The Department of Labor’s Employee Benefits Security Administration (DOL/EBSA) announced new guidance as featured below. You can subscribe to DOL/EBSA’s homepage for updates.
Amendments to abandoned plan program
On December 12, 2012, DOL/EBSA published in the Federal Register a proposed rule and related class exemption that will make it easier for Chapter 7 bankruptcy trustees to distribute assets from bankrupt companies’ retirement plans. The proposal would allow such trustees to use EBSA’s existing Abandoned Plan Program to terminate, wind up and distribute benefits from such plans.
The existing Abandoned Plan Program provides streamlined termination and distribution procedures for abandoned individual account plans, including 401(k) plans, under which benefits may be distributed in a manner that can substantially reduce fees charged to participants’ accounts for, among other things, annual reporting, legal compliance and other administrative services, including termination costs. By making this streamlined process available to Chapter 7 bankruptcy trustees, the time and resources required to “wind up” a bankrupt company’s retirement plan can be significantly reduced.
Under amendments in 2005 to federal bankruptcy law, if a company in liquidation administered an individual account plan, the company’s Chapter 7 bankruptcy trustee must perform those functions. The Abandoned Plan Program, established in 2006, provides specific guidance on when a plan may be considered abandoned, who may make that determination, and exactly how to terminate the affairs of the plan and make benefit distributions. The program also limits potential fiduciary liability of financial institutions that step in to terminate and wind up plans that have been abandoned by their sponsors.
2012 Form 5500 Annual Report
On December 4, 2012, DOL/EBSA, the IRS and the Pension Benefit Guaranty Corporation released advance informational copies of the 2012 Form 5500 annual return/report and related instructions. These copies are for informational purposes only and cannot be used to file.
Pension and welfare benefit plans that are required to file electronically an annual return/report regarding their financial conditions, investments and operations each year generally satisfy that requirement by filing the Form 5500 or Form 5500-SF and any required attachments.
Modifications to the Form 5500 and Form 5500-SF for plan year 2012 are described under “Changes to Note” in the 2012 instructions, including:
- Optional Paid Preparer Information
- Optional Trust Information in the Schedule H and Schedule I
- Schedule SB instructions updated to advise that additional detail is requested for the prior year’s excess contributions to be added to the prefunding balance
- Multiemployer actuarial information reporting clarified for changes in adjustable benefits and for amortization charges under the funding standard account statement for this plan year
The official electronic versions for filing are now available on the EFAST2 website.
Compliance guidance for those impacted by Hurricane Sandy
On November 20, 2012, DOL/EBSA provided guidance about compliance with employee benefit plan rules for those adversely impacted by Hurricane Sandy.
The guidance applies to employee benefit plans, plan sponsors, as well as service providers to such employers, located on October 26, 2012, in one of the counties or Tribal Nations that have been identified as covered disaster areas because of the devastation caused by Hurricane Sandy. Covered disaster areas are identified as federally declared disaster areas in the IRS issued News Releases for Victims of Hurricane.
The relief provided in this guidance is in addition to the Form 5500 Annual Return/Report filing relief already provided by the IRS. The relief provided in this guidance includes verification procedures for plan loans and distributions, participant contributions and loan repayments, blackout notices, and ERISA group health plans.
Outreach and education
For notice of upcoming events as they are scheduled, subscribe to DOL/EBSA’s website homepage. DOL/EBSA also conducts seminars for small businesses sponsoring health benefits plans. Information on these events is also available on DOL/EBSA’s homepage.