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.
Abstract: The IRS issued an update to its retirement plan correction program that significantly expands the errors that can be corrected without filing with the IRS or paying a filing fee. Most importantly, many plan loan errors can now be self-corrected. For example, if loan payments are missed but the maximum loan term (generally 5 years) has not yet expired, the loan can be corrected by repaying it in full or reamortizing it over the original maximum loan term. This is the case even if the loan's normal cure period has already expired. An IRS filing is no longer required to correct a loan in this way.
Source: Sgrlaw.com, April 2019
Abstract: The DOL recently published its Fiscal Year 2018 "Fact Sheet" documenting the criminal and civil enforcement activities. Total monetary recoveries increased for the third year in a row, due to historically high recoveries from EBSA's civil enforcement actions. Although civil enforcement recoveries reached a historic high -- the third largest in over a decade -- the trend of increased criminal investigations and decreased civil investigations continued in FY 2018.
Source: Eversheds-Sutherland.com, April 2019
Abstract: The DOL issued proposed regulations that, if adopted in proposed form, would substantially increase compensation thresholds used to determine whether executive, administrative, and professional employees must be paid overtime. Among other repercussions, the new rules could indirectly affect retirement plans, including 401k plans, because increased overtime eligibility might result in higher wages.
Source: Compliancedashboard.net, April 2019
Abstract: The Act focuses on promoting economic development in Puerto Rico and introduces various changes that impact individuals and corporations including changes to tax withholding rates for lump sum distributions from retirement plans, the compensation limit for Highly Compensated Employees, and distributions following a Disaster Declared by the Governor of Puerto Rico.
Source: Prudential.com, March 2019
Abstract: On March 22, 2019, the Internal Revenue Service (IRS) issued the Operational Compliance List for tax-qualified retirement plans. The Operational Compliance List is mandated by IRS Rev. Proc. 2016-37 and notifies plan sponsors and service providers of changes to the tax-qualification requirements that became effective during the 2019 calendar year.
Source: Westlaw.com, March 2019
Abstract: If you send the IRS a Voluntary Compliance Program submission on paper on April 1, it will be returned to you. Beginning April 1, 2019, the IRS will only accept VCP submissions that are made electronically through Pay.gov. It will return VCP submissions made on paper that have a postmark after March 31, 2019.
Source: Asppa-net.org, March 2019
Abstract: During our 401k audits, we see failures occurring at both the plan level and the participant level. Documentation failures arise when transactions occurring in the plan can't be supported by written direction.
Source: 5500audit.com, March 2019
Abstract: Prudent plan sponsors are proactive, have up-to-date procedures and guidelines, and periodically conduct an operational compliance review, or self-audit. Use these eight questions to help you pinpoint areas that may need to be addressed in your review.
Source: Findley.com, March 2019
Abstract: Since several provisions of the Budget Act were slated to be effective as early as January 1, 2019, it is important to understand the content of the proposed hardship regulations now in order to be poised to take advantage of them once they are finalized. This article discusses the content and impact of the proposed hardship regulations.
Source: Legacyrsllc.com, March 2019
Abstract: This compliance checklist incorporates defined benefit, defined contribution, and ERISA 403b requirements and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made.
Source: Prudential.com, February 2019
Abstract: The 2019 Expanded Reporting and Disclosure Requirements Calendar provides who, what, when and where reporting and disclosure information for single-employer pension plans under ERISA. Plan administrators can access concise instructions for filing reports with the DOL, IRS and Pension Benefit Guaranty Corporation, and for disclosing tax and benefit information to U.S. plan participants, beneficiaries and alternate payees.
Source: Willistowerswatson.com, February 2019
Abstract: March 15 is a well-known date in the defined contribution world. This is the date that corrective distributions must be processed for a failed ADP/ACP test (Actual Deferral Percentage/Actual Contribution Percentage test, respectively) for a calendar plan year. What can you do to prepare?
Source: Watkinsross.com, February 2019
Abstract: All too many 401k and pension plan sponsors and committee members still mistakenly believe that their recordkeeper is responsible for all plan compliance. Many services agreement makes the plan sponsor responsible for plan administration even though they are not actually taking care of most compliance matters themselves. Some new practices can help insure that the plan is run correctly and avoid potentially expensive penalties. Here are some steps to include in an action plan for coordinating with your recordkeeper.
Source: Cohenbuckmann.com, February 2019
Abstract: You recently met the requirement that necessitated an audit of your 401k Plan. You reach out to your financial advisor, third-party administrator, or perhaps even Google around for a 401k Plan auditor. After speaking to the partner of a few firms that you discovered, including the review of their amazing marketing material, you finally choose a firm. The date is set for the auditor to come out and start the audit. To your surprise, the partner that was heavily involved during the auditor search is nowhere onsite during the audit and the majority of testing is performed by the newer staff auditors. Welcome to the modern world of public accounting.
Source: Poolercpa.com, February 2019
Abstract: The ERISA Industry Committee (ERIC) today submitted suggestions to the U.S. Department of Labor Assistant Secretary of Labor Preston Rutledge on guidance related to the challenge of employers locating missing retirement plan participants.
Source: Eric.org, February 2019
Abstract: The Department of Labor recently released its 2019 inflation-adjusted penalties for benefits-related violations. Legislation adopted in 2015 requires adjustments to specific Department civil monetary penalties by January 15 of each year. Due to the government shutdown this year, the penalties were released a bit late, but are effective as of January 23, 2019. The cost-of-living adjustment is based on the Consumer Price Index for all Urban Consumers, which resulted in roughly a 2.5% increase.
Source: Winston.com, February 2019
Abstract: The Tax Cuts and Jobs Act amended Section 217 of the Internal Revenue Code (Code) to suspend the deduction for moving expenses from 2018 through 2025. This change has a subtle yet meaningful impact on many tax-qualified retirement plans.
Source: Morganlewis.com, February 2019
Abstract: A qualified retirement plan must meet various requirements throughout the year in order to retain the qualified status. If you are responsible for administering your company's defined contribution plan, it's critical to meet these deadlines. From processing failed ADP/ACP test refunds to delivering the participant fee disclosures, it can feel overwhelming. This DC plan compliance calendar will help you stay on track.
Source: Watkinsross.com, February 2019
Abstract: Despite how tedious some plan sponsors tasks are, they are all required tasks and failure to complete a task can cause a whole host of problems and money. This article is about tedious tasks that plan sponsors need to make sure is done and done correctly.
Source: Jdsupra.com, February 2019
Abstract: Occasionally an employee may experience a serious financial need. With no other help available, raiding a retirement plan may be the only option. Prior to 2019, employees and employers alike may have faced hurdles when wrestling with a hardship distribution. Due to new laws, however, hardship distribution rules are changing in 2019.
Source: Hallbenefitslaw.com, February 2019
Abstract: Attorneys would define a Safe Harbor as a provision of a statute or a regulation that specifies that certain conduct will be deemed not to violate a given rule. In our ERISA world, a Safe Harbor is a provision of the retirement plan law that can cut through the sometimes fog of ERISA and provide fiduciary protection to plan sponsors and at the same time make their retirement plans more efficient and effective. Here is a brief description of some of them.
Source: Retirementplanblog.com, February 2019
Abstract: Many 401k plans permit loans to participants. But often participant loans don't conform to the requirements of IRC Section 72(p) or are prohibited transactions under IRC Section 4975. This article reviews how to avoid and fix such mistakes.
Source: Irs.gov, February 2019
Abstract: The tax code governing 401k plans was written to prevent qualified retirement plans from overly favoring highly compensated employees. A series of non-discrimination tests were devised to measure whether a plan's design or operation tends to favoring the HCEs over the nonhighly compensated employees. This article dives into the different methods of correcting for an ADP test failure.
Source: Legacyrsllc.com, February 2019
Abstract: 401k plan administration is the process of maintaining a retirement plan and keeping it compliant with the Employee Retirement Income Security Act of 1974. Basically, all the day-to-day tasks that keep the 401k running. To help keep things as simple as possible, this article breaks the work into two types: Ongoing Administration, and Annual Compliance.
Source: Forusall.com, February 2019
Abstract: The Employee Benefits Security Administration enforces ERISA laws and regulations, including conducting civil and criminal investigations. EBSA enforcement of ERISA laws often results in recovering money from enforcement actions, voluntary fiduciary correction programs, abandoned plan programs, and informal complaint resolution. Enforcement statistics from 2018 and the Department of Labor strategic plan for the future provide some insights on enforcement for 2019.
Source: Bsllp.com, February 2019
Abstract: IRS Revenue Procedure 2018-52 mandates online filing of VCP submissions starting April 1, 2019. The IRS opened the online filing system for voluntary use starting January 1 of this year. Paper filing is optional through March 31, 2019. This article reports on first experiences with the online filing system.
Source: Eforerisa.wordpress.com, February 2019
Abstract: The calendar lists relevant 2019 administrative dates encountered by most defined contribution retirement plans, including deadlines for government filings and participant disclosures. The calendar also provides short descriptions of the actions required to meet each deadline.
Source: Milliman.com, January 2019
Abstract: The Department of Labor, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation released advance informational copies of the 2018 Form 5500 annual return/report and related instructions. Here are some of the changes that the instructions highlight.
Source: Ubabenefits.com, January 2019
Abstract: Plan Fiduciaries withheld tens of thousands of dollars from employees' paychecks, but did not forward these employee contributions to the plans, or did not forward them in a timely manner. The DOL also alleged in a lawsuit that fiduciaries to two retirement plans failed to administer the plans, leaving participants unable to gain information about their funds or gain access to their plan accounts.
Source: Planadviser.com, January 2019
Abstract: In a study of over 350 companies nationwide, the average company makes 53 payroll mistakes each year. If left unfixed, these mistakes can have some big ramifications, both in terms of compliance risk, as well as needless work during your annual audit. This article will walk you through five of the biggest 401k compliance mistakes.
Source: Forusall.com, January 2019
Abstract: Typically, retirement plan sponsors intend for the funds contained in a retirement plan to be held until the participant retires. Under some circumstances, a participant may need the money now. Some retirement plans allow participants to receive hardship distributions, though they are not required to do so. This article examines some common questions about hardship distributions.
Source: Hallbenefitslaw.com, January 2019
Abstract: The IRS issued Revenue Procedure 2019-1, Revenue Procedure 2019-2, Revenue Procedure 2019-3, Revenue Procedure 2019-4, Revenue Procedure 2019-5 and Revenue Procedure 2019-7. These Revenue Procedures became effective January 2, 2019, and update the annual Revenue Procedures, which set forth the procedures for Determination Letter requests and Private Letter Ruling requests. Importantly, these Revenue Procedures increase the user fees for certain requests.
Source: Icemiller.com, January 2019
Abstract: When it comes to 401k compliance, you probably already know that there's a lot you need to stay on top of. You probably also don't have time to spend hours researching online or digging through ERISA codes to figure out what you have to do and when you have to do it by. This simple 401k compliance calendar allows you to quickly see the compliance deadlines you should be aware of in 2019.
Source: Forusall.com, January 2019
Abstract: No matter how diligent you are around plan administration, occasional mistakes are nonetheless inevitable. The good news is they can be fixed. Both the IRS and the DOL have established programs to help plan sponsors correct defects, allowing you to maintain the tax-qualified status of your plans or get back on the fiduciary straight and narrow.
Source: Fidelity.com, January 2019
Abstract: AICPA's Auditing Standards Board has agreed on changes to auditing standards to respond to DOL's 2015 review of plan audits, but will likely delay the implementation of the changes until periods ending on or after December 15, 2020. The proposal was aimed at improving audit quality in response to DOL's 2015 review of audits in which deficiencies were found in a significant number of cases.
Source: Buck.com, January 2019
Abstract: I think you'll agree that 401k administration can be tedious and complex. And it's easy to mess up. And every time you make a mistake, even if it's just a tiny one, it can add a lot of frustration and hassle during your year-end compliance work. This article walks you through five 401k administration tips used by top companies to save time and keep their 401ks compliant, without wanting to pull their hair out.
Source: Forusall.com, January 2019
Abstract: This is a summary of the deposit deadlines applicable to all 401k plan contributions, including how to correct late contributions. If you're a 401k fiduciary, you can use this information to understand your plan's contribution deadlines and what you need to do in case you miss one.
Source: Employeefiduciary.com, January 2019
Abstract: The Puerto Rico Department of the Treasury issued Internal Revenue Informative Bulletin No. 18-24 (IB 18-24) announcing the 2019 applicable limits for Puerto Rico qualified retirement plans.
Source: Littler.com, January 2019
Abstract: The IRS has released its annual guidance including Revenue Procedure 2019-4 providing guidance on obtaining a determination letter.
Source: Irs.gov, January 2019
Abstract: The IRS has released the 2019 Instructions for Forms 1099-R and 5498. These detailed instructions describe the reporting requirements for IRA and employer-sponsored retirement plan distributions, IRA contributions, rollovers, conversions, recharacterizations, and fair market values.
Source: Ascensus.com, December 2018
Abstract: This chart provides reporting and disclosure requirements under ongoing calendar-year qualified retirement plans in the United States.
Source: Willistowerswatson.com, December 2018
Abstract: The IRS recently issued proposed regulations to implement changes to the rules for hardship distributions from 401k plans made by the Bipartisan Budget Act of 2018 that will take effect on January 1, 2019. The proposed changes will make hardship distributions more widely available and will ease administration of hardship distributions for plan sponsors.
Source: Hansonbridgett.com, December 2018
Abstract: In this episode of the Proskauer Benefits Brief, Paul Hamburger co-chair of Proskauer's Employee Benefits & Executive Compensation Group, and associate Steven Einhorn discuss the recently proposed IRS regulations addressing the hardship withdrawal rules affecting 401k and 403b plans.
Source: Erisapracticecenter.com, December 2018
Abstract: The DOL issued a proposed exemption related to the consolidation of small retirement savings accounts in 401k plans and IRAs when workers change jobs. The proposed individual exemption would permit automatic transfers of small 401k account balances (less than $5,000) from a "rollover" IRA containing an employee's former employer's plan balance, to his or her new employer's 401k plan, provided the employee does not opt out.
Source: Compliancedashboard.net, December 2018
Abstract: The American Institute of CPAs has taken another step toward improving the quality of audits of financial statements of employee benefit plans. The institute said its Auditing Standards Board voted to issue a new standard that addresses the auditor's responsibility to form an opinion and report on the audit of financial statements of plans subject to ERISA.
Source: Cfo.com, December 2018
Abstract: There are good times and bad times to be noticed. Most 401k plan sponsors don't want to be noticed (and then investigated) by the U.S. Department of Labor. But employers need to provide notices to employees as they become eligible to join a 401k plan or face potential employee complaints and DOL investigation.
Source: Alliant401k.com, December 2018
Abstract: Facts: Our company sponsors a safe harbor 401k plan that provides a matching contribution equal to 100% of the first 4% each participant defers. I had always thought that the deadline for us to deposit the match is the due date of our company tax return (with extensions), but my TPA mentioned something about a quarterly deposit requirement.
Source: Dwc401k.com, December 2018
Abstract: DOL recently issued an advisory opinion and proposed a prohibited transaction exemption concerning a program designed to automatically move an individual's small account from a prior employer's defined contribution plan to a default IRA and then ultimately into that individual's account in a new employer's defined contribution plan. The program, which would charge asset-based fees for accounts over $50, aims to eliminate duplicative fees for small retirement savings accounts and reduce leakage of retirement savings. While the proposed prohibited transaction exemption is pending, plan sponsors should consider whether they might want to participate in this program.
Source: Buck.com, December 2018
Abstract: This "to do" list covers qualified plan issues. It is broken into five categories.
Source: Swlaw.com, December 2018
Abstract: The Internal Revenue Service issued the 2018 Required Amendments List under IRS Notice 2018-91 on November 21, 2018. The Required Amendments List establishes the date by which plan amendments must be made for changes in qualification requirements contained on the list. There are no entries listing changes in qualification requirements on the 2018 Required Amendments List.
Source: Icemiller.com, December 2018
Abstract: Plan administrators should review the following actions to be taken before the end of 2018 and focus on what to expect for 2019. This 7-page checklist addresses plan amendments, notices and other considerations for qualified retirement plans, welfare plans, and stock-based and performance-based plans.
Source: Williamsmullen.com, November 2018
Abstract: Every year, plan sponsors must make sure their plans meet certain compliance requirements. This 5-page publication identifies the materials you need to review and will help you prepare for year-end. This information applies to qualified defined contribution plans and 403b plans that are subject to Title I of ERISA.
Source: Prudential.com, November 2018
Abstract: The DOL recognizes that these wildfires may impede efforts by plan fiduciaries, employers, labor organizations, service providers, and participants and beneficiaries to comply with ERISA over the next few months. The Department has published employee benefit plan compliance guidance and relief for victims of the California Camp, Hill, Woolsey and other 2018 California wildfires.
Source: Dol.gov, November 2018
Abstract: The Department of Labor released an FAQ for participants and beneficiaries in benefit plans impacted by the recent California wildfires.
Source: Dol.gov, November 2018
New Regulations on Hardship Distributions: What Plan Sponsors and Administrators May Do Now and Must Do Later
Abstract: Many plan administrators of 401k and 403b plans permitting hardship distributions will want to implement some of the changes soon to take advantage of the liberalized hardship distribution standards, and virtually all sponsors of such plans will be required to amend their plans in the not-so-distant future as a result of these changes.
Source: Bradley.com, November 2018
Abstract: Maybe you're looking into establishing a 401k for your company. Or perhaps you've realized it is time to make a change to how your plan is run. Both are often excellent, if tough, decisions. In this easy-to-read 401k plan document reference guide is just about everything you need to know about 401k adoption agreements.
Source: Forusall.com, November 2018
Abstract: Annual 401k administration tasks generally fall into one of four categories: nondiscrimination testing, Form 5500 reporting, participant disclosure, and plan document maintenance. If you're an employer, it is recommend that you manage the completion of these tasks using a checklist. A checklist can serve another important purpose, monitoring your 401k provider's job performance.
Source: Employeefiduciary.com, November 2018
Abstract: In order to encourage employers to use plan designs that include automatic contribution features (such as auto enrollment and auto escalation of elective deferrals), the IRS allows special "safe harbor" correction methods for plans that experience elective deferral failures related to these types of features.
Source: 401kspecialistmag.com, November 2018
Abstract: New York Gov. Andrew Cuomo had, through the Department of Financial Services, ordered state regulators to suggest to 401k and similar financial firms they "review any relationships they may have with the National Rifle Association and other similar organizations. Upon this review, the companies are encouraged to consider whether such ties harm their corporate reputations and jeopardize public safety."
Source: 401kspecialistmag.com, November 2018
Abstract: Under an auto portability program, employees would be told that their 401k savings will be moved to tax-favored IRAs when they leave a job or if the plan is terminated, and that the employee's savings in the IRA would then be automatically transferred to the 401k plan or other individual account plan of the new employer when the employee finds a new job. However, because the prohibited transaction provisions of ERISA and the Internal Revenue Code prohibit a plan fiduciary from using its discretion to cause the plan or IRA to pay the fiduciary a fee, implementation of this type of program would require a prohibited transaction exemption.
Source: Wagnerlawgroup.com, November 2018
Abstract: This 1-page article examines the correction methods for the most common downside of automatic contribution arrangements: elective deferral failures.
Source: Boutwellfay.com, November 2018
Abstract: With Student Loan Repayment programs so popular and with the blessing of the IRS in the case of at least one 401k SLR program, why is caution advisable? Steve Riordan notes that SLR contributions are subject to all qualification requirements; however, he said that he is more concerned about coverage, non-discrimination and contribution limits. Each component, he noted, is separately tested regarding coverage and non-discrimination. If one population receives a match and the other receives a non-elective contribution, that increases the potential for coverage and non-discrimination failures, he warned.
Source: Asppa.org, November 2018
Abstract: There's often confusion about the many required 401k plan notices including the purpose of each notice, when each must be distributed, and to whom each must be sent. This short article explains some of the most common notices and clarify the distribution requirements.
Source: Alliant401k.com, November 2018
Abstract: There are detailed laws and regulations regarding the content and when/how the plan participant notices are delivered. For most plans, the next plan year will begin on January 1, 2019, which means that December 1 is generally the last date by which those notices may be provided. This article touches on some bigger picture issues for an employer’s attention as we enter notice season.
Source: Hawleytroxell.com, November 2018
Abstract: The Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019. The contribution limit for employees who participate in 401k, 403b, most 457 plans, and the federal government's Thrift Savings Plan is increased from $18,500 to $19,000. Full details provided.
Source: 401khelpcenter.com, November 2018
Abstract: Plan sponsors could save a lot of time, expense and stress by implementing a thorough system for managing participant data. Having the appropriate procedures in place can limit potential liability in an audit. Most companies don't realize the pertinence of maintaining adequate, compliant records until there is a need.
Source: Planpilot.com, October 2018
Abstract: This calendar will help you set up your own schedule of activities to address as the year progresses so that you do not miss important deadlines for your qualified plans. As you evaluate the various tasks, you can confirm suitable deadlines with your vendors for their completion.
Source: Buckglobal.com, October 2018
Abstract: In addition to verifying that routine tasks are monitored in accordance with plan terms and administrative policies -- such as making required minimum distributions, sending safe harbor notices, and attending to the myriad annual reporting and disclosure requirements -- administrators must be on the alert for some important tasks. Here are some key areas to watch.
Source: Buckglobal.com, October 2018
Abstract: The U.S. Department of Labor recognizes that plan fiduciaries, employers, labor organizations, service providers, and participants and beneficiaries may encounter issues complying with ERISA over the next few months as the consequences of Hurricane Florence and Hurricane Michael unfold. It has published this employee benefit plan compliance guidance.
Source: 401khelpcenter.com, October 2018
Abstract: The U.S. Department of Labor's Employee Benefits Security Administration has developed compliance assistance resources to help protect employee benefits. EBSA's goal is to help workers by restoring plan assets and securing the payment of promised benefits, and to help employee benefit officials understand the law. These tools give employee benefit plans the ability to self-correct violations.
Source: 401khelpcenter.com, October 2018
Abstract: Employee Benefit Plans are common among most businesses. But just as common are the small mistakes employers can make that end up creating big problems. This podcast discusses the pitfalls surrounding 401k plans, and the steps you can take to avoid them.
Source: Dgccpa.com, October 2018
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