compliance alert

December 18, 2014

Year-End Compliance Deadlines for Multiemployer Retirement Plans

This Compliance Alert identifies some upcoming compliance deadlines for multiemployer defined benefit (DB) and defined contribution (DC) plans.

Plan Amendments

Trustees might need or wish to adopt amendments that:

  • Implement U.S. v. Windsor. If an amendment is needed to implement the U.S. Supreme Court’s June 26, 2013 decision in Windsor, the adoption deadline for calendar-year plans is December 31, 2014. The adoption deadline for non-calendar-year plans varies and is discussed in detail in Segal Consulting’s May 1, 2014 Compliance Alert on the Windsor decision.1 Non-calendar-year plans will have to adopt an amendment no later than the Cycle D filing deadline2 (and may have to adopt by December 31, 2014 depending upon the plan year).
  • Make discretionary plan changes. Under Internal Revenue Service (IRS) rules, discretionary plan amendments, such as amendments to reflect benefit changes, plan mergers, or other changes that are not required by law, generally must be adopted by the last day of the plan year in which they become effective. Calendar-year plans for which discretionary amendments were made with 2014 effective dates must have those amendments committed to writing and adopted (signed and dated) by December 31, 2014.
  • Adopt amendments related to prior determination letters. IRS determination letters require that a restatement or any amendment submitted for review in proposed form be adopted no later than 91 days after the date on which the determination letter was issued. The same 91-day adoption deadline applies to any amendments required by the IRS reviewer as a condition for receiving the determination letter. Plans that have recently received a determination letter should ensure that any proposed documents were adopted by the deadline.
  • Facilitate validation of rollovers. For plans that accept rollover contributions, the plan administrator must be able to reasonably conclude that the rollover is valid. If the administrator accepts a rollover and later determines that the rollover was not valid, the contribution and earnings must be distributed to the employee within a reasonable time. The IRS has provided guidance intended to facilitate rollovers by making it easier for plan administrators to determine that certain rollover contributions are valid. Trustees should review their plans (and related procedures) to determine if an amendment is necessary or desirable in order to take advantage of the IRS guidance.3

Determination Letters

All multiemployer plans must file for renewed determination letters in the IRS determination letter filing cycle designated Cycle D. The second Cycle D is currently underway, and recently released guidance has extended the filing deadline by two days to February 2, 2015. There is no option in this second Cycle D, as there was in the first, for non-calendar-year plans to delay their filing until Cycle E.

Issues to Consider

Multiemployer plan sponsors should consider the following compliance issues:

  • Required Minimum Distributions (RMDs) For participants who attain age 70½ in 2014, payment of the required minimum distribution must begin on or before April 1, 2015 — unless the DC or DB plan provides that distributions will be delayed until April 1 of the calendar year following the year of the participant’s termination of employment if later.
  • Safe-Harbor Notices on Taxation of Eligible Rollover Distributions The model Section 402(f) Notices have been revised to address revised rules on the taxation of eligible rollover distributions from DC or DB plans and to make various other updates and corrections.4 While most of the revisions relate to the allocation of pre-tax and after-tax amounts (including Roth after-tax amounts) when there are distributions from a plan that are made to multiple destinations at the same time, all plans should review the new models in order to incorporate the generally applicable updates and corrections in their own notices.
  • DB Hybrid Plan Regulations5 Generally, the new final regulations identify the interest rates that will be considered acceptable as a “market rate of return” for the purpose of interest credits under lump-sum based hybrid plans such as cash balance plans. The regulations apply for plan years beginning on or after January 1, 2016, and amendments are required by the last day of the 2015 plan year. Proposed regulations specifying how plans can correct interest-crediting rates that do not satisfy the new regulations were issued at the same time. Trustees should examine their hybrid plans to see if any changes are necessary or desirable.
  • DC Plan Investment Option Comparative Disclosure Charts DC plans with participant-directed investments are required annually to provide participants with detailed charts that compare the features (including fees) of the plan’s investment options. The deadline for providing the first chart was August 30, 2012, and the timing of subsequent charts was keyed to 12-month periods after the date of the first chart. To permit plans to distribute the chart on the same schedule as other annual disclosures (generally keyed to plan years), the Department of Labor allowed plans to “reset” the distribution date for this chart for either the 2013 or 2014 plan year. Plans that chose to reset for the 2014 plan year have until February 25, 2015 to distribute their 2014 charts.6

• • •

As with all issues involving the interpretation or application of laws and regulations, trustees should rely on fund counsel for authoritative advice related to the timing and content of amendments, government filings, plan disclosures, and other compliance issues. Segal Consulting can be retained to work with trustees and fund counsel on these issues.


1 For more information on amendment and adoption dates and required and permitted Windsor amendments, including information related to plans subject to benefit improvement restrictions, see Segal Consulting’s May 1, 2014 Compliance Alert, “Qualified Retirement Plans Required to Apply United States v. Windsor Prospectively from Date of Decision.” (Return to the Compliance Alert.)

2 Under IRS Announcement 2014-4, the filing deadline is February 2, 2015. (Return to the Compliance Alert.)

3 Rev. Rul. 2014-9 is on the IRS website. (Return to the Compliance Alert.)

4 See Notice 2014-74 on the IRS website. Two model notices are provided, one for distributions that do not include Roth amounts, the other for distributions of Roth amounts. (Return to the Compliance Alert.)

5 See Additional Rules Regarding Hybrid Retirement Plans in the September 19, 2014 Federal Register and Transitional Amendments To Satisfy the Market Rate of Return Rules for Hybrid Retirement Plans in the September 19, 2014 Federal Register. (Return to the Compliance Alert.)

6 DOL EBSA Field Assistance Bulletin 2013-2 is on the DOL website. (Return to the Compliance Alert.)


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