COLLECTED WISDOM™ on Compliance and Regulatory Related Issues

This page gathers relevant information for 401k plan managers, sponsors, administrators, recordkeepers and others with plan fiduciary and administrative responsibilities. It covers many aspects of compliance and regulatory related issues.

This archive contains not only the most current material on the topic, but also older items that are still relevant, provide background, perspective or are germane to the topic.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

IRS Delays Application of Certain RMD Final Regs to 2026 Distribution Calendar Year

The IRS announced in Announcement 2025-02 that certain future regulations regarding required minimum distributions will take effect in the 2026 distribution calendar year. This follows concerns raised by commenters about the proposed regulations amending specific Treasury regulations. Until these amendments are applicable, the IRS advises that taxpayers should apply a reasonable, good-faith interpretation of the existing statutory provisions.

Source: Asppa-net.org, December 2024

IRS Extends Deadline for Certain RMDs

The Internal Revenue Service and the Department of the Treasury on Wednesday issued an announcement stating that several aspects of required minimum distribution rules will not apply until 2026. The decision was made after commenters expressed concerns about challenges in implementing the final regulations.

Source: 401kspecialistmag.com, December 2024

DOL Launches Retirement Savings Lost and Found

The SECURE 2.0 Act of 2022 introduced a new Section 523 to ERISA, mandating the creation of an online database called the Retirement Savings Lost and Found. This database aims to assist individuals in locating unclaimed retirement benefits by identifying the current plan administrators of employer-sponsored plans. On November 18, 2024, the DOL launched a Voluntary Information Collection Request to retirement plan administrators and recordkeepers to start populating the RSLF. The current RSLF is narrower in scope compared to earlier proposals and serves as a starting point for the database, while also addressing key concerns regarding data security and fiduciary responsibilities that were not fully resolved in previous proposals.

Source: Verrill-law.com, December 2024

Plan Sponsors Face Legal Challenges Over 401k Plan Forfeiture Use

ERISA was established to protect plan assets and impose legal responsibilities on fiduciaries. Typically, employers and their delegates are considered fiduciaries and must act in the best interests of the plans and their participants. Recently, several lawsuits have emerged against plan sponsors concerning the use of a plan's forfeiture account to lower future employer contributions in 401k plans, with around two dozen such cases currently pending. Although the future of these lawsuits is uncertain, employers may want to consider protecting themselves by amending their plan document to provide a predetermined, specific order in which forfeiture funds shall be used.

Source: Phelps.com, December 2024

SECURE 2.0 in 2025: Here Comes a Big Plan Design Change

As we approach 2025, new provisions from SECURE 2.0 will be implemented, impacting plan design, administration, and costs. Understanding these provisions will enable you to better advise your clients on how they may affect their plans. This knowledge will help you strategize necessary administrative changes and effectively communicate with participants. This article provides a detailed review of these provisions.

Source: Penchecks.com, December 2024

IRS Issues 2024 Required Amendments List for Qualified Plans and 403b Plans

The IRS issued Notice 2024-82, which outlines the 2024 Required Amendments List for qualified plans under IRC sections 401(a) and 403(b). This RA List indicates the deadline for plan amendments necessary to comply with recent legislative and regulatory changes that affect these plans, applicable to both individually designed and pre-approved plans. Each year's RA List includes changes for which the IRS has provided guidance or determined that no guidance is needed. The 2024 RA List includes amendments related to the SECURE Act, the Bipartisan American Miners Act, the CARES Act, the Relief Act, and the SECURE 2.0 Act.

Source: Milliman.com, December 2024

QPAM Amendments Impact on CITs: What Banks and Their Advisers Need to Know

Effective June 17, 2024, the DOL has adopted significant amendments to Prohibited Transaction Exemption 84-14, known as the "QPAM exemption." This exemption allows investment funds, including collective investment trusts for employee benefit plans under ERISA, to conduct transactions with parties in the interest of those plans, provided the fund's asset management is under the discretionary control of a qualified professional asset manager. This article discusses the origins and objectives of the Sole Responsibility Requirement within this framework and its implications for arrangements between banks and investment advisors concerning CITs. It posits that if banks and advisors follow specific guidelines, they can ensure compliance with the exemption, thereby enabling them to engage in transactions with parties in interest associated with their CITs.

Source: Klgates.com, December 2024

Planning for 2025: Employee Benefit Plan Changes Taking Effect

As the new year approaches and a new administration begins, changes to employee benefit plans will be implemented in 2025 due to existing laws like ERISA and the Setting Every Community Up for Retirement Enhancement Act of 2022. This summary highlights these upcoming changes and provides insights to help plan sponsors stay informed. It's important for plan sponsors to proactively review and adjust their plans to remain compliant with the new mandates.

Source: Bdo.com, December 2024

Most SECURE 2.0 Plan Design Options Fully Available for 2025

The SECURE 2.0 Act, passed in December 2022, introduced over 90 provisions aimed at enhancing defined contribution plans, building on the earlier SECURE Act from December 2019. These provisions have staggered effective dates to allow the Treasury Department and the IRS to provide necessary guidance and for recordkeepers to update their systems. Although final guidance is still pending in some areas, the Treasury and IRS have provided enough information for recordkeepers to implement the new plan design options available under SECURE 2.0. This article discusses some of the more relevant provisions for plans in 2025.

Source: Segalco.com, December 2024

Employee Benefit Plans: Important Considerations for Year-End and 2025

As the 2025 plan year approaches, plan sponsors should take the opportunity to review their plan documents and policies, consider potential design changes, and ensure compliance with new legislative and regulatory requirements. While this overview focuses on key updates affecting retirement and health plans, it's essential to note that for 2024, no amendments are required unless discretionary changes have been made. The SECURE 2.0 Act of 2022 introduces several mandatory and optional provisions that are already in effect, making this an important time for plan sponsors to assess their plans.

Source: Mwe.com, December 2024

RMD Comparison Chart (IRAs vs. Defined Contribution Plans)

This article from the IRS provides a comparison of the Required Minimum Distributions for Individual Retirement Accounts and defined contribution plans. It outlines key differences and similarities in how RMDs are calculated and when they must begin for both types of accounts. The article emphasizes the importance of understanding the rules to avoid penalties for missed RMDs.

Source: Irs.gov, December 2024

SECURE 2.0 Permits Employer Roth Contributions

As the January 1 plan year approaches, 401k plan sponsors are considering potential changes to their plans in light of the features introduced by the SECURE 2.0 Act of 2022. One notable feature allows participants to elect Employer Contributions as Roth amounts, instead of the traditional pre-tax contributions. This option applies to various retirement plans, including 401k, 403b, and governmental 457b plans, as outlined in SECURE 2.0 Section 604. This article serves as a reminder for plan sponsors on how to implement this new provision effectively.

Source: Ferenczylaw.com, December 2024

What Is a plan document?

The question this short item tackles is about the necessity of a plan document. A plan document is defined as the official and legally binding record of a retirement plan's rules. The discussion emphasizes the importance of having this document, not only for compliance with regulations set by the IRS and DOL but also for clarity and confidence in managing employee benefits.

Source: Employeebenefitslawreport.com, December 2024

DOL Retirement Savings Lost and Found Database Begins Voluntary Data Collection Process

On November 18, 2024, the DOL announced the immediate collection of information from retirement plan administrators to create a new online "Retirement Savings Lost and Found" database. This initiative, established by the SECURE 2.0 Act, aims to reconnect individuals who have lost track of their retirement benefits with the corresponding retirement plans. Currently, participation by plan administrators in populating this database is voluntary. This article reviews specific questions addressed in the DOL announcement.

Source: Compliancedashboard.net, December 2024

Is Matching Student Loan Repayments Worth the Cost for Employers?

The SECURE 2.0 Act allows employers to match student loan repayments with retirement plan contributions, providing support for younger employees facing student debt challenges. This benefit can enhance recruitment and retention efforts, making it appealing to HR teams and talent acquisition professionals. However, implementing this feature can lead to significant costs that employers need to evaluate carefully. While the provision offers valuable advantages, it also presents challenges. This article will help HR professionals and plan sponsors understand the practical implications and key factors involved in implementing student loan repayment matching.

Source: 5500audit.com, December 2024

Year-End Considerations for Employer-Provided Retirement Plans

As 2024 approaches, it's important to assess the impacts of recent changes under the SECURE Acts on qualified retirement plans. Although plan amendments are not due until December 31, 2026, qualified plans must be compliant with the new requirements from the law's effective date. This article provides a review of significant changes that have already taken effect or will soon.

Source: Rrlawpc.com, December 2024

2025 DC Plan Compliance Calendar

The document is a compliance calendar for defined contribution plans for 2025. It outlines important deadlines related to various compliance requirements that plan sponsors must adhere to, including notices, filings, and other obligations. Key dates include deadlines for submitting disclosures to participants, filing reports with regulatory agencies, and ensuring plan amendments are made timely. The calendar serves as a useful tool for employers and plan administrators to help them maintain compliance with legal and regulatory standards in managing their defined contribution plans.

Source: Mercer.com, December 2024

2025 Changes in Catch-Up Contributions Available

The article highlights important updates regarding 401k catch-up contributions set to take effect on January 1, 2025. As part of the SECURE 2.0 Act, participants aged 60 to 63 will be able to contribute larger amounts in catch-up contributions compared to previous years, with new limits established. However, the implementation of this provision is not automatic; plan sponsors must actively decide to adopt it for their employees. Additionally, there is currently a lack of guidance from the IRS on how to manage these new limits, which presents some challenges for plan sponsors as they prepare for these changes.

Source: Ferenczylaw.com, December 2024

401k Annual Administration: A Checklist for 2025

Effective annual 401k administration shouldn't be overwhelming for employers, as qualified providers handle the technical aspects. To streamline this process, employers are encouraged to use a checklist for the timely completion of annual tasks. Employers can utilize this checklist for the 2025 plan year to ensure compliance and organization.

Source: Employeefiduciary.com, December 2024

Long-Anticipated VFCP Changes May Be Issued Soon

This piece discusses anticipated changes to the Voluntary Fiduciary Correction Program that may be issued by the DOL in early 2025. The VFCP is a program that allows fiduciaries of employee benefit plans to correct certain violations of ERISA without facing enforcement actions. The proposed modifications are expected to streamline the correction process and make it easier for fiduciaries to comply with regulations. The article highlights the importance of these changes for plan sponsors and fiduciaries, as well as the potential impacts on the administration of retirement plans.

Source: Asppa-net.org, December 2024

Forfeiture Funds: Legal Requirements, Permitted Uses, and Litigation Risk Management

Forfeiture funds in 401k plans consist of unvested employer contributions that revert to the plan when participants leave before becoming fully vested. Effective management of these funds is essential for plan sponsors, who must adhere to federal regulations and their plan documents as fiduciaries. Properly utilizing forfeiture funds minimizes litigation risks and ensures compliance with ERISA fiduciary standards. By regularly reviewing and carefully drafting plan documents, plan sponsors can establish clear guidelines for the use of forfeiture funds, protecting both the plan and its fiduciaries from potential legal issues.

Source: Quarles.com, November 2024

Key SECURE 2.0 Act Updates for Defined Contribution Retirement Plans

Beginning in 2025, new regulations will impact 401k and 403b retirement plans concerning long-term part-time employees, automatic enrollment, catch-up contributions, and Roth treatment for high earners. These updates reflect a significant shift in the retirement planning landscape aimed at enhancing access and contribution flexibility for employees while ensuring compliance with new regulations.

Source: Quarles.com, November 2024

End of The Year Tips for 401k Plan Sponsors

As we transition from Thanksgiving to the holiday season and prepare for the New Year, retirement plan sponsors must focus on year-end planning for their plans. This article emphasizes the fiduciary responsibility of sponsors to review and enhance their retirement plans in anticipation of the upcoming year. For detailed information and guidance on maintaining and improving retirement plans, please refer to the full publication.

Source: Jdsupra.com, November 2024

Agencies Release 2024 Form 5500 Series With Minimal Changes

The agencies have released the 2024 Form 5500 series, including Form 5500, Form 5500-SF, Form 5500-EZ, and their instructions, with minimal changes mostly concerning retirement plans. Key highlights include: 1. Pension-Linked Emergency Savings Accounts: A new plan characteristics code (2Y) has been added for these accounts, which are available for plan years beginning in 2024. Plans offering this feature must include the code on Form 5500 (line 8a) or Form 5500-SF (line 9a). 2. Form 5558 for DCG Filing: Defined contribution group (DCG) plan administrators can file a single Form 5558 to request an extension for Form 5500 without needing to attach a list of participating plans.

Source: 401khelpcenter.com, November 2024

Who Can Make Additional 401k Catch-up Contributions Under the SECURE 2.0 Act?

The SECURE 2.0 Act allows for enhanced catch-up contributions for older participants in 401k plans starting in 2025. Specifically, participants aged 60 to 63 will be able to contribute the greater of $10,000 or 150% of the standard catch-up limit for 2024 ($7,500, indexed for inflation). In 2025, this means the maximum catch-up contribution for older participants will be $11,250.

Source: 401khelpcenter.com, November 2024

DOL Initiates Data Collection to Reunite Workers With Lost Retirement Savings

The DOL has begun efforts to create the Retirement Savings Lost and Found database, an online tool to help workers locate lost retirement benefits. Starting Monday, plan administrators, recordkeepers, and service providers are invited to voluntarily submit data to help populate the database, which is expected to launch by December 29. The EBSA has issued a request outlining the necessary data elements and submission methods, highlighting the importance of collaboration between the government and the retirement plan community for the tool's success.

Source: Planadviser.com, November 2024

DC Plan Sponsors and Forfeiture Lawsuits Webinar: What You Need to Know

In a recent webinar hosted by NEPC's Dan Beaton and Groom Law Group's Jennifer Eller, the discussion focused on the surge of lawsuits involving defined contribution plan forfeiture accounts. They explored the allowed uses of forfeitures and offered strategies for plan sponsors to minimize the risk of litigation in this area. The replay of the webinar is available here.

Source: Nepc.com, November 2024

Avoiding 401k Problems With Former Employees

The author reflects on his experience as a former employee to explain why his employer avoided hiring staff for their law firm. Additionally, his employer identified a potential liability risk for 401k plan sponsors involving former employees who still have account balances in the plan. To minimize this risk, the author recommends encouraging these former participants to roll over their balances or cash them out if they qualify under the cash-out provision. For more details, the full publication is available here for review.

Source: Jdsupra.com, November 2024

Form 1099-R Distribution Codes for Defined Contribution Plans

Form 1099-R must be issued by January 31 of the year following the distribution. The accompanying image outlines the most commonly used boxes on the form and provides explanations specifically for distributions from defined contribution plans.

Source: Dwc401k.com, November 2024

IRS Releases Guidance on Overpayments From 401k Plans

On October 15, 2024, the IRS issued Notice 2024-77, which outlines new rules for correcting overpayments from retirement plans, including 401k plans, under the SECURE 2.0 Act. This guidance clarifies situations in which plan sponsors can correct inadvertent benefit overpayments made to participants without needing to recoup those amounts or make corrective payments, a shift from the previous requirement that sponsors attempt recoupment to avoid potential plan disqualification.

Source: Compliancedashboard.net, November 2024

The Basics of New Comparability Plans

New comparability plans are qualified defined contribution plans that allow employers to allocate varying profit-sharing contribution percentages to different employee groups. These plans enable higher contributions for owners and highly compensated employees while minimizing contributions for other staff. However, they must pass discrimination tests that assess the retirement benefits equivalent to the contributions made. These plans are particularly effective when there is a significant disparity in compensation or age between favored employees and the rest of the workforce.

Source: Belfint.com, November 2024

The Challenges of Census Data in Non-Discrimination Testing: Why Uniformity Remains Elusive

Each year, 401k Plan Sponsors must compile a detailed employee census for non-discrimination testing, a process that can be frustrating and prone to errors related to data consistency and accuracy. Auditors often find discrepancies between census data and payroll records, highlighting the need for careful data management. Despite the requirement for NDT across all plans, there is no standard format for census reports, primarily due to various challenges that prevent uniformity in payroll systems.

Source: 5500audit.com, November 2024

Fred Reish on Things I Worry About: Automatic Enrollment - Part 2

The SECURE Act 2.0, enacted on December 29, 2022, mandates that new 401k and private sector 403b plans automatically enroll eligible employees starting in the plan year after December 31, 2024. This article focuses on the effective date as pertaining to the 2025 calendar year, which is approaching. It highlights two specific issues related to automatic enrollment: the determination of "which" eligible employees will be automatically enrolled and the inclusion of long-term, part-time employees in this requirement.

Source: Fredreish.com, November 2024

How to Improve 401k Plan Fee Disclosures

Congress sought the Government Accountability Office's evaluation of 401k plan fee disclosures, which found that participants largely do not read or understand these disclosures. The Department of Labor's 2010 initiative to mandate quarterly fee disclosures has been ineffective, as many participants remain unaware of their fees. The GAO report suggests there may not have been a need for these separate disclosures, given the availability of account information online. Instead, the DOL could enhance regular account statements with clear, concise, standardized fee information, removing complex language to improve participant understanding. The article provides three suggestions to improve fee disclosures.

Source: Encorefiduciary.com, November 2024

IRS Guidance: How Reliable Is It?

Federal agencies translate legislation affecting defined contribution plans into guidance, with the IRS focusing on tax laws and the DOL on labor laws. The IRS provides crucial guidance that helps plan sponsors, fiduciaries, and participants to effectively implement tax-preferred savings options. This framework is essential, as it reduces uncertainty surrounding new laws such as the SECURE Act of 2019, the CARES Act of 2020, and SECURE 2.0 from 2022, ensuring these legislative changes are practical and beneficial.

Source: Callan.com, November 2024

New Permissible Minimum Service Requirements for 401k and 403b Plans

The SECURE Act, signed into law on December 20, 2019, followed by SECURE Act 2.0 on December 23, 2022, introduced several changes to 401k and 403b plan requirements. One significant change pertains to minimum service requirements for participation in 401k plans, allowing sponsors to set criteria that help streamline administration by excluding part-time employees with minimal participation history. This is aimed at reducing the administrative burden associated with managing small accounts. Meanwhile, 403b plans must provide universal eligibility but can exclude employees working less than 20 hours per week for similar administrative efficiency reasons.

Source: Berrydunn.com, November 2024

Retirement Plan Disaster Relief

Recent news highlights the increasing frequency of natural disasters across the United States, affecting many people. Although these catastrophes cannot be prevented, the SECURE 2.0 Act has made it easier for retirement plan participants to access their savings after such events. This federal legislation allows retirement plan sponsors to provide greater access to funds following a federally recognized disaster, streamlining the previous process which required individual congressional measures for each disaster. Once a major disaster is declared by the President, relief options become available for approximately six months, allowing individuals in the affected areas who have suffered economic losses to access their retirement savings.

Source: Legacyrsllc.com, November 2024

SECURE 2.0 2025 Catch-Up Contribution Increase

The SECURE 2.0 Act of 2022 introduced changes to catch-up contributions under the Internal Revenue Code that have delayed effective dates. Notably, Section 109 increases the limit on catch-up contributions, effective for tax years beginning January 1, 2025. A second provision requires that catch-up contributions for employees earning over $145,000 in FICA wages be made as Roth contributions. Initially set to begin on January 1, 2024, this requirement has now been postponed to January 1, 2026, pending IRS guidance. Currently, catch-up contributions from higher-paid employees do not need to be made as Roth contributions.

Source: Ferenczylaw.com, November 2024

Retirement Plan Amendments and 2024 Year-End Action Items

The notice advises plan sponsors to prepare for 2024 IRS year-end amendments and outlines key action items. This includes amendments related to qualified plans, catch-up contributions under the SECURE Act 2.0, and the IRS final rule regarding required minimum distributions after death. The advisory emphasizes upcoming deadlines for amending qualified retirement plans and encourages plan sponsors to review other important considerations.

Source: Alston.com, November 2024

What Are the Consequences of Excess Deferrals? IRS Offers a Look

When a participant makes excess deferrals to a 401k plan, there are significant implications, as detailed by the IRS in their Issue Snapshot. The IRS outlines the limitations on elective deferrals, their treatment under tax law, and the implications related to catch-up contributions under IRC Section 414(v). Excess deferrals can lead to increased income tax liability for participants, and if mismanaged, could jeopardize a plan's qualified status. The IRS also provides guidance for employers and plan sponsors on how to audit elective deferrals effectively.

Source: Asppa-net.org, November 2024

IRS Announces 2025 Retirement Plan Limits

On November 1, 2024, the IRS announced that the contribution limit for 401k plans will increase to $23,500 for 2025, up from $23,000 in 2024. Additionally, the IRS provided technical guidance on cost-of-living adjustments impacting pension plans and other retirement-related items for tax year 2025 in Notice 2024-80.

Source: 401khelpcenter.com, November 2024

IRS Announces 2025 Cost of Living Adjustments to Various Retirement Plan Limits

The IRS has announced cost-of-living adjustments for retirement plan limitations effective January 1, 2025. While inflation rates have stabilized, resulting in modest increases, these adjustments are still welcomed. The updated limits include slight increases in the 415 and 402(g) limits, as well as new limits for additional catch-up contributions for participants aged 60-63 and deferral limits for Starter 401k Plans.

Source: Ferenczylaw.com, November 2024

How Are Plans Handling Missing Participants?

The article addresses the difficulties plan administrators encounter in locating missing participants and distributing their plan balances, especially for terminated employees. Although there are no specific regulations from the DOL regarding this issue, plan sponsors are expected to show a reasonable effort to distribute funds to these individuals. A survey conducted by the Plan Sponsor Council of America in September 2024 revealed insights from 234 plan sponsors across various sectors about their strategies for managing missing participants and small plan balances. Will Hansen, the Executive Director of PSCA, noted that this concern is prevalent among plan sponsors, who allocate considerable time and resources to the issue. The survey aims to highlight current trends and practices in addressing these administrative challenges.

Source: Ntsa-net.org, October 2024

Consequences to a Participant Who Makes Excess Deferrals to a 401k Plan

IRC Section 402(g) limits the amount of elective deferrals a participant may exclude from taxable income in a calendar year. This IRS "snapshot" examines the consequences to a participant who makes excess elective deferrals to a 401k plan.

Source: Irs.gov, October 2024

Four SECURE 2.0 Provisions Plan Sponsors Are Likely to Add

Fidelity Investments surveyed 2,000 clients to assess interest in the optional provisions of the SECURE 2.0 Act among plan sponsors. The survey highlighted the top four provisions that plan sponsors are keen to adopt. They are outlined in this article. It also indicated that smaller plan sponsors are likely to have the lowest adoption rates due to the increased complexity of implementing each new provision.

Source: Consultrms.com, October 2024

SECURE 2.0 Act: Provisions for Implementation in 2025

The SECURE 2.0 Act introduced several sweeping changes to how Americans can use retirement savings plans. Some provisions have already taken effect, while others are scheduled for implementation in 2025 and beyond. Financial advisors and plan sponsors should be aware of these upcoming provisions, as many will require a decision on whether to opt in or out. This article provides a summary of the key changes for 2025 that financial advisors and plan sponsors need to know.

Source: Consultrms.com, October 2024

Federal Data Crackdown Poses Risks to 401k Student Loan Match

The article discusses potential risks associated with a federal crackdown on data privacy that could impact 401k plans and student loan matching programs. As the government enhances scrutiny on how employers manage and share employee data, companies may face challenges in offering benefits connected to loan repayment. This increased regulation might lead to complications for programs designed to match student loan payments with 401k contributions, potentially affecting the financial well-being of employees reliant on these benefits.

Source: Bloomberglaw.com, October 2024

DOE Regulations Could Interfere With the Student Loan Match, Industry Warns

The article discusses potential issues arising from new Department of Education regulations that may interfere with student loan matching programs. Industry experts warn that these regulations could complicate or negatively impact efforts to help employees manage student loan debt, particularly regarding employer-sponsored assistance programs. Concerns include the potential for increased administrative burdens and reduced participation in these beneficial programs, ultimately affecting employees' financial well-being. The article emphasizes the need for a careful balance between regulatory compliance and effective support for those managing student loans.

Source: Psca.org, October 2024

ERISA Row Related to How Employers Use 401k Forfeitures Deepens

Since last fall, plaintiffs have initiated over twenty ERISA class actions alleging breaches of fiduciary duties concerning 401k plan forfeitures. Despite existing guidance from the Treasury Department and the Department of Labor, this new legal theory is gaining traction. Two preliminary rulings have permitted these forfeiture claims to advance, further encouraging this trend. However, two recent decisions, one addressing fiduciary discretion and the other exploring the limits of ERISA, provide valuable insights and nuanced discussions on the issue.

Source: Nixonpeabody.com, October 2024

DOL, Treasury Rules to "Heat Up" This Fall: Senior DOL Official

During a session at the ASPPA Annual Conference on September 22 in Orlando, key figures from the DOL and Treasury discussed regulatory priorities using sports metaphors. Jeff Turner and Kyle Brown provided insightful updates on topics like the fiduciary rule, LTPTE, ESOPs, and Form 5500 modernization. Turner advised the audience to remain engaged with the evolving status of the Retirement Security Rule, indicating more developments were on the horizon.

Source: Napa-net.org, October 2024

How Long Must We Store our 401k Records?

As regulatory complexities grow, maintaining detailed records for employee benefit plans is essential. The IRS and DOL have set guidelines for record retention, which apply directly to plan sponsors. While service providers may store some records, sponsors are still legally responsible for retaining all relevant documentation.

Source: Dwc401k.com, October 2024

How to Calculate Years of Service in your Retirement Plan

One of the most fundamental requirements in managing a qualified retirement plan is counting an employee's length of service. It is the basis for determining such items as plan eligibility, entitlement to company contributions, vesting, and even retirement itself. Although this seems like a straightforward task, the rules are quite complex and create traps for the unwary.

Source: Dwc401k.com, October 2024

How to Determine Eligibility for Your 401k Plan

Companies sponsoring retirement plans have considerable flexibility in defining eligibility criteria, but they must ensure that the plan documentation aligns with their goals. There are four key variables to consider. Each of these factors needs careful consideration and precise wording in the plan documents to effectively reflect company objectives.

Source: Dwc401k.com, October 2024

Back-to-School Special: IRS Offers Insight on Implementing Qualified Student Loan Payments

On August 19, 2024, the IRS released Notice 2024-63, offering guidance on implementing Section 110 of the SECURE 2.0 Act of 2022. This section allows employers with 401k or 403b plans to make matching contributions based on employees' student loan payments. The Notice addresses key topics such as eligibility rules, employee certification, nondiscrimination testing, and other administrative procedures through a series of questions and answers. This article is an in-depth look.

Source: Mwe.com, October 2024

What to Know About the New RMD Rules

The SECURE Act passed in late 2019, altered the Required Minimum Distribution rules for account holders and most non-spouse beneficiaries. In 2022, the IRS issued proposed interpretations of these regulations. After a two-year wait, the final regulations have now been released, confirming most of the initial proposals and introducing additional new rules.

Source: Manning-Napier.com, October 2024

Avoid an IRS Audit Surprise by Checking These Areas of Your 401k Plan

When notified of an impending IRS audit for a 401k plan, it's crucial to take proactive steps rather than remain inactive. Collect all requested materials and review your 401k plan for potential errors. Conducting a mock audit with an ERISA attorney and your third-party administrator can help identify and correct any significant issues before the official audit takes place.

Source: Jdsupra.com, October 2024

The Trouble With True-ups: Make Sure You Budget for the Maximum Match

Employers that give substantial bonuses tend to allow their employees to contribute the maximum 401k or 403b deferral amount out of their bonus pay. To ensure that employees who take advantage of this flexibility get the maximum match, the employers have to make sure that their plan document has a true-up match provision. There's also a lesson to be learned by employers who don't like surprises.

Source: Belfint.com, October 2024

IRA and Employer Plan Disaster Relief

Congress has equipped the IRS with more sweeping authority to respond to disasters without having to wait for legislative action. The SECURE 2.0 Act permanently allows plan participants to take penalty-free distributions and to borrow more from their retirement savings when a major disaster has been declared by the President. This article summarizes current federal disaster relief guidance.

Source: Ascensus.com, October 2024

Required Minimum Distributions

As we approach the end of the calendar year, it is important to be reminded about one frequently overlooked retirement plan requirement. Upon attainment of age 73, certain participants of a tax-qualified retirement plan may be required by federal tax law to withdraw a minimum amount from such plan each year. These mandatory distributions are known as "required minimum distributions."

Source: Legacyrsllc.com, October 2024

401k Student Loan Match Perk Hindered by Employer Hesitation

While offerings from administrators like Betterment, Fidelity, and SoFi have already been marketed as services to facilitate matching for student loan payments, plan sponsor uptake appears to be lagging. Companies have been slow to offer an enticing new perk because of compliance and logistical concerns even as the IRS cleared the way for employers to provide the benefit.

Source: Wagnerlawgroup.com, October 2024

The Final RMD Regulations: The High Points

The good news is that the final RMD rules did not make major changes to the 2022 proposed regulations. But there are important refinements and clarifications, and, of course, discussion of many of the SECURE 2.0 RMD changes that Congress passed after the Treasury released the proposed regulations. This article highlights some of the most important changes.

Source: Ferenczylaw.com, October 2024

IRS Ruling on 401k Discretionary Contributions

On August 23, 2024, the IRS gave its approval to a novel arrangement in which employees participating in their employer's 401k plan would be permitted to elect to allocate certain employer discretionary contributions made under such plan among various other types of employee benefits offered by the employer. The IRS determined that, as long as specified conditions are met, the proposed arrangement would not cause the various plans to run afoul of the Internal Revenue Code rules applicable to the plans.

Source: Compliancedashboard.net, October 2024

DOL vs. IRS Rules: Courts Asked to Decide How 401k Plans Can Use Forfeiture Assets

What started as a small law firm filing a handful of suits against 401k plans' use of forfeited funds has metastasized into a broad attack on sponsors that raises questions about reducing participants' expenses. It's a trend of law firms filing more lawsuits seeking to use DOL regulations regarding fiduciary duty to supersede IRS rules. The eruption of lawsuits has been accompanied in the early stages by divergent federal court decisions that don't give plan sponsors -- and their ERISA attorneys -- a clear picture of how to defend against this type of lawsuit.

Source: Wagnerlawgroup.com, September 2024

IRS Addresses Matches for Qualified Student Loan Payments

The SECURE 2.0 Act gave plan sponsors of certain DC plans the ability to make matching contributions when workers make qualified student loan payments on qualified educational loans. The IRS has issued interim guidance that applies to 401k, 403b, and governmental 457b plans as well as SIMPLE IRAs. The interim guidance is effective for plan years beginning after December 31, 2024.

Source: Segalco.com, September 2024

Chevron Explained

On June 28, the U.S. Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo. The court overruled its own 1984 holding in Chevron v. Natural Resources Defense Council, in which it stated that the federal courts, in many cases, should defer to agency interpretations of ambiguous federal statutes. Here, ERISA expert David Kaleda unpacks the Supreme Court decision that gives the courts more weight in areas that include employee benefits law.

Source: Planadviser.com, September 2024

A Brief Guide to Qualified Disclaimers for Retirement Plan Administrators

A "qualified disclaimer" is a tax-effective way to refuse a transfer of property that would otherwise occur on someone's death. From time to time, retirement plan administrators may be contacted by a beneficiary who wants a deceased participant's benefit to go to a contingent beneficiary or the participant's estate. The way to make that happen is a qualified disclaimer.

Source: Verrill-law.com, September 2024

2025 401k Contribution Limits: Milliman Halves Its Increase Prediction

It's looking like retirement savers will only see a $500 increase in the amount they can contribute to their 401k, 403b, or 457 plans in 2025, according to the newly updated final forecast for the 2025 IRS contribution limits from Milliman. For 2024, the elective deferral limit was also increased by $500 compared to 2023.

Source: 401kspecialistmag.com, September 2024

IRS Issues Guidance on Retirement Matches for Student Loan Payments

Employers now have some clarity around a new program that allows them to match retirement plan contributions to employees' student loan payments. The IRS on Aug. 19 released long-awaited interim guidelines regarding the program, a provision under SECURE ACT 2.0 that allows employers with 401k, 403b, governmental 457b, or SIMPLE IRA plans to match employees' student loan payments like they would for traditional retirement contributions. The provision took effect this year, but employers have been waiting for more guidance around the new program.

Source: Shrm.org, September 2024

Federal Regulators Seek Comments on Saver's Match Contributions

The IRS put out a request for comments on issues related to the SECURE Act 2.0 provision that creates a federal Saver's Match, under which the federal government would contribute up to $2,000 annually to an individual's defined contribution plan or individual retirement account. The Saver's Match, scheduled to begin in 2027, would replace the Saver's Credit, a nonrefundable tax credit. It is intended to increase retirement savings for low-to-moderate-income Americans.

Source: Planadviser.com, September 2024

DOL Seeks to Streamline PTE Process With Updated Procedures

Updated DOL procedures for handling requests for prohibited transaction exemptions require more detailed disclosures from ERISA plan sponsors. The final rules also enhance the agency's scrutiny of independent fiduciaries and appraisers hired to safeguard plans and their participants. Although service providers may also seek PTEs, this article focuses on aspects of the final rules most relevant to sponsors.

Source: Mercer.com, September 2024

NAGDCA Explains How to Offer a Self-Directed Brokerage Window

While brokerage windows offer retirement plan participants expanded investment choices, fiduciaries must navigate a complex landscape of provider selections, fee structures, and investment parameters to ensure compliance with their responsibilities, according to the National Association of Government Defined Contribution Administrators. When considering the addition of a brokerage window, NAGDCA recommended that plan fiduciaries pay careful attention to these key factors, which are reviewed here.

Source: Planadviser.com, September 2024

Long-Term Part-Time Eligibility Provisions -- 2025 Edition

Everyone is now an expert on how to apply the "long-term part-time employee" provisions of the SECURE Act which became effective at the beginning of this year. Unfortunately, it is now time to "adjust" that knowledge in anticipation of certain impending changes to the LTPT rules. This is because, while the SECURE Act established the LTPT rules that became required for most plan sponsors on January 1, 2024, subsequent retirement plan legislation commonly referred to as "SECURE 2.0" modified and expanded the LTPT rules. This article discusses those changes to the LTPT rules as imposed by SECURE 2.0.

Source: Legacyrsllc.com, September 2024

Major SECURE 2.0 Guidance Issued: Extra Credit for Repaying Qualified Student Loans

On August 19, 2024, the IRS issued Notice 2024-63 providing guidance for plan sponsors that wish to provide matching contributions based on eligible student loan repayments made by participants, rather than based only on elective deferrals, pursuant to the SECURE 2.0 Act of 2022. This article summarizes guidance under the Notice.

Source: Beneficiallyyours.com, September 2024

Interim Guidance on Matching Qualified Student Loan Payments

Until recently, employer matching contributions under qualified plans were required to be conditioned solely upon employee contributions made to the plan. However, one of the many changes enacted by the SECURE 2.0 Act enabled certain qualified plans to condition employer matching contributions on employees' qualified student loan repayments. The IRS recently released Notice 2024-63, which provides interim guidance related to the administration of such loan repayment matching programs.

Source: Pbwt.com, September 2024

IRS Releases Guidance on Matching Contributions for Qualified Student Loan Payments

The IRS released Notice 2024-63, regarding employer matching contributions for "qualified student loan payments" made by employees participating in 401k plans. The SECURE 2.0 Act of 2022 permits plans that include matching contributions to provide such contributions based on certain student loan payments, as opposed to basing them exclusively on elective deferrals. This is a short overview.

Source: Compliancedashboard.net, September 2024

Final Warning: Distributions to Beneficiaries Must Begin in 2025

The complexity of the RMD rules and subsequent proposed and final regulations has created confusion in administering plan provisions. The IRS has given qualified plan beneficiaries relief from the excise tax through 2024 and has also put plan sponsors on notice that RMDs must be administered correctly going forward.

Source: Brickergraydon.com, September 2024

IRS Issues Interim Guidance on Matching Contributions Made on Account of Qualified Student Loan Repayments

Starting in 2024, the SECURE 2.0 Act allows employers to make matching contributions to 401k, 403b, and governmental 457b plans, and SIMPLE IRAs on account of employees' qualified student loan payments. Many plan sponsors have deferred implementation of QSLP matches pending IRS guidance, and on August 19, 2024, the IRS issued Notice 2024-63, which provides that interim guidance in a question-and-answer format. It addresses discrete issues of eligibility, annual certification, ADP testing, and reasonable procedures to administer a plan with a QSLP matching feature.

Source: Wagnerlawgroup.com, August 2024

IRS Issues Guidance Regarding Matching Contributions Based on Eligible Student Loan Payments in Qualified Retirement Plans

The IRS issued Notice 2024-63 guiding qualified retirement plans that implement matching contributions based on an employee's qualified student loan payment. Notice 2024-63 is in question-and-answer format, illustrating several plan administrative issues in various examples. This is a three-page review of the guidance.

Source: Voya.com, August 2024

Employers Now Have Interim Guidance on Student Loans and Retirement Plans

The IRS provided interim guidance to employers that provide matching retirement plan contributions based on student loan payments, a new benefit courtesy of a 2022 law. Notice 2024-63 implements Section 110 of the SECURE 2.0 Act of 2022. It applies to sponsors of 401k and similar retirement plans that provide matching contributions based on eligible student loan payments made by their participating employees.

Source: Thetaxadviser.com, August 2024

Final and New Proposed RMD Regulations Issued

On July 19, 2024, the IRS and the Department of Treasury released both final regulations and proposed regulations for compliance with the RMD rules. This article focuses on important developments under these final regulations and proposed regulations that impact administrators and participants/beneficiaries of qualified plans (both defined benefit and defined contribution), 403b plans, and 457b plans.

Source: Icemiller.com, August 2024

IRS Issues Proposed Required Minimum Distribution Regulations

On July 19, 2024, the IRS bestowed upon us two pieces of "light" reading on required minimum distributions. One was the final regulations to Internal Revenue Code 401(a)(9), a mere 290 pages. The other guidance was the proposed RMD Regulation, which expounds on several of the components of the SECURE 2.0 Act of 2022 impacting RMDs. That is the subject of this article.

Source: Ferenczylaw.com, August 2024

IRS Releases Guidance on Retirement Plan Student Loan Matching

On August 19, 2024, the IRS released Notice 2024-63, providing much-anticipated guidance on employer retirement plan contributions as they relate to qualified student loan payments (QSLPs). This notice provides important clarification for plan sponsors who are considering adding matching student loan payments to their retirement plans.

Source: Captrust.com, August 2024

Catch-Up Contributions Must Exceed Some Limit

What's the Catch? Catch-up contributions are not subject to discrimination testing. Misclassification of regular deferrals as catch-up contributions affects the results of the discrimination testing. If the ADP test passes with ample margin, or the plan is a safe harbor plan, this contribution classification error may not have much impact. However, if the test passes by a hair or if the test fails, then having included the misclassified catch-up contributions would yield a different result.

Source: Belfint.com, August 2024

Domestic Abuse Withdrawal Penalty Exception

Can a client's 401k plan, which requires spousal consent for distributions, be amended to adopt the new domestic abuse victim distribution option? SECURE Act 2.0 provides a new exception to the 10 percent additional tax on early withdrawals for domestic abuse victim distributions. But, such distributions may not be part of defined benefit plans or defined contribution plans that are subject to the spousal consent rules.

Source: Retirementlc.com, August 2024

IRS Issues Notice on Certain Exceptions to the 10 Percent Additional Tax Under Section 72(t)

The IRS recently issued Notice 2024-55, which concerns exceptions to the 10% additional tax under section 72(t) of the Internal Revenue Code. These exceptions include emergency personal expenses and domestic abuse victim distributions from qualified retirement plans.

Source: Hallbenefitslaw.com, August 2024

Nordstrom Nailed With Massive Allegations in 401k Fiduciary Breach Suit

The plaintiffs' bar has picked up on a new angle with a new suit combining allegations of excessive 401k fees, un-personalized (and overpriced) managed accounts, and misuse of forfeitures. More specifically, the suit alleges that the fiduciaries of the $3.4 billion, 105,000 participant Nordstrom 401k Plan "failed to fulfill their fiduciary duties to prudently and loyally ensure the Plan's total recordkeeping and other administrative expenses were reasonable and not excessive, as well as engaged in self-dealing with regard to Plan forfeitures in violation of ERISA fiduciary prohibited transaction rules."

Source: Asppa.org, August 2024

401k Forfeiture Lawsuit Wave Still Splashing West Coast

August has been a hot month for retirement plan litigation particularly so in California, where a wave of recent misuse of forfeited funds lawsuits are mostly clearing the motion to dismiss hurdle. A California federal judge's recent decision not to dismiss a federal benefits lawsuit alleging Intuit misspent 401k plan forfeitures shows how a new pleading approach has gained traction in some district courts, despite recent guidance from the DOL and IRS about how plan sponsors have increased flexibility on how they can use forfeitures.

Source: 401kspecialistmag.com, August 2024

IRS Issues Guidance on Employer Matches of Qualified Student Loan Payments

The IRS on August 19th issued interim guidance concerning employer matching contributions made to retirement plans related to qualified student loan payments (QSLPs) made by employees. The guidance, which is in question-and-answer format, comes in Notice 2024-63. It addresses issues that may arise in 401k, 403b, governmental 457b, or SIMPLE IRA plans in administering such matching contributions.

Source: Asppa.org, August 2024

IRS Issues Guidelines on Retirement Matches for Student Loan Repayments

The IRS issued highly anticipated guidance for plan sponsors wanting to match retirement plan contributions to qualified student loan payments (QSLPs). Notice 2024-63, posted by the IRS, implements section 110 of SECURE 2.0, which allows employers to match contributions for employees based on their QSLPs.

Source: 401kspecialistmag.com, August 2024

How Employee Benefits Rules May Fare in the Post-Chevron World

The Supreme Court's long-awaited decision overruling its landmark 1984 decision in Chevron USA v. Natural Resources Defense Council, held that a court considering a federal agency's regulatory interpretation of a statute must follow the "best" reading of the statute, not just a "permissible" reading. This raises the bar for federal agencies, including those administering employee benefits laws. The decision has already affected ERISA litigation, as discussed here. This article also identifies some other potential effects.

Source: Wagnerlawgroup.com, August 2024

Employing the Proper Definition of Compensation

The DOL and IRS routinely report common operational failures that such agencies detect in the context of retirement plan audits and investigations. One of the operational failures that is always at or near the top of that list concerns plan sponsors failing to employ the correct definition of compensation. This article is intended to briefly highlight some of the issues that can occur when the incorrect definition of compensation is employed as well as explain some of the differences between the most commonly employed definitions of compensation.

Source: Legacyrsllc.com, August 2024

Coverage Rules for 401k and Other Qualified Plans: Average Benefit Test and the Minimum Participation Rule

This is the third in a series of articles designed to inform you of the significance of the so-called "coverage rules" and the "minimum participation rules" applicable to qualified retirement plans. This article finishes the discussion of the coverage rules by exploring: (a) the average benefit test; (b) the rules for aggregating and disaggregating plans for coverage testing purposes; and (c) the transition rule for certain business acquisitions and dispositions.

Source: Employeebenefitslawgroup.com, August 2024

When Are Those SECURE 2.0 Technical Corrections Coming?

Since a technical corrections discussion draft was distributed in December, there have not been any major legislative updates. This poses issues for plan sponsors in search of clarity on important provisions in the SECURE 2.0 Act of 2022 that need correction.

Source: Napa-net.org, August 2024

IRS Final Regulations on Required Minimum Distributions Address Both Secure Acts

On July 19, 2004, the IRS released final regulations on required minimum distributions that address changes to the RMD rules made by the SECURE Act and the SECURE 2.0 Act. The final regulations are effective September 17, 2024, and generally apply to RMDs made on or after January 1, 2025. Details are reviewed in this article.

Source: Compliancedashboard.net, August 2024

Self-Correction of Plan Failures Made Easier, At Least For Now

In response to requests by practitioners, in 1998, the IRS modified and consolidated its remedial guidance for qualified plans under the EPCRS. The IRS has since periodically updated and modified EPCRS and its component correction programs. EPCRS was most recently revised and restated in Revenue Procedure 2021-30. In its current form, EPCRS continues to offer the following three programs for plan sponsors to use in correcting plan failures, thereby avoiding the consequences of plan disqualification.

Source: Truckerhuss.com, August 2024

IRS Issues Final Regulations on Required Minimum Distributions

The final regulations apply for purposes of determining RMDs for calendar years beginning on or after January 1, 2025. For prior calendar years, the previously issued final regulations apply and presume a reasonable, good-faith interpretation of amendments issued under SECURE and SECURE 2.0. The final regulations address certain ambiguities regarding the interpretation of the RMD provisions in SECURE and SECURE 2.0.

Source: Voya.com, August 2024

Treasury Guidance on Retirement Plan RMDs

The Treasury has issued a final rule governing required minimum distributions from certain retirement plans. The final rule reflects changes made by the SECURE 2.0 Act and closely follows the 2022 proposed rule. The final rule generally applies to years beginning and distributions made on or after January 1, 2025. Here are the details.

Source: Segalco.com, August 2024

IRS Form 5500 Reminders for Employer Plan Sponsors

Form 5500 is a required annual report that is filed with both the IRS and the DOL. It contains details relative to finances and operations of health plans and retirement plans. The July 31, 2024, un-extended Form 5500 due date for calendar year employee benefit plans is here. A careful review of Form 5500 with your professional advisors before signing is advised. Here are a few reminders and observations relative to those reviews.

Source: Hawleytroxell.com, July 2024

IRS Finalizes (and Proposes More) Required Minimum Distribution Rules

The Treasury Department and the IRS issued final (and newly proposed) regulations that address the major changes to Code section 401(a)(9) under the SECURE Act 1.0 and SECURE 2.0 and make other conforming changes to the eligible rollover rules. These regulations impact the calculation of required minimum distributions from qualified plans, IRAs, 403b, and 457b plans. This is a summary that highlights the key provisions of the 2022 proposed regulations, noting changes made in the final regulations and the new 2024 proposed regulations.

Source: Groom.com, July 2024

Quick Update on Final Required Minimum Distribution Regulations

On July 18, 2024, The Department of the Treasury and the Internal Revenue Service released final regulations updating the Required Minimum Distribution rules. These changes reflect the updates made by the SECURE Act and the SECURE 2.0 Act, impacting retirement plan participants, IRA owners, and their beneficiaries. Here is a summary of the key points.

Source: Tri-ad.com, July 2024

IRS Finalizes RMD Regulations: Key Takeaways and the 10-Year Rule for Beneficiaries

The IRS issued its highly anticipated final regulations for required minimum distributions on July 19, 2024. These regulations incorporate rules from both the Secure and Secure 2.0 acts. This article covers what to know about the impact on investors who own Roth accounts, IRAs, and employer plans.

Source: Morningstar.com, July 2024

Are the Floodgates About to Open After the Demise of Chevron Deference?

In 2021, the DOL adopted a new rule that interpreted ERISA to allow retirement plan managers to consider the ESG factors. The new rule was immediately challenged by a group of states, companies, and trade associations. The district court, following the mandate of Chevron, deferred to the interpretation of the current DOL and rejected the challenge. Plaintiffs appealed. And then SCOTUS overruled Chevron. In a new decision, a three-judge panel of the Fifth Circuit has elected not to answer that weighty question on appeal "Given the upended legal landscape, and our status as a court of review, not first view, we vacate and remand so that the district court can reassess the merits." Are we about to see a slew of these types of decisions revisiting agency regulations after the demise of Chevron?

Source: Cooleypubco.com, July 2024

How to Prevent a Lawsuit Over Retirement Plan Forfeitures

There has been a rash of lawsuits recently challenging how forfeitures are used in retirement plans. The novel theory in these suits -- a purported misuse of discretion in the application of forfeitures -- has recently gained some steam and legitimacy after surviving a motion to dismiss in Perez-Cruet v. Qualcomm. Employers with retirement plans that provide discretion over the use of forfeitures should consider making a simple plan design change to avoid being a litigation target.

Source: Bradley.com, July 2024

How to Navigate Late 401k Deposits After Receiving Letter From the DOL

Managing a 401k plan involves careful oversight and adherence to regulations set forth by the DOL. One critical aspect is ensuring timely deposits of employee deferrals into their retirement accounts. However, despite best intentions, mistakes can happen, leading to late deposits. The consequences of such errors can be significant. This article delves into understanding late 401k deposits and how to rectify them.

Source: Belfint.com, July 2024

What Is the Rule of 55 and How Does It Work?

The rule of 55 can benefit workers who have an employer-sponsored retirement account such as a 401k and are looking to retire early or need access to the funds if they've lost their job near the end of their career. It can be a lifeline for workers who need cash flow and don't have other good alternatives. Here's how the rule of 55 works and whether you should consider using it.

Source: Bankrate.com, July 2024

DOL Launches New Online Filing System for Abandoned Plans

The DOL launched a new online system for qualified plan termination administrators to "more efficiently" submit information for individual account retirement plans, such as 401k plans, that have been abandoned. The system comes shortly after the DOL amended a rule to include Chapter 7 bankruptcies.

Source: Plansponsor.com, July 2024

IRS Releases RMD Regulations

More than two years after releasing proposed regulations that revised the required minimum distribution regulations and other related guidance, the IRS has released final regulations that revise existing regulations applicable to RMDs, eligible rollover distributions, and excess accumulation tax.

Source: Ascensus.com, July 2024

Chevron Deference Overturned: Video

This video delves into the U.S. Supreme Court's recent overturning of the Chevron doctrine and how this landmark decision is opening the floodgates for challenges against federal agencies including the DOL.

Source: Workforcebulletin.com, July 2024

Why Chevron Reversal May Make Retirement's "Most Cautious" Players More Risk-Averse

In late June, the Supreme Court struck down the so-called Chevron doctrine through a decision in Loper Bright Enterprises v. Raimondo. The overturning of a longstanding standard of deference to federal agencies may make those in the already cautious 401k plan industry all the more "plain vanilla," according to experts.

Source: Planadviser.com, July 2024

ERISA Forfeiture Litigation: The New Frontier

There have been important developments from the IRS as well as pending court cases regarding the proper use of forfeitures that arise under DC plans, such as 401k plans. These developments present potential conflicts and liabilities that employers and fiduciary committees need to be aware of and review. These issues should be discussed with ERISA counsel and consideration should be given to the "next steps" and "the key decision" discussed here.

Source: Dglaw.com, July 2024

New Guidance: Emergency Personal Expense and Domestic Abuse Victim Distributions

Of interest to 401k plan sponsors and administrators, the IRS recently issued Notice 2024-55, giving guidance on SECURE 2.0's new exceptions -- effective January 1, 2024 -- to the additional 10% tax on early qualified retirement plan distributions for emergency personal expenses and victims of domestic abuse. Both types of distributions are optional and may be adopted through discretionary plan amendments.

Source: Benefitslawadvisor.com, July 2024

Interim Final Rule for Abandoned Plans Released

The DOL has issued an interim final rule, expanding the Abandoned Plan Program regulations to also include plans of employers who are in liquidation under Chapter 7 of the U.S. Bankruptcy Code. The DOL has also released a corresponding amendment to Prohibited Transaction Exemption 2006-06, Class Exemption for "Services Provided in Connection with the Termination of Abandoned Individual Account Plans."

Source: Ascensus.com, July 2024

Automatic Enrollment Is Mandatory in 2025: Now Is the Time to Prepare

SECURE 2.0 implemented almost 100 different changes to the retirement plan landscape. This article is focused on one of the most impactful of such changes which is scheduled to first become effective in 2025. This change is the requirement that most plan sponsors adopt automatic enrollment provisions for their 401k and 403b plans.

Source: Legacyrsllc.com, July 2024

IRS Guidance on New Exceptions to the Penalty Tax for Early Qualified Plan or IRA Withdrawals

The IRS recently issued guidance in Notice 2024-55 on the application of two new exceptions to the 10% additional tax under Code section 72(t) for early withdrawals from a qualified plan or IRA. These exceptions are for (1) emergency personal expense distributions and (2) domestic abuse victim distributions. This guidance will assist plan sponsors and plan administrators in implementing these provisions. Formal plan amendments are not required until December 31, 2026, at the earliest.

Source: Groom.com, July 2024

Did Your Auditors Find an Error During Your Plan Audit?

Even the most well-intentioned plan sponsors can have a plan error because plan administration is increasingly difficult. Over the years, the IRS has made EPCRS significantly more liberal on when an employer may self-correct operational and plan document errors. In SECURE 2.0, Congress further expanded the self-correction relief.

Source: Brickergraydon.com, July 2024

SECURE 2.0's Saver's Match: The Promise and the Challenges

When provisions of SECURE 2.0 were signed into law in December 2022, the clock started ticking on one of its most consequential retirement savings public policy initiatives: the Saver's Match. Tom Hawkins explores four key themes associated with the impactful SECURE 2.0 provision set to replace the Saver's Credit for tax years following 2027.

Source: 401kspecialistmag.com, July 2024

Exceptions to Penalty on Early Retirement Plan Distributions Outlined

The IRS issued guidance on exceptions to the Sec. 72(t)(1) additional 10% tax on early distributions from retirement plans for emergency personal expense distributions and for domestic abuse victim distributions, which were added by the SECURE 2.0 Act. The provisions of the act became effective Jan. 1. However, Notice 2024-55, issued Thursday, notes it is optional for a plan to permit emergency personal expense distributions and domestic abuse victim distributions.

Source: Thetaxadviser.com, June 2024

401k Plan Sponsor Fiduciary Best Practices For Lost Or Missing Plan Participants

When plan sponsors have lost contact with 401k plan participants, they must address several key questions. The DOL has recently asked for input on its proposal to deal with lost or missing plan participants. But the idea of a participant being missing or lost is less black and white than it seems.

Source: Fiduciarynews.com, June 2024

Financial Incentives for Employee Participation in 401k

Employers who sponsor 401k and 403b plans without auto enrollment provisions have traditionally been challenged with increasing participation rates. Most employers were interested in different options to encourage more employees to affirmatively make elective deferral contributions into their retirement plans. Thanks to SECURE 2.0, for plan years beginning after December 29, 2022, employers that sponsor 401k or 403b plans may offer employees a "de minimis" financial incentive.

Source: Consultrms.com, June 2024

Form 5500 Participant Count: Cash or Accrual Basis? To Audit or Not to Audit?

The number of participants as of the beginning of the year determines whether the plan's financial statements must be audited. Starting in 2023, eligible participants who do not have an account balance on the first day of the plan year are no longer included in the participant count used to determine whether the plan must be audited. The literal application of this rule seems quite simple. No money, no account, right? Maybe not!

Source: Belfint.com, June 2024

Dueling Decisions Spur Employer Confusion on 401k Forfeitures

Employers tasked with reallocating 401k assets forfeited by former employees are encountering a wave of litigation alleging the misuse of plan funds, as well as an emerging disagreement between judges on these suits' viability.

Source: Bloomberglaw.com, June 2024

IRS Clarifies 10% Additional Tax for Certain Emergency Distributions

The IRS issued guidance on June 20 on the application of exceptions to the 10% additional tax under Internal Revenue Code (IRC) Section 72(t)(1) for emergency personal expense distributions and domestic abuse victim distributions. The guidance comes in Notice 2024-55. More specifically, Notice 2024-55 provides guidance on the portions of the SECURE 2.0 Act that added exceptions to the 10% additional tax.

Source: Asppa.org, June 2024

Group Says DOL Overreaches with "Lost and Found" Database

The ERISA Industry Committee wants the DOL to back off from requiring retirement plans to provide what it calls excessive amounts of participant information for its SECURE 2.0-mandated "Retirement Savings Lost and Found" database.

Source: 401kspecialistmag.com, June 2024

How Much Could 401k Contribution Limits Rise in 2025?

How much will the maximum 401k, 403b, and 457 deferrals for defined contribution plans rise in 2025? More than this year, if one firm's forecast is any indication. Milliman researchers Nina Lantz and Abby Kendig believe it will increase by $1,000, going from $23,000 in 2024 to $24,000 in 2025.

Source: Napa-net.org, June 2024

Form 5500 Deadline Fast Approaching

The deadline for filing the Form 5500 Series for 2023 calendar year plans is fast approaching. Employers and plan sponsors with a calendar-year plan must submit the Form 5500 Series by July 31, the last day of the 7th month after the end of the plan year about which they are to report. So they must submit the Form 5500 series for reporting about the 2023 plan year by July 31, 2024.

Source: Asppa.org, June 2024

Retirement Plan Data Accuracy

Offering a retirement plan carries with it responsibilities, but also benefits. So making the most of a plan maximizes its worth to all the stakeholders. This is the first in a series concerning the practical tips for making the most of a retirement plan. This installment focuses on the importance of making sure data is accurate.

Source: Asppa.org, June 2024

2025 IRS Retirement Plan Limits Forecast -- May

This is an update to the Milliman 2025 IRS Limits Forecast using the U.S. Bureau of Labor Statistics report published June 12, 2024. This article includes information about the limits for qualified retirement plans, how these limits are calculated, how they are affected by SECURE 2.0, and why they may be relevant for certain plan sponsors.

Source: Milliman.com, June 2024

2025 401k Contribution Limit Forecast: $1,000 Increase on Tap?

The Milliman 2025 IRS Limits Forecast was updated recently using the U.S. Bureau of Labor Statistics report published June 12, 2024. The update forecasts a $1,000 boost to this year's 401k elective deferral limit of $23,000, which would bring the 2025 limit to $24,000. For 2024, the elective deferral limit increased by $500 compared to 2023.

Source: 401kspecialistmag.com, June 2024

Use of Plan Forfeitures Not the Slam Dunk It Used to Be

A recent rash of class action lawsuits in California claims that using forfeitures to reduce future employer contributions to tax-qualified retirement plans runs afoul of ERISA. These cases have continued to advance despite their central claim seeming to contradict long-standing IRS guidance for the permitted use of plan forfeitures. Considering these developments, this article reviews how an employer can best use the forfeiture dollars without risking exposure to litigation.

Source: Benefitslawadvisor.com, June 2024

When Does a Corporate Transaction Trigger a 401k Participant's Right to a Distribution?

To accurately answer that question and to avoid potentially costly operation errors, sponsors of 401k plans who intend to participate in corporate transactions should be well-versed in the applicable distribution rules under the Internal Revenue Code and how they apply to various transaction scenarios. This article focuses on the rules applicable to 401k plans.

Source: Reinhartlaw.com, June 2024

Use of 401k Plan Forfeitures Continues to be Scrutinized in Litigation

Forfeitures typically occur when an employee leaves a company before fully vesting in the 401k plan, thus leaving the employer with excess contributions. In a handful of recent lawsuits, plan sponsors have been questioned about their use of forfeitures assets to reduce employer contributions in 401k plans.

Source: Plansponsor.com, June 2024

A Pop Culture Guide to the New Final Amendments to the QPAM Exemption

The DOL recently finalized amendments to the QPAM exemption that will considerably alter the exemption's conditions effective as of June 17, 2024. There are several immediate action items for investment managers and ERISA plan fiduciaries under the revised exemption. Here is a "Pop Culture" guide.

Source: Erisapracticecenter.com, June 2024

SECURE 2.0: IRS Issues Fact Sheet on Disaster Relief Distributions and Plan Loans

The IRS recently issued Fact Sheet 2024-19, which addresses the special rules for distributions and plan loans for certain individuals impacted by major federally declared disasters under the SECURE 2.0 Act. Though not breaking much new ground, the fact sheet provides clear and helpful guidance to plan sponsors choosing to extend all or some of the distribution and/or loan relief to their employees in the wake of disasters.

Source: Morganlewis.com, June 2024

Expanded Abandoned Plan Program Gives Certain Bankruptcy Trustees QTA Eligibility

A new DOL interim final rule expands eligibility to serve as a "qualified termination administrator" to include Chapter 7 bankruptcy trustees and certain parties appointed by such trustees. Beyond expanding QTA eligibility, the interim final rule also makes several technical changes that may impact the administration of abandoned plans. Here is the background and a review of the interim final rule.

Source: Groom.com, June 2024

Chamber of Commerce, ERIC Plead for Fewer Retirement Plan Disclosures

Industry groups have asked the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation to simplify and improve retirement plan disclosures with specific recommendations in response to a request for information issued by the DOL in January. The interest groups agree that most participants do not read nor understand many disclosures related to their retirement benefits.

Source: Planadviser.com, June 2024

A Guide to 401k Withdrawal Strategies

Not all employees have the same financial or personal circumstances. There may be times when they may need to make partial or total early withdrawals from their 401k account. What are the 401k withdrawal rules? Is there a penalty for an early 401k withdrawal? How can you withdraw money from a 401k before retirement? InvestmentNews provides answers to these and more in this article.

Source: Investmentnews.com, June 2024

Abandoned Plan Program Expanded

The Employee Benefits Security Administration, Department of Labor issued interim final rules that expand the Abandoned Plan Program to include plan sponsors in Chapter 7 bankruptcy and other technical corrections. The interim final rule is effective July 16, 2024.

Source: Principal.com, May 2024

IRS Releases Guidance on Disaster Relief Distributions and Loans Under 401k Plans

The IRS issued guidance in the form of "frequently asked questions" on disaster relief distributions and expanded loans under qualified retirement plans, including 401k plans, under the SECURE 2.0 Act. This article briefly reviews what's in the FAQ.

Source: Compliancedashboard.net, May 2024

IRS Issues FAQs to Explain Optional Disaster Relief

The SECURE 2.0 Act provides for permanent distribution and loan relief for any federally declared major disasters occurring on or after January 26, 2021. This new relief is intended to facilitate timely disaster distributions from qualified plans and IRAs, without having to wait for any specific IRS relief (as was needed in the past).

Source: Groom.com, May 2024

DOL Revises Abandoned Plan Program, Extends Program Eligibility to Chapter 7 Bankruptcy Trustees

More than a decade after proposing amendments to regulations on abandoned plans, the DOL has issued interim final regulations that, among other things, allow bankruptcy trustees to use the DOL's Abandoned Plan Program to terminate and wind up the plans of sponsors in Chapter 7 bankruptcy. The article provides background and highlights of the regulations for bankruptcy trustee QTAs.

Source: Thomsonreuters.com, May 2024

Avoid RMD Complexity With Force-Out Distributions at Normal Retirement Age

Required minimum distributions may not come up often in retirement plan operations. When they do, it can be a real pain in the administration. The RMD rules can be complicated with exceptions to the exceptions, and recent law changes just added to the complexity. Retirement plans can forgo the RMD chaos altogether by using the plan's force-out provisions and automatic rollover IRAs for terminated participants at normal retirement age.

Source: Penchecks.com, May 2024

IRS Extends Post-Death RMD Relief Under the 10-Year Rule for 2024 Distributions

The Internal Revenue Service recently extended relief concerning certain post-death required minimum distributions under Internal Revenue Code Section 401(a)(9). Here is a short overview.

Source: Morganlewis.com, May 2024

Five Things on the DOL's Radar for Employee Benefit Plans

All qualified retirement plans are subject to a myriad of requirements of ERISA. The DOL is charged with enforcing the requirements of ERISA. This article discusses some of these requirements and related guidance issued by the DOL, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation, as well as some related future guidance to be issued by the DOL as required by SECURE Act 2.0.

Source: Foley.com, May 2024

Unwritten Rules That Must Be Followed

Unlike unwritten rules referring to the social norms, customs, and expectations that guide behavior in various contexts, SECURE 2.0 brings rules that must be followed effective on January 1, 2024, even though the related plan amendments are not due until 2025. For example, SECURE 2.0 requires employers to give Long-Term, Part-Time Employees the opportunity to contribute elective deferrals to retirement plans effective on January 1, 2024.

Source: Belfint.com, May 2024

How to Streamline Your 401k Plan Audit

As a plan sponsor of a 401k plan that requires an annual audit, you've probably wondered in frustration, "Why does it take so long?" Yes, audits can be time-consuming, but they don't have to be. Here are the top industry reasons why your audit takes so long and how you and your auditing team can speed up the process.

Source: Cassellplanaudits.com, May 2024

DOL Opens Abandoned Plan Program to Retirees of Bankrupt Companies

The DOL announced it is expanding its rules and pushing forth an amendment that would better protect the retirement savings of employees who worked for bankrupt companies. Specifically, the changes would make it easier for Chapter 7 bankruptcy retirees to distribute assets from bankrupt companies' retirement plans using the Abandoned Plan Program, a service originally adopted in 2006 that allows trustees to "terminate, wind up, and distribute benefits," the DOL said.

Source: 401kspecialistmag.com, May 2024

New DOL Guidance Extends Abandoned Plan Program to Bankruptcy Trustees

The DOL has released interim final rules and an amendment to a prohibited transaction class exemption to make it easier for Chapter 7 bankruptcy trustees to distribute assets from bankrupt companies' retirement plans. The guidance issued May 16 by the DOL's Employee Benefits Security Administration amends the agency's Abandoned Plan Program to allow these trustees to use the program to terminate, wind up, and distribute benefits.

Source: Asppa-net.org, May 2024

IRS Explains New Disaster Relief Distribution and Loan Rules

The IRS has issued FAQs addressing the disaster relief provisions of the SECURE 2.0 Act of 2022, which gives retirement plan sponsors the option to provide distribution and loan relief in response to a "qualified disaster," which is a major disaster declared by the president and indicated on the Federal Emergency Management Agency website.

Source: Segalco.com, May 2024

Six Steps to a Strong Missing Participant Policy

Missing participants, defined as individuals who have become disconnected from their retirement savings are a significant challenge that has long plagued defined contribution plans. The responsibility for locating these persons falls squarely on the shoulders of plan sponsors. Retirement Clearinghouse's Tom Hawkins shares keys to building a policy that will fulfill a plan sponsor's fiduciary duty.

Source: 401kspecialistmag.com, May 2024

Defining an Employee vs. Independent Contractor: New DOL Guidelines

Do the final DOL regulations defining employee vs. independent contractor affect who can participate in retirement plans? Determining whether a worker is an employee or an independent contractor, particularly for retirement plan coverage purposes can be tricky. The DOL has a new FLSA employee standard. There's also the IRS definition of employee for tax purposes and Supreme Court rulings. All three of these standards may impact whether a worker is an employee who should be covered under an employer-sponsored retirement plan.

Source: Retirementlc.com, May 2024

2024 DOL ERISA Investigation Update: Recent Publications Offer Insight Into Possible Areas of Focus

The DOL maintains a robust investigatory program for auditing employee benefit plans for potential ERISA violations. ERISA plan fiduciaries and service providers can expect the DOL to continue its ever-evolving enforcement program targeting both fiduciaries and nonfiduciary service providers. Recent reporting by the DOL provides insight into its current official and unofficial enforcement priorities and may help plan fiduciaries and in-house counsel seeking to track the DOL's enforcement activities.

Source: Morganlewis.com, May 2024

Retirement Topics - Plan Notices

Plan administrators must give employees certain written information about their retirement plans. Some of this information must be provided regularly and automatically. Other kinds of disclosures are available upon written request, free of charge, or for copying fees. Plan administrators can give notices to participants electronically if they meet certain conditions. This is a review of plan notices.

Source: Irs.gov, May 2024

What Plan Sponsors Need to Know About Proposed IRS Regulations for Long-Term, Part-Time Employees

The Internal Revenue Service issued a Notice of Proposed Rulemaking addressing the "long-term, part-time employees" rules enacted under the Setting Every Community Up for Retirement Enhancement Act of 2019 and the SECURE 2.0 Act of 2022. The proposed regulations provide helpful clarity for plan sponsors required to implement these new rules. This is a four-page review of the new rules including some next steps.

Source: Icemiller.com, May 2024

Sample IRS Plan Amendment Language (via LRMs) Is Here

The IRS recently issued updated LRMs for defined contribution plans that address several plan changes under recent laws. Importantly, this language can be used by both pre-approved and individually designed plans. Due to the complexities of the Internal Revenue Code, and wanting to be sure that the plan document complies with the law, this document is a good starting point. Set forth here is a summary of the key provisions that were updated to reflect recent law.

Source: Groom.com, May 2024

IRS and DOL Release Guidance for PLESA Provisions

In January 2024, the IRS released Notice 2024-22, giving guidance concerning anti-abuse rules for Pension-Linked Emergency Savings Accounts, a new provision created by the SECURE 2.0 Act. Soon after, the DOL issued a set of FAQs intended to provide answers to general compliance questions about the administration of PLESAs. This is a review of the new guidance.

Source: Ascensus.com, May 2024

IRS Provides Relief for Certain 2024 RMDs

The IRS has provided relief for 2024 required minimum distributions from DC plans to beneficiaries of participants who died in 2020, 2021, 2022, or 2023 after their required beginning dates. The IRS issued similar relief for 2022 and 2023 RMD distributions. The extended relief addresses a controversial proposed IRS interpretation of an RMD provision changed by the Setting Every Community Up for Retirement Enhancement Act.

Source: Segalco.com, May 2024

DOL Seeks Voluntary Data for New Lost and Found Registry

The DOL has announced that it intends to obtain the data needed to populate the Lost and Found Registry created by the SECURE 2.0 Act by asking sponsors of private sector retirement plans to provide the information voluntarily. In an information collection request, the DOL describes the data it seeks from plans. The DOL requests comments on the ICR by June 17, 2024.

Source: Segalco.com, May 2024

QACA and EACA: Considerations for Plan Sponsors

Determining if a Qualified Automatic Contribution Arrangement or Eligible Automatic Enrollment Arrangement is right for your plan. This document discusses options available for Cash or Deferral Arrangement plans established before the enactment of SECURE 2.0 (December 29, 2022) that are not required to have an Eligible Automatic Contribution Arrangement.

Source: Fidelity.com, May 2024

Seven Common Plan Errors and How to Avoid Them

Correctly maintaining a retirement plan comes with responsibilities and administrative duties to ensure compliance with the various complex employee benefit plan laws and regulations, making it important to have knowledgeable service providers and strong internal company controls. The IRS expects plan administrators and service providers to catch mistakes and correct them right away. In this article, the author discusses seven common mistakes and provides tips on how to keep them from happening.

Source: Consultrms.com, April 2024

Maintaining Retirement Plan Records

Employers who sponsor a retirement plan are required by law to keep books and records available for the Internal Revenue Service to review. Having these records available is also helpful when determining participant benefits. Records may be kept in either paper or electronic format, as long as they can be readily retrieved. This article reviews what records you should keep and how long you must retain them.

Source: Consultrms.com, April 2024

IRS Extends Relief for Certain Required Minimum Distributions

On April 16, 2024, the IRS issued Notice 2024-35, which extends the relief that the IRS has twice previously granted plan sponsors concerning certain "specified" required minimum distributions taken from qualified retirement plans, including 401k plans. Here is a review.

Source: Compliancedashboard.net, April 2024

DC Plan Forfeitures: Proposed Regulations and Recent Litigation

There have been recent developments from both the IRS and the DOL and pending court cases about how plan forfeitures under defined contribution retirement plans must be handled. The purpose of this article is to summarize what the potential conflicts are and to make sure that employers are aware of them, and that until these potential conflicts are resolved, employers are administering their plans so as not to violate any of the rules.

Source: Kelleydrye.com, April 2024

IRS Extends Required Minimum Distribution Relief Pending Issuance of Final Regulations

On April 16, 2024, the IRS issued Notice 2024-35 which further extends the required minimum distributions relief for the fourth year in a row while plan sponsors, IRA providers, participants/IRA owners, and their beneficiaries await final Code section 401(a)(9) regulations. This Article provides a summary of the notice.

Source: Groom.com, April 2024

IRS Notice 2024-35: (Another) Temporary Waiver for Certain RMDs

On April 16, 2024, the IRS released Notice 2024-35 extending temporary relief for certain required minimum distributions related to the SECURE Act's 10-year distribution rule through 2024. This notice follows similar relief provided by the IRS in Notice 2022-53 and Notice 2023-54 for earlier periods.

Source: Erisapracticecenter.com, April 2024

DOL Issues Proposal for SECURE 2.0 Lost and Found Database

In the proposed procedure, the DOL places the burden of data collection and reporting on plan administrators. Administrators would be required to provide necessary data to the DOL via Form 5500s each year, perhaps starting with the 2023 5500s that are due in 2024. Because, for most plans, the collection of 5500 data is almost always outsourced to a third-party administrator or bundled recordkeeper, these will be the entities that would presumably provide required data to the DOL via the 5500s of the individual plan sponsors.

Source: Captrust.com, April 2024

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