IRS Provides Guidance on Implementing Pension Funding Relief Rules

By Sheva Levy, ASA, E.A., Cleveland, and Adam Berk, ASA, E.A., Houston

Editor: Michael Dell, CPA

Employee Benefits & Pensions

The IRS released Notice 2014-53, which contains guidance on implementing the defined benefit pension relief provisions included in the Highway and Transportation Funding Act of 2014 (HATFA), P.L. 113-159. While the funding relief contained in HATFA is welcome, the timing of its enactment on Aug. 8, 2014, gave sponsors of plans operating on a calendar-year basis little or no time to make changes to their 2013 valuations before the filing deadlines for their 2013 Forms 5500, Annual Return/Report of Employee Benefit Plan. Notice 2014-53 contains guidance on the timing of various elections that may need to be made and describes instances in which an employer can rely on a deemed election.

Timing and Elections

The funding relief under HATFA would reduce the amounts that many plan sponsors need to contribute to their plans for the 2013 plan year. Many plan sponsors, however, had already finalized their plan funding decisions for 2013. Some plan sponsors may have filed their Form 5500 and reported their funding decisions, while others were nearing their filing deadlines. Generally, once a Form 5500 is filed, funding decisions cannot be reversed. Notice 2014-53, however, provides guidance allowing many plan sponsors to file as planned and follow up with a revised filing later, the timing of which depends on the due date of their Form 5500. This gives plan sponsors the flexibility to give more thought to the implications of HATFA for their particular plan.

Note that plan sponsors had only until Dec. 31, 2014, to defer use of the HATFA segment rates until the first plan year beginning on or after Jan. 1, 2014. That was also the deadline for revoking the deemed election to defer use of the HATFA segment rates until the first plan year beginning on or after Jan. 1, 2014.


Plan sponsors still need to consider the 2013 and 2014 funded status of their plans and consider how HATFA may affect funding and notice requirements. The provisions contained in Notice 2014-53 provide plan sponsors with a little more flexibility on the time frame in which to consider these issues.


Michael Dell is a partner at Ernst & Young LLP in Washington.

For additional information about these items, contact Mr. Dell at 202-327-8788 or

Unless otherwise noted, contributors are members of or associated with Ernst & Young LLP.

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