Treasury Official Confirms Pension Reform Guidance On the Way

Washington, August 1, 2001 ( - Plan sponsors hoping for guidance on the implementation of the new pension reform provisions have a friend at Treasury - Benefits Tax Counsel Bill Sweetnam says he is still committed to having model amendments out by the end of August.

Newly appointed, but no stranger to pension reform, Sweetnam came to his present position from a role as Tax Counsel on the Majority Staff of the Senate Finance Committee (see Sweetnam Awarded Treasury Appointment ), working closely with Senator William Roth on many of the provisions as they were shepherded through the legislative process.

Speaking at a conference Tuesday sponsored by Hewitt Associates and the US Chamber of Commerce, Sweetnam told an audience of plan sponsors that his number one goal was to “give sponsors a chance to see amendments that could help them focus on what they needed to do” to incorporate the benefits in the new bill.

Sweetnam noted that “most” of the 60 provisions included in the bill “don’t need major guidance,” while acknowledging that some do.    

That Was Then, This is Now
Much to the consternation of many procrastinating plan sponsors, Sweetnam acknowledged the IRS’ refusal to further extend the GUST amendment deadlines (see IRS Promises Pension Reform Language, No GUST Extension ).  He also noted that while the new legislation provided for a remedial amendment period, plan sponsors could proceed based on “good faith plan amendments” – and that he hoped the model amendments would help sponsors respond quickly and appropriately to the new provisions.

“Historically, changes in the law didn’t show up in amendments until years later,” he said.  However, unlike prior efforts, he anticipates a larger than normal amount of participant interest – and “push” for inclusion of the new provisions.  That sentiment was echoed by a number of plan sponsors in attendance.

Catching Up

A huge item on plan sponsors’ minds were the catch-up provisions, specifically how they will be able to actually implement them. Sweetnam noted the issue was “very easy from far away” – e.g. at the senator/congressman level – but notoriously complicated in implementation. 

Issues already discussed included:

  • What if a participant dies in the plan year he turns 50, but before he turns 50?
  • What is the “plan limit”?  Is it month-to-month, payroll-to-payroll, a year’s accumulation?
  • How does the plan limit apply with nondiscrimination rules?
  • How does the plan limit work with the 402(g) limit (the $11,000/year limit?
  • What if someone is in more than one plan?

He also noted that employers have already asked if they could, at least in the first year of implementation, correct mistakes beyond the current March 15 deadline.  During a discussion that followed, several employers asked about the requirement that an employer offer the catch-up to all employees uniformly, without regard to union plans, or other small plans that are generally treated separately. Sweetnam said that might be addressed under a future technical correction.

He noted that he wanted to finalize the 401(a) 9 minimum required distribution regulations this year, and that means a look at the actuarial tables for calculating these distributions.

Making A List

Sweetnam noted a number of additional priorities on the guidance agenda, specifically:

  • Updating the 401(k) regulations, specifically for the elimination of the multiple use test and same desk rule.  In fact, he said they might re-propose the whole 401(k) section.
  • T