The Washington Report
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March 27, 2019
The Washington Report
Retirement
IRS Releases Updated Mortality Improvement Rates and Static Mortality Tables for Defined Benefit Pension Plans for 2020
On March 22, 2019, the Internal Revenue Service (IRS) released IRS Notice 2019-26, which provides the updated mortality improvement rates and static mortality tables that are used for purposes of determining: 1) the minimum funding requirements under Internal Revenue Code (Code) Section 430(h)(3) for 2020 plan years; and 2) the minimum present value under Code Section 417(e)(3) for distributions with annuity starting dates that occur during stability periods beginning in the 2020 calendar year. The minimum present value requirements under Code Section 417(e)(3) apply to “decreasing annuity” forms of payment including lump sums. The IRS has retained the same methodology for the 2020 mortality tables as was used for 2019, but with an update to the projection scale. The IRS is also requesting comments on potential changes for years after 2020. Compared to the 2019 mortality tables, the 2020 tables will slightly reduce (generally by less than 0.5%) minimum funding liabilities and minimum factors for converting lump sums to annuities.
IRS Notice 2019-26 is available
here.
President Releases Additional Budget Details; Includes PBGC Changes
On March 18, 2019, the Trump administration released additional details regarding its fiscal 2020 budget proposal, which was first released on March 11. While the specifics are limited, the proposal includes changes to the Pension Benefit Guaranty Corporation (PBGC) premiums for both single employer plans and multiemployer plans. The proposed changes for single employer plans include a one-year freeze in premium rates for many plans and an adjustment to the variable-rate premium cap to increase the incentive for sponsors to improve plan funding. The proposed changes for multiemployer plans include the introduction of a variable-rate premium and an exit premium for withdrawing employers. It is important to note that the President’s budget has already been met with significant scrutiny in Congress, and any budget bill that is ultimately enacted will most likely reflect significant changes. However, the proposal demonstrates that PBGC premiums continue to receive attention in the budgetary process.
Detailed information on the President’s budget is available
here.
Aon Publications
DOL Says Employers May Not Delay, or Permit Waiver of, FMLA Leave
Employers may not delay or allow employees to waive a leave of absence under the Family and Medical Leave Act (FMLA), even if the employee requests to do so, according to an opinion letter (Op. Ltr. FMLA2019-1-A) issued by the U.S. Department of Labor (DOL) on March 14, 2019.
The Aon bulletin, which contains a brief overview of the DOL Opinion Letter (Op. Ltr. FMLA2019-1-A), can be found
here.