From the President

By Bill Karbon • June 18, 2018 • 0 Comments

ACOPA leadership was very active in Washington, DC from May 18 to May 22. Leadership met with our new Executive Director, attended American Retirement Association (ARA) Government Affairs Executive Committee meetings, visited the Pension Benefit Guaranty Corporation (PBGC) and met with Senate and House Tax and Labor staffers. The following summarizes the results of our meetings. 

Meeting with Marty Pippins

On May 18, John Markley, Lauren Okum, Justin Bonestroo and I met with our new Executive Director, Marty Pippins. In order to provide Marty with a better perspective regarding ACOPA we discussed the following:

  • Membership
  • Dues
  • ACOPA’s relationship with the American Academy of Actuaries
  • ACOPA’s participation in the North American Actuarial Council (NAAC) and the International Actuarial Association (IAA)
  • ACOPA’s involvement with the Joint Board for the Enrollment of Actuaries (JBEA)
  • Budget issues
  • Succession planning
  • Continuing education
  • Multiemployer task force
  • ACOPA committees

The greatest focus of the meeting was to discuss with Marty the need to grow membership. We reviewed the need for the revamped membership committee to communicate that ACOPA is the only actuarial organization to solely represent the pension actuary, and we provide the strongest lobbying efforts with a goal to preserve and enhance the employer-based retirement system. Discussions of membership growth led to budget/dues issues, which are highly dependent on membership growth.

There was also a lengthy conversation about our intersocietal relationships. If ACOPA is going to strongly promote the perspective of the small plan pension actuary, we must maintain strong relationships with the American Academy of Actuaries and actively engage with the members of the North American Actuarial Council and the International Actuarial Association.

We also reviewed ACOPA’s committee structure and the need to develop a succession plan for each committee. Committee discussions led to a review of or involvement with the JBEA. A more detailed review of our involvement with the JBEA will be included in a future ACOPA Monthly.

The lengthy meeting was very successful in providing Marty with a deeper understanding of ACOPA.

ARA Government Affairs Executive Committee

The ARA Government Affairs Executive Committee includes the President, President-Elect and GAC chair from each of the ARA sister organizations. On May 20, John Markley, Tom Finnegan and I represented ACOPA during our annual face-to-face meeting. The meeting provided updates from the GAC chairs of each sister organization, legislative and regulatory updates from ARA GAC staff and prepared us for agency and hill visits on May 21 and 22.

Agency Visits

On the morning of the 21st, we met with PBGC staff and discussed the following issues.

Coverage issues

  • The PBGC cannot provide definitive guidance regarding specific types of employers (i.e., investment advisors) as the determination is based on the specific information of each case.
  • The goal of the PBGC is to respond to coverage determinations within 90 days.
  • Coverage determinations are processed more rapidly if the information detailed on the PBGC website is provided as part of the determination filing.
  • During FY 2017 there were approximately 425 coverage requests, and 90% of the requests were processed within 50 days.
  • PBGC indicated that if all participants other the owner are paid out, a coverage determination is required to verify that the plan is no longer covered by the PBGC.

Small annuities and the missing participant program for amounts between $1,000 and $5,000

  • Once a plan terminates, the plan sponsor cannot purchase an IRA for missing participants regardless of the lump sum amount. All missing participants must be settled through the missing participant program. Furthermore, the PBGC is also reviewing whether required procedures were followed when small annuity IRAs were purchased for missing participants prior to plan termination.

Availability of annuities when insurance companies cannot deliver for small annuity purchases

  • PBGC is considering providing names of potential insurers for small annuities on a regular basis.

Benefit calculations for employees terminated decades ago

  • PBGC will make sure that all efforts are taken to locate information needed to calculate terminated participant’s benefit. If information is unavailable, a practical solution to the problem will be determined.

Reportable event filings 

  • PBGC is very concerned that all reportable events are not filed at all or are not filed on a timely basis. Twenty-eight percent of reportable event filings are not filed timely; in particular there is a significant problem with reporting minimum funding failures on a timely basis. If reportable events event filings continue to be filed late, PBGC may more robustly enforce penalties for late filing.

During the afternoon of the 21st, we met with IRS staff and discussed the following:

  • Nondiscrimination relief for closed defined benefit plans
  • Projecting cash balance interest crediting rates for testing purposes

Both of these issues are on the IRS 2018 guidance plan, so the IRS did not disclose any blockbuster ideas to us. With respect to closed plans, we discussed that, while early adoption of portions of the 2016 proposed regulation is allowed, there is a need to finalize these regulations. Notice 2014-5 continues to provide relief to plans that were not subject to the gateways previously and would become subject during the transition period, but that relief was not intended to last many years. Furthermore, there are issues with the proposed regulations that need to be addressed in final guidance.

With respect to projecting interest credit rates, both ACOPA and AAA wrote comment letters in 2017 suggesting that due to volatility of some allowable investment-based interest credit rates, the current standard of projecting the most recent value of the rate is impractical and the regs should specifically allow the use of a proxy for projection purposes. Both ACOPA and AAA suggested the use of a variant of the second segment rate; albeit quite different variants. IRS officials took our discussion under advisement.

Agency Visits

On the 22nd, we met with staffers from the Senate Finance, Senate HELP, House Ways & Means and House Education and Workforce Committees. The focus of the meetings was a discussion of the following issues.

  • ARA’s support of the Retirement Enhancement and Savings Act (RESA). There is hope that the bill will find support in the Senate. However, it is unlikely that the House of Representatives will bring the bill to a vote during the 115th Congress.
  • ARA’s support of a legislative proposal that allows all required retirement plan information disclosures be made available to participants/beneficiaries electronically as the default. Disclosures would be available to participants/beneficiaries via paper upon request.
  • Given the recent increase in the Employee Plan Compliance Resolution System (EPCRS) submission fees for small businesses, ARA supports the expansion of the ability to self-correct common retirement plan mistakes without a submission to the IRS and payment of a user fee as a means of offsetting the impact of the fee increase.

Lastly, I am thrilled that Marty Pippins has joined ACOPA as its Executive Director and am convinced that his background will be of great value to ACOPA membership. His agency/legislative background will enhance our internal governance and government affairs efforts.

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