Aon Washington Report
October 2, 2017
PBGC Posts New Insurance Coverage Web Page
On September 29, 2017, the Pension Benefit Guaranty Corporation (PBGC) posted a new web page for employers and practitioners summarizing which pension plans are covered by PBGC’s insurance program and which are not. According to the PBGC, “for the vast majority of plans, it’s fairly obvious whether PBGC coverage applies, but due to complicated rules in the law, that is not always the case. This is especially true for small plans that cover only professional individuals (e.g., attorneys, architects), plans based in Puerto Rico, and plans affiliated with a church.” The new web page provides an overview of the rules, and highlights the types of plans that should consider requesting a coverage determination.
The PBGC Insurance Coverage web page is available here.
IRS Releases 2017–2018 Special Per Diem Rates
On September 25, 2017, the Internal Revenue Service (IRS) released IRS Notice 2017-54. The annual notice provides the 2017–2018 special per diem rates for taxpayers to use in substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home, specifically: (1) the special transportation industry meal and incidental expenses rates; (2) the rate for the incidental-expenses-only deduction; and (3) the rates and list of high-cost localities for purposes of the high-low substantiation method.
The per diem rates, effective from October 1, 2017, to September 30, 2018, are to increase to $284 for travel to any high-cost location (up from $282 in 2017). The rates for travel to other locations in the continental U.S. are to increase to $191 (from the 2017 rate of $189). For 2018, high-cost locations have a federal per diem rate of at least $238 (up from $236 in 2017). The amount of the $284 high rate and $191 low rate that is treated as paid for meals remains $68 for travel to any high-cost locality, and $57 for travel to any other location in the continental U.S. The special rates for meals and incidental expenses for taxpayers in the transportation industry remain at $63 for any location in the continental U.S., and $68 for any location outside the continental U.S.
IRS Notice 2017-54 is available here.
SEC Releases Interpretive Guidance on Pay Ratio Rule
On September 21, 2017, the Securities and Exchange Commission (SEC) approved interpretive guidance to assist companies in their efforts to comply with the pay ratio disclosure requirement mandated by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the SEC’s rule implementing the pay ratio requirement, companies are required to begin making pay ratio disclosures in early 2018. The guidance:
- States the SEC’s views on the use of reasonable estimates, assumptions and methodologies, and statistical sampling permitted by the rule;
- Clarifies that a company may use appropriate existing internal records, such as tax or payroll records, in determinations about the inclusion of non-U.S. employees and in identifying the median employee; and
- Provides guidance as to when a company may use widely recognized tests to determine whether its workers are employees for purposes of the rule.
The SEC's staff also provided guidance separately about the pay ratio rule (“Division of Corporation Finance Guidance on Calculation of Pay Ratio Disclosure”). The Director of the Division of Corporation Finance noted, “This additional staff guidance, which includes examples illustrating how reasonable estimates and statistical methodologies may be used, is intended to assist companies with their compliance efforts and reduce the costs associated with preparing disclosures. We encourage companies to contact the division staff if additional interpretive questions arise as the compliance date approaches.”
The SEC press release is available here.
The SEC interpretive guidance is available here.
The additional SEC staff guidance (Division of Corporation Finance Guidance on Calculation of Pay Ratio Disclosure) is available here
Dead Again—Senate Won’t Vote on Graham-Cassidy “Repeal & Replace” Bill
On September 26, 2017, the U.S. Senate put an end to the latest effort to repeal and replace the Affordable Care Act (ACA), with Senate Republicans announcing that they will not vote on the Graham-Cassidy bill. The decision came after three Senate Republicans—John McCain, Rand Paul, and Susan Collins—announced their opposition to the bill. With no Democrat supporting the bill, Senate Republicans could afford only two defections from their 52-member caucus.
The failure of the legislation, however, does not end the ongoing concerns expressed by employers regarding the ACA. Congress and the Trump Administration still face several critical short-term and long-term issues regarding employer compliance with the ACA, along with decisions on the upcoming enrollment period for the public health care exchanges.
The Aon bulletin can be found here.
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