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Pension Newsin 2012

The following list tracks important guidance that was released during 2012. 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

  • Pension funding stabilization relief and PBGC reforms enacted as part of highway funding bill; IRC §420 transfers to the end of 2021 and expanded to include transfers to retiree group-term life insurance accounts [Citation: Moving Ahead for Progress in the 21st Century Act (“MAP-21"), P.L. 112-141 (July 6, 2012)]
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Treasury Regulations

  • Proposed regulations would amend minimum distribution regulations to allow for deferred longevity annuities starting no later than age 85 payable from up to 25% of account balance [Citation: Prop. Treas. Reg. §§1.401(a)(9)-5, Q&A-3(d) and (e), 1.401(a)(9)-6, Q&A-17, 1.403(b)-6(e)(9), 1.408-8, Q&A-12, 1.408A-6, Q&A-14(d), and 1.6047-2, 77 F.R. 5443 (February 3, 2012)]
  • Proposed regulations would make it simpler for defined benefit plan to offer a payment option consisting of a partial annuity with lump sum remainder [Citation: Prop. Treas. Reg. §1.417(e)-1(d)(7), 77 F.R. 5454 (February 3, 2012)]
  • Proposed regulations would allow elimination of certain accelerated forms of benefit under DB plan maintained by sponsor who is a debtor in bankruptcy [Citation: Prop. Treas. Reg. §1.411(d)-4, Q&A-2(b)(2)(xii), 77 F.R. 37349 (June 21, 2012)],
  • IRS eliminates the signature requirement for extending filing deadline for Form 8955-SSA; regulations revised to incorporate Form 8955-SSA [Citation: Prop. Treas. Reg. §§1.6081-11(a), (b)(3) and (e)(2), 301.6057-1(a)(4), (b)(2) and (b)(3), and 301.6057-2(c), 77 F.R. 37352 (June 21, 2012)]
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  • Amendments to Circular 230 would consolidate and clarify standards for written advice and expand internal compliance procedures for affected firms [Citation: Prop. Treas. Reg. §§10.1, 10.22, 10.31, 10.35, 10.36, 10.37, 10.52, 10.81, 10.82, 10.91, 77 F.R. 57055 (September 17, 2012)] Text available at
  • Regulations allow elimination of certain accelerated forms of benefit under DB plan maintained by sponsor who is a debtor in bankruptcy [Citation: Treas. Reg. §1.411(d)-4, Q&A-2(b)(2)(xii), 77 F.R. 66915 (November 8, 2012)], Text available at

IRS Guidance

  • Annual update of user fee procedure for 2012 [Citation: Rev. Proc. 2012-8, 2012-1 I.R.B. (January 3, 2012)]
  • Annual update of determination letter procedure for 2012 [Citation: Rev. Proc. 2012-6, 2012-1 I.R.B. (January 3, 2012)]
  • Expansion of relief under Rev. Rul. 2011-1 for certain trusts containing ERISA §1022(i)(1) plan investments and extended amendment deadline for governmental retiree benefit plans [Citation: Notice 2012-6, 2012-3 I.R.B. (January 16, 2012)]
  • IRS provides FAQ guidance on the SSA statement required to be furnished to affected participants [Citation: FAQs Regarding Form 8955-SSA,,id=252298,00.html]
  • IRS makes it easier for a defined contribution plan to offer deferred annuity options without immediately triggering the QJSA spousal consent rules [Citation: Rev. Rul. 2012-3, 2012-8 I.R.B. (February 21, 2012)
  • IRS clarifies how the vesting rules and IRC §415 limits apply to the annuitization of a direct rollover from a defined contribution plan to a defined benefit plan maintained by the same employer [Citation: Rev. Rul. 2012-4, 2012-8 I.R.B. (February 21, 2012)]]
  • HSA limits for 2013 are as follows: (1) annual contribution limit is $3,250 for self-onoy coverage and $6,450 for family coverage, (2) the minimum annual deductibnle under a high deductible plan must be no less than $1,250 for self-only coverage, and no less than $2,500 for family coverage, and (3) the maximum annual out-of-pocket expenses under a high deductible plan must not exceed $6,250 for self-only coverage and not exceed $12,500 for family coverage.
  • IRS will delay normal retirement age regulations for governmental pension plans; considering special normal retirement age rules for governmental plans [Citation: Notice 2012-29, 2012-18 I.R.B. (April 30, 2012),]
  • IRS posts links for resolving nonamenders of pre-approved plans that missed the April 30, 2010, or April 30, 2012, deadline [Citation: Correcting Plan Errors - VCP Submission Kits for Pre-Approved Plans,,,id=257274,00.html]
  • IRS provides guidance on the ERISA §101(j) notice requirement when a certain benefit restrictions under IRC §436 go into effect [Citation: Notice 2012-46, I.R.B. 2012-30 (July 20, 2012)]
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  • IRS has published the initial 25-year averages, and the adjusted monthly segment rates to reflect the stabilization corridor under IRC §430(h)(2)(C)(iv) for plan years beginning in 2012 [CItation: Notice 2012-55, 2012-36 I.R.B. (August 31, 2012)]
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  • Rev. Proc. 2012-35, which supersedes Rev. Proc. 94-22, no longer permits a plan administrator, plan sponsor, or qualified termination administrator of an orphan plan to use the IRS' letter forwarding program to find a missing participant under a plan in order to make distribution to such person. [Citation: Rev. Proc. 2012-35, 2012-37 I.R.B. (September 10, 2012)]
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  • IRS provides formal guidance on the MAP-21 segment rates, including when and how the MAP-21 segment rates are used, transition rules, the effect on interest crediting rates for statutory hybrid plans, elections relating to the use of the MAP-21 segment rates, and reporting rules for the 2012 Schedule SB. [Citation: Notice 2012-61, 2012-42 I.R.B. (October 15, 2012)]
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  • IRS announces 2013 dollar limits. [Citation: IR-2012-77,] Also see for incorporation of the 2013 limits into The ERISA Outline Book.
  • IRS announces relief for victims of Hurricane Sandy [Citation: IR-2012-83,]
  • IRS provides relief from certain procedural requirements for loans and hardship distributions made to Hurricane Sandy victims [Citation: Announcement 2012-44,
  • Delayed amendment deadline for IRC §436 amendments [Citation: Notice 2012-70,]
  • Governmental plans may elect Cycle E instead of Cycle C for post-EGTRRA remedial amendment cycle [Citation: Rev. Proc. 2012-50,]
  • Voluntary reclassification of workers relief program [Citation: Announcement 2012-45, 2012-51 I.R.B. (December 17, 2012)]
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  • 2012 list issued for review of Cycle C plans and pre-approved defined benefit plans in the 2nd cycle under Rev. Proc. 2007-44 [Citation: Notice 2012-76, 2012-52 I.R.B. (December 27, 2012)]
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IRS Private Letter Rulings/IRS Internal Communications

  • Understanding between employer and employee that early retirement followed by immediate “rehire” is not a bona fide retirement for purposes of allowing pre-age 62 retirement distributions from pension plan [Citation: PLR 201221033]
  • Lump sum payment of remaining benefit owed to participant in pay status, pursuant to window period adopted by plan amendment, does not violate the minimum distribution requirements under IRC §401(a)(9) [Citation: PLR 201228045 (July 18, 2012)]
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  • Premium refunds from insurer with respect to group annuity purchased to satisfy all liabilities under terminated defined benefit plan are permitted to be reverted to the employer and are not subject to IRC §4980 excise tax [Citation: PLR 201228055 (July 18, 2012)]
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  • Employees who are eligible to make 401(k) deferrals but are not eligible for an allocation of other employer contributions are not taken into account to compute IRC §404(a)(3) deduction limit [Citation: PLR 201229012,]
  • Extra payment made in error by financial institution did not result in a prohibited modification under IRC §72(t)(4) [Citation: PLR 201235029]
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  • Failure to provide 204(h) notices to alternate payees and unions representing covered employees corrected within 30 days; reasonable diligence exception to IRC §4980F penalty under IRC §4980F(c)(2) applicable [Citation: PLR 201243021]
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DOL Regulations

  •  Delayed affective date for service provider fee disclosure requirements also delays the effect of the extension of the transition rule for initial disclosures required under the participant fee disclosure regulations [Citation: DOL Reg. §2550.404a-5(j)(3)(i), 76 F.R. 42539 (July 19, 2011), analyzed in conjunction with DOL Reg. §2550.408b-2(c), 77 F.R. 5632 (February 3, 2012)]
  • Regulations imposing disclosure requirements on service providers in order to qualify for the statutory exemption under ERISA §408(b)(2) are issued in final form, with some clarifications, delayed effective date, and deferral of any requirement to provide summary or “road map” [Citation: DOL Reg. §2550.408b-2(c), 77 F.R. 5632 (February 3, 2012)]
  • Proposed regulations would expand orphan plan termination program to allow bankruptcy trustees to terminate plans maintained by plan sponsors who are liquidating under Chapter 7 of the Bankruptcy Code; other technical changes to orphan plan program also proposed [Citation: Prop. DOL Reg. §§2520.103-13, 2550.404a-3, 2578.1, 77 F.R. 74063 (December 12, 2012),

DOL Formal Guidance/Prohibited Transaction Exemptions

PBGC regulations and other guidance

EBSA Advisory Opinions, Field Assistance Bulletins and other informal guidance

  • Inclusion of private sector employers in State government’s group health plan would result in loss of status as a governmental plan [Citation: Advisory Opinion 2012-01A (April 27, 2012),]
  • DOL provides supplemental guidance on fee disclosures [Citation: Field Assistance Bulletin (FAB) 2012-02R, (July 30, 2012)] (Replaces FAB 2012-02, issued on May 7, 2012, by withdrawing Q&A-30, regarding fiduciary issues associated with brokerage windows offering a wide range of investment options none of which are identified as designated investment alternatives, and replacing it with Q&A-39, providing much more general fiduciary guidance)
  • DOL concludes that “open” multiple employer plans (MEPs) fail to constitute a single plan because the participating employers do not satisfy the definition of a group or association of employers; rejects use of open MEP even for abandoned plans [Citation: Advisory Opinion 2012-03A (May 25, 2012) (abandoned plans), Advisory Opinion 2012-04A (May 25, 2012) (active plans)]
    Text available at: (Advisory Opinion 2012-03A) (Advisory Opinion 2012-04A)
  • If an employer maintains a separate qualified plan to which it makes matching contributions based on elective deferrals made to a 403(b) plan, the employer fails to satisfy the DOL Reg. §2510.3-2(f) safe harbor with respect to the 403(b) plan [Citation: Advisory Opinion 2012-02A (May 25, 2012)]
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  • Satisfaction with ERISA §407 requirements, including “geographically dispersed” rule, determined after contribution of one or more parcels of real property to plan or sale of one or more parcels by plan [Citation: Advisory Opinion 2012-05A (July 20, 2012)]
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ERISA Litigation

  • Causation of loss due to failure to review investment strategy must be shown before recovery against fiduciary is warranted [Citation: Plasterers’ Local Union No. 96 Pension Plan v. Pepper, 663 F.3d 210 (4th Cir. December 1, 2011)]
  • Spinoff did not violate ERISA §510 because it was not motivated by desire to interfere with ERISA benefits [Citation: Nauman v. Abbott Laboratories, 669 F.3d 854 (7th Cir. February 3, 2012)]
  • Individualized monetary damages for affected plans precludes certification under Rule 23(b)(2) [Citation: Nationwide Life Insurance Company v. Haddock, 52 EBC 11613 (2nd Cir. February 6, 2012)]
  • “First” wife entitled to survivor annuity rather than “second” wife if first marriage was never dissolved [Citation: IBEW Pacific Coast Pension Fund v. Lee, 52 EBC 2378 (6th Cir. February 13, 2012)]
  • Moench presumption not applicable during motion to dismiss stage; 404(c) not defense to duty to select prudent investment menu [Citation: Pfeil v. State Street Bank and Trust Company, 671 F.3d 585 (6th Cir. February 22, 2012]
  • IRC §4980 excise tax does not apply to a tax-exempt organization, even if the organization was subject to UBTI during certain years [Citation: Research Corp. v. Commissioner, 138 T.C. No. 7 (February 29, 2012),]
  • Plaintiffs failed to meet post-Amara standard for equitable relief to avoid summary judgment [Citation: Skinner v. Northrop Grumman Retirement Plan, 673 F.3d 1162 (9th Cir. March 16, 2012)]
  • Sovereign immunity does not apply to USERRA cases brought against a State; money damages awarded to servicemember for improper failure to rehire [Citation: U.S. v. Alabama Department of Mental Health and Mental Retardation, 2012 WL 877222, ___ F.3d. ___ (11th Cir. March 16, 2012)]
  • Estate may attempt to enforce surviving spouse’s waiver of interest in retirement benefits after benefits have been distributed from the plan [Citation: Estate of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3rd Cir. March 20, 2012)]
  • Amendment to modify social security offset calculation was not a reduction of accrued benefits in violation of ERISA §204(g) [Citation: Cinotto v. Delta Airlines, Inc., 674 F.3d 1285 (11th Cir. March 23, 2012)]
  • Fiduciaries breached duties to 401(k) plan by failing to monitor recordkeeping costs, failing to negotiate rebates on revenue sharing, selecting investments with higher expense ratios, allowing plan to pay excessive fees to subsidize corporate services, and failing to transfer float income to plan [Citation: Tussey v. ABB, Inc., ___ F.3d ___ (52 EBC 2826) (W.D.Mo. March 31, 2012)]
  • Moench presumption applied during pleading stage; fiduciaries under no obligation to provide plan participants non-public information that could pertain to the employer securities investment option in the plan; false or misleading statements in SEC filings do not constitute ERISA breaches [Citation: Fisher v. JP Morgan Chase & Co., 2012 WestLaw 1592208 (2nd Cir. May 8, 2012) (not selected for publication in the Federal Reporter)]
  • Eleventh Circuit adopts Moench presumption with respect to fiduciary’s decision to invest in Home Depot stock; fiduciaries not required to disclose non-public information to plan participants [Citation: Lanfear v. Home Depot, Inc., ___ F.3d ___ (2012 WL 1580614) (11th Cir. May 8, 2012)]
  • Participant could not bring suit for fiduciary breach since she had earned profits on investments she was challenging [Citation: Taylor v. KeyCorp., 680 F.3d 609 (6th Cir. May 25, 2012)]
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  • ERISA §404(c)(5) safe harbor for QDIA applies even though funds transferred to QDIA had been invested by affirmative participant election, provided notice and other requisite conditions are satisfied [Citation: Bidwell v. University Medical Center, Inc.,685 F.3d 613 (2012 WL 2477588) (6th Cir. June 29, 2012)]
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  • Equitable remedies of surcharge and estoppel are available in claim against insurer for accepting life insurance premiums on ineligible person [Citation: McCravy v. Metropolitan Life Insurance Company, ___ F.3d ___ (2012 WL 2589226) (4th Cir. July 5, 2012)]
  • Plan administrator’s interpretation of plan’s default beneficiary provision that “children” did not include unadopted stepchildren was reasonable [Citation: Herring and Herring v. Campbell, __ F.3d ___ (2012 WL 317674) (5th Cir. August 7, 2012)] Text available at:
  • ERISA’s anti-retaliation statute extends to participant’s unsolicited statements made to the employer [Citation: George v. Junior Achievement of Central Indiana, Inc., ___ F.3d ___ (2012 WL 3984408) (7th Cir. September 4, 2012)]
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  • Moench presumption not applicable during motion-to-dismiss stage; fiduciary breach claim may be based on statements made in SEC filings that are cross-referenced in SPD [Citation: Dudenhoefer v. Fifth Third Bancorp, ___ F.3d ___ (No. 11-3012) (6th Cir. September 5, 2012)]
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  • Participant could not recover benefits from plan that had been withdrawn by his ex-wife, where information relating to electronic distribution requests was sent to participant’s last known mailing address in accordance with plan’s administrative procedures [Citation: Foster v. PPG Industries, Inc., ___ F.3d ___ (2012 WL 3834722) (10th Cir. September 5, 2012), affirming 49 EBC 2289 (N.D.Okla. 2010)]
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  • Weekend/holiday rule does not apply to amendment adopted after the plan’s termination date to determine the terms of the plan as of the termination date [Citation: PBGC v. Town & Country Bank and Trust Company, Civil Action No. 3:11-CV-602-H, ___ F.Supp.2d ___ (W.D.Ky. October 4, 2012)]
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  • Unpaid prevailing wage contributions were not plan assets [Citation: Pantoja v. Edward Engel & Son Express, Inc., 2012 W.L. 6117886 (11th Cir. December 11, 2012) (not selected for publication in the Federal Reporter)]
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Miscellaneous Guidance

  • Puerto Rico Treasury Department issues guidance on new rules relating to determination letters, retroactive qualification procedures [Citation: Circular Letter No. 11-10, Puerto Rico Treasury Dept]
  • Application of NASD Rules 2210 and 2211 to participant-level fee disclosure information provided pursuant to DOL Reg. §2550.404a-5 [Citation: FINRA Regulatory Notice 12-02,]

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