IRS Work Plan Provides Focus for Examination of Multiemployer Plans

The Tax Exempt and Government Entities Division (TEGE) of the IRS recently released its work plan for the 2018 fiscal year (ending September 30, 2018). The work plan states that for multiemployer plans the IRS will

"continue to examine plans that failed to properly calculate retirement benefits affecting service crediting and/or allocation/accruals, failed to make required minimum distributions, and/or failed to adjust benefits when retirement is delayed beyond the Normal Retirement Age"

In essence, the IRS has told us what additional areas they will focus upon when examining a multiemployer plan. These areas are in addition to the usual areas of focus for all plans, which includes accrual rules and minimum distribution requirements. The entire work plan for TEGE can be found at this link.

CHEIRON OBSERVATION: Late retirements pose several complex issues, the resolution of which depends on the plan's provisions and the age at which a participant retires. As a general rule, participants that retire after Normal Retirement Age may be entitled to an actuarial adjustment, depending on whether or not the participant continued to work in covered service, the plan's rules regarding suspension of benefits, and whether the plan administrator properly notified participants of the rules. Also, many plans require a participant to apply for benefits in order to begin distributions. This may lead to participants not beginning to receive benefits until after the date benefits are required to begin, thereby triggering the need for an actuarial adjustment or penalties for failure to comply with required minimum distribution requirements.

ACTION: Plans should make sure that their procedures for benefit calculations and commencement, including those for required minimum distributions, comply with the provisions set forth in plan documents and the requirements of the law.

Cheiron pension consultants can assist plan administrators in reviewing plan documents and developing processes to assure compliance with the distribution rules.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.