Correction procedures at “top of the list” for forthcoming guidance, IRS official says

The IRS is working on two revenue procedures on correction programs for qualified retirement plans and tax-sheltered annuities, an IRS official said on September 21, 2012. The IRS is updating Rev. Proc. 2008-50, which provides guidance on the Employee Plans Compliance Resolution System (EPCRS), Victoria Judson, associate chief counsel (Tax Exempt and Government Entities), told participants at the ALI-CLE Conference on Retirement Plans and Welfare Plans of Tax-Exempt and Governmental Employers. The IRS is also developing a correction program under Code Sec. 403(b), Judson said. Both items are “at the top of the list” of guidance priorities that the IRS hopes to issue soon, she indicated.

Other pending guidance projects, according to Judson, concern plan funding, the basis of plan rollovers and Roth account rollovers. Asked about guidance under Code Sec. 457(f), Judson said that the IRS had some discussions about drafting the regulations with Bill Bortz of the Treasury, before he left. Treasury Benefits Tax Counsel George Bostick, who also spoke at the conference, said the 457(f) guidance is “still in the works,” that there are some issues to resolve, and that he did not expect guidance to be issued in 2012.

Bostick told conference moderator Louis Mazawey, Groom Law Group, Chartered, Washington, D.C., that there will be more guidance on longevity annuities. The government is looking at potential impediments to rollovers, target date funds and guaranteed lifetime withdrawal benefits, Bostick said. The government is struggling with the question of whether benefits that accrue each year under a target date fund are discriminatory, he said. For guaranteed lifetime benefits, there are Code Sec. 411 issues that require additional consideration, he indicated.

Source: IRS and Treasury officials, speaking at ALI-CLE Conference on Retirement Plans and Welfare Plans of Tax-Exempt and Governmental Employers, September 21, 2012.

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For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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