Blogging Employee Benefits

August 1, 2006

Effective Dates and Other Key Dates in PPA

Filed under: Legislation, Pensions — Fuguerre @ 3:38 am

The 2008 delayed effective date of new minimum funding standards for pension plans may be the date that will get the most press of the Pension Protection Act of 2006, but one of our first practical tasks needs to be to sort through the entire tangle of dates set by the legislation.

Retroactive Applicability

  • Notice of Blackout Period — Technical change relating to the definition of a one-person plan for purposes exemption from the participant blackout notice requirement, retroactively effective to 1/26/2003 as if included in P.L. 107-204. [PPA §509(b)]
  • Purchase of Permissive Service Credit — Clarifications, retroactively effective as if included in TRA 97 (i.e., purchases on or after 1/1/1998) and EGTRRA (i.e., trustee-to-trustee transfers on or after 1/1/2002). [PPA §821(d)]

9/12/2001

  • Penalty-Free Early Withdrawals upon Extended Active Military Service. [PPA §827(c)(1)] See also the deadline for certain filings at 8/17/2007.

Periods Beginning On or After 6/29/2005

  • Hybrid Plan Rules. [PPA §701(e)(1)] Additional specific effective dates for certain PPA rules for hybrid plans are described below.

6/30/2005

  • Multiemployer Plan Amortization Extensions — Pre-PPA rules apply for applications filed on or before 6/30/2005. [PPA §201(d)(2), PPA §211(b)(2)]
  • Conversion of Traditional Defined Benefit Plan to Hybrid Plan – PPA rules apply to amendments adopted and effective on or after 6/30/2005. [PPA §701(e)(5)]

7/27/2005

  • Limitation on PBGC Guarantee of Shutdown Benefits — Applicable to benefits payable because of event occurring on or after 7/27/2005. [PPA §403(b)]

1/1/2006

  • Rules for Substantial Owner Benefits in Terminated Plans. [PPA §407(d)]

Taxable Years Beginning On or After 1/1/2006

  • Tax-Free Distributions from IRAs for Charitable Purposes — Provision sunsets after 2007. [PPA §1201(c)(1)]

Plan Years Beginning On or After 1/1/2006

  • Extension of 2005 Interest Rate Basis for Funding Standards — Through 2006 and 2007 plan years. [PPA §301]
  • Extension of 2005 Interest Rate Basis for PBGC Variable-Rate Premiums – Through 2006 and 2007 plan years. [PPA §301(a)(3)]
  • Interest Rate Assumption for §415 Benefit Limitations Applicable to Lump Sum Distributions. (Note: Actual PPA language refers to distributions made in “years” versus “plan years.”) [PPA §303(b)]
  • Determination of Average Compensation for IRC §415 Limits. [PPA §832(b)] (Note: PPA refers to “years” rather than to “plan years.” The change will likely be applied to limitation years beginning on or after 1/1/2006.)
  • Deduction Rules for Combination of Plans. [PPA §803(d)]
  • Special Deduction Rule under IRC §404(a)(1)(D). [PPA §801(e)(2)]

8/17/2006 – Date of PPA Enactment

  • Hybrid Plan Rules for Present Value of Accrued Benefit — Applicable to distributions made after PPA enactment. [PPA §701(e)(2)]
  • Special Funding Rules for Certain Plans Maintained by Commercial Airlines — Applicable to plan years ending after PPA enactment. [PPA §402(j)]
  • Extension of Nondiscrimination Requirement Moratorium to All Governmental Plans — Applicable to years beginning after PPA enactment. [PPA §861(c)]
  • Voluntary Early Retirement Incentive and Employment Retention Plans Maintained by Local Educational Agencies. [PPA §1104(d)]
  • Treatment of Plan Maintained by Indian Tribal Government as Governmental Plan – Applicable to years beginning on or after PPA enactment. [PPA §906(c)]
  • Grandfather Rule under IRC §401(a)(9) for Church Plans that Self-Annuitize — Applicable to plan years ending after PPA enactment. [PPA §865(a)]
  • Transfer of Excess Pension Assets for Retiree Health Benefits. [PPA §841(b)]
  • Waiver of Excise Tax on Early Withdrawals by Public Safety Employees – Applicable to distributions after PPA enactment. [PPA §828(b)]
  • Applicability of IRS regulations for minimum required distributions under §401(a)(9) to governmental plans, as contrasted with good-faith interpretation of statute. [PPA §823. Note: Effective date here based on JCX-30-06 Technical Explanation.]
  • No Reduction in Unemployment Compensation on Account of Pension Rollover — Applicable to weeks beginning on and after PPA enactment. [PPA §1105(b)]
  • Prohibited Transaction Rules for Certain Financial Investments – Applicable to transactions after PPA enactment. [PPA §611(h)(1)]
  • Bonding Requirements – Applicable to plan years beginning after date of PPA enactment. [PPA §611(h)(2)]
  • Clarification of Fiduciary Rules — Relating to selection of annuity contract as optional form of distribution from an individual account plan. [§625(b)]
  • Correction Period for Certain Transactions involving Securities and Commodities – Applicable to transactions after PPA enactment. [PPA §612(c)]
  • Increase in Penalties for Coercive Interference with Exercise of ERISA Rights – Applicable to violations occurring on or after PPA enactment. [PPA §623(b)]
  • Multiemployer Withdrawal Liability — Continuation if work contracted out. [PPA §204(b)(2)]
  • Procedures for Multiemployer Withdrawal Liability Disputes — Applicable to receipt of notification on or after PPA enactment with respect to transaction occurring on or after 1/1/1999. [PPA §204(d)(2)]
  • ERISA Title IV Treatment of Controlled Group Membership Change or Cessation. [PPA §409(b)]
  • Disclosure of Plan Termination Information to Plan Participants. [PPA §506(c)]
  • Interest on Refund of PBGC Premiums. [PPA §406(b)]
  • Directorship of PBGC. New authorization and procedures. [§411(d)]
  • Nonqualified Deferred Compensation Plans — Restrictions on funding of non-qualified plans if employer maintains an underfunded or terminated single-employer plan. Applies to transactions after PPA enactment. [PPA §116(c)]
  • Tax Treatment of Death Benefits from Corporate-Owned Life Insurance — Applicable to contracts issued after PPA enactment. [PPA §863(d)]
  • Rules Applicable to Tax Court Judges
    • Participation in Thrift Savings Plan. [PPA §853] Actual participation will commence at the next open season.
    • Cost-of-Living Adjustments for Tax Court Judicial Survivor Annuities. [PPA §851(b)]
    • Cost of Life Insurance Coverage for Judges Age 65 and Older. [PPA §852]

9/16/2006 – 30 Days After Date of PPA Enactment

  • Employer Bankruptcy — Bankruptcy filing substituted for termination date. [PPA §404(c)]
  • Acceleration of PBGC Computation of Benefits Attributable to Recoveries. [PPA §408(c)]

Transactions On or After 1/1/2007

Taxable Years Beginning On or After 1/1/2007

  • Transfer of Excess Pension Assets to Multiemployer Health Plan. [PPA §842(b)]
  • Allowance of Reserve for Medical Benefits of Plans Sponsored by Bona Fide Associations. [PPA §843(b)]
  • Distributions from Governmental Plans for Health and Long-Term Care Insurance for Public Safety Officers. [PPA §845(c)]
  • Rollovers of After-Tax Contributions in 403(b) Annuities. [PPA §822(b)]
  • Saver’s Credit — Elimination of sunset. [PPA §812]
  • Inflation Indexation of Gross Income Thresholds for Retirement Savings Initiatives. [PPA §833(d)]
  • Allowance of Additional IRA Payments in Certain Bankruptcy Cases. [PPA §831(b)]
  • Direct Payment of Tax Refunds to IRA. [PPA §830(b)]
  • Elimination of Aggregate Limit for Usage of Excess Funds from Black Lung Disability Trusts. [PPA §862(b)]

Plan Years Beginning On or After 1/1/2007

  • Accelerated Vesting of Employer Nonelective Contributions. [PPA §904(c)] Delayed effective date for collectively bargained plans.
  • Diversification Requirements for Defined Contribution Plans. [PPA §901(c)(1)] Delayed effective date applies to collectively bargained plan.
  • Investment of Assets where Participant Fails to Direct. [PPA §624(b)(1)]
  • Notice of Freedom to Divest Employer Securities. [PPA §507(d)]
  • Distributions during Working Retirement. [PPA §905(c)]
  • PBGC Premiums for Small Plans — Relief. [PPA §405(b)]
  • Notice and Consent Period regarding Distributions. [PPA §1102(a)(3), (b)(2)]
  • Periodic Pension Benefit Statements — Modifications to rules. [PPA §508(c)] Delayed effective date for collectively bargained plans.
  • Simplified Annual Filing Requirements
  • Exemption of Certain Church Plan Benefits from Compensation-Based IRC §415 Limitation. [PPA §867(b)] (Note: PPA refers to “years” rather than to “plan years.” The change will likely be applied to limitation years beginning on or after 1/1/2007.]

2/13/2007 – 180 Days After Date of PPA Enactment

  • Hardship Distribution Rules — Modified regulations. [PPA §826]

8/17/2007 – 1 Year After Date of PPA Enactment

  • Waiver of Limitations relating to Exemption from Early Penalty Penalty for Certain Military Personnel – Deadline for filing claim for refund or credit of certain tax overpayment. [PPA §827(c)(2)] See also the underlying provision at 9/12/2001.
  • Revocation of Election of Treatment as Multiemployer Plan — Action must be taken within 1 year after PPA enactment. [PPA §1106]
  • Domestic Relations Orders
    • Time and Order of Issuance of Domestic Relations Order. [PPA §1001] Regulations due within one year after PPA enactment.
    • Benefit Entitlement of Divorced Spouses to Railroad Retirement Annuities Independent of Actual Entitlement of Employee. [PPA §1002(b)]
    • Extension of Tier II Railroad Retirement Benefits to Surviving Former Spouses pursuant to Divorce Agreements. [PPA §1003(b)]

Transactions On or After 1/1/2008

  • Direct Rollover from Retirement Plan to Roth IRA. [PPA §824(c)]

Plan Years Beginning On or After 1/1/2008

  • Minimum Funding Standards for Defined Benefit Pension Plans — [PPA §101(d), §111(b)]
    • Minimum Funding Standards for Single-Employer Plans — [PPA §102(c), §112(b)]
      • Transition Rule — Exemption from new shortfall amortization base for plans reaching certain targeted funded ratios during a 3-year phase-in period beginning in 2008. [ERISA §303(c)(5) added by PPA §102(a); IRC §430(c)(5) added by PPA §112(a)]
      • Benefit Limitations for Underfunded Single-Employer Plans — With delayed effective date as late as plan years beginning on or after 1/1/2010 for plans maintained subject to collective bargaining agreement. [PPA §103(c), §113(b)]
    • Minimum Funding for Multiemployer Plans — [PPA §201(d)(1), §211(b)(1)]
      • Additional Funding Rules for Plans in Endangered or Critical Status. [PPA §202(f)(1), §212(e)(1)] Special dates apply for certain notices and for certain restored benefits. Note sunset rule described for 2015 below.
      • Determinations of Impending Insolvency. [PPA §203(b), §213(b)]
    • Technical and Conforming Amendments — Generally relating to minimum funding standards. [PPA §107(e)]
  • Deduction Limit.
  • Requirement for Additional Survivor Annuity Option. [PPA §1004(c)] Delayed effective date for collectively bargained plans.
  • Plan Amendment for Lump Sum Limit under IRC §415 – Must be adopted by end of plan year. [PPA §301(c)]
  • Automatic Contribution Arrangements. [PPA §902(g)]
  • Diversification Requirements for Certain Employer Securities Held in ESOP. [§901(c)(3)]
  • Increase in Maximum Bond Amount — Applicable to plan holding employer securities. [PPA §622(b)]
  • Interest Rate Assumption for Determination of Lump Sum Distributions — Subject to 5-year phase-in. [PPA §302(c)]
  • Hybrid Plan Vesting and Interest Rate Requirements. [PPA §701(e)(3)] Earlier applicability may be elected. Delayed effective date for collectively bargained plans.
  • Inapplicability of Fiduciary Liability Relief during Suspension of Investment Direction. [PPA §621(b)] Delayed effective date for collectively bargained plans.
  • PBGC Variable-Rate Premiums — Modification of valuation assumptions. [PPA §401(a)(2)]
  • ERISA 4010 Filings — Changes in filing criteria. [PPA §505(c)] (Note: PPA technically refers to “years” versus “plan years.”)
  • Defined Benefit Plan Funding Notice. [PPA §501(d)]
  • Access to Multiemployer Pension Plan Information. [PPA §502(d)]
  • Additional Annual Reporting Requirements. [PPA §503(f)]
  • Electronic Accessibility of Annual Report Information. [PPA §504(b)]

Taxable Year Containing 1/1/2009

  • Special Exemption Excise Tax on Multiemployer Plan Funding Deficiency — Applicable only to one particular multiemployer plan. [PPA §214]

Plan Years Beginning On or After 1/1/2009

  • Anti-Cutback Relief for PPA-Related Plan Amendments — Amendment must be made on or before the final date of the 2009 plan year. [PPA §1107(b)] Delayed effective date applies for governmental plan.

Transactions On or After 1/1/2010

  • Single-Employer Plan Termination Premium — Repeal of sunset. [PPA §401(b)]
  • Tax-Free of Exchanges among Certain Insurance Policies for Long-Term Care Contracts. [PPA §844(g)(2)]
  • Information Reporting relating to Charges for Qualified Long-Term Care Insurance Contracts. [PPA §844(g)(3)]

Taxable Years Beginning On or After 1/1/2010

  • Tax Treatment of Insurance Contracts with Long-Term Care Insurance Feature — Applicable to contracts issued on or after 1/1/1997. [PPA §844(g)(1)]
  • Treatment of Policy Acquisition Expenses for Certain Long-Term Care Insurance Contract Arrangements. [PPA §844(g)(4)]

Plan Years Beginning On or After 1/1/2010

  • Eligible Combined Defined Benefit Plan and Qualified Cash or Deferred Arrangement. [PPA §903(c)]

Plan Years Beginning On or After 1/1/2011

  • Elimination of EGTRRA Sunset. [PPA §811]
  • Plans of Certain Government Contractors
    • Minimum Funding Standards — Changes to minimum funding standards otherwise applicable under the preceding portions. An earlier effective date applies if the plan ceases to be an eligible government contractor plan or if the CASB publishes pension harmonization rules. [PPA §106(a)]
    • Interest Rate — For plan years beginning on or after 1/1/2008 and prior to the relevant effective date for the new funding standards for government contractors, use of the third segment rate. [PPA §106(b)]

Plan Years Beginning On or After 1/1/2014

  • PBGC Settlement Plans — Changes to minimum funding standards otherwise applicable under the preceding portions. [PPA §105]

Plan Years Beginning On or After 1/1/2015

  • Multiemployer Plans – Special New Minimum Funding Rules — Sunset. [PPA §221(c)]

Plan Years Beginning On or After 1/1/2017

  • Multiple Employer Plans of Certain Cooperatives
    • Minimum Funding Standards — Changes to minimum funding standards otherwise applicable under the preceding portions. [PPA §104(a)]
    • Interest Rate — For plan years beginning on or after 1/1/2008 and prior to 1/1/2017, use of the third segment rate. [PPA §104(b)]

Other

  • Missing Participant Rules. Applicable to distributions made after final regulations. [PPA §410(c)]
  • PBGC PIMS Model Information. As soon as practicable. [PPA §412]
Advertisements

4 Comments »

  1. With apologies to anyone receiving an RSS feed on all this, I’ve been popping back into this posting off and on the past day to clean up some formatting. But this note points out the first substantive change made to the post since its original drafting (yes, through to just after 3am Tuesday morning – too much too read, too little time, none left for any sleep): to 2010 I’ve added the elimination of the sunset on the plan termination premiums.

    Comment by Fuguerre — August 3, 2006 @ 1:06 pm

  2. Another addition made to my PPA effective dates: Plan amendments reflecting to the extension and modification of the interest rate IRC §415 for lump sum distributions and other benefit payments subject to 417(e) must be made by the close of the plan year beginning in 2008, as provided under PPA §301(c).

    As had been echoed in IRS Notice 2005-95, the deadline for plan amendments reflecting the original PFEA temporary change in that interest rate had been the close of the plan year beginning in 2006. Even if that original PFEA plan amendment has already been adopted, a successor plan amendment on the issue will likely be necessary, since PPA not only makes the interest rate change permanent, but modifies the applicable rate.

    Note that the 2008 plan year deadline for this plan amendment precedes the general 2009 plan year deadline for other plan amendments made to comply with PPA, as provided under PPA §1107(b).

    Comment by Fuguerre — August 4, 2006 @ 11:46 pm

  3. Is there somewhere under the new PPA, that it is now possible for non-spouse beneficiaries named in a defined contribution plan to roll over their inheritance into their own beneficiary IRA to take advantage of the lifetime withdrawal rather than receiving a lump sum?

    Comment by deborah — August 15, 2006 @ 3:44 pm

  4. […] P&B Weblog comment […]

    Pingback by Pensions & Benefits Weblog » Blog Archive » A Brief Word on Comments — August 15, 2006 @ 9:02 pm


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: