The Plan Sponsor Council of America (PSCA) has prepared
resources retirement plan sponsors and advisers may use for a plan participant educational
campaign corresponding with 401(k)/403(b) Day—the Friday after Labor Day.
The “5 Ways for a Secure Retirement” campaign was
designed to help plan officials increase employee understanding and appreciation of sponsors’ retirement
plans. The campaign focuses on five key areas that are important for
participants to understand to become financially secure: budgeting, spending,
saving, planning and sharing.
The PSCA encourages plan sponsors and their advisers to implement the campaign
in a way that makes sense for their company and employees. One opportunity is
to hold a week of financial wellness—highlighting one of the subject areas in a
presentation each day. Plan sponsors may also designate any day of their
choosing to provide the complete campaign.
All of the materials are available electronically and can be
distributed to employees to use at their own pace, and in their own way. The
five modules are contained on a website, www.5waysin5days.com.
Customizable promotional flyers, posters, and e-mails, as
well as a user guide are available at http://www.psca.org/401kDay.
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IRS Issues Guidelines for Cooperative and Small Charities Pensions
The Cooperative and Small Employer Charity Pension
Flexibility Act specifies funding requirements for certain pensions that were
not immediately affected by PPA funding rules.
The Internal Revenue Service (IRS) has issued guidance about
certain issues relating to the Cooperative and Small Employer Charity Pension
Flexibility Act (CSEC Act), which was enacted April 7, 2014.
The CSEC Act specifies minimum funding requirements and
related rules that apply with respect to certain defined benefit pension plans
maintained by groups of cooperatives and related entities and groups of
charities.
The IRS explains that Section 430 of the Internal Revenue
Code (Code), which was added by the Pension Protection Act of 2006 (PPA),
specifies the minimum funding requirements that generally apply to
single-employer defined benefit pension plans and multiple-employer plans.
However, section 104 of the PPA provided that the effective date for the
application of the minimum funding rules under Section 430 and the
funding-based benefit restrictions under Section 436 of the PPA is delayed for
certain plans maintained by more than one employer that are specified types of
cooperative organizations and related entities. For those plans, the minimum
funding rules and the funding-based benefit restrictions generally do not apply
for plan years beginning before January 1, 2017.
In addition, legislation passed in 2010 amended Section 104
of the PPA to expand the group of plans covered by the delayed effective date
to include certain plans (eligible charity plans) that are maintained by
employers that are described in Section 501(c)(3) of the Internal Revenue Code.
NEXT: Rules under the CSEC Act
IRS Notice 2015-58 explains that the CSEC Act added
Section 433 to the Internal Revenue Code, which specifies minimum funding rules
that apply to CSEC plans for plan years beginning on or after January 1, 2014.
The minimum funding rules are similar to rules currently governing these plans;
however, they provide that the amortization period for the change in liability
resulting from an amendment to a CSEC plan is 15 years instead of 30 years, and
Section 433 does not include a requirement to make a deficit reduction contribution
as required under pre-PPA rules.
In addition, Section 433 provides special rules that apply
to a CSEC plan with a funded percentage of less than 80%. Such a plan is in
“funding restoration status.” If a CSEC plan is in funding restoration status,
the plan sponsor must establish a funding restoration plan that is designed to
bring the plan’s funded percentage to 100% over a period of seven years (or the
shortest amount of time practicable to bring the plan’s funded percentage to
100%, if longer).
For the period for which a CSEC plan is in funding
restoration status (as certified by the enrolled actuary for the plan), an
amount no less than the plan’s normal cost must be contributed for each plan
year. If the normal cost is not contributed for the plan year then an
accumulated funding deficiency will exist regardless of the size of the plan’s
credit balance. A CSEC plan that is in funding restoration status generally
cannot be amended to increase benefits or accelerate vesting unless a specified
additional contribution is made.
Under the CSEC Act, a number of elections are available to
cease to be an eligible charity plan. The IRS also warns that certain eligible
charity plans are not CSEC plans, and certain CSEC plans maintained by
employers that are Section 501(c)(3) organization employers are not eligible
charity plans. The notice answers the question, “What is a CSEC plan?” and
describes the elections available.
The guidance applies not only for purposes of the Internal
Revenue Code but also for purposes of the parallel provisions of the Employee
Retirement Income Security Act (ERISA).