News

IRS Issues Final Regulations Approving Forfeitures to Fund QNECs, QMACs

The IRS and Department of the Treasury have issued final regulations amending the definitions of qualified nonelective contribution (QNEC) and qualified matching contribution (QMAC), settling the issue of whether participant forfeitures can be used to fund QNECs and QMACs.

QNECs and QMACs are types of employer contributions to qualified retirement plans commonly used to correct certain contribution testing failures in 401(k)-type plans. Unless certain safe harbor exemptions apply, 401(k) plans generally must satisfy rules that limit the disparity between the average deferrals of highly compensated employees (HCEs) and nonhighly compensated employees (nonHCEs). Similarly, in nonsafe harbor situations, 401(k) plans must satisfy rules that limit the disparity between average matching contributions of HCEs and nonHCEs. To correct testing failures under these rules, employers can make QNECs and QMACs.

These final regulations finalize the proposed regulations issued by the IRS in January 2017, which first altered the definitions of QNEC and QMAC to allow the use of forfeitures in funding QNEC and QMAC contributions. Before 2017, the IRS and Treasury Department interpreted the 401(k) regulations in a manner that did not permit the use of participant forfeitures to fund these employer contributions.

The final regulations are scheduled to be published as early as July 20 in the Federal Register, and will take effect on that publication date.


Dennis Zuehlke Discusses New Tax Reform

In a recent artic​le​ published by the Credit Union National Association, Dennis Zuehlke discusses the recently passed tax-reform bill​ eliminating the ability to reverse a Roth individual retirement account (IRA) conversion​, also known as a recharacterization. He warns that individuals who convert and do not seek tax advice may not be aware of the tax impact until they file their federal tax return months later.


IRS Releases 2018 Detailed Instructions for IRA Reporting

The IRS has released the 2018 tax year Instructions for Forms 1099-R and 5498. This release was much anticipated because of tax law changes resulting from the Tax Cuts and Jobs Act in December 2017 and the Bipartisan Budget Act in February 2018. The release of these detailed instructions was delayed substantially from prior years.

The following changes are included in the 2018 Instructions.

  • No recharacterizing of 2018 or later Roth IRA conversions, or 2018 or later retirement plan-to-Roth IRA rollovers
  • Special rules for victims of 2016 and 2017 natural disasters
  • New Form 1099-R reporting code for a qualified plan loan offset distribution due to severance from employment or termination of a plan
  • New Form 5498 reporting code for rollover of offset retirement plan loans
  • Special reporting for U.S. Armed Forces in designated combat zones

Although the IRS previously released the 2018 version of Form 5498, IRA Contribution Information, as of this writing, the IRS had not released the 2018 version of Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.


IRS Grants Tax-Related Deadline Relief to Texas Storm Victims

The IRS has issued News Release TX-2018-05, describing tax-related deadline relief available to victims of severe storms and flooding in Texas. In addition to postponement of tax return deadlines falling within dates identified in the news release, the relief includes postponement of deadlines for completing certain time-sensitive tax-related acts specified in Treasury Regulation 301.7508A-1(c)(1). These acts include completion of rollovers or recharacterizations, correction of certain excess contributions, making plan loan payments, filing Form 5500, and certain other acts under this regulation.

Such deadlines falling on or after June 19, 2018, and on or before October 31, 2018, are postponed to October 31, 2018.

The Texas counties included in the relief at this time include Cameron and Hidalgo. The relief applies specifically to residents of these identified areas, to those whose businesses or records necessary to meet a covered deadline are located there, and to certain relief workers providing assistance following the disaster events. Any individual visiting a covered disaster area who is injured or killed as a result of the events is also entitled to deadline relief. Affected taxpayers who reside or have a business located outside the covered disaster area are required to call the IRS disaster hotline at 866-562-5227 to request relief.


IRS Releases 2018 Form 5498 for IRA Contribution Reporting and Updates General Instructions

The IRS has released the finalized version of the 2018 tax year Form 5498, IRA Contribution Information. The separate instructions for the 2018 form—Instructions for Forms 1099-R and 5498—had not yet been released at the time of this writing. The IRS also released an updated version of the 2018 General Instructions for Certain Information Returns.

Form 5498

Form 5498 is used by IRA custodians, trustees and issuers to report IRA contributions, rollovers, conversions, recharacterizations, fair market value, and other IRA contribution-related information. In addition to date and deadline changes, this 2018 version was updated with changes to Box 13a, now titled “Postponed/late contrib.” The form instructions indicate the following changes for Box 13c, Code. Both revisions were a result of changes made by the Tax Cuts and Jobs Act of 2017.

  • Code FD, PL115-97 for the Sinai Peninsula of Egypt, has been added as a code for late contributions made by individuals who serve in this qualified hazardous duty area.
  • Code PO is a new code to use for retirement plan participants who make rollovers of qualified retirement plan loan offsets.

General Instructions for Certain Information Returns

The 2018 General Instructions for Certain Information Returns was first released in late January, but was updated further and rereleased on July 5. The General Instructions are update every year for dates, limitations, and IRS penalties for incorrect reporting. Also see the “What’s New” section for additional revisions.

As of this writing, the IRS had not released the 2018 versions of Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., or the detailed instructions for the Forms 1099-R and 5498.

 


IRS Releases 2018 Series Forms for VCP Plan Correction Submissions

The IRS has released a series of June 2018-dated forms that are used in submissions for retirement plan corrections under the Service’s Voluntary Correction Program (VCP). In addition to the general VCP Compliance Statement form, individual schedules are used for specific plan types (e.g., SIMPLE IRAs, SEPs) or certain plan failures (e.g., non-amender, plan loan failure). The updated forms follow.

Form 14568-B, Model VCP Compliance Statement Schedule 2: Other Nonamender Failures and Failure to Adopt a 403(b) Plan Timely

Form 14568-E, Model VCP Compliance Statement Schedule 5: Plan Loan Failures (Qualified Plans and 403(b) Plans)

Form 14568-H, Model VCP Compliance Statement Schedule 8: Failure to Pay Required Minimum Distributions Timely


IRS, PBGC Issue Tax-Related Deadline Relief for Victims of Recent Hurricanes

The IRS and the Pension Benefit Guaranty Corporation (PBGC) have issued announcements that expand previously-issued tax-related deadline relief for victims of storms, flooding, landslides, and mudslides in Hawaii.

IRS Relief

Under this relief, certain time-sensitive tax-related acts are eligible to be completed beyond their normal deadlines as provided in Treasury Regulation 301.7508A-1(c)(1). They include completion of rollovers and recharacterizations, correction of certain excess contributions, making plan loan payments, filing Form 5500, and certain other acts under this regulation.

The relief applies specifically to residents of the identified areas, to those whose businesses or records necessary to meet a covered deadline are located there, and to certain relief workers providing assistance following the disaster events. Any individual visiting a covered disaster area who was injured or killed as a result of the events is also entitled to deadline relief. Affected taxpayers who reside or have a business located outside the covered disaster areas are required to call the IRS disaster hotline at 866-562-5227 to request relief.

Under IRS News Release HI-2018-03, covered deadlines that fall on or after April 13, 2017, and on or before August 15, 2018, are extended to August 15, 2018. The relief applies to affected individuals who reside or have a business in the City and County of Honolulu and Kauai County.

PBGC Relief

The PBGC—the agency with primary oversight over defined benefit pension plans—issued Disaster Relief Announcement 18-07 describing special relief the agency is granting to plans and to designated persons (those responsible for meeting a PBGC deadline) affected by storms, flooding, landslides, and mudslides in Hawaii. The disaster area consists of the City and County of Honolulu and Kauai County.

The deadline relief applies to the following actions.

  • Payment of PBGC insurance premiums (single and multi-employer plans)
  • Filing termination notices (single-employer plans)
  • Completing the distribution of plan assets (single-employer plans)
  • Filing post-distribution certification, Form 501 (single-employer plans)
  • Filing for distress termination, Form 601
  • Filing a reportable event notice
  • Filing Form 5500, Annual Return/Report of Employee Benefit Plan

Also, certain plans with underfunding, missed contribution, or funding waivers that must file special actuarial information within 15 days following the filing of their Form 5500 will have until August 15, 2018, for such filing.


Ascensus Acquires INTAC Actuarial Services, Inc.

Leading Service Provider Expands Its TPA Presence While Strengthening Defined Contribution and Defined Benefit Expertise

Dresher, PA— Ascensus, a technology-enabled solutions provider that helps more than 8 million Americans save for the future, has entered into an agreement to acquire INTAC Actuarial Services, Inc. (INTAC). The third-party administration (TPA) firm will immediately become part of Ascensus’ TPA Solutions division.

Based in Ridgewood, New Jersey, INTAC provides complete administration of employer-sponsored retirement plans for about 3,000 small to mid-sized companies, their owners, key executives and employees. The firm understands what employers want and need in a retirement plan and delivers solutions through high quality client service—each retirement plan is designed, created, and proactively refined to meet each client’s goals while maximizing retirement benefits. INTAC also provides ongoing education to their clients and the professionals in the communities they service to ensure that they remain abreast of industry changes and issues.

“Like Ascensus, INTAC is committed to excellence in everything that they do—especially when it comes to making retirement plans work for their clients,” states David Musto, Ascensus’ president. “INTAC has one of the lowest employee turnover rates in the industry and has been ranked as one of the best places to work in New Jersey; we’re pleased to have their associates join us to help Americans save for retirement.”

“As a family-run business, we pride ourselves on creating meaningful client relationships and on creating a culture in which employees feel like they’re part of the family,” says Charles Rosenberg, INTAC’s vice president. “As part of Ascensus, we’ll be able to combine our expertise with their resources to continue to provide a proactive, personalized client experience at every interaction with our firm while also offering exciting growth opportunities to our employees.”

“Geographically speaking, the tri-state and greater Delaware areas are important market expansion opportunities for our TPA Solutions division,” says Raghav Nandagopal, Ascensus’ executive vice president of corporate development and M&A. “With its strong historical growth, successful long-term track record, and associate-focused culture, INTAC is an ideal business to help Ascensus achieve its immediate and long-term growth plans.”

About Ascensus

Ascensus helps more than 8 million Americans save for the future—retirement, education, and healthcare—through technology-enabled solutions. With more than 35 years of experience, the firm offers tailored solutions that meet the needs of asset managers, banks, credit unions, state governments, financial professionals, employers, and individuals. Ascensus supports over 60,000 retirement plans, more than 4 million 529 education savings accounts, and a growing number of ABLE savings accounts. It also administers more than 1.6 million IRAs and health savings accounts. As of March 31, 2018, Ascensus had over $187 billion in total assets under administration. For more information about Ascensus, visit ascensus.com.

View career opportunities at careers.ascensus.com/page/show/tpa and careers.ascensus.com or on LinkedIn at linkedin.com/company/ascensus. For the latest company news, follow @AscensusInc on Twitter.


Women in Technology Spotlight: Zina Ilchenko

Senior software engineer

Tell me a little bit about where you attended school and your work history.

I started my career teaching world history at a high school in Ukraine. When I came to the U.S., I barely spoke English, and I had never touched a computer in my life. I started working at a daycare, where the other teachers taught me the language. When I realized everyone was going to business and technical school, I decided to attend school in northeast Philadelphia, while working full-time. In 1998, I was hired by Ascensus.

What made you interested in pursuing a career in technology?

When my daughter entered high school she needed a computer, so I bought her one. I started exploring on it and ended up teaching myself how to type. Computers were a big trend back then and an emerging industry. I thought if other people could do it, then I could do it too.

What makes working on the IT team at Ascensus different or unique?

The type of work we do at Ascensus is special. We serve a large portion of our nation—more than 7 million Americans! Without our help, they wouldn’t be able to contribute to their retirement, education, or health savings accounts.

What advice would you give someone who wants to land a job in the technology field?

Learn what you can as early as possible. Talk to people who are in this industry and be interested in ongoing innovations. I never imagined that I’d go down this career path, but truly anyone of any age can do it.

What woman is your biggest inspiration and why?

One of my good friends who still lives in Ukraine really inspires me. We’ve been friends for more than 30 years and she has always overcome struggles in her life.

Did anyone or anything help you to get to where you are today?

There are many people who have helped me to get to where I am today. Especially, all of the women who taught me how to speak English at the daycare, and all of my teammates here at Ascensus. I have more of a business background, so when I need help understanding something technical, everyone always takes their time to help me.

Why do you like working for a company that helps people save?

Life has taught me that in order to survive, you need to save. I like that we help people save, so they have some sort of safety net in their lives. It’s so important to save for yourself, for your family, and for your future.


Dan Kravitz Discusses Strategic Plan Terminations

In a recent article published by ​PLANSPONSOR, Dan Kravitz, president of Kravitz, Inc., and Chris Pitman, an expert plan termination consultant with the firm,​ ​​​​​​define the concept of strategic plan termination—what the pros and cons are, and what an employer’s responsibilities entail under IRS and PBGC regulations. “If an employer has the right goals and follows the right process​, strategic plan terminations can be a win-win for the company and for employees,​”​ said the pair.