RECENT Developments

by | Nov 4, 2015 | Institutional Services

Determination Letter Program Changes

Based on its need to direct its limited resources more efficiently, the IRS stated in Announcement 2015-19 that effective January 1, 2017, the staggered five-year determination letter remedial amendment cycles for individually designed plans will be eliminated. There will be a cycle E PPA restatement and a cycle A of the third five-year restatement cycle, which will end January 31, 2017. In addition, effective July 15, 2015, the IRS no longer accepts determination requests submitted off-cycle, with limited exceptions. The IRS will be limiting the issuance of determination letters for individually designed plans to the initial qualification of new plans and plan termination qualification and to other situations to be determined by the Treasury and IRS.

Individually designed plans could see an increase in plan document failures arising during plan audits as the IRS will rely on auditing to keep plans in compliance. We may see some sponsors of individually designed plans move onto preapproved documents. We could also see the use of ERISA attorneys and other service providers to regularly review individually designed plans for compliance.

Defined Benefit Plan RMD Changes

The IRS is limiting the ability of defined benefit plan sponsors to allow participants who are receiving annuity payments to take a lump-sum distribution. Required minimum distribution regulations allow for payment of increased benefits resulting from a plan amendment, but only for a plan’s termination or a participant’s death or retirement. Some plan sponsors had interpreted these rules to mean that a plan can be amended to permit a lump-sum option for a participant receiving minimum distributions, but the IRS will no longer permit this approach. The new rules were effective on July 9, 2015, though there are exemptions for plans that met certain pre-July 9, 2015 requirements.

Latest From The Blog

Archives

Our Services

Investment Management

Tailor portfolios to your needs and goals.

Retirement Planning

Investing and saving wisely is vital to success in retirement.

Financial Planning

Navigating the complexities of your financial affairs can be simplified.

Tax Management

Help to increase the amount you “take home”.

Estate Planning

Protect your loved ones and make sure your legacy endures.

Executive Compensation Analysis

Simplify the many options and decision points of executive compensation plans.

Education Planning

Confidently plan for your children’s future.

Charitable Giving

Give in a tax-smart, simple way.

*Please Note: Limitations.  The scope of services to be provided depends upon the terms of the engagement, and the specific requests and needs of the client. BFSG does not serve as an attorney, accountant, or insurance agent.  BFSG does not prepare legal documents or tax returns, nor does it sell insurance products.  Please Also Note: Different types of investments involve varying degrees of risk.  Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by BFSG) or any financial planning or consulting services, will be profitable, equal any historical performance level(s), or prove successful.

Sign Up For Our Newsletters

(They're great, we promise)

Connect With Us