Guidance on DOMA, lifetime income, fiduciary rules are priority projects for IRS and EBSA, speakers tell ASPPA conference

Guidance on cash balance plans, lifetime income, fiduciary rules, and the Defense of Marriage Act (DOMA) are among the priority guidance projects at the IRS and the Department of Labor’s Employee Benefits Security Administration (EBSA), according to top officials at the two agencies. The remarks by IRS and EBSA officials were made on October 29, 2013, at the annual conference of the American Society of Pension Professionals and Actuaries (ASPPA).

Cash balance plans

Mark Iwry, Senior Advisor to the Secretary of the Treasury and Deputy Assistant Secretary said the cash balance final regulations are coming soon. These regulations will include cash balance and pension equity plans. Some defined benefit plans that were converted from traditional to cash balance plans are bumping into discriminatory allocations as older participants are receiving rich benefits to make up for the plan conversion from a traditional defined benefit plan to a cash balance plan. The IRS understands the need for the final regulations, Iwry said.


Regarding DOMA, Iwry said the IRS will augment the guidance already provided to address some of the issues raised regarding qualified plans.

Phyllis Borzi, EBSA Assistant Secretary, noted that President Obama gave the Justice Department coordination responsibilities for DOMA guidance after the United States v. Windsor case was ruled on by the Supreme Court. The first task was to define spouse and consider the state of domicile vs. state of celebration for various rules and regulations.

Lifetime income

The Department of Labor is also concerned about lifetime income and is considering modifying the requirements for benefit statements to add annuity information and expected balance of a participant’s account at normal retirement age. This is very much a work in progress, Borzi said. It is expected that a safe harbor version of this will be proposed. The Department of Labor would also be in favor of more participants taking structured withdrawals, installment distributions providing lifetime income, she added.

Regarding lifetime retirement income, Iwry discussed how participants could be encouraged to take a combination distribution including both a partial annuity portion and a lump-sum portion from defined benefit plans providing partial annuities and lump sums. He also mentioned the idea of participants taking deferred annuities with benefits starting at age 80 or 85 as another means to provide for lifetime retirement income.

Re-proposed fiduciary rules

Issuance of re-proposed fiduciary rules is the Labor Department’s highest priority, Borzi said. She indicated that when the proposed regulations are reissued there will be three pieces: the regulatory text, preamble including a cost benefit analysis, and an extensive list of prohibited transaction exemptions. All of these will be released to the public, subject to public notice, and DOL is again expecting a robust comment period. The Department is co-coordinating with the SEC on this matter. It is possible the fiduciary rules could go to the OMB by the end of the year, Borzi said.

Source: Annual conference of the American Society of Pension Professionals and Actuaries (ASPPA), October 29, 2013.

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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