Defined Benefit Pension Plans

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The IRS recently issued Notice 2023-43 providing new interim guidance for self-correction of plan errors. This guidance applies to corrections made prior to the anticipated issuance of revisions to the Employee Plans Compliance Resolution System (“EPCRS”). Under this guidance, provided certain conditions are satisfied, most Eligible Inadvertent Failures (defined below) may be self-corrected, though there are specific types of failures that may not be self-corrected at this time (discussed below).

As previously discussed, the Pension Benefit Guaranty Corporation (the “PBGC”) issued final regulations in July 2022 for plans that receive special financial assistance (“SFA”) under the American Rescue Plan Act of 2021 (“ARPA”).  Among other things, the regulations imposed special withdrawal liability rules on plans that receive SFA – including a phase-in period for…

In Kanefsky v. Ford Motor Co. Gen. Ret. Plan, No. 22-cv-2259, 10548 U.S. Dist. 2023 WL 186800 (E.D. Mich. Jan. 13, 2023), the court granted a motion to dismiss a pension plan participant’s claim that the plan was equitably estopped from recouping overpaid plan benefits.  Upon termination of his employment, the participant requested and…

The IRS issued new proposed regulations that would permanently change the rules that require spousal consent for plan distributions to be signed in the physical presence of a notary or plan representative.  Specifically, the proposed regulations would allow plans to accept remote notarization or witnessing by a plan representative if the remote process meets certain…

The wait is over for SECURE 2.0, a long-awaited (and debated) package of retirement plan reforms.  Today, Congress passed the “SECURE 2.0 Act of 2022” as part of the 2023 Consolidated Appropriations Act; President Biden is expected to sign the bill into law soon. The bill text may be viewed here, and the Senate…

A hotly debated (and litigated) issue for multiemployer pension plans in recent years has been the appropriate interest rate to determine a multiemployer pension plan’s liabilities when calculating the plan’s underfunding for withdrawal liability purposes.  The Pension Benefit Guaranty Corporation (the “PBGC”) is now poised to end the debate.  The PBGC proposes to allow multiemployer…

On Monday, November 1, 2015, President Obama signed into law the Bipartisan Budget Act of 2015 (the “BBA”) which brings familiar changes for sponsors of defined benefit pension plans. Similar to the Moving Ahead for Progress in the 21st Century Act in 2012 (“MAP-21”), the BBA provides relief from pension funding obligations while increasing PBGC premiums.  The following summarizes the two major changes under the BBA that affect pension plans.

On December 13, 2013, the IRS issued Notice 2014-5 which provides temporary relief for satisfying the nondiscrimination requirements under Section 401(a)(4) of the Internal Revenue Code (the “Code”) for plan sponsors that maintain defined benefit plans which have been closed to new hires.

Many defined benefit plan sponsors have implemented “soft freezes” of their plans, closing them to new hires, but continuing defined benefit plan accruals for participants hired before the “soft-freeze.”   These employers might then implement a new or enhance an existing defined contribution plan for new hires.  Over time, the defined benefit plan might no longer pass coverage testing under Code Section 410(b) on its own because of greater turnover among the non-highly compensated employee group covered by the plan relative to the highly compensated employee population.  As a result, the frozen defined benefit plan must be aggregated with the defined contribution plan to satisfy the coverage requirements of the Code (the defined benefit plan, when aggregated with the defined contribution plan for testing is referred to as the “Aggregated Plan”).