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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.

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Regulatory Monitor: Department of Labor Update

In this article, Groom Principal David Kaleda explains the significance and contents of the "Supplemental Statement on Private Equity in Defined Contribution Plan Designated Investment Alternatives" issued by the DOL in December, including the Department's position concerning such investment alternatives, and its emphasis on several important fiduciary principles discussed in the Information Letter.

Source: Groom.com, May 2022

Final Form 5500 Revisions Guidance Issued

This guidance focuses primarily on defined benefit reporting changes affecting Schedule MB Multiemployer Defined Benefit Plan and Certain Money Purchase Plan Actuarial Information, Schedule SB Single-Employer Defined Benefit Plan Actuarial Information, and Schedule R Retirement Plan Information. Additionally, the final revisions add plan characteristic codes reported on Form 5500 and Form 5500-SF by sponsors of multiple employer plans, to indicate the type of MEP arrangement.

Source: Futureplan.com, May 2022

2023 IRS Limits Forecast

Inflation in the 12 months ending April 30, 2022, was 8.3%. With only five months remaining for FFY 2022, the 2023 IRS retirement plan limits could show the highest one-year increase, both in dollars and percentage, even if inflation transitions to a more reasonable 3.0% annually for the final five months.

Source: Milliman.com, May 2022

Revisions to Form 5500 Series for 2022 Reporting Released

The DOL, Treasury, and Pension Benefit Guaranty Corporation on May 20th released the final revisions to the forms and instructions for the Form 5500 series to be used for reporting concerning plan years beginning on or after Jan. 1, 2022. They also indicated, however, that the review of additional considerations and revisions will continue.

Source: Asppa.org, May 2022

Common 401k Plan Mistakes: Running the Plan Based on Your Employee Handbook

Employee handbooks are great for communicating an employer's basic policies and procedures. However, a retirement plan sponsor will always want to check the actual plan document to confirm proper plan operations. When it comes to retirement plans or benefits in general, an employee handbook will not get into some of the details, and this can cause issues, both minor hiccups, and major problems. Here are several situations encountered in working with retirement plans.

Source: Conradsiegel.com, May 2022

Time is Running Out to Meet the July 31, 2022 'Cycle 3' Deadline

Employers sponsoring 401k or other types of defined contribution plans "pre-approved" by the IRS should be aware that the restatement deadline is quickly approaching. The IRS requires pre-approved plans to be amended and restated every six years to incorporate recent law changes. The deadline for the current restatement cycle, "Cycle 3," is July 31, 2022. You should have received one or more notices from your current document provider. Failing to timely adopt a Cycle 3 restatement may jeopardize a plan's favorable tax status.

Source: Benefitsnotes.com, May 2022

Crypto, SDBAs, and Your 401k Plan: What Now?

Plan sponsors may see more cryptocurrency investment options available to plans in the future. The hope, of course, is the DOL will continue to evolve its guidance around this growing trend, especially as it relates to SDBAs. For now, there is much for a plan sponsor to weigh and discuss with its advisors when it comes to offering cryptocurrency investment options and determining the proper level of oversight associated with implementing or maintaining an SBDA.

Source: Benefitslawadvisor.com, May 2022

Dealing With Undocumented Workers in ERISA Plans

Dealing with such plan participation adds yet another layer of administrative difficulty and legal exposure for employers who hire employees not authorized to work in the U.S. ERISA does not exclude individuals otherwise qualifying as common law employees from plan rights and protections simply because of their immigration status. However, although the DOL has affirmed that other federal statutes, such as the FLSA, protect undocumented workers, it has conspicuously failed to formally state that ERISA does too.

Source: Benefitslawadvisor.com, May 2022

IRS Extends Temporary Relief From the Physical Presence Requirement

The IRS announced that it is extending to the end of 2022 the temporary relief from the requirement that certain participant elections be witnessed in the physical presence of a plan representative or a notary public. In Notice 2022-27 the IRS says that due to the pandemic, it is extending the temporary relief provided in Notice 2021-40 from the requirement that certain participant elections be witnessed in the physical presence of a plan representative or a notary public, the physical presence requirement.

Source: Asppa.org, May 2022

Required Participant Notices: A Refresher

Providing information and notice to plan participants is not a suggestion, it's a requirement. A recent blog entry provides some reminders as to why it matters and what notices need to be sent.

Source: Asppa.org, May 2022

Proposed Changes to Prohibited Transaction Exemption Procedures: White Paper

Congress provided for three kinds of possible exemptions from prohibited transaction prohibitions: statutory exemptions, class exemptions, and individual exemptions. The DOL has long had regulations setting forth the procedures for applying for class and private exemptions and has granted many such exemptions over the last 48 years. Now, however, the DOL is proposing changes to its procedures that would significantly modify the process and create additional burdens on applicants and independent fiduciaries covered by the exemption.

Source: Wagnerlawgroup.com, April 2022

Finding Missing Participants: The DOL's Prescription

Missing and nonresponsive participants are a liability for any retirement plan. Undelivered notices, uncashed checks, and unreturned election forms all create compliance issues and additional administrative expenses. Unfortunately, a participant's "radio silence" gives the plan no relief from the obligation to keep accurate records and take appropriate steps to ensure that the participants and beneficiaries are paid their full benefits when due. The DOL has some reader-friendly advice for plan administrators. Here are the highlights.

Source: Erisadc.com, April 2022

401k Compliance Check: Required Participant Notices

This piece focuses on the variety of typical notices that are required for 401k retirement plans. Failing to provide required notices can subject the plan, and its fiduciaries, to liability. Notice failures can result in penalties imposed by the IRS or DOL, or lawsuits from participants who were not informed about important information that affected their decision-making.

Source: Foley.com, April 2022

Oops! We're in a Controlled Group of Companies. What Happens to Our 401k Plan Now?

Whether you made the mistake of thinking that you were or were not in either a controlled group of companies or an affiliated service group, your plan will have fundamental tax qualification issues that must be corrected before you wind up in an IRS audit. Here is what to be on the lookout for.

Source: Employeebenefitslawgroup.com, April 2022

DOL Issues Guidance on Cryptocurrency Retirement Plan Investments

The DOL issued guidance relating to cryptocurrency as an investment option in participant-directed 401k plans. It was the closest the DOL has ever come to saying "No way!" on a fiduciary issue. Here is a rundown on the guidance.

Source: Mcdonaldhopkins.com, April 2022

Industry Groups Push Back on Recent DOL Rulemaking Practices

Spurred by the recent cryptocurrency "compliance assistance release," nearly a dozen industry trade groups -- including the U.S. Chamber of Commerce -- have expressed concern about "a trend at EBSA away from rulemaking based on a robust notice and comment process."

Source: Asppa.org, April 2022

DOL Warns 401k Plans Against Allowing Crypto Investments

The DOL is warning 401k plan fiduciaries to "exercise extreme care" before considering whether to include a cryptocurrency option in a plan investment menu. The sternly worded guidance, in Compliance Assistance Release No. 2022-01, published March 10, reveals heightened skepticism of 401k cryptocurrency investments and predicts new DOL enforcement activity for fiduciaries who permit participants to invest in cryptocurrencies.

Source: Shrm.org, March 2022

Safe Harbor Plan Rules for 2022

It's helpful to know which IRS rules and limits apply from year to year, whether you currently offer a Safe Harbor 401k or you are exploring options to open a small business 401k plan in 2022. See what rule changes are in place for small business Safe Harbor 401k plans for 2022.

Source: Myubiquity.com, March 2022

401k Deadlines for Plan Sponsor's in 2022

Every month holds important deadlines for employers offering small business 401ks. The following checklist will help you prepare for the road ahead and stay on top of deadlines.

Source: Myubiquity.com, March 2022

IRS Proposes New Rules for Required Minimum Distributions

On February 24, 2022, the IRS issued proposed regulations for determining the required minimum distribution payable to retirement plan participants and their beneficiaries. This article addresses the proposed regulations in the context of the SECURE Act provisions specific to employer-sponsored defined contribution plans. It concludes with action items for employers pending the issuance of final regulations.

Source: Caplindrysdale.com, March 2022

Plan Document Foul-ups Can Cost You as a 401k Plan Sponsor

As a plan sponsor, there are many things you don't know about your plan document and you really should because the plan documents could be a major culprit in what ails your 401k plan.

Source: Jdsupra.com, March 2022

New Audit Rules for Employee Benefits Plans Take Effect

After the U.S. Department of Labor expressed concerns about the quality of audits in employee benefit plans, the American Institute of Certified Public Accountants released a Statement on Auditing Standards (SAS 136) to address those concerns. Originally slated to go into effect in 2020, AICPA delayed implementing the audit rules for one year due to the COVID-19 pandemic. As a result, SAS 136 will apply to 2021 employee benefit plan audits.

Source: Hallbenefitslaw.com, March 2022

DOL Threatens to Investigate Fiduciaries Over Cryptocurrency in 401ks

Compliance Assistance Release No. 2022-01 is a significant departure from DOL's established regulatory norms. The author states that they are not aware of any other instance in which DOL has made such sweeping statements about the potential prudence of an entire asset class. DOL has recently elected to back away from proposals to create special standards for specific asset classes. However, in the Release, DOL implies that the agency will presume that fiduciaries making cryptocurrencies available have acted imprudently.

Source: Groom.com, March 2022

DOL Issues Big Caution on Crypto

The DOL has published compliance assistance for 401k plan fiduciaries considering plan investments in cryptocurrencies, in an effort aimed at protecting the retirement savings of U.S. workers. Compliance Assistance Release No. 2022-01 cautions plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401k plan's investment menu for plan participants.

Source: Asppa.org, March 2022

How to Shoot Yourself in the Foot With Your SPD

Benefit plan sponsors sometimes send out Summary Plan Descriptions having given too little thought to the legal consequences. Two recent cases illustrate how an organization can end up in serious and costly litigation based on statements that did not have to be made in SPDs that did not have to be issued.

Source: Verrill-law.com, March 2022

IRS Provides Additional Clarity on RMD Calculations

On February 24, 2022, the IRS published proposed regulations addressing the calculation and payment of required minimum distributions under qualified retirement plans. The proposed regulations are generally designed to address the changes to a participant's required beginning date and payment of death benefits enacted under the SECURE Act. For defined contribution plan sponsors, the proposed regulations also provide needed clarifications on the calculation of death benefits.

Source: Reinhartlaw.com, March 2022

Class Action Suit Challenges Big CUSIP Licensing Fees

A class-action complaint was filed last week in the Southern District of New York that could have a ripple effect on the retirement industry's infrastructure, and, at least potentially, the costs of operation.

Source: Napa-net.org, March 2022

An Employer's Guide to Annual Retirement Plan Compliance Requirements

Do you have a retirement plan compliance checklist? If you think your organization doesn't need one this year, think again. Legislative and regulatory changes, as well as organizational changes, can affect your plan. To guide you in conducting a thorough review of your plan over the next few months, here is some help in creating a retirement plan compliance checklist.

Source: Usicg.com, March 2022

IRS Provides Guidance on RMDs After SECURE

Last week the IRS issued proposed regulations for RMDs incorporating the changes made by the SECURE Act in an attempt to resolve many of those issues. Although these proposed regulations do not have the force and effect of law until finalized, the IRS has announced that complying with the proposed regulations will be a reasonable, good-faith interpretation of the SECURE Act provisions and the current regulations for RMDs made in the 2021 calendar year.

Source: Graydon.law, March 2022

IRS Revamps Minimum Required Distribution Rules

At long last, the Internal Revenue Service issued proposed regulations under Code section 401(a)(9) that take into account the major changes made by the SECURE Act, and make other conforming changes to the eligible rollover rules. Compliance with these rules will pose challenges of every type, communications, system redesign, and plan documentation to name the major ones. This article highlights the major changes.

Source: Groom.com, March 2022

Voluntary Fiduciary Correction Program Checklist

This checklist provides step-by-step guidance for private employers on the use of the DOL's Voluntary Fiduciary Correction Program to correct and self-report fiduciary violations or prohibited transactions under ERISA. The VFCP also provides limited Internal Revenue Code excise tax relief for certain prohibited transactions that can be corrected under the VFCP.

Source: Foxrothschild.com, March 2022

What's New in '22 For 401ks: Disclosures for Participants About Lifetime Income

A new disclosure requirement for ERISA-covered defined contribution plans requires compliance starting this year, and some remaining uncertainty shouldn't prevent ERISA-covered defined contribution plan sponsors from taking action.

Source: Voya.com, February 2022

Is That "Missing Form 5500" Email Legit?

Did you receive an email from Scott Albert at DOL for a missed Form 5500 filing? It's not spam. That's right, the DOL recently sent out approximately 22,000 emails to Form 5500 contacts for certain "stop-filer" plans. Specifically, the emails targeted plans where a Form 5500 or 5500-SF was submitted in 2019 but not in 2020.

Source: Asppa.org, February 2022

IRS Proposes Restatement of Required Minimum Distribution Regulations to Incorporate SECURE Act Changes

The IRS released proposed regulations that would restate the required minimum distribution rules to incorporate changes made by the SECURE Act. Those changes increased the age for determining an individual's required beginning date to age 72 from 70-1/2 (for individuals attaining age 70-1/2 after 2019), and significantly altered the timing requirements for RMDs made to beneficiaries after a participant's death.

Source: Thomsonreuters.com, February 2022

Correcting 401k Plan Excess Elective Deferrals

With the April 15 deadline for distributing excess elective deferrals fast approaching, this post summarizes the rules for correcting excess elective deferrals made to a 401k plan. In brief, excess elective deferrals not distributed from a 401k plan by April 15 of the calendar year following the calendar year in which they were contributed will be taxed twice and may be subject to an additional 10% tax on early distributions. In addition, excess elective deferrals arising solely under a single employer's 401k plan that is not corrected by the April 15 deadline put the tax-qualified status of the plan at risk.

Source: Verrill-law.com, February 2022

Missing Participants: The Search Continues

ERISA has always required that plan fiduciaries maintain adequate plan records and distribute plan-related materials to participants and beneficiaries; however, there was no specific DOL guidance regarding missing participants, outside the context of plan terminations, until 2021, when the DOL issued such guidance in three distinct publications. Each of these important DOL publications is discussed here.

Source: Truckerhuss.com, February 2022

Avoid Trouble By Depositing Employee Contributions on Time

This article looks at another critical issue for employers, the need to deposit participant 401k contributions in the plan's trust or custodial account in a timely manner, and what to do when they aren't.

Source: Foley.com, February 2022

New Mortality Table May Lead to Lower Rmds Under 401k Plans

A new IRS mortality table effective on and after January 1, 2022, may lower the amount of required minimum distributions under 401k retirement plans for many participants required to receive such distributions in 2022 and beyond. This comes about due to a directive from the Trump Administration requiring the IRS to update the outdated 2012 mortality table. The new table is based on more recent data reflecting the general trend toward longer life expectancies.

Source: Compliancedashboard.net, February 2022

IRS Updates Safe Harbor Methods for "Substantially Equal Periodic Payment" Exception

Recent IRS Notice 2022-6 updates longstanding guidance on when a series of payments from an individual account under a tax-favored retirement plan is considered a series of "substantially equal periodic payments." This article summarizes the new guidance, which also applies to nonqualified annuities under section 72(q).

Source: Groom.com, February 2022

Oops, Was That Plan Compensation?

Using an inaccurate definition of compensation can be a small mistake that ends up being a big mistake. Such a failure directly affects contributions and can affect a few participants, all participants, or something in between. And even though the amounts involved may be small from payroll-to-payroll, they can go undetected (and therefore uncorrected) for many years, adding up to significant amounts required for correction.

Source: Erisadc.com, February 2022

Annual Plan Deadlines for the Plan Year Ending December 31, 2022

There are many important requirements for Internal Revenue Code Section 401(a) and 401k defined contribution plans that occur either during the calendar year or during the plan year. This chart explains key plan events and deadlines for defined contribution plans with a plan year ending December 31, 2022.

Source: Voya.com, February 2022

2022 401k Compliance Calendar

This year, start your company's 401k planning off right by familiarizing yourself with relevant deadlines and expectations before they creep up on you. Though many of the deadlines for various forms and reports are the same as last year, there are a couple of dates that have changed to reflect this year's calendar. As always, the year starts with relatively few things due, but requirements begin picking up in March.

Source: Forusall.com, February 2022

Required Minimum Distributions and Missing Plan Participants

The IRS Form 5500 Examination Procedures make it clear that the failure of a qualified retirement plan to make timely RMDs to participants is a qualification failure. A retirement plan must commence RMDs to plan participants by their required beginning dates regardless of whether the participants have made elections to commence their benefits under the plan or have failed to respond to notices regarding their RMD commencement dates. A plan will be treated as failing to satisfy Code Section 401(a)(9) unless the only reason for the plan’s failure to make a timely RMD is that the participant or beneficiary is missing. A participant or beneficiary is treated as missing only after a diligent search.

Source: Verrill-law.com, February 2022

DOL Issues Final 5500 Rules for MEPs and PEPs, but Defers Finalizing Broader Changes

On December 29, 2021, the DOL released a final form revision modifying the Form 5500 Annual Return/Report of Employee Benefit Plan for benefit plans. The final revisions primarily address issues related to multiple employer plans and pooled employer plans and leave other proposed changes affecting most plans -- including reporting of detailed expenses and IRS compliance issues -- for future rulemaking.

Source: Groom.com, February 2022

IRS Updates Annual Determination and Opinion Letter Procedures

Rev. Proc. 2022-4 contains annual updates to procedures for requesting IRS determination letters, private letter rulings, and other tax advice on employee plan matters. Key changes to last year's revenue procedure are reviewed here.

Source: Mercer.com, January 2022

What Plan Documents Must You Surrender if You Are Sued Under ERISA?

When a retirement plan participant files a lawsuit to recover damages from harm due to the plan sponsor's alleged breach of fiduciary duty, employers and plan administrators must furnish certain plan documents on demand. While ERISA requires the production of relevant materials, employers and plan administrators are not required to undertake any extensive searches for irrelevant documents. A recent court case, Theriot v. Building Trades United Pension Trust Fund, offers guidance on the extent to which employers and plans must go to meet their duties and where to draw the line.

Source: Hallbenefitslaw.com, January 2022

401k Compliance Check: Who Makes the Decisions for Your 401k Plan?

For most employers, January kicks off a brand new 401k plan year. Now that all of the year-end plan amendments, participant notices, and new deferral elections are behind you, this is a great time to take a step back and look at the big picture for your 401k plan's governance and decision-making process and make sure your 401k plan decision-makers are properly authorized to make those decisions.

Source: Foley.com, January 2022

401k Nondiscrimination Testing Study: What Percentage of Plans Fail?

401k plans must pass certain IRS-mandated nondiscrimination tests annually to confirm Highly-Compensated Employees do not disproportionately benefit and that no plan participant exceeded certain contribution limits. Often, these tests are completed as soon as possible following a year-end so correction and deduction deadlines are not missed. For calendar-based 401k plans, that means now. What percentage of 401k plans fail these tests? This study looked at 3,217 small business plans to find out. Results from the study of 2020 data -- including key findings -- can be found here.

Source: Employeefiduciary.com, January 2022

New Audit Responsibilities for Plan Sponsors Take Effect

Under a new auditing standard, benefit plan sponsors have added responsibilities when preparing for plan audits and face greater liability risks if they fail to meet these new requirements. In general ERISA requires employers that sponsor plans with 100 or more participants to engage a qualified accountant to audit the plan's financial statements. SAS 136 requires plan sponsors to provide additional information and documentation to the auditor in a number of areas.

Source: Shrm.org, January 2022

Puerto Rico 2022 Limits

The Puerto Rico Department of Treasury announced the 2022 limits for retirement plan sponsors of dually qualified plans and plans qualified solely in Puerto Rico.

Source: Principal.com, January 2022

New Guidance for Substantially Equal Periodic Payments

The IRS has released Notice 2022-6, which provides updated life expectancy tables used to calculate substantially equal periodic payments from qualified and non-qualified retirement plans as well as Individual Retirement Accounts and Individual Retirement Annuities. The updated tables follow the required minimum distribution tables that were released under final regulations in November 2020.

Source: Principal.com, January 2022

2022 Penalty Amounts for ERISA Health & Welfare and 401k Plans

On January 14, 2022, the DOL published its annual announcement of civil monetary penalties for various employee benefits-related violations under ERISA, as in effect for the calendar year 2022. To encourage compliance with the law, ERISA imposes various sanctions, including fines, which are subject to adjustment each year for inflation.

Source: Compliancedashboard.net, January 2022

Puerto Rico Announces 2022 Limits on Qualified Retirement Plans

On January 14, 2022, the Puerto Rico Department of the Treasury issued Internal Revenue Circular Letter No. 22-01 announcing the applicable 2022 limits for Puerto Rico qualified retirement plans. According to Section 1081.01(h) of the Puerto Rico Internal Revenue Code of 2011, as amended, the Secretary of the Treasury is required to publish the applicable limits under Section 401(a) of the Internal Revenue Code of 1986, which are incorporated by reference into the PR Code limits, once the IRS publishes its retirement plan limits under the US Code.

Source: Littler.com, January 2022

New Retirement Payment Withholding Procedure Is Final

The IRS released a new withholding form on January 4, 2022: Form W-4R, Withholding Certificate for Nonperiodic Payments, and Eligible Rollover Distributions. The IRS also issued a revised Form W-4P, Withholding Certificate for Pension or Annuity Payments. As a result, payers and individuals will have a new process for calculating and electing federal income tax withholding on retirement distributions. Although the IRS will not require payers to use the new and revised forms until January 1, 2023, payers may start using them in 2022.

Source: Ascensus.com, January 2022

IRS Issues 2022 Procedures for Letter Rulings, Determination Letters, and Other Guidance

The IRS has issued its annual update and restatement of the revenue procedures governing letter rulings, determination letters, and other guidance, including guidance about employee benefit plans. These revenue procedures supersede their 2021 counterparts and are generally effective as of their issuance date. Here are highlights for employee benefit plans.

Source: Thomsonreuters.com, January 2022

Tick, Tock, the DC Restatement Clock Is Running Out

Chances are that if you have a 401k plan, the document is on an IRS pre-approved form. One of the "costs" of having a pre-approved plan is that it must be re-stated every six years onto an updated pre-approved document that incorporates recent changes in the law. For DC plans, such a 401k, the current restatement deadline is July 31, 2022. A restatement is generally not something that can be done in a week or two, and vendors are under a great amount of stress trying to get all of their clients restated by this looming deadline. This is why it is so important that the restatement process be started as soon as possible.

Source: Erisadc.com, January 2022

ERISA Update and Outlook for 2022

Employers have spent the last two years dealing with many challenges and disruptions, and they are now looking to move forward in 2022 against a backdrop of economic and pandemic-related uncertainty and market volatility. To help plan sponsors navigate the challenging road ahead, this short article outlines four themes those plan sponsors should be keeping a close eye on in 2022.

Source: Bdo.com, January 2022

DC Retirement Plan 2022 Compliance Calendar

Retirement plan sponsors are responsible for compliance with any ongoing reporting, disclosure, and notice requirements. This 4-page Retirement Plan Compliance Calendar summarizes the major requirements that apply to DC plans for 2022. Due dates are based on a calendar year plan year and apply to plans subject to the ERISA.

Source: Usicg.com, January 2022

PTE 2020-02 Compliance: Avoiding Five Common Mistakes

It may be a New Year, but 2022 is going to seem very familiar to Broker-Dealers and their Registered Representatives who advise retirement plans and IRAs. They are going to be spending a lot of time working to comply with new exemptions and new ERISA rules coming from the DOL. As some of these deadlines are right around the corner, this article reviews the five common pitfalls and problems, and how to better address them in disclosures and policies and procedures.

Source: Brokerdealerlawblog.com, January 2022

CPAs Shift Audit Risk to Plan Fiduciaries

SAS 136 transfers a significant amount of liability for an audit's accuracy from an auditor to a plan's fiduciaries. SAS 136 intends to enhance the quality of audits of ERISA plans by adding new procedures to CPAs' audits beginning December 15, 2021. The burden for producing the added plan-related documentation required will likely fall to employers' human resources departments.

Source: Rolandcriss.com, January 2022

Finalized Form 5500 Changes Add to Plan Sponsors' Responsibilities

Some updates to the Form 5500 implement changes called for by the SECURE Act, and others will require more review from plan sponsors to ensure completeness and accuracy.

Source: Plansponsor.com, January 2022

IRS Updates Procedures for Determination Letter Requests

The new procedures are outlined in Revenue Procedure 2022-04. Rev. Proc. 2022-04 is a general update of Rev. Proc. 2021-4, published in Internal Revenue Bulletin 2021-01.

Source: Asppa.org, January 2022

2022 DC Retirement Plan Compliance Calendar

For defined contribution plan years starting Jan. 1, this retirement plan compliance calendar lists key IRS and DOL reporting and disclosure deadlines.

Source: Mercer.com, January 2022

2021 Form 5500 Series Informational Copies Released

The DOL, IRS, and the Pension Benefit Guaranty Corporation jointly released the 2021 Form 5500, Annual Return/Report of Employee Benefit Plan, 2021 Form 5500-SF, Annual Return/Report of Small Employee Benefit Plan, and their respective instructions. The IRS likewise released the 2021 Form 5500-EZ, Annual Return of a One-Participant Retirement Plan or Foreign Plan, and instructions.

Source: Ascensus.com, January 2022

DOL Publishes Informational Copies of 2021 Form 5500

Among other notable changes, the Form 5500 instructions have been amended to make clear that a pooled employer plan is a multiple employer plan that files a single Form 5500 Annual Return/Report.

Source: Plansponsor.com, December 2021

IRS Adds FAQs on In-Service Distributions, Rehiring Retirees

The IRS added answers to some frequently asked questions on whether rehiring a retiree causes the employee to lose bona fide retirement status. It also issued some FAQs on in-service distributions to individuals who continue to work.

Source: Hallbenefitslaw.com, December 2021

Form 5500 Revisions Implement PEP Filing Requirements

The DOL on Dec. 29 unveiled final revisions to the Form 5500 and the Form 5500-SF Short Form Annual Return/Report of Small Employee Benefit Plan. The revised forms are to be used for reporting concerning the 2021 plan year and include changes that apply to pooled employer plans.

Source: Asppa.org, December 2021

DOL Clarifies Its Prior Guidance on Private Equity Investments in 401k Plans

The DOL issued the Supplementary Statement in response to concerns from unidentified stakeholders that the Information Letter could be viewed -- particularly by sponsoring employers and other plan-level fiduciaries in typical 401k-type plans -- as endorsing or recommending PE investments and not sufficiently emphasizing the risks that accompany such investments.

Source: Debevoise.com, December 2021

DOL Clarifies Guidance on Private Equity in 401k Plans

A supplemental statement released by the Department of Labor cautions that private equity investments in participant-directed retirement savings plans may not be appropriate in certain cases. The Dec. 21 statement from the DOL advises that except in a minority of situations, plan-level fiduciaries of small, individual account plans are not likely suited to evaluate the use of private equity investments in designated investment alternatives in individual account plans.

Source: Asppa.org, December 2021

ERISA Requirements Calendar

Sponsors of defined benefit and defined contribution plans should keep deadlines and other important dates in mind as they work toward ensuring compliance with their plans in 2022. Dates assume a calendar year plan. Some deadlines may not apply or may have dates shifted based on your organization's fiscal year.

Source: Bdo.com, December 2021

How Do We Self-Correct a Failure to Enroll a New Employee in Our Automatic 401k Contributions?

The IRS's Employee Plans Compliance Resolution System offers several pre-approved methods that can be used to correct failures to implement automatic deferrals. The standard method for correcting full-year elective deferral failures (including enrollment failures under an automatic contribution arrangement) involves making a qualified nonelective contribution for 50% of the missed deferrals plus a contribution for the full amount of any missed matching or nonelective contributions. But lower-cost methods may be available if the correction is made within specified timeframes.

Source: Thomsonreuters.com, December 2021

Fast-Approaching Deadlines for Employee Benefit Plans

The end of 2021 brings important deadlines for employers that sponsor 401k plans, 403b plans, cafeteria plans, and group health plans. Under the Bipartisan Budget Act of 2018 and related IRS regulations, for 401k and 403b plans using the hardship distribution safe harbor there are several changes, some required and others optional.

Source: Venable.com, December 2021

2022 ERISA Plan Compliance Calendar

Being a retirement plan sponsor involves juggling many tasks, one of the more important is to make sure your plan complies with all pertinent federal legislation and regulations. This compliance calendar will help you keep track of your company's required filings, their due dates, and related details so you can avoid incurring any fines or other penalties for late filings or missing information.

Source: Plansponsor.com, December 2021

Retirement Plans Required Year-End Amendments for 2021

As 2021 winds down, retirement plan sponsors should confirm that their plan documents are amended by December 31, 2021, to comply with certain plan changes which are outlined here.

Source: Faegredrinker.com, December 2021

2021 ERISA/Employee Benefits Legal Compliance Checklist

A handy checklist that covers plan documents, plan operations, plan investments, and fiduciary concerns for end-of-year 2021.

Source: Wagnerlawgroup.com, December 2021

Mistakes You Should Avoid When Dealing With an IRS/DOL Audit

Plan sponsors tend to focus on the wrong things. One of the biggest dangers to them and their pocketbook is an audit by the Internal Revenue Service or the Department of Labor. Yet most act nonchalantly about it. The problem is they make mistakes and this article is all about warning you not to make them.

Source: Jdsupra.com, December 2021

Five Good Reasons to Correct Retirement Plan Errors

If your business sponsors a 401k or other retirement plan, it is governed by a lengthy plan document, often a separate trust agreement or custodial account agreement, and multiple other documents. Not surprisingly, most plan sponsors get something wrong somewhere along the way, whether it's concerning the plan document or the operation of the plan. Here are five reasons why taking prompt action to correct plan errors is in the best interests of your business, and your employees.

Source: Eforerisa.com, December 2021

December 31, 2021 Reminders for Retirement Plan Sponsors

Amendments implementing the 401k and 403b plan hardship distribution changes of the Bipartisan Budget Act of 2018 are the main amendments needed by December 31, 2021. This deadline applies to both calendar-year and fiscal-year plans. The amendments generally need to be retroactive to each provision's effective date.

Source: Segalco.com, December 2021

Getting the Most out of Year-End Plan Reviews

Year-end plan reviews are just around the corner. On a Dec. 6. Session of the ASPPA Winter Symposium, Missy Matrangola, QKA, QPA, Consultant with Atlantic Pension Services, offered ideas on how to get the most out of those reviews.

Source: Asppa.org, December 2021

401k Annual Administration - A Checklist for 2022

A checklist can serve another important purpose, monitoring your 401k provider's job performance. As a 401k fiduciary, you can't simply assume your 401k provider is doing their job. You must "monitor" them to ensure they're doing a competent and timely job. A checklist can make monitoring easy.

Source: Employeefiduciary.com, December 2021

IRS' 2021 Required Amendments List Doesn't Affect 401k Plans

On November 30, 2021, IRS released Notice 2021-64, its annual list of required amendments for individually designed qualified retirement plans. This year, the RA List is notable in that, for perhaps the first time, it contains no provisions directly applicable to 401k plans.

Source: Compliancedashboard.net, December 2021

DOL Seeks Information From Alight Solutions About Cybersecurity Incidents

Alight has been sued by retirement plan participants whose accounts were hacked, and the Department of Labor is investigating the provider's practices.

Source: Planadviser.com, December 2021

DOL Continues Emphasis on Enforcement in 2021

The DOL's Employee Benefits Security Administration issued its enforcement fact sheet showing that it recovered $1.9 billion from its investigations during the fiscal year ended September 30th, 2021, underscoring that enforcement remains an important priority for the agency. This is the third consecutive year that EBSA's recoveries from investigations totaled almost $2 billion and that total recoveries totaled almost $2.5 billion.

Source: Groom.com, December 2021

IRS Issues Required Amendments List for Individually Designed Plans

On November 30, 2021, the IRS released Notice 2021-64 containing the 2021 required amendments list. This annually issued list describes changes in retirement plan qualification requirements and amendment deadlines for individually designed qualified and individually designed 403b plans. Some items require plans to be amended, while others do not. This article lists the changes to qualification requirements.

Source: Ascensus.com, December 2021

Hardship Distribution Amendment Deadline Is Fast Approaching

Over the past few years, several laws and regulations were passed to loosen rules on hardship distributions for 401k and 403b retirement plans. While there was an extension to give plan sponsors more time to revise plans to reflect the changes, the final day to amend pre-approved qualified retirement plans that adopted hardship distribution regulations is Dec. 31, 2021.

Source: Bdo.com, November 2021

Voluntary Fiduciary Correction Program

This article describes the Voluntary Fiduciary Correction Program administered by the DOL's Employee Benefits Security Administration. The VFCP offers employers and fiduciaries of employee benefit plans subject to ERISA the opportunity to self-correct certain delineated fiduciary violations. Applicants can voluntarily apply for EBSA approval of the corrections to avoid certain penalties, excise taxes, and governmental enforcement actions. This article sets forth the specific violations covered by the VFCP, methods for correcting violations, including calculation of plan restitution amounts, and describes the VFCP application process.

Source: Gjassets.com, November 2021

Why You Should Encourage "Mini" Retirement Plan Audits

From the annual hassle of engaging an accountant to review retirement plan financials to the ever-present threat of a DOL investigation, "audit" is practically a four-letter word for plan sponsors, financial professionals, and administrators. But they don't have to be a bad thing. Regularly conducting "mini" plan audits allows compliance to be broken down into more manageable, bite-sized pieces. These voluntary reviews require minimal time and resources and can pay big dividends.

Source: Voya.com, November 2021

Which Plan Documents Must You Surrender if You Are Sued?

When participants believe they have been mistreated by your company's retirement plan and take their complaints to court, be prepared for requests for plan documents. Although under ERISA you are obligated to produce relevant materials, you are not required to indulge in a document fishing expedition. A recent court case, Theriot v. Building Trades United Pension Trust Fund, offers insights on just how far you need to go and where to draw the line.

Source: Orba.com, November 2021

DOL's EBSA Investigations, Recoveries Down From Record in FY 2020

The Labor Department's Employee Benefits Security Administration recovered about $2.4 billion in fiscal 2021, down from $3.1 billion a year prior.

Source: Investmentnews.com (registration may be required), November 2021

Retirement Plan Amendment Deadlines

As we approach the end of 2021, it is a good time to review upcoming year-end plan amendment deadlines applicable to retirement plans. Employers should review their plans with their providers and advisers to determine if any plan amendments need to be adopted by the end of 2021.

Source: Bsk.com, November 2021

Year-End Reminders for Retirement Plans 2021 Edition

As the end of 2021 approaches, employers and plan sponsors of retirement plans need to be aware of their year-end responsibilities and some of the issues they will need to consider going into 2022. Here is a brief overview.

Source: Wagnerlawgroup.com, November 2021

Required Plan Amendment Compliance Tracking Procedure for Individually Designed Retirement Plans

In Revenue Procedure 2016-37 the IRS eliminated the determination letter process for individually designed plans for all situations except initial plan qualification, qualification upon plan termination, and a few other special circumstances such as a plan merger in the event of a merger or acquisition involving unrelated entities. Once the IRS ended this process, they substituted a new "self-help" procedure that left employers on their own for demonstrating compliance with these requirements.

Source: Foley.com, November 2021

Retirement Fiduciary Calendar for 2022

This Retirement Fiduciary Calendar for 2022 makes it fast, simple, and easy for plan sponsors to keep their retirement plans in compliance with Internal Revenue Service, Department of Labor, and ERISA regulations. When used, it will help them stay in front of administrative deadlines and submission complexities.

Source: Tri-ad.com, November 2021

Form 5500 DOL Investigations

When you receive a letter from the DOL letting you know that the plan that you administer is under investigation, it is natural to ask "how did my plan get picked?" While some investigations are opened based on participant complaints or concerning news reports, many investigations are opened because your plan meets the criteria that a current initiative has flagged. This is a lot of words to say that Form 5500 has become an enforcement tool.

Source: Groom.com, November 2021

Employer-Sponsored Retirement and Health Plans: What You Need to Know for Year-End

While year-end is ordinarily a busy time for companies, the number of COVID-19-related pieces of legislation and developments present additional items employers and plan sponsors must address in wrapping up 2021.

Source: Troutman.com, November 2021

IRS Adds Two FAQs to Its Covid-19 Q&A Guidance for Retirement Plans

On October 28, 2021, the IRS added two FAQs to its official guidance in the form of questions and answers regarding COVID-19 pandemic relief for retirement plans, including 401k plans.

Source: Compliancedashboard.net, November 2021

What Should We Do When Our 401k Plan Must Make a Distribution to Someone We Cannot Locate?

Each year, when our 401k plan makes required minimum distributions, we discover that the addresses on file for some distributees are no longer valid. We sometimes have similar problems locating beneficiaries when a participant dies. What procedures should we follow when our plan must make distributions to individuals we cannot locate? And what can we do to minimize this problem?

Source: Thomsonreuters.com, November 2021

Retirement Plan Error Corrections Options Available Through EPCRS

Earlier this year, the IRS issued Revenue Procedure 2021-30, which provides retirement plan sponsors additional opportunities to use voluntary and self-correction features of the Employee Plan Compliance Resolution System. This guidance continues a trend of the IRS seeking ways to make it easier for plan sponsors to correct errors that may occur in running a tax-qualified retirement plan.

Source: Bdo.com, November 2021

IRS Adds FAQs on In-Service Distributions, Rehiring Retirees

The IRS has shed light on whether rehiring a retiree causes that retirement to not be considered a bona fide retirement and on in-service distributions to people who are still working. The IRS provided this information by adding frequently asked questions to those it provides concerning Coronavirus-related relief for retirement plans and IRAs.

Source: Asppa.org, November 2021

Provider Reviews, Contracts Emphasized in DOL Cybersecurity Guidance

Retirement plan fiduciaries often rely on their service providers to create the electronic systems used to maintain participant data and conduct electronic transactions involving plan assets, so the Department of Labor is paying special attention to these relationships.

Source: Planadviser.com, November 2021

Participation of Long-Term, Part-Time Employees in 401k Plans

One of the goals of the SECURE Act was to increase participation in 401k plans. In this regard, Section 112 of the SECURE Act requires certain long-term, part-time employees to be allowed to make salary deferrals to a 401k plan. The clock started on January 1, 2021, for tracking hours to determine eligibility under a 401k plan as a long-term, part-time employee. As we are nearing the close of the first 12-month period since the effective date, employers that exclude part-time employees from 401k plan participation should ensure that they are on track for compliance with the new rules.

Source: Kilpatricktownsend.com, November 2021

Year-End Deadlines and Considerations for Employee Retirement, Health and Welfare Plans

With the end of the year fast approaching, employers should be aware of several important deadlines and considerations related to retirement and health and welfare plans. With the onslaught of recent COVID-19-related legislation, 2021's year-end employee benefit plan checklist is more complicated than usual. This checklist will assist employers with specific year-end requirements and remind employers of important items on the horizon.

Source: Huschblackwell.com, November 2021

2021 Retirement Plan Year-End Amendments and Operational Compliance

As we approach the end of 2021, it's again time for sponsors of 401(a) and 403b plans to review their plan documents and plan operations to ensure compliance with increasingly complex qualification requirements. While there is no one-size-fits-all checklist, the following provides an overview of these requirements to help plan sponsors (1) determine the need to adopt plan amendments before year-end, (2) ensure operational compliance with changes in law, (3) evaluate the implications of potential plan changes, and (4) take appropriate action/next steps.

Source: Groom.com, November 2021

2021 Year-End Preparation for Benefit Plans

As 2021 barrels toward its end and the focus is on infrastructure and tax legislation, don't lose sight of important 2021 legislative and regulatory deadlines. With that in mind, here is a list of benefits and compensation items to be sure to check off your list before 2021 concludes.

Source: Ipbtax.com, November 2021

SIMPLE IRAs vs 401k Safe Harbor Plans - 2021

This outline compares a SIMPLE IRA with a safe-harbor 401k plan and is especially important for employers who must cover participants other than just the owners.

Source: Consultrms.com, November 2021

What are Prohibited Transactions in Retirement Plans?

What exactly is a prohibited transaction? A transaction between the qualified plan and anyone listed here is considered a prohibited transaction unless there is a statutory exemption allowing for the transaction to occur.

Source: Consultrms.com, November 2021

EPCRS Update Brings Good News for Plan Sponsors

Rev. Proc. 2021-30 is the latest iteration of the IRS correction program -- Employee Plans Compliance Resolution System -- that enables plan sponsors and the retirement industry to sleep at night knowing that plan errors can be corrected and may retain their all-important tax-favored status. In this article, Groom’s Elizabeth Dold and David Levine outline the few, key changes that were made to the Self-Correction Program, Voluntary Correction Program, and the Audit Closing Agreement Program, and Voluntary Audit Cap via EPCRS.

Source: Groom.com, November 2021

Time Running Out to Issue Plan Notices

It is again time for plan sponsors to distribute their annual notices to participants. Outside of the normal changes to plan COLAs and investment expense ratios, plan sponsors will want to consider and incorporate any changes made to their plan in the past year into this year's annual notice. As a reminder, the 401k safe harbor, qualified default investment alternative, and automatic enrollment notices must all be sent to plan participants between 30-90 days before the beginning of the plan year (i.e., no later than December 2nd for calendar year-end plans), and may be combined into a single document.

Source: Graydon.law, November 2021

ERISA Bonding Requirements and Compliance Testing

ERISA bonding requirements and compliance testing, although not necessarily related, are two of the compliance matters auditors commonly look at during an audit. It is important for plan fiduciaries to be aware of the overall purpose of the bonding requirements and the compliance tests and be familiar with the correction methods and deadlines.

Source: Berrydunn.com, November 2021

The Who, What, Where, Why, and How of Retirement Plan Audits

You (or your client) may have just found out that an audit is required for its retirement plan. Many questions may be running through your head such as Why must an audit be performed? What must be audited? Who performs audits? Who is required to have an audit? How is an audit performed? Well, it's your lucky day, because this blog will address these burning questions. If your plan already requires an audit, this article may still provide benefits by uncovering facts that you didn't know.

Source: Belfint.com, November 2021

Deemed Distributions Can Be Triggered by More Than Just Loan Nonpayment

Plan sponsors might be most familiar with the failure that occurs when a participant loan goes into default if payments are not made. But the IRS says failures also could occur when participant loans exceed the maximum dollar amount, have payment schedules that do not meet the time or payment requirements or are not legally enforceable agreements.

Source: Plansponsor.com, October 2021

What Plan Sponsors Need to Know About SOC Reports

Most 401k and other benefit plans outsource the vast majority of plan activities to a service organization (e.g., recordkeepers/custodians and payroll service providers). Most service organizations will have a Service Organization Controls report that documents internal controls over financial reporting as well as the results of the tests of those controls for operating effectiveness. Information contained in the SOC report helps plan sponsors act in the best interests of their plan participants, which is part of the plan sponsor's fiduciary duty.

Source: Eisneramper.com, October 2021

Field Assistance Bulletin No. 2021-02

This document announces a temporary enforcement policy related to the Department of Labor's prohibited transaction exemption (PTE) 2020-02.

Source: Dol.gov, October 2021

DOL Further Delays Enforcement of PTE 2020-02

The DOL has issued Field Assistance Bulletin No. 2021-02 to further delay enforcement of Prohibited Transaction Exemption 2020-02, which sets forth several requirements that financial institutions and investment professionals must satisfy when providing fiduciary investment advice, including advice to roll over a retirement plan account into an individual retirement account. The transition relief currently in effect was set to expire on December 20, 2021. Citing practical difficulties caused by the year-end timing, the DOL has extended its non-enforcement policy for compliance with PTE 2020-02 to January 31, 2022, for all requirements other than the specific documentation and disclosure requirements for rollover recommendations.

Source: Bradley.com, October 2021

401k Plan Top 10 Year End Laundry List

No one likes doing laundry, but having a calendar year-end top 10 list may be exactly what plan sponsors and administration committees need to prevent operational or document compliance issues being raised by a 401k plan participant or beneficiary, the IRS, or the DOL. This list highlights issues for sponsors and administration committees between now and year-end for calendar year plans.

Source: Foley.com, October 2021

Retirement Plan Sponsors Have Short List of 2021 Year-End Amendments

Retirement plan sponsors face a very short list of required amendments to make before year-end, but a few will need to formally adopt plan changes already operationally in effect. This article summarizes the amendments that may be required by year-end for qualified defined benefit, defined contribution plans, and Section 403b plans.

Source: Mercer.com, October 2021

SAS 136 Is Here: A Review of All the Changes

SAS 136 is around the corner. There have been tidbits of information so you can be prepared for the change, but this piece ties it all together because the effective date is for periods ending on or after December 15, 2021 (i.e., beginning with December 31, 2021, year-ends).

Source: Lindquistcpa.com, October 2021

SAS 136: How to Plan Ahead and Prepare for Additional Requirements

401k plan sponsors will need to prepare for additional requirements related to their 2021 plan audits. Statement on Auditing Standards No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, is effective for periods on or after December 15, 2021.

Source: Lindquistcpa.com, October 2021

DOL New Proposed ESG Regulations (and Other Updates)

The author writes, "Without question, we heard from Third Party Administrators, Certified Public Accountants, and Institutional Pension Workers, that this year was one of the most challenging October 15th deadlines. The fallout from the 2020 census hokey-pokey, and ongoing personnel shortage with Plan Sponsors, added massive challenges to an already difficult process. While you were locked in your chair and not sleeping, lots of interesting proposed regulations and legislation were floated and it's time to start putting your thinking caps on to figure out how this all might impact our clients."

Source: Ferenczylaw.com, October 2021

Cybersecurity Requests Appear in DOL Audits

Benefit plan sponsors and service providers need to take a proactive approach to cybersecurity and be prepared for a possible DOL investigation. Although the immediate attention has been on retirement plans, health and welfare plan sponsors and fiduciaries should also be prepared to field questions about cybersecurity from DOL auditors.

Source: Groom.com, October 2021

How Can Plan Sponsors Evaluate Prospective Auditors?

As the results of a DOL study on audit quality shift, the industry focus on the qualifications of employee benefit plan auditors. CPA firms with specialized retirement plan audit practices choose to demonstrate their commitment to quality employee benefit plan audits by displaying their auditors’ badges on marketing materials, social media, and email signature lines. What do the badges mean and how does a plan sponsor differentiate between prospective audit teams that are equally credentialed?

Source: Belfint.com, October 2021

Getting Up to Date on Form 5500

The SECURE Act of 2019 has a long reach and that extends to Form 5500. An Oct. 18 session at the 2021 ASPPA Annual conference took a look at changes that have taken place in the form vis-a-vis the enactment of the measure.

Source: Asppa.org, October 2021

Scary Surprise for Some New 401k Sponsors: Plan Audit Costs

You are a business owner and have just found out that as part of your Form 5500 filing obligations you need to engage the services of an independent qualified public accountant to audit plan operations and finances. The cost of these services run about $10,000. This is a scary surprise for you. Did things have to end up this way?

Source: Eforerisa.com, October 2021

DOL Proposes Rule to Remove Barriers to Considering ESG Factors in Retirement Plan Management

The DOL announced a proposed rule that would remove barriers to plan fiduciaries' ability to consider climate change and other environmental, social and governance factors when they select investments and exercise shareholder rights. The proposed rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," follows Executive Order 14030, signed by President Biden on May 20, 2021. The order directs the federal government to implement policies to help safeguard the financial security of America's families, businesses and workers from climate-related financial risk that may threaten the life savings and pensions of U.S. workers and families.

Source: Dol.gov, October 2021

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