Employee Benefits Bulletin, May 2002
NEW GUIDANCE
IRS Issues Proposed Regulations regarding the ERISA §204(h) notice. The regulations require plans to give defined benefit plan participants and alternate payees a 45 day advance notice when a plan amendment will cause a significant reduction in the rate of future benefit accrual. The proposed regulations will not become effective until after the IRS publishes final regulations on the matter, although good-faith compliance is required until that time.
IRS Issues Proposed Regulations providing guidance on §457(b)deferred compensation plans of state and local governments and tax-exempt entities. The proposed regulations update the 1982 final regulations for the statutory changes made by recent legislation. Regs. §1.457-1 thru 1.457-11 are generally effective for tax years beginning in 2002.
IRS Provides Rollover Notice in Spanish. A safe harbor version of the notice required to be given to recipients of rollover distributions (updated for EGTRRA) is available on the internet at: http://www.irs.gov/pub/irs-drop/a-02-46.pdf.
IRS Provides Timetable for Use of New Model IRA Forms. The new Model IRA Forms must be used to establish new IRAs after October 1, 2002 (extended from original June 1, 2002 deadline). Existing IRAs must be amended to conform to the new Model IRA Forms by December 31, 2002. Prototype IRA sponsors must submit amended prototypes to the IRS by December 31, 2002; the amended prototype IRAs must then be adopted within 180 days after approval.
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