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IRS Releases Pension Smoothing Guidance for Single-Employer Pension Plans

The Highway and Transportation Funding Act of 2014 (?Ç£HATFA?Ç¥) extended for five years the funding stabilization provisions for single-employer defined benefit pension plans that were included in MAP-21. The IRS recently released Notice 2014-53 providing guidance on the funding stabilization rules after the passage of HATFA. The Notice, among other things, provides that a plan sponsor may irrevocably elect to defer, until the first plan year beginning on or after January 1, 2014, the use of the HATFA rates, either for all purposes or solely for purposes of Internal Revenue Code (?Ç£Code?Ç¥) Section 436 funding-based limits on benefits and benefit accruals. The deferral requires the plan sponsor to provide written notice to the plan?ÇÖs enrolled actuary and plan administrator by the later of (i) the deadline for filing the plan?ÇÖs 2013 Form 5500, including extensions, or (ii) December 31, 2014. However, an election to defer the plan?ÇÖs use of the HATFA rates until the 2014 plan year is deemed made if the plan?ÇÖs 2013 Form 5500 is filed and its Schedule SB reflects the MAP-21 rates, rather than the HATFA rates.

A copy of Notice 2014-53 is available here.

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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September 2014