Compliance Newsletter November 2023
- PBGC 2024 Levels
PBGC announced premium and maximum benefit levels for 2024. - Louisiana Disaster Relief
The IRS and PBGC extended certain deadlines for taxpayers affected by seawater intrusion in parts of Louisiana. - IRS and Treasury 2023-2024 Priority Guidance Update
IRS and Treasury released an outline of items they hope to complete through June 30, 2024.
PBGC 2024 Levels
Pension Benefit Guaranty Corporation (PBGC) announced the flat and variable rate premium amounts as well as the maximum benefit levels for various purposes for 2024.
Flat and Variable-Rate Premiums
As in previous years, PBGC announced an increase to the flat and variable-rate premiums for plan years beginning in 2024. The table below highlights the changes from last year.
| Plan Type | Flat-Rate Premium | Variable-Rate Premium | ||
|---|---|---|---|---|
| 2023 | 2024 | 2023 | 2024 | |
| Single-Employer | $96 | $101 | $52* $652 Per Participant Cap |
$52* $686 Per Participant Cap |
| Multiemployer | $35 | $37 | Not Applicable | |
*per $1,000 of unfunded vested benefits
Maximum Benefit for 2024
PBGC also increased the guaranteed maximum monthly benefit for participants in under-funded single-employer pension plans in 2024. Multiemployer plan maximum guarantees are calculated differently and are not based on an indexed amount.
Here is a table that compares 2023 and 2024 maximum monthly benefits for a 65-year-old in a single-employer plan.
| Payment Option | 2023 Maximum Benefit | 2024 Maximum Benefit |
|---|---|---|
| Straight Life | $6,750.00 | $7,107.95 |
| Joint and 50% Survivor* | $6,075.00 | $6,397.16 |
Present Value of Maximum Guarantee
When a defined benefit plan’s Adjusted Funding Target Attainment Percentage (AFTAP) is at least 60% but less than 80%, the plan must generally limit accelerated benefits, like lump sum distributions, to the lesser of:
- 50% of the payment that would be paid if the restriction did not apply, or
- The present value of the PBGC maximum guarantee
PBGC announced the present value of the maximum guarantee for 2024 is $1,024,251 for a 65-year-old individual. This is down from $1,067,191 in 2023. The maximum guarantee is adjusted for different ages. A complete table can be found at www.pbgc.gov.
Louisiana Disaster Relief
Taxpayers affected by seawater intrusion in parts of Louisiana that began September 20, 2023,are eligible for various Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) deadline relief.
Impacted Areas and Dates
Individuals who reside or have a business in Jefferson, Orleans, Plaquemines, and St. Bernard parishes qualify for relief for certain deadlines occurring on and after September 20, 2023, and before February 15, 2024. Deadlines may be extended to February 15, 2024.
Impacted Deadlines
Below is a partial list of retirement-impact tax filing and payment deadlines that may be extended:
- Retirement plan loan repayments under Internal Revenue Code section 72(p)(2)
- Required minimum distributions under Internal Revenue Code section 401(a)(9)
- The 10% additional income tax continues to not apply even if the following is missed during the relief period:
- Substantially equal payments made over the participant’s life or joint lives of the participant and designated beneficiary
- Deadline for using a distribution from an IRA for a first-time home purchase by the close of the 120thday after the distribution is received
- Prior tax year contribution deadlines for retirement plans
- Indirect rollover distribution deadlines
- 60-day rollovers
- Rollover of qualified loan offsets
- Refunds as a result of
- Excess deferrals
- ADP/ACP non-discrimination testing
- Eligible automatic contribution arrangement (EACA) withdrawals
- Excess IRA contributions
- Deadline for recontributing qualified reservist distributions
- Form 5500 and Form 8955-SSA filing
- Form 5498 for IRAs
- PBGC premium payments
- PBGC deadlines that are based on the Form 5500 deadline
- Single Employer Plan Termination Forms 500 and 501
Additional Resources
For any questions related to IRS deadlines and other disaster-related issues, the IRS has a toll-free number at 1-866-562-5227. For PBGC disaster-related questions, call 1-800-736-2444 ext. 4136.
IRS and Treasury 2023-2024 Priority Guidance Update
The Internal Revenue Service (IRS) and Department of Treasury (Treasury) recently released the 2023-2024 Priority GuidancePlan. While not binding, the plan lists projects that the Treasury and IRS hope to complete by June 30, 2024.
Priority Guidance for Retirement Plans
Noteworthy items related to retirement plans include:
- Guidance relating to certain IRS, Tax Exempt and Government Entities, and Employee Plans programs, including the Pre-approved Plan Program, the Determination Letter Program, and the Employee Plans Compliance Resolution System (EPCRS).
- Regulations relating to the additional ten percent income tax on early distributions.
- Final regulations on the application of the normal retirement age for governmental plans (Proposed regulations were published January 27, 2016).
- Final regulations relating to the timing of the use or allocation of forfeitures in qualified retirement plans (Proposed regulations were published February 27, 2023).
- Regulations and other guidance relating to modifications to 401(k) plans made by the SECURE Act of 2019 and the SECURE 2.0 Act.
- Guidance on student loan payments and qualified retirement and 403(b) plans.
- Regulations and related guidance on closed defined benefit plans (Proposed regulations were published on January 29, 2016).
- Guidance on missing participants, including guidance on uncashed checks.
- Final regulations around the minimum present value requirements for defined benefit plans. Proposed regulations were published on November 25, 2016.
As the Treasury and IRS work through these issues and others, we will keep you informed of any changes that impact retirement plans.
The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
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