Legislative and Regulatory Update

1. Legislative and Regulatory Update Presented by: Joleah White, Manager EP R&A Planning Analysis & Reporting October 2, 2012

2. Current Employee Plans Organization Robert Choi, Director, Employee Plans (EP) • Andrew Zuckerman, Director, EP R&A • Determinations • Determinations Quality Assurance • Voluntary Compliance • Technical • Technical Guidance and Quality Assurance • Monika Templeman, Director, EP Exam • Five Examination Areas • Exam Programs and Review

3. Discussion Topics • EP Determinations Update • EP Voluntary Compliance Update • FY 2012 Guidance Overview • EP Examination Update

4. EP Determinations Update • Changes to the EP Determination Letter Program described in Announcement 2011-82 • Elimination of Demonstrations Regarding Coverage and Nondiscrimination Requirements • Form 5307 Applications Limited to Adopters of VS Plans Who Modify Pre-Approved Terms • Form 5300 Applications for M&P and VS Plans • Changes are reflected in Revenue Procedure 2012-6

5. EP Determinations Update • 2nd Remedial Amendment Cycle for Pre-approved DC Plans began on 2/1/2011 (Revenue Procedure 2011-49) • Release of Revenue Procedure for 403(b) Pre-Approved Plans? • Other Possible Pre-approved Programs • What about the Governmental Plan Submissions for the 2nd Cycle C beginning on 2/1/2013?

6. EP Voluntary Compliance Update • New VCP Submission Kit for DB pre-approved plans not timely amended by April 30, 2012 • New video/audio clip on Tips for Completing Your VCP Submission on Appendix F Applications • Improving coordination with Determinations program

7. FY 2012 Guidance Overview February 2012 - Lifetime Income Quartet • Revenue Ruling 2012-3: Clarifies rules for DC plans that offer lifetime income options • Revenue Ruling 2012-4: Clarifies rules that apply to rollovers from DC plan into DB plan • Proposed regulations under IRC § 401(a)(9): Guidance for plans offering longevity annuity options • Proposed regulations under IRC § 417: Partial lump sum payment from a DB plan

8. FY 2012 Guidance Overview Governmental Plans • Released two items of proposed guidance consisting of: • An announcement of proposed rulemaking (ANPRM) • A draft notice of proposed rulemaking containing proposed regulations • One item provides guidelines for determining whether a retirement plan is a governmental plan under section 414(d) • The other item provides guidelines for determining whether a plan of an Indian Tribal Government (ITG) is a governmental plan • Town hall and consultation meetings on the ANPRMs were held • Received over 2,000 comments

9. FY 2012 Guidance Overview • REG-153627-08: Proposed regulations related to filing the Form 8955-SSA, “Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits” • REG-113738-12: Proposed regulations that would provide guidance under the anti-cutback rules of IRC § 411(d)(6) in relation to plans sponsored by employers in bankruptcy • Notice 2012-29: The IRS and Treasury announce their intent to issue guidance on the applicability of Treas. Reg. § 1.401(a)-1(b) (the 2007 Normal Retirement Age regulations) to IRC section 414(d) governmental plans

10. FY 2012 Guidance Overview • The Moving Ahead for Progress in the 21st Century Act (MAP-21) • Notice 2012-55: Determination of the 25-year segment rates that are applied to adjust the otherwise applicable 24-month average segment rates • Notice 2012-61: Provides guidance on the special rules relating to pension funding stabilization for single-employer defined benefit pension plans • Notice 2011-96 • Provides a sample plan amendment that satisfies IRC § 436 regarding limitations on the accrual and payment of benefits under certain underfunded single employer DB plans • Extends both the deadline to amend a plan to satisfy IRC § 436 and the period during which such an amendment is eligible for relief from the anti-cutback requirements of IRC § 411(d)(6)

11. EP Examination Update 401(k) Electronic Compliance Check Questionnaire Project • Published an interim report highlighting trends and other information in February 2012 • 86% of plans use a pre-approved plan document • 23% of plan sponsors requested a determination letter from the IRS • 68% of plans provide matching contributions • The IRS continues to use the questionnaire data • to enhance compliance strategies • to improve the Employee Plans Compliance Resolution System, and • to improve guidance and outreach products, such as the web-based 401(k) Fix-It Guide

12. EP Examination Update • International • Continued expanding the focus of the Employee Plan Team Audit (EPTA) program to large employee plan cases with multinational issues • Worked with Puerto Rico and the Virgin Islands on dual jurisdiction audits and voluntary compliance efforts • Emerging Issues and Abusive Transactions: • Continued work on tools and resources to address hard-to-value assets in retirement plans • Developed and refined resources that aid in the identification of abusive and promotional schemes • Coordinated with CI on promoter investigation issues

13. EP Examination Update Employee Plans Compliance Unit (EPCU) • Final reports on many completed projects will be posted on the IRS website • Leased Employees • Domestic Trust • Foreign Distributions • SEP • Adverse Accountants Opinions • 412(i) • Qualifying Employer Securities • New projects and planned projects • Project verifying single employer DB plan compliance with PPA 2006 benefit restrictions • The annual recertification of non-bank trustees and custodians • An ineligible employer project related to 403(b) plans • Final returns filed with reported assets • Nonqualified 401(k) plans

14. Additional Resources • Visit our Web site on a regular basis: www.irs.gov/ep • E-mail your questions to: RetirementPlanQuestions@irs.gov • Call us @ (877) 829-5500 with your questions • Subscribe and read our Newsletters: • Retirement News for Employers • Employee Plans News • Your feedback and comments are appreciated