Deals & People January 9, 2015

Miller & Chevalier Hires ERISA Attorney

Erin M. Sweeney is joining the ERISA & Fiduciary Litigation Practice at Washington, D.C., law firm, Miller & Chevalier.
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Miller & Chevalier, a Washington, D.C., law firm representing insurance companies, large employers, self-funded employee benefits plans, and Employee Retirement Income Security Act (ERISA) plan participants, announced the hire of Erin M. Sweeney to join the firm’s ERISA & Fiduciary Litigation Practice.

Sweeney counsels clients about executive compensation, health care reform, and employee benefit plan matters. She represents companies in litigation related to fiduciary obligations, Sarbanes-Oxley compliance, health care privacy (HIPAA), and benefit claims. She also designs stock option plans and programs, structures executive compensation programs, and negotiates termination packages.

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“We are excited to add Erin to our roster of ERISA lawyers,” says Anthony F. Shelley, chair of Miller & Chevalier. “She understands the intricacies of labor and benefits law and brings her talents to us at a time when ERISA obligations are becoming more complex – and potentially costly – for businesses. Her experience will greatly benefit our clients.”

Sweeney joins the firm from Dickstein Shapiro’s Corporate & Finance practice. She also served at the U.S. Department of Labor (DOL) as a senior benefit law specialist where she was the primary architect of the DOL’s default investment regulation, and drafted major legislation and regulations, including the Pension Protection Act of 2006.

Sweeney earned a J.D. and an M.A. from American University and a dual B.S. and B.A. from Ohio University. She currently chairs the Fiduciary Responsibility Subcommittee and co-chairs the ERISA Subcommittee, both of the ABA Employee Benefits Committee.

Compliance January 9, 2015

IRS Expands Approval for Changes in DB Plan Funding Method

A pension plan that has changed actuarial services firms can have a change in funding method automatically approved.
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An Internal Revenue Service announcement provides for automatic approval of a change in funding method with respect to a single-employer defined benefit plan under certain circumstances in which the change in method results from a change in the plan’s enrolled actuary.

According to Announcement 2015-3, under Section 412(c)(5) of the Internal Revenue Code, as in effect prior to the Pension Protection Act of 2006 (PPA), any change of funding method requires the approval of the IRS. However, Revenue Procedure 2000-40 provided automatic approval for certain changes in funding method that occurred with respect to “takeover plans”—plans for which both the enrolled actuary and the business organization providing actuarial services are changed.

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Section 412(d)(1) of the Code, as amended by PPA, retained the requirement that a change in funding method be approved by the IRS. Under PPA, a single funding method must be used to determine the liabilities for any single-employer defined benefit plan subject to Section 430, but there may be some variation in the manner the method is applied. The prior Revenue Procedure has not been updated to reflect the changes made by PPA, and calculations used for a “5% test” that was a condition of automatic approval for takeover plans are not used under Section 430. The test basically requires that the actuarial value of plan assets for the prior plan year, as calculated by the new enrolled actuary, be within 5% of the value for the actuarial value of plan assets reported in the prior plan year’s Schedule SB (Form 5500, Single-Employer Defined Benefit Plan Actuarial Information).

For plan years beginning on or after January 1, 2009, Announcement 2010-3 provides automatic approval for certain changes in funding method used to determine the minimum funding requirement for defined benefit plans subject to the requirements of Section 430. These approvals apply to certain funding method changes that result either from a change in the valuation software used to determine the liabilities for such plans or from a change in the enrolled actuary and the business organization providing actuarial services to the plan. Under Announcement 2010-3, 5% tests similar to those under Revenue Procedure 2000-40 are required to be applied with respect to the liabilities and assets reflected on the Schedule SB for the prior plan year.

The current announcement expands upon the automatic approval for takeover plans under Announcement 2010-3 by allowing the 5% tests to be performed for the year in which the takeover occurs, and permits the newly hired enrolled actuary to use a signed actuarial valuation report issued by the prior enrolled actuary for the plan in lieu of the Schedule SB. This change facilitates the filing of an amended Schedule SB for the 2013 plan year for a takeover plan without the need for the newly hired enrolled actuary to perform the 5% test using the valuation results for the 2012 plan year.

The announcement lays out four conditions for a plan to have automatic approval of a change in funding method.

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