DOL and IRS REPORTING and DISCLOSURE 1
Annual Funding Notices Required by Multiemployer DBPs under ERISA 101(f), as Amended by WRERA * Requires disclosure of value of assets and liabilities as of valuation date, not end of plan year * Must include actuarial and fair market value of plan assets 2
ERISA Section 101(k) as Amended by WRERA: * Multiemployer plans may reveal individually identifiable information about investment managers, advisors or anyone (other than a plan employee) who prepares a report that must be disclosed under the Section 3
Pension Benefit Statements under ERISA Section 105 as Amended by PPA * No model benefit statements have been issued to date * Scheduled for release in June 2009 4
Notice of Consequences of Failing to Defer Distribution under Code 411 * More detail required by proposed regs than by transitional guidance see written report * Proposed to be effective as of January 1, 2010 5
Nonspouse Beneficiary Rollovers under Code 402(c)(11), as Amended by WRERA * Must be treated as an eligible rollover distribution * Code 402(f) notice required 6
Model Notice of Multiemployer Plan Critical Funding Status under ERISA 305 and Code 432 * Safe harbor, not mandatory * Can be amended for use by plans in endangered status 7
Temporary Relief from PPA Funding Rules Provided by WRERA * Multiemployer plans may elect to retain last year s funding status * Notice of election required * No notice of certified status is required if plan is green by reason of election 8
Notice of Diversification Rights under ERISA 101(m) * IRS Notice 2008-7 extended transitional guidance in Notice 2006-107 until final regs are issued * Model notice included in Notice 2006-107 9
Civil Penalties under ERISA 502(c) for Notice Violations Final Regs * ERISA 101(j) * ERISA 101(k) * ERISA 101(l) * ERISA 514 10
Prohibited Transaction Exemption for Investment Advice under ERISA 408(g) * Final regs issued in January * Details of notice requirement and model notice included * Effective as of March 23, 2009 11
Reporting HSA Administrative and Maintenance Fees * Fees withdrawn by a trustee from an HSA for administration and maintenance must be reported on Form 5498-SA in fair value of HSA, not on Form 1099-SA as a distribution 12
Reporting ESOP Dividends under Code 404(k) * Must be reported on a separate Form 1099-R, beginning in 2009 13
Disclosures Under the Labor Management Reporting and Disclosure Act (LMRDA) 14
Plan-Related LMRDA Disclosure * No change to the LM-10 rules for 2008 plans are not required to file LM-10 * Minor LM-30 changes for plans: Payments from trusts with employees, including expense reimbursement, are reportable on an individual s Form LM-30 Loans (other than outstanding credit card balances) from financial institutions that deal with a trust related to the filer s union are reportable on an individual s Form LM-30 * The biggest change for plans is the Form T-1 15
Form T-1: The Basics * Filed by labor organizations * Reporting financial information about trusts in which the labor organization is interested * Not required in connection with plans that are required to file Form 5500 * First reports due no earlier than March 31, 2010. Actual filing schedule depends on the fiscal year of the trust and of the labor organization 16
Form T-1: Who s Covered? * A trust in which a labor organization is interested Trust or any other type of organization; That was either established by the labor organization, or to the board of which the labor organization appoints one member; and A primary purpose is to provide benefits to union members. Benefits not limited to employee benefits 17
Form T-1: Who s Covered? * A trust is only subject to Form T-1 reporting if the labor organization: alone or with other labor organizations, appoints a majority of the governing board; OR alone or with other labor organizations, contributes more than 50% of receipts Contributions made by employer pursuant to CBA are considered to come from the labor organization Contributions from participants are not considered to come from the union 18
Form T-1: What s Reported? * Basic financial information about the trust * Detailed financial information about Receipts totaling $10,000 or more from any one source (but not employer contributions) Disbursements totaling $10,000 or more to any one recipient (but not benefit payments) Disbursements to officers or employees totaling $10,000 or more * Can attach an audit in place of financial information, but only if the audited financials include required detail on receipts and disbursements 19
Proposed Regulations Affecting ERISA Section 204(h) 20
Introduction * In March 2008, the IRS issued proposed regulations impacting the timing and necessity of some 204(h) notices. * The general rule is still that a 204(h) notice must be provided at least 45 days prior to the effective date of a qualified pension plan amendment that significantly reduces a participant s future benefit accruals or early retirement benefits (15 days for multiemployer and certain small plans). 21
No 204(h) Notice is Required for Adoption of Section 417(e) Assumptions * The PPA amended section 417(e)(3) of the Code by providing new actuarial assumptions (e.g. mortality table and applicable interest rate) for calculating the minimum present value of a participant s accrued benefit. * Prior to the issuance of the proposed regulations, it was unclear whether a plan amendment that adopted the new actuarial assumptions would trigger a 204(h) notice. * The proposed regulations clarify that a reduced distribution resulting from a plan amendment adopting the new 417(e)(3) actuarial assumptions does not require a 204(h) notice. 22
Effective Date of Retroactive Amendment is When First Put Into Effect * Currently, the timing of a 204(h) notice is based on the amendment date, defined as the later of the effective date or the date the amendment is adopted. * The proposed regulations clarify that the effective date of an amendment that is permitted to be adopted retroactively is the date the amendment is put into effect on an operational basis rather than the date of adoption. * Thus, a 204(h) notice for an amendment adopted retroactively must be provided at least 45 days (15 days for multiemployer plans) before the first day the plan is operated as if the amendment were in effect, even if the amendment is not adopted until a later date. 23
45 Day Notice Rule Applies to Cash Balance Plans Eliminating Whipsaw * The IRS previously indicated in Notice 2007-6 that a plan administrator must give a 204(h) notice 30 days before amending a plan to base lump sum payments solely on a participant s account balance (thus eliminating the whipsaw calculation as permitted by the PPA). * The proposed regulations clarify that this 30 window only applies to amendments effective prior to December 31, 2008. * Under the proposed regulations, an amendment that eliminates a whipsaw calculation after the end of 2008 will be subject to the normal 45 day 204(h) notice requirement. 24
No Need for Multiple Notices * The proposed regulations eliminate the need to provide multiple notices with substantially the same function and information to affected persons. * If a plan complies with the applicable standards of certain other notices, then the plan will be treated as having complied with section 204(h) without actually having to send a separate 204(h) notice. 25
No Need for Multiple Notices * The proposed elimination of duplicative 204(h) notices applies to the following types of notices: A notice regarding an amendment that reduces benefit accrual where the plan has applied for and received approval from the Secretary of the Treasury (IRC 412(d)(2)). A notice required under section 101(j) of ERISA concerning a plan amendment made to comply with the benefit limitations of Code 436. 26
No Need for Multiple Notices A notice required for an amendment that reduces or eliminates accrued benefits attributable to employer contributions with respect to a multiemployer plan in reorganization (Section 4244A(b) of ERISA). A notice relating to the effects of the insolvency status for a multiemployer plan (Section 4245(e) of ERISA). A notice to the PBGC, plan participants and plan beneficiaries of an amendment of a terminated multiemployer plan reducing benefits pursuant to section 4281(c) of ERISA. 27
204(h) Satisfied by a Code 432(e)(8)(C) Notice for Plans in Critical Status * Code Section 432 permits multiemployer plans in endangered or critical status to adopt amendments that reduce prior accruals. * Code Section 432(e)(8)(C) requires notice of such an amendment be provided at least 30 days before the effective date and include information that is sufficient for participants and beneficiaries to understand the effect of any reduction on their benefits. * A notice for a multiemployer plan in critical status that satisfies the timing and content requirements under section 432(e)(8)(c) will be treated as satisfying the timing and content requirements of 204(h). 28
Contributing Employers in Multiemployer Plans Must be Provided 204(h) Notices The proposed regulations require that a 204(h) notice for a multiemployer plan must be provided not only to plan participants and other organizations required by ERISA section 204(h), but must also be provided to contributing employers. 29
Proposed Regulations Generally Apply To Amendments Effective January 1, 2008 The proposed regulations generally apply to amendments effective on or after January 1, 2008. * For any amendment adopted after its effective date, the clarification of the effective date of the amendment in the proposed regulations is applicable to those amendments on or after July 1, 2008. 30