January 10, 2008

New Proposed Regulations

  • Diversification Requirements for DC Plans Investing in Employer Securities.  The IRS recently issued proposed regulations addressing the employer securities diversification aspect of the Pension Protection Act (PPA).  The PPA of 2006 requires that if a defined contribution plan allows investments in publicly-traded employer securities, then plan participants must be allowed to diversify their portfolios (see Employer Securities Diversification from the Sept 2006 edition of the Benefit Beat).  Until final regulations are issued, plans including publicly-traded employer securities can rely on guidance included in Notice 2006-107, which was extended by Notice 2008-07; or, they can rely on the recently issued proposed regulations.
  • Civil Penalties for Failure to Provide Participant Notices.  The DOL has recently issued proposed regulations that would impose significant civil penalties against plan administrators for failure to provide certain PPA-required disclosure notices to participants, including notice of participant’s rights and obligations under automatic contribution arrangements (see the QDIA article from last month’s Benefit Beat).  If finalized, these regulations would impose up to a $1,000 per day penalty for failure to comply with these notice obligations.


The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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