1994 and 2008. Rather than ESG, Perez and the DOL favor the term "ETI," short for "economically targeted investments." His explanation of the need to repeal Interpretive Bulletin 2008-1-which until now had provided the most direct guidance on ESG issues for retirement plan fiduciaries-was particularly derisive and highlighted the influence of President Barack Obama's politics in the DOL's ongoing rulemaking.
IRS 2016 Priorities
The Internal Revenue Service (IRS) says it anticipates starting several new compliance-check projects in fiscal year 2016. The Employee Plans (EP) unit will focus resources on specialty program casework, particularly on EP Team Audit (EPTA)/Large Case, multiemployer plans, and Internal Revenue Code (IRC) Section 403(b) and 457(b) plans. The IRS says these areas have been selected for increased attention because they have a historical pattern of noncompliance and also allow for greater coverage of the retirement plan participant universe. The remaining resources will be applied toward cash balance plans, 401(k) plans and employee stock ownership plans (ESOPs). According to the announcement, the EP unit will continue to select various plan types-e.g., profit-sharing, money-purchase, 401(k) and defined benefit (DB)-from within its Risk Assessment program, while continuing to pursue taxpayer and interagency referrals, reported funding deficiencies and non-bank trustee investigations.
PPA Surcharges Not Included In Withdrawal Liability
The 3rd U.S. Circuit Court of Appeals has agreed that the withdrawal liability for a member of a multiemployer pension plan subject to more than one collective bargaining agreement (CBA) should be calculated using the highest contribution rate established in any of the CBAs. The appellate court found there is no ambiguity in the definite article "the" used in the phrase "the highest contribution rate" in the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). "[I]t is clear that Congress appreciated that an employer might contribute at different rates under multiple plans and designated 'the highest' rate as the appropriate rate to apply in calculating annual payments of the withdrawal liability," the court wrote in its opinion.
Bill Redefines Small Employers Under ACA
Earlier this month, President Barack Obama signed into law the Protecting Affordable Coverage for Employees (PACE) Act. The bill amends the Patient Protection and Affordable Care Act (ACA) and Public Health Service Act to now include employers with 51 to 100 workers as large employers, for purposes of health insurance markets. However, states will still have the option to treat these employers as small employers. Currently under the ACA, employers with 51 to 100 workers are small employers, but the new law allows states, prior to January 1, 2016, to elect to treat them as large employers. Where this affects the group in question is that the ACA requires health insurance offered in the small-employer market to meet certain requirements not applicable to the large-employer market, including the requirement to cover the essential health benefits. -PS