The Washington Report

May 22, 2024

Note to Subscribers

While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.

Retirement

 

DOL Releases Interim Final Rules Amending Abandoned Plan Regulations;
Publishes Amendment to Prohibited Transaction Exemption
On May 17, 2024, the Department of Labor (DOL) released interim final rules which
amend the Abandoned Plan Program regulations that provide streamlined procedures
for the termination of, and distribution of benefits from, individual account pension
plans that have been abandoned by their sponsoring employers. The regulations,
which were adopted in 2006 under ERISA, did not cover individual account pension
plans whose sponsors are in liquidation under Chapter 7 of the Bankruptcy Code. The
interim final rules expand the regulations to cover these plans so that bankruptcy
trustees may use the Abandoned Plan Program’s streamlined procedures to terminate
and wind them up. Other technical amendments also are being made to improve the
efficiency and operation of the Abandoned Plan Program. The amendments will affect
employee benefit plans (primarily small defined contribution plans), participants and
beneficiaries, service providers, and individuals appointed to serve as bankruptcy
trustees under Chapter 7 of the Bankruptcy Code. On the same day, the DOL also
issued an amendment to PTE 2006–06, the prohibited transaction exemption
accompanying the Abandoned Plan Program regulations. The interim final rules and
amendment to PTE 2006-06 become effective on July 16, 2024.

The news release is available here.

The interim final rules are available here.

The amendment to PTE 2006-06 is available here.

IRS Announces Updated Static Mortality Tables for Defined Benefit Pension
Plans for 2025
On May 15, 2024, the Internal Revenue Service (IRS) released Notice 2024-42, which
specifies updated static mortality tables to be used for defined benefit pension plans
under Section 430(h)(3)(A) of the Internal Revenue Code and Section 303(h)(3)(A) of
ERISA. These updated static mortality tables apply for purposes of calculating the
funding target and other items for valuation dates occurring during the 2025 calendar
year. Notice 2024-42 also includes a modified unisex version of the mortality tables for
use in determining minimum present value under Section 417(e)(3) and Section 205(g)
(3) of ERISA for distributions with annuity starting dates that occur during stability
periods beginning in the 2025 calendar year.

IRS Notice 2024-42 is available here.

Aon Publications

 

ACA Out-of-Pocket Maximum Housekeeping for 2025
Each year, employers designing their medical and prescription drug group health plans
must comply with the new indexed limits issued by the Internal Revenue Service (IRS).
For 2025, employers sponsoring non-grandfathered group health plans must comply
with the Affordable Care Act (ACA) out-of-pocket (OOP) maximum limit, which will
decrease in 2025. Employers that sponsor Health Savings Account (HSA)-compatible
High-Deductible Health Plans (HDHPs) (HSA/HDHPs) must consider a separate OOP
maximum and a minimum deductible as part of the plan design, which the IRS issued
earlier this month as described in the Aon bulletin dated May 14 (IRS Issues 2025
HSA Limits).

This Aon bulletin alerts employers to the lower ACA OOP maximum for 2025,
addresses the interaction between the ACA OOP maximum and the HDHP limits, and
highlights a potential change to the definition of Essential Health Benefit for
prescription drugs.

The Aon bulletin is available here.

Aon Client Alert: Final Regulations on Fiduciary Investment Advice and Impact
on Retirement Investors
The Department of Labor recently released final regulations regarding the provision of
fiduciary investment advice to retirement plans. While the impact to plan sponsors
appears to be limited, it is important for plan sponsors to be aware of the guidance and
ensure that they know which organizations may be advising them in a fiduciary
capacity. Plan sponsors may also want to review the information provided in
communications to participants to ensure that they would not be considered to be
providing fiduciary investment advice. Aon has provided this Client Alert to summarize
the new guidance and potential implications. The new guidance will be effective
September 23, 2024.

The Aon Client Alert: Final Regulations on Fiduciary Investment Advice and Impact on
Retirement Investors, is available here.