Pension News - What's New in 2019?

The following list tracks important guidance that were released during 2019. These items are summarized in detail, with appropriate commentary, in our quarterly newsletter, eRISA Update. See our Newsletters page to sign up for eRISA Update.

Legislative Developments

• None

Treasury Regulations

• Treasury obsoletes outdated regulations [Citation: Treas. Reg. §§1.72-15, 1.72-17A, 1.72-18, 1.401-3, 1.401-4, 1.401-5, 1.401-6, 1.401-8, 1.401-10, 1.401-11 through 1.401-13, 1.401(e)-1 through 1.401(e)-6, 1.401(f)-1, 1.402(a)-1, 1.402(e)-1, 1.403(a)-1, 1.404(a)-1, 1.404(a)-2, 1.404(a)-2A, 1.404(a)-3, 1.404(a)-4 through 1.404(a)-7, 1.404(a)-8, 1.404(a)-9, 1.404(a)-10, 1.404(a)(8)-1T, 1.404(e)-1, 1.404(e)-1, 1.404(e)-1A, 1.405-1 through 1.405-3, 1.410(a)-1, 1.410(b)-0, 1.410(b)-1, 1.411(a)-1, 1.411(a)-5, 1.411(a)-9, 1.411(d)-2, 1.411(d)-5, 1.412(b)-5, 1.412(c)(1)-3T, 1.412(l)(7)-1, 1.414(r)-8, and 1.416-1, 84 F.R. 9231 (March 14, 2019)]
  Text available at https://www.govinfo.gov/content/pkg/FR-2019-03-14/pdf/2019-03474.pdf
• Regulations under IRC §6707A amend the calculation of the penalty for failure to disclose a reportable transaction to reflect changes made by the Small Business Job Act of 2010 [Citation: Treas. Reg. §301.6707A-1, 84 F.R. 11217 (March 26, 2019)]
  Text at https://www.govinfo.gov/content/pkg/FR-2019-03-26/pdf/2019-05546.pdf

IRS Guidance

• Annual update of general procedures for obtaining Employee Plans private letter rulings, determination letters, and user fees pertaining to rulings, determination letters and VCP submissions[Citation: Rev. Proc. 2019-4, 2019-1 I.R.B. (January 2, 2019)]
  Text available at http://bit.ly/2SIxJyk
• “De-risking” programs that allow retirees in pay status to convert annuity stream to lump sum payment will no longer be permitted under many circumstances [Citation: Notice 2019-18 I.R.B. 2019-13 (March 25, 2019; advance release on March 6, 2019)
  Text available at https://www.irs.gov/pub/irs-drop/n-19-18.pdf
• IRS issues 2019 covered compensation table [Citation: Rev. Rul. 2019-08, 2019-14 I.R.B. (April 1, 2019); advance publication on March 15, 2019)]
  Text available at https://www.irs.gov/pub/irs-drop/rr-19-06.pdf
• Static mortality tables for IRC §430(h)(3) funding calculations for 2020 valuation dates; applicable mortality tables for IRC §417(e) determinations for annuity starting dates that occur in stability periods beginning in 2020; mortality improvement rates for 2020 valuation dates [Citation: Notice 2019-26, 2019-25 I.R.B. (April 8, 2019) (advance release on March 22, 2019)]
  Text available https://www.irs.gov/pub/irs-drop/n-19-26.pdf
• IRS updates Operational Compliance Checklist to include rules taking affect in 2018 and 2019 [Citation: Operational Compliance Checklist, as updated on March 26, 2019]
  Text available at https://www.irs.gov/retirement-plans/operational-compliance-list
• Latest update of EPCRS procedure allows for certain loan failures to be self-corrected, expands self-correction options for certain document failures [Citation: Rev. Proc. 2019-19, 2019-19 I.R.B. (May 6,2019) (advance release on April 19, 2019)]
  Text available at https://www.irs.gov/pub/irs-drop/rp-19-19.pdf
• IRS expands determination letter options for individually-designed plans - one temporary the other open-ended [Citation: Rev. Proc. 2019-20, 2019-20 I.R.B. (May 13, 2019); advance release on May 1, 2019]
  Text available at https://www.irs.gov/pub/irs-drop/rp-19-20.pdf

IRS General Counsel Memoranda, Field Service Advice, Chief Counsel Advice, Private Letter Rulings and Technical Advice Memoranda

• IRS explains its interpretation of how offset arrangements affect benefiting determinations for 401(a)(4) and 401(a)(26) testing [Citation: Application of Sections 401(a)(4) and 401(a)(26) to a Cash Balance Plan That Offsets Benefits With Benefits Under a Defined Contribution Plan, CCA 201810008 (February 7, 2018; released March 9, 2018)]
  Text available at http://bit.ly/2p5boxj
• IRS examiners told not to challenge 403(b) plans that have not made timely RMDs to missing participants if reasonable search steps have been taken [Citation: TEGE-04-0218-0011 (February 23, 2020)]
  Text available at http://bit.ly/2paGvbm
• Student loan program that provides an employer nonelective contribution to employee who enroll does not violate contingent benefit rule under IRC §401(k)(4)(A) [Citation: PLR 201833012 (August 17, 2018)]
  Text available at http://bit.ly/2MAywBo

DOL Regulations

• Civil penalty adjustments for 2019 [Citation: DOL Federal Civil Penalties Inflation Adjustment Act Annual Adjustments for 2018, DOL Reg. §2575.3, 84 F.R. 213 (January 23, 2019)]
  Text available at http://bit.ly/2DuyB4e

DOL Formal Guidance/Prohibited Transaction Exemptions

• None

PBGC Regulations and Other Guidance

• None

EBSA Advisory Opinions, Field Assistance Bulletins and other informal guidance from the DOL

• Clarification of participant’s right to appoint representative for disability claims; plan must not impede ability to appoint representatives [Citation: Information Letter to Jonathan Sistare of The Law Offices of Jonathan Sistare, PLLC (February 27, 2019)]
  Text available at http://bit.ly/2IWLU22

ERISA Litigation

• Equitable reformation resolved ambiguous plan provision regarding calculation of benefits for rehired employees [Frommert v. Conkwright, Nos. 17 114 cv(L), 17 738 cv(CON), ___ F.3d ___ (2nd Cir. January 14, 2019)]
  Text available at http://bit.ly/2BmqJ3d
• Sixth Circuit favors more nuanced standard of review of Darden factors used to establish employee or independent contractor status; gives substantial weight to independent contractor agreement entered into by parties [Citation: Jammal v. American Family Insurance Company, No. 17-4125, ___ F.3d ___ (6th Cir. January 29, 2019)]
  Text available at http://bit.ly/2DW0Qb8
• Ninth Circuit rejects claims for restitution and disgorgement because they were not equitable in nature; service provider not acting as fiduciary when selling its product even if fees excessive; ERISA doesn’t preempt state law regarding fraudulent sales practices [Citation: The Depot, Inc. v. Caring For Montanans, Inc., No. 17-35597, ___ F.3d ___ (9th Cir. February 6, 2019)]
  Text available at http://bit.ly/2TusKEX
• Financial service provider was not a fiduciary merely because it had the authority to change the credited rate on stable value product since, after any such change, the plan fiduciary could eliminate the investment and participants could direct out of that investment [Citation: Teets v. Great-Wrst Life & Annuity Insurance Company, No. 18-1019, ___ F.3d ___ (10th Cir. March 27, 2019)]
  Text available at https://www.ca10.uscourts.gov/opinions/18/18-1019.pdf
• Sale of company stock to ESOP was a prohibited transaction because ESOP overpaid for stock; ERISA §408(e)(1) exemption not applicable because overpayment by ESOP fails “adequate consideration” requirement [Citation: Brundle v. Wilmington Trust, N.A., No. 17-1873, ___ F.3d ___ (4th Cir. March 27, 2019)]
  Text available at http://www.ca4.uscourts.gov/Opinions/171873.P.pdf
• Fiduciary breach suit against large 403(b) plan for excessive fees relating to investment options allowed to proceed to trial; allegations must focus on deficiencies in fiduciary’s process [Citation: Sweda v. University of Pennsylvania, No. 17-3244, ___ F.3d ___ (3rd Cir. May 2, 2019)]
  Text available at https://www2.ca3.uscourts.gov/opinarch/173244p.pdf

Miscellaneous Guidance

• SEC proposes rules to enhance protections for retail investors and to clarify investment professional relationships [Citation: Prop. SEC Reg. §§240.15l-1, 240.17a-3 (“Rule 17a-3"), 240.17a-4(e)(5) (“Rule 17a-4"), 83 F.R. 21574 (May 9, 2018), Prop. SEC Reg. §§§240.17a-14(f), §275.211h–1, and 275.204-5(e), 83 F.R. 21416 (May 9, 2018), Release No. IA–4889, 83 F.R. 21203 (May 9, 2018)]
  Text available at http://bit.ly/2I3pTOa (Best Interest Standard), http://bit.ly/2K5v4tA (Release No. 1A-4889), and http://bit.ly/2jKXhuM (CRS proposal)
• Executive Order directs DOL to expand access to multiple employer plans, make retirement plan disclosures more understandable and useful, and review life expectancy factors for RMD purposes [Executive Order on Strengthening Retirement Security In America (August 31, 2018)]
  Text available at http://bit.ly/2x1Wrkq