IRS Issues Revenue Procedure 2019-20 for a Limited Expansion of the Determination Letter Program for Individually Designed Plans

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Limited Expansion of the Determination Letter Program for Individually Designed Plans

On May 1, 2019, the Internal Revenue Service (IRS) issued Revenue Procedure 2019-20 that provides for a limited expansion of the determination letter program for individually designed plans. Under the limited expansion, the IRS will accept determination letter applications for:

  • Individually designed statutory hybrid plans – plan sponsors may submit determination letter applications during a 12-month period beginning September 1, 2019 and ending August 31, 2020; and
  • Individually designed merged plans – (as defined in Section 5.01(2) of the revenue procedure) plan sponsors may submit determination letter applications for certain merged plans on an ongoing basis.

In Revenue Procedure 2016-37, the IRS closed the determination letter program except for initial plan qualification and for qualification upon plan termination. The IRS later issued Revenue Procedure 2019-4 to provide an “other circumstances” category for which determination letters can be requested; however, the agency did not specify the “other circumstances” that would be applicable.

In addition, Revenue Procedure 2019-20 provides for a limited extension of the remedial amendment period under Section 401(b) of the Internal Revenue Code and Revenue Procedure 2016-37 under specified circumstances, and for special sanction structures that apply to certain plan document failures indicated by the IRS during the review of a plan submitted for a determination letter in accordance with the new revenue procedure.

It is important to note that last year NASRA, NCTR and NCPERS submitted joint comments requesting that the IRS allow governmental plans to voluntarily seek determination letters on a limited scope. Furthermore, in April 2019, the IRS issued Revenue Procedure 2019-19 to expand the Self-Correction Program (SCP) to allow plan sponsors to self-correct certain retirement plan errors without filing a Voluntary Correction Program submission with the IRS, which is available here.

Revenue Procedure 2019-20 is available here.

NCPERS Updates Best Governance Practices for Public Retirement Systems

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NCPERS Updates Best Governance Practices for Public Retirement Systems

In May 2019, the National Conference on Public Employee Retirement Systems (NCPERS) released its revised report on “Best Governance Practices for Public Retirement Systems.” NCPERS developed the governance practices to assist plan fiduciaries improve pension fund performance, while addressing risks related to changing markets and the global economy. The best practices focus on accountability, consistency and transparency, which are intended to improve performance and risk oversight for the benefit of members, taxpayers and other stakeholders.

The best practices include:

  • Governance Manual – to be maintained as a central repository of the fund’s primary governance documents for trustees and stakeholders in either electronic or paper form.
  • Board Practices – to establish, document and promote adherence to practices which impact the fund’s investment and operational performance and risk oversight.
  • Board Policies – to help guide system operations toward stated goals within established risk tolerances.
  • Risk Oversight – to adopt a risk management policy that defines risk categories, accountabilities and reporting.
  • Strategic Planning – to establish long-term goals and performance measures with an implementation plan to achieve those goals.
  • Reporting Key Performance and Risk Measures – to assess the fund’s progress related to actuarial, administrative, audit compliance and investment goals.
  • Stakeholder Communications – to provide transparency regarding fund operations and help improve member satisfaction through reports and surveys.
  • In addition to other revisions, the report includes a Model Risk Management Framework that provides an example of best practices that funds use to manage risk across investment program exposures and functions.

The report is available here.

EBRI Publishes 2019 Retirement Confidence Survey Report

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EBRI Publishes 2019 Retirement Confidence Survey Report

On April 23, 2019, the Employee Benefit Research Institute released its 2019 Retirement Confidence Survey Summary Report. The 29th annual survey found that workers’ overall confidence in retirement security has returned to pre-financial crisis levels. According to the survey, the percent of workers who are very confident about having a financially secure retirement increased from 17% in 2018 to 23% in 2018. Additionally, the percent of workers who are very or somewhat confident increased from 64% in 2017 to 67% in 2018, similar to the levels measured in 2007 before the financial crisis of 2008.

The percent of retirees who are very confident about having a financially secure retirement was 35% while 18% are not too or not at all confident in 2019. Retirees reported being at least somewhat confident in having enough money to cover basic expenses throughout their retirement years was 85% in 2019. In addition, health care expenses are greatly affecting retirees’ confidence. The survey found that retirees reported being very or somewhat confident about having enough money to cover medical expenses was 80%, and for long-term care was 59%.

A key difference found in the survey was workers’ expectations related to relying on income from working in retirement compared with retirees’ actual experience. About 80% of workers expect to earn income from working in retirement compared with only 28% of retirees that report actually working for pay in retirement.

The summary report is available here.

The fact sheets and additional information are available here.

GRS Consultant and CO FPPA Trustee to Speak at NCPERS TEDS

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May 18-19, 2019

GRS Consultant and CO FPPA Trustee to Speak at NCPERS TEDS

GRS Senior Consultant Leslie Thompson, FSA, EA, FCA, MAAA and Pam Feely, CPA, a Trustee with Colorado FPPA will present a “Back to Basics” session at the NCPERS 2019 Trustee Education Seminar (TEDS).

For trustees who’d like a refresher on the actuarial valuation-contents, meaning and implications-this “Back to Basics” session is just for you.  The seminar is intended to provide trustees with insights and tools to move forward with their fiduciary responsibilities for funding their retirement plan.

The National Council on Public Employee Retirement Systems (NCPERS) TEDS program is being May 18-19, 2019 in Austin, TX.

Leslie Thompson to Serve On Expert Panel at 2019 GFOA Conference

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May 18, 2019

Leslie Thompson to Serve On Expert Panel at 2019 GFOA Conference

Leslie Thompson, FSA, EA, FCA, MAAA will serve on a panel at a pre-conference session during the 2019 Government Finance Officers Association (GFOA) annual conference. Topics will include selecting actuarial assumptions and their impact, data needed, the valuation process, a walk-through of an actuarial report and crosswalk to financial statements amounts and disclosures, and the role and reliance of external auditors.

The session is scheduled for May 18, 2019, prior to the main GFOA conference being held May 19-22, 2019 in Los Angeles, CA.

Piotr Krekora to Discuss OPEB Trends at GFOA Conference

Events​

May 19-22, 2019

Piotr Krekora to Discuss OPEB Trends at the GFOA Conference

Piotr Krekora, ASA, EA, FCA, MAAA, PhD will serve as a panel speaker for the topic OPEB Trends: What a Finance Officer Should Know. Mr. Krekora will present results of a recent research project examining actions taken by employers to manage the OPEB burden and the impact of new GASB standards on reported OPEB obligations.

The 113th GFOA Conference is being held May 19-22, 2019 in Los Angeles, CA.