Questions and Answers with Marty Pippins

Martin "Marty" Pippins, IRS EP technical guidance and quality assurance, has addressed the National Association of Public Pension Attorneys (NAPPA) tax section for many years with regard to Internal Revenue Service (IRS) guidance projects.

For the past several years, we have structured the NAPPA tax update program so that Pippins prepares responses to previously submitted questions. This year, as an introduction to his remarks, Pippins noted that the president's chief of staff, Rahm Emanuel, had issued a memo (the Emanuel Memo) to all executive agencies asking for a delay in the processing of regulations pending White House review. The Emanuel Memo has affected the timetable for issuance and/or implementation of certain guidance projects including:

· The governmental plans definition project

· HEART Act implementation

In response to specific questions, Pippins provided the conference with the following responses:

· RMD Holiday for 2009. The plain language of the statute says that the holiday applies to DC plans and IRAs, not to DB plans and not to hybrid features of DB plans. (Some of our clients are considering requesting that the IRS reconsider this position in the case of hybrid plans.)

· NRA Definition. IRS does not plan to publish additional guidance regarding the normal retirement age (NRA) requirement for governmental plans and is not considering exempting government plans from the NRA regulations. However, the NRA issue is one of the reasons, along with the governmental plans definition, that the IRS provided the option for a Cycle E filing for governmental plans. It is important for governmental plans to realize that the NRA definition issues does not affect a plan design that permits true retirement at an "early" age. What the NRA definition can affect is in-service distributions and vesting issues. Pippins also confirmed what Bortz had said – that there could be more than one NRA per plan.

· 415 Testing. Section 103(b) of the American Recovery and Reinvestment Act implements a change in the mortality table under 415(b). The new law is applicable to "years beginning after December 31, 2008." For 415(b) testing purposes, Pippins agreed that this should be interpreted to mean that the new mortality table is applicable to limitation years beginning after December 31, 2008, rather than plan years.

· Cycle C Filings. Cycle C filings will be given priority over all other filers. All the training has been done. The Cycle C check sheets have been updated. Pippins stated that issues the IRS finds in the determination letter process for Cycle C will be posted on the governmental plans website. The remedial amendment period for Cycle C governmental plan filers will be extended through Cycle E if governmental plans choose to use the Cycle E filing option offered by the IRS.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.