IRS Tells Plan Sponsors What They ‘Have To’ Do About HATFA

The IRS has issued guidance on pension funding stabilization under the Highway and Transportation Funding Act of 2014 (HATFA). IRS Notice 2014-53, issued late on Sept. 11, addresses both the 2013 and 2014 plan years. Generally speaking, plan sponsors have until Dec. 31 (later for some non-calendar-year plans) to determine the optimal transition to HATFA segment rates. As requested in the ASPPA College of Pension Actuaries' Aug. 31 comment letter, filing a 2013 Schedule SB using MAP-21 segment rates will be deemed to be an election to defer use of the HATFA rates until 2014. 

The Notice includes:

• a procedure for electing to defer use of HATFA segment rates (or revoking the deemed election to defer);
• rules regarding elections and designations relating to the minimum funding requirements applicable to the plan for the plan year beginning in 2013; 
• rules for 2014 AFTAPs originally certified using MAP-21 rates; 
• late elections to add excess contributions for the 2013 plan year to the prefunding balance, as well as for redesignation of a Section 436 contribution; and 

• redesignation of a contribution originally designated for 2013.

Written Notifications

The notice indicates that any reversal of an election made after the generally applicable deadline, or redesignation of contributions, is to be made by the plan sponsor by providing written notification to the plan’s enrolled actuary and plan administrator, and must be made no later than the last day of the plan year beginning in 2014. That written notification must specify the employer identification number and the name and plan number of the plan, and must set forth the relevant details, including the specific dollar amount involved. The notice indicates that a conditional or formula-based election does not satisfy this requirement.

Look for a future ASPPA asap with additional details.