Human Resources
Aon Washington Report - 9/5/2017

Aon Washington Report

September 5, 2017


Congress Returns to Hill After Summer Recess

The House and Senate return to the Hill this week to consider a number of legislative items, including the budget and tax reform.


DOL Releases Notice Delaying Fiduciary Rule Exemptions Until July 2019

On August 30, 2017, the Department of Labor’s (DOL) Employee Benefits Security Administration released a Notice of Proposed Amendments to certain prohibited transaction exemptions extending the special transition period under Sections II and IX of the Best Interest Contract Exemption, and Section VII of the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs. The Notice also proposes to delay the applicability of certain amendments to Prohibited Transaction Exemption 84-24 for the same period. According to the DOL, the primary purpose of the extension is to give the agency the time necessary to consider possible changes and alternatives to these exemptions. The DOL is particularly concerned that, “without a delay in the applicability dates, regulated parties may incur undue expense to comply with conditions or requirements that it ultimately determines to revise or repeal.”

The present transition period is from June 9, 2017, to January 1, 2018. The new transition period would end on July 1, 2019. The proposed amendments to these exemptions would affect participants and beneficiaries of plans, IRA owners, and fiduciaries with respect to such plans and IRAs.

The DOL has also announced an enforcement policy in Field Assistance Bulletin (FAB) No. 2017-03 related to the arbitration provision in the Best Interest Contract Exemption and Principal Transaction Exemption. Both exemptions include an arbitration provision that makes the exemptions unavailable if the financial institution's contract with a retirement investor includes a waiver or qualification of the retirement investor’s right to bring or participate in a class action or other representative action in court. In light of the recent position adopted by the Acting Solicitor General in its amicus brief in NLRB v. Murphy Oil USA, Inc., the U.S. government is no longer defending these specific anti-arbitration provisions as applied to agreements preventing investors from participating in class-action litigation. The FAB adopts an enforcement policy consistent with that position.

Comments are due on or before September 15, 2017.

The Notice is available here.

The news release is available here.

FAB No. 2017-03 is available here.

IRS Further Extends Temporary Nondiscrimination Relief for Closed Defined Benefit Plans Through 2018

On August 31, 2017, the Internal Revenue Service (IRS) released Notice 2017-45, which extends the temporary nondiscrimination relief for closed defined benefit plans that is provided in Notice 2014-5 by making that relief available for plan years beginning before 2019 if the conditions of Notice 2014-5 are satisfied. Notice 2016-57 had previously extended the relief for plan years beginning before 2018.

Like the extension provided last year in Notice 2016-57, the latest extension in Notice 2017-45 is provided in anticipation of the issuance of final amendments to the Section 401(a)(4) regulations. According to the IRS, those regulations are expected to be effective for plan years beginning on or after the date of publication of the final regulations, and are expected to permit plan sponsors to apply the provisions of the regulations that apply specifically to closed plans for certain earlier plan years.

IRS Notice 2017-45 is available here.

IRS Notice 2016-57 is available here.

IRS Notice 2015-28 is available here.

IRS Notice 2014-5 is available here.

Disaster Relief

IRS Announces That Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Harvey; DOL Updates Compliance Guidance for Employee Benefit Plans

On August 30, 2017, the Internal Revenue Service (IRS) published Announcement 2017-11, which provides relief to taxpayers who have been adversely affected by Hurricane Harvey, and who have retirement assets in qualified employer plans that they would like to use to alleviate hardships caused by Hurricane Harvey. Additionally, the Announcement provides relief from certain verification procedures that may be required under retirement plans with respect to loans and hardship distributions. The relief provided under the Announcement is in addition to the relief already provided by the IRS pursuant to News Release IR-2017-135 under Section 7508A of the Internal Revenue Code for victims of Hurricane Harvey. (For a listing of employee benefit-related acts and deadlines that, under the News Release, were postponed until January 31, 2018, in response to Hurricane Harvey, please refer to the regulations under Section 7508A and Section 8 of Revenue Procedure 2007-56, 2007-2 C.B. 388.)

On the same day, the Department of Labor (DOL) also posted an update on employee benefit plan compliance by those impacted by the Hurricane. A link to the announcement (which includes additional employer resources, such as Frequently Asked Questions (FAQS)) is provided below.

IRS Announcement 2017-11 is available here.

The DOL update on Hurricane Harvey is available here.

FAQs for Participants and Beneficiaries Following Hurricane Harvey is available here.

PBGC Announces Disaster Relief Relating to Deadlines in Response to Hurricane Harvey

On August 29, 2017, the Pension Benefit Guaranty Corporation (PBGC) announced it is waiving certain penalties and extending certain deadlines in response to severe storms and flooding from Hurricane Harvey.

Additional information can be found in the PBGC announcement, available here.

Other HR/Employment

White House Suspends EEOC Pay Data Reporting Plan

On August 29, 2017, the Office of Management and Budget informed the Equal Employment Opportunity Commission (EEOC), via a memo from the White House Office of Information and Regulatory Affairs, that it is initiating a review and immediate stay of the effectiveness of the pay data collection aspects of the EEO-1 form that was revised on September 29, 2016. The EEOC plan was to be applied to revised EEO-1 forms beginning in 2018. The program was meant to collect wage information based upon race, ethnicity, and gender.

In the news release, the EEOC states that the “previously approved EEO-1 form which collects data on race, ethnicity and gender by occupational category will remain in effect. Employers should plan to comply with the earlier approved EEO-1 (Component 1) by the previously set filing date of March 2018.”

The EEOC news release is available here.

The Office of Information and Regulatory Affairs memo is available here.

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