Winter Edition of Retirement News for Employers: Notice 2007-07/PPA Information Page/T.D. 9294 Use of Electronic Media/Automatic Rollover IRAs/Lost Participants/Terminating Plans/Payroll Deduction IRA/Self-Correction Program/401(k) Checklist/DOL News/IRS Form 5558/2007 IRS Tax Calendar/Upcoming Deadlines
February 19, 2007

The winter 2007 edition of Retirement News for Employers is now available. This newsletter is a great source of information for plan sponsors as well as qualified plan professionals. Here are some of the highlights:  

• IRS Notice 2007-07 was released on January 10, 2007.
• As discussed in this post, the IRS has a PPA information page.
• Treasury Decision (T.D.) 9294 - Use of Electronic Media for Providing Employee Benefit Notices and MakingEmployee Benefit Elections and Consents was issued:

Final regulations have been issued setting forth standards for electronic systems that make use of an electronic medium to provide notices to recipients, or make participant elections or consents, with respect to retirement plans, employee benefit arrangements, or individual retirement plans. Generally, these regulations apply to applicable notices provided, and participant elections made, on or after January 1, 2007.

Note: These final regulations reflect the applicable provisions of the Electronic Signatures in Global and National Commerce Act (E-SIGN), Public Law 106–229, as it relates to the electronic delivery of notices. E–SIGN generally provides that electronic records and signatures are given the same legal effect as their paper counterparts.

The article includes an informative, easy-to-understand explanation of the rules. 

• The following automatic rollover IRAs concerns were discussed:
  
  
  • Plan sponsors wonder how to set up IRAs for automatic rollovers of participants’ accounts pursuant to § 657 of EGTRRA. Note: Section 657 of EGTRRA amended the Code to require that mandatory distributions of more than $1,000 from a qualified plan be paid in a direct rollover to an IRA.
    
  • Plan sponsors/administrators of terminated plans have been told that they cannot set up IRAs for the account balances of missing participants. (For more information on this item not discussed in the newsletter, check out When terminating a defined contribution plan, may the plan cash out a participant who has a vested balance of over $5,000 who can not be located?)
    
    
• The IRS has established two groups to assist in selecting the most appropriate returns to review or audit. The first group, the Data Analysis Unit (DAU), consists of outside experts with experience in various areas of data analysis. The second group, the Employee Plans Compliance Unit (EPCU), consists of employees hired from within the IRS, to focus on high profile projects. An example of the projects this group is working on is the “Identification of reported fraud from analysis of the Form 5500”.
   
• Employers who want to help employees save for retirement without establishing an employee benefit plan should consider a Payroll Deduction IRA. Payroll Deduction IRAs for Small Businesses, a “plain-language” publication, was just released.
   
• We have previously discussed the Employee Plans Compliance Resolution System (EPCRS). The newsletter includes an excellent 2½ page article on the Self-Correction Program, including the following sections:
  
  
  • Self-Correction Program (SCP)
  • Eligibility Requirements for Using SCP
  • Determining if the Violation is Insignificant
  • Correction Must be Timely
  • Availability of Correction by Plan Amendment in SCP
  • Diligent Plan Administration and Prompt Correction is the Best Policy
     
• A 401(k) Checklist (Publication 4531) that highlights the top 10 compliance issues occurring in 401(k) plans available online. The purpose is to raise awareness of these issues to plan sponsors.
   
• The newsletter includes a DOL News section. Many of the items covered in this section can also be found in the Rules and Regulations section of our website:
  
  
  • Inherited IRA Regulation and Exemption
  • Cross-Trading Statutory Exemption
  • Investment Advice Statutory Exemption
  • Individual Benefit Statements and Diversification Notices
  • Proposed PPA Revisions to Form 5500 Annual Report for 2008
     
• Two forms were recently updated: IRS Form 5558, which was also discussed here, and Publication 575 – Pension and Annuity Income.
   
• The 2007 IRS Tax Calendar for Small Businesses and Self-Employed (Publication 1518) has been released.
   
• The newsletter includes a reminder of the following upcoming deadlines:
  
  
  • March 15: Deadline for –
    • Submitting waiver requests for the 2006 plan year for single employer plans.
    • Change in funding method requests for the 2006 plan year if a statement is attached detailing the reason for the delay.
  • April 1: Last day to make required minimum distributions - Code section 401(a)(9) requires that distributions begin no later than April 1 of the calendar year following the later of:
    • The calendar year in which the employee attains age 70 ½ (required for 5% owners) or
    • The calendar year in which the employee retires.
  • April 15: First quarterly installment due date for the 2007 plan year.
  • April 15: Excess elective deferrals and any earnings thereon from the prior year must be distributed by this date.
  • April 17: Deadline to establish an IRA for possible deductions in the 2006 calendar year.