May 14, 2014
- Rubio Unveils Retirement Security Proposal
- IRS, PBGC Issue Filing Relief for Federal Disaster Victims
- IRS Guidance Affects Certain Foreign Retirement Plans
Rubio Unveils Retirement Security Proposal
Senator (and possible presidential candidate) Marco Rubio (R-FL) released a proposal on May 13 designed, in his words, “to strengthen entitlement programs, make it easier for young Americans to save for retirement, and remove financial penalties on Americans who choose to keep working into their golden years.” A fact sheet is also available.
The centerpiece of Rubio’s proposal is the expansion of the federal Thrift Savings Plan (TSP), which covers federal workers, to permit coverage of private sector workers without access to an employer plan. “Today there are 75 million Americans working for employers that do not offer a retirement plan. … I propose we give Americans who do not have access to an employer sponsored plan the option of enrolling in the federal Thrift Savings Plan. Opening Congress’ retirement plan to the American people will allow us to bring the prospect of a secure, comfortable and independent retirement into reach of millions of people.”
The proposal also includes a number of reforms to the Social Security program, including:
- Eliminating the 12.4 percent Social Security payroll tax for all individuals who have reached retirement age;
- Eliminating the Retirement Earnings Test, under which benefits are reduced approximately 50 cents for every dollar a person between the ages of 62 to 65 earns in excess of $15,000 a year;
- Gradually increasing the retirement age for future retirees to account for the rise in life expectancy; and
- Adjusting the calculation of initial benefits to reduce the growth of benefits for upper income seniors.
Rubio’s proposal also endorses the Medicare premium support plan adapted from Representative Paul Ryan’s (R-WI) Fiscal Year 2015 budget proposal.
The Council will be meeting with Senator Rubio’s staff to discuss his objectives for comprehensive retirement policy reform. Consideration of retirement reform legislation in 2014 should be considered highly unlikely. For more information, contact Diann Howland, vice president, legislative affairs, at (202) 289-6700.
IRS, PBGC Issue Filing Relief for Federal Disaster Victims
On May 8, the Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) announced that they will waive certain penalties and extend certain deadlines in response to the severe stormsand flooding that began on April 28, 2014, in the southeastern United States.
The IRS is postponing certain deadlines for taxpayers who reside or have a business in federal disaster areas in Florida, Alabama, Arkansas and Mississippi. For instance, certain deadlines falling on or after April 28, and on or before October 15, have been postponed to October 15, 2014. This includes the deadline for filing extensions for Form 5500 series returns as well as the deadline for many tax-exempt organizations to file their annual Form 990. It also includes the June 16 and September 15 deadlines for making quarterly estimated tax payments. A variety of business tax deadlines are also affected, including the April 30 and July 31 deadlines for quarterly payroll and excise tax returns.
The PBGC relief similarly applies to any “designated person” responsible for meeting a PBGC deadline (e.g., a plan administrator or contributing sponsor) who is located in Florida, Alabama, Arkansas and Mississippi and “cannot reasonably obtain information or other assistance needed to meet the deadline from a service provider, bank, or other person whose operations are directly affected by the severe weather.” The PBGC announcement discusses requests for case-by-case relief, how to claim relief, assessment of premium payments, treatment of single-employer plan terminations, reportable event notices, requests for reconsideration and appeals, and multiemployer plan deadlines.
The IRS and PBGC disaster relief pages are frequently updated to add new states or counties in affected states. For more information, contact Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.
IRS Guidance Affects Certain Foreign Retirement Plans
As we reported in the May 9 Benefits Byte, the Internal Revenue Service (IRS) recently issued Notice 2014-35, providing administrative relief from penalties under the Internal Revenue Code for a failure to comply in a timely fashion with regard to certain annual reporting requirements under ERISA. The relief is intended for late filers participating in the Delinquent Filer Voluntary Compliance (DFVC) Program administered by the U.S. Department of Labor Employee Benefits Security Administration (EBSA).
At the same time, the IRS also issued Revenue Procedure 2014-32, providing guidance on late annual reporting for non-Title I retirement plans. The revenue procedure establishes a temporary one-year pilot program providing administrative relief to plan administrators and plan sponsors of “one-participant plans” and/or certain foreign plans from applicable penalties under the tax code for a failure to timely comply with some annual reporting requirements. This revenue procedure also requests comments as to whether a permanent relief program should be established and, if so, how fees should be determined.
While such relief is unlikely to apply to most Council members’ domestic plans, we have learned that some members may welcome this relief, such as those with foreign plans maintained outside the United States primarily for nonresident aliens, which must file form 5500-EZ. For more information, contact Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.