There are few developments as controversial as cutting back on promised retirement benefits offered through company and multiemployer plans. The Multiemployer Pension Reform Act of 2014 included provisions allowing for the suspension of benefit payments for retirees and beneficiaries in those plans projected to become insolvent. To protect plan participants, the suspension process, as one might surmise, is complex, and requires plan sponsors to provide complete and comprehensive applications to the Treasury Department.
The Internal Revenue Service last week released an advance version of Revenue Procedure 2017-43, which sets out changes to current procedures for obtaining approval from the United States Treasury Department to suspend benefits under those plans that are determined to be in “critical and declining status”. The 43 page Revenue Procedure provides new and revised procedures on how best to apply for suspension status and gain the necessary approval. The document also contains a detailed checklist by which applicants can evaluate overall compliance with the ruling.
Note that the newly released Revenue Procedure supersedes Revenue Procedure 2016-27, 2016-19 I.R.B. 725 and plan sponsors must follow the new procedures for all applications submitted on or after September 1, 2017. The fundamental purpose behind the ruling is to incorporate improvements in the process that have been identified by Treasury officials in their past experience complying with the Multiemployer Pension Reform Act of 2014.
On April 28, 2016, the Treasury Department and the Internal Revenue Service published final regulations under Internal Revenue Code §432(e)(9), amended by the Multiemployer Pension Reform Act of 2014. That Act essentially requires the Secretary of the Treasury to approve a plan to suspend benefits if the plan is eligible for the proposed suspension and the proposed suspension satisfies §432(e)(9)(C) through (F) of the [Internal Revenue] Code.
Planning for suspension of retirement benefits under these new rules is a necessary component of successfully navigating the new procedures. Should you have questions, or require assistance, please contact Bob Grossman or Don Johnston.
