May 16, 2014
- IRS Guidance Clarifies Treatment of Mid-Year Plan Amendments Under Windsor
- ERISA Advisory Council Announces 2014 Discussion Topics
IRS Guidance Clarifies Treatment of Mid-Year Plan Amendments Under Windsor
The Internal Revenue Service (IRS) issued Notice 2014-37 on May 15, providing additional guidance for retirement plan administration under the U.S. Supreme Court's decision in U.S. vs. Windsor. Specifically, the notice amplifies Notice 2014-19 (issued April 4) to provide guidance on mid-year amendments to safe harbor 401(k) plans.
In light of the Windsor ruling, which struck down key sections of the Defense of Marriage Act, retirement plans must recognize same-sex marriages for purposes of issuing survivor benefits, obtaining spousal consent, eligibility for joint and survivor annuities and other administrative functions. In some cases, a plan amendment must be made to comply with the with the “state of celebration” standard established by the IRS under Revenue Ruling 2013-17.
Question No. 8 of Notice 2014-19 established that “the deadline to adopt a plan amendment is the later of (i) the otherwise applicable deadline under section 5.05 of Revenue Procedure 2007-44 [which established the staggered remedial amendment period,] or its successor, or (ii) December 31, 2014. Moreover, in the case of a governmental plan, any amendment made pursuant to this notice need not be adopted before the close of the first regular legislative session of the legislative body with the authority to amend the plan that ends after December 31, 2014.”
Under prevailing regulations, a 401(k) safe harbor plan must be adopted before the beginning of the plan year and be maintained throughout a full 12-month plan year, except as otherwise provided under sections 1.401(k)-3(g) of the tax code (relating to the reduction or suspension of safe harbor contributions) or other general guidance.
Notice 2014-37 clarifies that a 401(k) or (m) safe harbor plan can adopt a mid-year amendment pursuant to Notice 2014-19. “A plan will not fail to satisfy the requirements to be a […] 401(k) or (m) safe harbor plan merely because the plan sponsor adopts a mid-year amendment pursuant to Q&A-8 of Notice 2014-19.” This guidance is being provided to help non-calendar year plans, which would have had difficulty meeting the deadline without a mid-year amendment.
For more information, contact Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.
ERISA Advisory Council Announces 2014 Discussion Topics
The ERISA Advisory Council (EAC), a group of benefits experts established by Congress and appointed by the U.S. Department of Labor (DOL) to identify emerging benefits issues and advise the Secretary of Labor on health and retirement policy, has released its working group topics for 2014. These topics are:
- Pharmacy Benefit Manager (PBM) Compensation and Fee Disclosure
- Outsourcing Employee Benefit Plan Services
- Issues and Considerations around Facilitating Lifetime Plan Participation
The chair of the EAC for the 2014 term will be Neal S. Schelberg, senior partner at Proskauer Rose LLP (a Council board member company), representing employers on the panel. Other EAC members from Council board/member organizations are:
- Ralph C. Derbyshire, senior vice president and deputy general counsel for FMR (Fidelity Investments) LLC, representing investment management.
- Josh Cohen, head of institutional defined contribution at Russell Investment Group, representing investment counseling.
- Christina R. Cutlip, managing director and head of plan sponsor services for TIAA-CREF, representing employers.
- Kevin T. Hanney, director of pension investments for United Technologies Corporation, representing employers.
- David C. Kaleda, a principal in the Fiduciary Responsibility group at Groom Law Group, Chartered. representing corporate trusts.
- Mark Schmidke, shareholder at Ogletree, Deakins, Nash, Smoak & Stewart, representing Insurance.
Final reports from prior years are available on the EAC website. For more information, particularly if you are interested in testifying on the Council’s behalf, contact Jan Jacobson, senior counsel, retirement policy, at (202) 289-6700.