Defined benefit plan

Senators Patty Murray (D-WA) and Richard Burr (R-NC)—chair and ranking members of the Senate Health, Education, Labor and Pensions Committee respectively—have released a discussion draft of compiled retirement provisions from several bills into the Senate’s latest version of what has been coined SECURE Act 2.0. The RISE & SHINE Act shares some similarities to, and builds upon the Securing a Strong Retirement Act bill that passed the House in March.

The Department of Labor’s Employee Benefits Security Administration (EBSA), IRS, and the Pension Benefit Guaranty Corporation (PBGC) have released final forms revisions to the Form 5500 Annual Return/Report of Employee Benefit Plan and Form 5500-SF Short Form Annual Return/Report of Employee Benefit Plan, and related instructions, that apply to plan year reports beginning on or after January 1, 2022. A proposed rule was issued last September.

The IRS has issued Notice 2022-25, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for May used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 

Representative Mark DeSaulnier (D-CA) has introduced HR 7740 – the Employee and Retiree Access to Justice Act. The bill proposes to amend ERISA to provide that any mandatory predispute or coerced postdispute arbitration clause, class action waiver, representation waiver, or discretionary clause with respect to a plan is unenforceable. The bill would also amend ERISA to prohibit any such clause or waiver from being included in a plan document or other agreement with participants. A Senate companion bill was introduced by Senator Tina Smith (D-MN).

Representative DeSaulnier is the Chair of the House Subcommittee on Health, Employment, Labor and Pensions. Senator Smith is a member of the Senate Health, Education, Labor and Pensions Committee.

May 9, 2022 – The SEC has extended the period to comment on its proposed rule regarding climate-related disclosures initially released in March, and published in the federal register on April 11, 2022. The proposal would require publicly traded companies to include certain climate-related disclosures in registration statements and periodic reports such as the annual Form 10-K. Additional details were previously announced in March. The comment deadline was extended from May 20 2022, to June 17, 2022.

May 3, 2022 - The Department of Treasury and Internal Revenue Service have released proposed regulations to update the mortality tables that are used to calculate minimum required contributions for single-employer defined benefit pension plans. The regulations are proposed to be first effective for plan years beginning in 2023.

Comments must be received by June 9, 2022. A public hearing on these proposed regulations has been scheduled for June 28, 2022. The regulations will be reviewed, and additional details provided as warranted.

The Department of Labor (DOL) has kicked off what is to be a series of roundtable discussions on how to improve retirement security for workers. Labor Secretary Marty Walsh and Kathleen Kennedy Townsend, the Secretary’s representative for pensions and retirement, joined several state officials, trade group representatives, educators, and others in New York City to review current retirement security policies.

In the coming months, Kennedy Townsend will host similar discussions around the country to promote retirement security reform and open a dialogue between various stakeholders. Topics of focus will include encouraging automatic enrollment, improving portability of benefits as workers move from job to job, and leveraging affordable lifetime income options.

The IRS has issued Notice 2022-16, which contains updated guidance on factors used in certain defined benefit (DB) pension plan minimum funding and present value calculations. Updates include the corporate bond monthly yield curve, the corresponding spot segment rates for April used under Internal Revenue Code Section (IRC Sec.) 417(e)(3), and the 24-month average segment rates under IRC Sec. 430(h)(2). IRC Sec. 417 contains definitions and special rules for minimum survivor annuity requirements in DB plans. IRC Sec. 430 addresses minimum funding standards for single-employer DB plans.

The U.S. House of Representatives passed the Securing a Strong Retirement Act of 2022 (SSRA) by a 414-5 vote on March 29, 2022. H.R. 2954 (also commonly referred to as “SECURE 2.0”) contains over 50 retirement plan provisions—nearly double the number as the original Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. The U.S. Senate is expected to take up a similar bipartisan bill later this year, which could result in the need for a conference committee to reconcile differences between the two bills.

The Department of Labor’s Employee Benefit Security Administration has announced the extension of the public comment period for proposed amendments to procedures governing the filing and processing of prohibited transaction exemption applications. The comment period was initially set to expire on April 14, 2022, but has been extended an additional 45 days through May 29, 2022.

The agency has received multiple requests from interested parties to grant additional time to develop and submit comments. Details of the proposal were previously announced and can be found here.