Compliance April 14, 2016

IRS Withdraws Proposed Nondiscrimination Rules

Proposed rules providing nondiscrimination testing relief for certain DB plans is not affected.
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The Internal Revenue Service (IRS) has announced it will withdraw certain provisions of proposed regulations published on January 29, 2016.  

The provisions of the proposed regulations that will be withdrawn are the provisions that would modify Internal Revenue Code (IRC) Sections 1.401(a)(4)-2(c) and 1.401(a)(4)-3(c). These provisions were intended to address certain qualified retirement plan designs that take advantage of flexibility in the existing nondiscrimination rules to provide a special benefit formula for selected employees without extending that formula to a classification of employees that is reasonable and established under objective business criteria.

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Cross-tested plans, as well as qualified supplemental executive retirement plans (QSERPs) use these designs.

In Announcement 2016-16, the IRS says it and the Treasury have given additional consideration to the potential effects of those provisions on the adoption and continued maintenance of qualified retirement plans with a variety of designs and have concluded that further consideration will be needed with respect to issues relating to those provisions.  Accordingly, the Treasury Department and the IRS will withdraw the provisions.

The provisions relating to defined benefit (DB) nondiscrimination testing relief are not affected.
Products April 14, 2016

Ascensus Enhancing Its Commission-Based Solution

The changes are designed to reflect the DOL’s new fiduciary regulations.
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Ascensus is enhancing its product platform to provide support for financial professionals and broker/dealers looking to comply with the Department of Labor’s (DOL’s) new fiduciary regulations.

The retirement plan provider is carefully studying the new regulations and will tailor its commission-based solution to be in line with them. Changes are scheduled to be available in the third quarter of 2016, and will be designed to ensure level compensation and a layer of additional fiduciary protection related to the management of a client’s investment lineup.

“Our product platform is designed to help financial professionals and broker/dealers comply with the new fiduciary regulations while minimizing disruption to their businesses,” says Steven Schweitzer, senior vice president of Ascensus’ Strategic Business Support Services. “Our ability to leverage technology and automation to ensure level compensation while offering an open-architecture investment platform and the flexibility to work within a desired business model makes Ascensus the easy choice for financial professionals and broker/dealers who want to comply with and thrive under the new standards.”

While financial professionals and broker/dealers may have had knowledge of various drafts of the new regulations, Ascensus anticipates they will be seeking assistance with the final guidelines as the new rules are reviewed and clarification from the DOL is provided prior to becoming effective.

“We’ve been working with financial professionals and broker/dealers to make sure that they’re comfortable with the new rules and the support we will provide them,” says Kathleen Connelly, Ascensus’ executive vice president of Client Services. “The ability to offer them a comprehensive product platform along with access to our ERISA experts will allow them to feel confident that they are adhering to the new standards as they service their clients.”

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