Compliance July 6, 2017

IRS Makes Effort to Encourage Use of Pre-Approved Plans

The agency has made changes to its opinion letter program for pre-approved retirement plans.
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The Internal Revenue Service (IRS) has issued Revenue Procedure 2017-41, which sets forth the procedures for issuing opinion letters regarding the qualification in form of pre-approved plans under Sections 401, 403(a), and 4975(e)(7) of the Internal Revenue Code. 

In addition, the revenue procedure modifies the IRS pre-approved letter program by combining the master and prototype (M&P) and volume submitter (VS) programs into a new opinion letter program. It also modifies the on-cycle submission period for the third six-year remedial amendment cycle for providers of pre-approved defined contribution (DC) plans so that it begins on October 2, 2017, and ends on October 1, 2018. 

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The IRS says it is modifying its historic approach to pre-approved plans in order to expand the provider market and encourage employers that currently maintain individually designed plans to convert to the pre-approved format.

In addition to the program being simplified by eliminating the distinction between M&P and VS plans, the program is liberalized by increasing the types of plans eligible for pre-approved status, the IRS says. The program is revised to afford greater flexibility in the design of pre-approved plans.

Compliance July 6, 2017

Window Opens to Submit Fiduciary Rule RFI Responses

With its publication in the Federal Register, the DOL’s request for information regarding its implementation (or not) of the fiduciary rule is officially open for public comment.
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The Employee Benefits Security Administration (EBSA) of the Department of Labor (DOL) last week announced it would imminently circulate a request for information (RFI) in connection with its examination of the final fiduciary rule under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (IRC).

Today the RFI language has been formally entered into the Federal Register, officially starting the 15-day comment period that applies to some aspects of the RFI. Other elements of the RFI are to be answered within 30 days.

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The shorter comment period, as laid out in the text of the RFI, applies to Question 1, relating to extending the January 1, 2018, applicability date of certain provisions of the fiduciary rule. The agency’s wider RFI also seeks input regarding potential new and amended administrative class exemptions from the prohibited transaction provisions of ERISA and the IRC that were published in conjunction with the fiduciary rule expansion.

EBSA hopes the responses submitted to this RFI can “form the basis of new exemptions or changes/revisions to the rule and prohibited transaction exemptions, as well as provide input regarding the advisability of extending the January 1, 2018, applicability date of certain provisions in the best interest contract exemption, the class exemption for principal transactions in certain assets between investment advice fiduciaries and employee benefit plans and individual retirement accounts, and PTE 84-24.”

Probably the most efficient way for advisers and their clients to submit commentary is through the Federal eRulemaking Portal (http://www.regulations.gov). The fiduciary rule RFI has been assigned the docket ID number EBSA-2017-0004. Comments can also be electronically submitted via email at EBSA.FiduciaryRuleExamination@dol.gov.

Interesting to note, the RFI’s formal publication comes only a couple days after the DOL filed an appellate court brief arguing it must not lose its broad authority to regulate the workplace retirement planning market—notwithstanding the fact that it may very well decline to implement or aggressively enforce the fiduciary rule under President Trump. 

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