PLANADVISER - November/December 2020 - 7

of it is includable in gross income until
such amounts are actually paid out
of the account to a participant or that
person's beneficiary.
Rev.
Rul.
2020-23
presents
a
number of theoretical situations to
assist in plan sponsor compliance. In
one of these, the guidance explains
that, after the occurrence of an in-kind
distribution, the custodial account
will be maintained as an ICA of the
participant or beneficiary and is no
longer part of the 403(b) plan from
which it came. The distributed ICA is
to be maintained by the custodian as
a Section 403(b)(7) custodial account
that adheres to Section 403(b) requirements
in effect at the time the ICA is
distributed-again until the participant
or beneficiary is paid.
➜ PBGC Takes Over
J.C. Penney Pension Plan
The Pension Benefit Guaranty Corporation
(PBGC) will take on administrative
and financial responsibility for
the J.C. Penney Corp. Inc. Pension Plan,
which covers approximately 36,000
current and future retirees. The takeover
comes nearly six months after J.C.
Penney Corp., along with more than
a dozen subsidiaries and related entities,
filed for Chapter 11 protection in
the U.S. Bankruptcy Court in Corpus
Christi, Texas, and just a few weeks
after the retail company sought court
approval of the sale of its operating
assets to a joint venture led by Brookfield
Asset Management Inc. and the
Simon Property Group.
The joint venture did not agree to
assume the pension plan, the PBGC
reports, leaving it without an ongoing,
viable sponsor. Thus, the agency has
stepped in to become trustee of the
pension plan. According to the PBGC,
retirees will continue to receive benefits,
and future retirees may apply for
benefits as soon as they are eligible, but
it will pay only pension benefits earned
by J.C. Penney's current and future
retirees up to the legal
limits. The
plan's termination was effective as of
November 6. The PBGC estimates that
J.C. Penney's plan is 92% funded, with
approximately $3.3 billion in assets and
about $3.6 billion in benefit liabilities.
➜ The DOL's Registration
Requirements for PPPs
The Department of Labor (DOL) has
announced its final rule on registration
requirements for pooled
employer plans (PEPs), pursuant to
the Setting Every Community Up for
Retirement
Enhancement
(SECURE)
Act. The SECURE Act amended the
Employee Retirement Income Security
Act (ERISA) and the Internal Revenue
Code (IRC)
(IRAs), annuities and certain other taxfavored
employer-provided retirement
arrangements. The final regulations
in this document apply to distribution
calendar years beginning on or after
January 1, 2022.
The effect of these changes is to
to establish PEPs. These
plans are administered by pooled plan
providers (PPPs).
PEPs may start operating this
coming January 1 (see " Expanded Plan
Access, " page 32), but their PPPs must
first register with the secretary of
Labor and the secretary of the Treasury
at least 30 days prior, which they
may do electronically by submitting
the new Employee Benefits Security
Administration (EBSA) Form PR. The
new electronic filing system is available
starting November 25 at https://
efast.dol.gov. An informational version
of the new Form PR and instructions
will be made available at https://dol.
gov/agencies/ebsa. Until
January 31,
the requirement to register at least
30 days prior to operating a PEP is
waived, provided registration occurs
no later than the start of the plan.
Plans must also submit supplemental
filings regarding any specific reportable
events and a final filing after the
provider's last PEP has been terminated
and has ceased operations.
The DOL first announced its notice
of proposed rulemaking (NPRM)
concerning these registration requirements
in August. The proposal said
the EBSA believes the most efficient
approach is to integrate the Form PR
registration filing process into the
current electronic filing system that
employee benefit plans use to file their
Form 5500 annual return.
➜ New Life Expectancy Tables
Will Decrease RMDs
The IRS has issued final regulations
that update the life expectancy and
distribution period tables used to
calculate required minimum distributions
(RMDs) from qualified retirement
plans, individual retirement accounts
reduce RMDs generally, which will
allow participants to keep larger
amounts in their retirement plans to
account for the possibility that they
may live longer, the IRS says.
➜ 2021 Contribution
And Benefit Limits
Next year's contribution limits,
regardless of which type of defined
contribution (DC) plan an employee
invests in and whether he makes
catch-up contributions, remain the
same as this year's limits. For participants
in 401(k), 403(b) and most 457
plans and the federal government's
Thrift Savings Plan, the maximum
contribution is and will be $19,500.
For these participants who are 50 or
older, the maximum catch-up contribution
stays at $6,500.
The contribution limit for SIMPLE
[savings incentive match plan for
employees]
retirement
accounts
remains $13,500 and for individual
retirement accounts (IRAs)
remains
$6,000. The additional catch-up contribution
limit for IRAs is not subject to
an annual cost-of-living adjustment
(COLA) and stays at $1,000.
Effective January 1, 2021, the limitation
on the annual benefit
for a
defined benefit (DB) plan participant
under Section 415(b)(1)(A) remains at
$230,000. For a participant who separates
from service before this coming
January 1, his compensation limitation,
according to Section 415(b)(1)(B),
is computed by multiplying the limitation,
as adjusted through 2020, by
1.0122.
The limitation for defined contribution
plans under Section 415(c)(1)
(A), which addresses annual additions
to DC plans, has been increased
for 2021 to $58,000 from $57,000. The
limitation used in the definition of
" highly compensated employee " (HCE)
under Section 414(q)(1)(B) remains at
$130,000. -PA
planadviser.com November-December 2020 | 7
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PLANADVISER - November/December 2020

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