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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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2019 Plan Year: Year-End Compliance Reminders

Every year, plan sponsors must make sure their plans meet certain compliance requirements, including those listed here. This 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: Retirepru.com, December 2019

What is a Suspense Account and Can We Use Our Forfeiture Account Instead

Can we just move the overfunded amounts to the forfeiture account, or is there a requirement that we create a separate suspense account? The short answer is that you can use the forfeiture account, but this is one of those "just because you can doesn't mean you should" situations.

Source: Dwc401k.com, December 2019

Beware of the "Overshare": Construe Requests for ERISA Plan Documents Narrowly

Administrators of ERISA plans frequently receive requests from participants, beneficiaries, and their representatives for plan-related documents. A recent decision from the Court of Appeals for the Fifth Circuit supports providing only those documents that fall under a narrow reading of ERISA Section 104(b)(4). Over-production could serve to facilitate litigation.

Source: Beneficiallyyours.com, December 2019

Understanding the Mindset of Participants Who Take Loans

Most participants tend to be under financial stress when taking a loan from their 401k, so the thought of repaying it becomes an afterthought that later adds to their stress, according to a new study. Greenwald & Associates conducted a survey of 500 plan participants who have taken at least one plan loan and performed in-depth interviews with a subset of the participants to better understand the context around loan-taking, participant education and loan defaults.

Source: Asppa.org, December 2019

Short Plan Years: What They Are and What They Mean

What is a short plan year? Defining a short plan year is very easy: any plan year with fewer than 12 months. Company-sponsored retirement plans are generally required to operate on a 12-month plan year. From time-to-time, however, there are circumstances that cause a given year to be truncated. And those circumstances are really the key issue.

Source: Asppa.org, December 2019

Ways to Make Default E-Delivery Even More Effective

Recordkeepers and other service providers have submitted generally positive comment letters to the Department of Labor regarding its proposed e-delivery default rule, but they also have some specific suggestions for improving the proposal.

Source: Planadviser.com, November 2019

2020 Key Administrative Dates and Deadlines for Calendar-Year DC Retirement Plans

The calendar lists relevant 2020 administrative dates encountered by most defined contribution plans (401k, 403b, profit sharing, etc.), including deadlines for quarterly benefit statements, participant disclosures, and safe harbor notices. The calendar also provides a short description of the actions required to meet each deadline.

Source: Milliman.com, November 2019

2019 End of Year Plan Sponsor "To Do" List for Qualified Retirement Plans

As 2019 comes to an end, Snell & Wilmer presents their traditional End of Year Plan Sponsor Qualified Retirement Plans "To Do" List. This "To Do" List offers items on which you may want to act before the end of 2019 or in early 2020.

Source: Swlaw.com, November 2019

2020 Retirement Plan Compliance Calendar

For defined contribution plan years starting on January 1, this retirement plan compliance calendar list key IRS, PBGC, and DOL reporting and disclosure deadlines.

Source: Mercer.com, November 2019

DOL Sues Ben Shinn Trucking Over Handling of 401k

The DOL has filed a lawsuit against Iowa trucking company Ben Shinn Trucking for allegedly failing to remit about $465,000 in employee salary deferral contributions to the company's retirement plan. The lawsuit against Ben Shinn Trucking and owner Roger Shinn was filed in U.S. District Court in Des Moines on Nov. 18.

Source: Landline.media, November 2019

Smarter and Not Harder: The New IRS Hardship Distribution Regulations

The Treasury Department and the IRS recently finalized new hardship distribution rules applicable to defined contribution plans. Plan sponsors should prepare for operational changes to comply with the new regulations, including some beginning January 1, 2020.

Source: Mwe.com, November 2019

Proposed Electronic Disclosure Rule Would Allow Greater Flexibility for Retirement Plans

Under a new proposed rule, certain required disclosures could be provided electronically to all retirement plan participants, including former employees and beneficiaries. On October 23, 2019, the U.S. Department of Labor issued a proposed rule intended to expand the use of internet technology to furnish ERISA-required disclosures to plan participants, and to reduce printing and mail expenses. The proposed rule cannot be relied on until a final rule is issued, and the final rule will take effect as of the first calendar year following its publication.

Source: Hansonbridgett.com, November 2019

IRS Proposes Update to Minimum Required Distribution Rules

The proposed IRS regulations would reduce the required distribution amounts from qualified defined contribution plans and individual retirement account balances that generally apply annually after a participant reaches his or her required beginning date.

Source: Groom.com, November 2019

Advanced Copies of 2019 Form 5500 Released

Advanced copies of the 2019 Form 5500 series, including schedules and attachments, were recently released by the DOL, IRS, and the PBGC. These copies are only for informational purposes and are not to be used to report information pertaining to the 2019 plan year. Here are some of the changes the agencies made related to welfare and 401k plan filings.

Source: Compliancedashboard.net, November 2019

IRS and DOL Identify Fall Regulatory Guidance Priorities

The IRS and the Department of Labor Employee Benefit Security Administration have identified priority regulatory topics on their fall guidance agendas. These postings are not assurance that all items listed will be completed and issued within hoped-for timeframes, but serve as a general reference to the guidance these agencies are working to complete.

Source: Ascensus.com, November 2019

DOL Releases Advance Copies of Form 5500 Annual Return/Report for 2019

The DOL's Employee Benefits Security Administration, the IRS, and the Pension Benefit Guaranty Corporation today released advance informational copies of the 2019 Form 5500 Annual Return/Report and related instructions. The "Changes to Note" section of the 2019 instructions highlights important modifications to the Form 5500 and Form 5500-SF, as well as to their schedules and instructions.

Source: Dol.gov, November 2019

Time to Review Your Plan's Hardship Distributions: Understanding 2020 Hardship Changes

On September 19, the IRS released final hardship regulations that were previously issued in proposed form on November 9, 2018. The final regulations contained substantive changes to the previously issued proposed regulations. This article provides an overview of some of the changes set forth in the proposed regulations that were retained in the final regulations and become effective beginning in 2020.

Source: Hallbenefitslaw.com, November 2019

DOL Proposes a More Practical Rule for Electronic ERISA Disclosures

The DOL released a proposed rule for electronic delivery of ERISA disclosures. Although the DOL already allows for electronic delivery under the 2002 Electronic Safe Harbor, its availability is limited and technology quickly outpaced its usefulness. The proposed rule creates a new, additional safe harbor the DOL calls the "Notice and Access" safe harbor that will allow for electronic delivery as a default method of delivery for certain ERISA Title I disclosures. At this point, the safe harbor applies only to ERISA-governed retirement plans and does not reach health and welfare benefit plans.

Source: Employeebenefitslawreport.com, November 2019

Four Essential Tips to Simplify Year-End Plan Administration

November . . . December . . . January . . . these are busy months for 401k sponsors whose plans have a December 31 year-end. With forethought, there's the opportunity during this busy time to ease plan administration and avoid errors. Before you're too far into November, consider four areas where a little effort now could reduce frustration down the road.

Source: Alliant401k.com, November 2019

401k and Retirement Plan Limits for 2020

Based on the actual and projected CPI, there is little doubt that we will see increases in the pension limits for 2020. Below are our projected changes. Remember, these are unofficial projections. The IRS hasn't officially announced the 2020 limits and will not do so until late October.

Source: 401khelpcenter.com, November 2019

Chart of Required Participant Notices

As we enter the fourth quarter of 2019, it's important for sponsors of calendar year retirement plans to be mindful of certain required participant notices. Sponsors of qualified retirement plans, such as 401k or 403b plans, may need to provide several of these notices per various Internal Revenue Service and Department of Labor regulations.

Source: Strategicbenefitservices.com, November 2019

DOL Proposes New Electronic Disclosure Option for Retirement Plans

The DOL proposed a new safe harbor for electronic retirement plan disclosures. The proposal would supplement existing regulations to allow website posting as an additional method to e-deliver certain disclosures to plan participants, beneficiaries and other individuals entitled to receive them. The DOL will accept comments on the proposed regulations through November 22.

Source: Buck.com, October 2019

Proposed Regulations on Electronic Disclosures: What Plan Administrators and Sponsors Need to Know

The regulations are in proposed form and plan administrators should not rely on the proposed safe harbor for electronic distribution that is described in the DOL release. If finalized, however, the proposed regulations would offer a limited new opportunity for electronic distribution that could bring some relief to plan administrators who want greater ease and cost-efficiency with respect to the numerous participant disclosures that are required under ERISA. Here are the most important points to note.

Source: Bradley.com, October 2019

The Trump Administration Wants You to Know, Guidance Is Not Law!

Two new Executive Orders and a corresponding decision in the Supreme Court effectively limit how agencies can utilize guidance against private parties, the agency must rely only on guidance that is fully consistent with the governing statute.

Source: Beneficiallyyours.com, October 2019

Using Paper Checks for 401k Cash-Outs Doesn't Make Sense

While small balance cash-out provisions are a good idea, many plan sponsors sabotage the potential benefits by also including a provision that distributes balances of $1,000 or less to participants via paper checks. Here's why this is a terrible idea.

Source: Shrm.org, October 2019

Some Retirement Plans Need 2019 Year-End Amendments

Retirement plan sponsors may need to adopt amendments in 2019 to reflect changes in law or plan design. This article summarizes the amendments that may be required for individually designed defined contribution and defined benefit plans.

Source: Mercer.com, October 2019

DOL Proposes Regulations to Expand Electronic Distribution Options

The Proposed Rule offers a safe harbor for administrators to satisfy ERISA's distribution standards by making required disclosures available online and providing notice of their availability via email and/or smartphone addresses. For non-ERISA, public sector plans, the DOL Rules are not binding but serve as useful guidance on electronic disclosure.

Source: Icemiller.com, October 2019

Final Hardship Distribution Regulations Issued: Potential Plan Sponsor Action Necessary

The Bipartisan Budget Act of 2018 made some changes to the laws governing the distribution of 401k plan assets on account of hardship. The IRS issued final regulations relating to those changes in late September. The rules also apply to 403b plans. This is a summary of the changes.

Source: Hawleytroxell.com, October 2019

DOL Releases Proposed Regulations Authorizing Default Electronic Notices and Disclosures for 401k Plans

Under the proposed regs, sponsors of 401ks and other retirement plans would be permitted to furnish participants having valid email addresses or smartphone numbers with copies of all of their legally required retirement plan disclosures -- such as summary plan descriptions and fee disclosure notices -- electronically instead of by paper. Although electronic delivery has been permitted in a wide variety of situations for some time now, previously, paper disclosures and notices have always remained the default delivery vehicles.

Source: Compliancedashboard.net, October 2019

Welcome to the 21st Century -- The DOL Proposes Changes to Antiquated Electronic Disclosure Rules Under ERISA

The DOL issued proposed rule changes governing the disclosure of ERISA-required notices via an electronic format. These proposed rules update final regulations issued by the DOL in 2002, which given the pace at which employers and employees were then transitioning to the use of computers and the internet as the principal means of communication, were pretty much outdated by the time the DOL issued them in final form. The new proposal establishes a safe harbor standard that employers should find more useful than the previous safe harbor rules, resulting in cost and administrative burden savings for retirement plan sponsors and administrators.

Source: Beneficiallyyours.com, October 2019

IRS Finalizes New Hardship Distribution Rules for 401k and 403b Plans

The IRS published final regulations that amend the rules for hardship distributions from 401k and 403b plans. The regulations finalize the proposed regulations issued in November 2018 to implement statutory changes made by the Tax Cuts and Jobs Act of 2017 and the Bipartisan Budget Act of 2018 intended to make it easier for plan participants to take hardship distributions. Although the final regulations make few changes to the proposed rules, they help clarify the new rules and provide other useful guidance.

Source: Hansonbridgett.com, October 2019

Moving From Paper to Digital as the Default Delivery Method for Retirement Plan Disclosures

The DOL released a proposed rule that seeks to modernize the disclosure rules for ERISA covered retirement plans. If finalized, the proposed rule could lead to a dramatic shift for retirement plans and service providers from paper formats to electronic formats that could lead to greater participant engagement and reduced mailing costs.

Source: Groom.com, October 2019

Are We Required to Make Safe Harbor Contributions for HCEs?

The article is an answer to this question, "Is there a way to structure the plan so that the company contribution for the HCEs is optional while still maintaining the safe harbor status?"

Source: Dwc401k.com, October 2019

Fact Sheet on Proposed Electronic Disclosure Safe Harbor

A plan administrator would be permitted to furnish documents by means of electronic delivery to plan participants and beneficiaries with valid electronic addresses unless they affirmatively opt-out of electronic delivery. The DOL has published a fact sheet on this proposed electronic disclosure safe harbor.

Source: Benefitsforward.com, October 2019

Department of Labor Proposes New Electronic Disclosure Rule

Consistent with President Donald J. Trump's Executive Order 13487, the U.S. Department of Labor today announced a proposed rule to allow online retirement plan disclosures to reduce printing and mail expenses.

Source: 401khelpcenter.com, October 2019

Projected 401k and Retirement Plan Limits for 2020

Based on the actual and projected CPI, there is little doubt that we will see increases in the pension limits for 2020. Below are our projected changes. Remember, these are unofficial projections. The IRS hasn't officially announced the 2020 limits and will not do so until late October.

Source: 401khelpcenter.com, October 2019

Year-End Audit: Comply with Confidence

Want to have a less stressful and successful employee benefit plan year-end audit? Here are six steps that can help.

Source: Tra401k.com, October 2019

Plugging the Leak: Uncashed Distribution Checks

Plan sponsors have taken many actions to preserve and protect retirement savings. They've restructured loan provisions, offered partial distributions, changed investment options and accepted roll-ins from other plans. Now, the Department of Labor is focusing on an additional type of leakage, uncashed checks.

Source: Planadviser.com, October 2019

Two New Executive Orders Promise to Impact Retirement and Health Plan Guidance

On October 9, 2019, President Trump signed two executive orders that will likely have the potential to materially impact how the Department of Labor's Employee Benefit Security Administration, the Department of the Treasury, the Internal Revenue Service, and other agencies regulate retirement and health plans.

Source: Groom.com, October 2019

IRS Issues Proposed Regulations on Withholding for Qualified Retirement Plan Participants With Non-U.S. Address

In May, the IRS proposed new regulations regarding the required tax withholding that will impact these individuals specifically. Currently, withholdings are required when distributions are made to individuals from retirement plans, IRAs, and other types of retirement plans. In certain circumstances, such as with an individual living abroad, they may want to elect out of the withholding and the proposed IRS regulations aim to clarify this rule.

Source: Hallbenefitslaw.com, October 2019

Student Loan and Retirement Plan Guidance on IRS Priority List

The IRS has released its fiscal year 2019-2020 Priority Guidance Plan. Employee benefit-related items on the list include "Guidance on student loan payments and qualified retirement plans and 403b plans." Both employers and federal lawmakers have made student loans a high-profile issue, due in part to debt burdens that are said to be limiting employees' ability to participate fully in their employers' retirement plans, and in the U.S. economy.

Source: Ascensus.com, October 2019

IRS Issues Guidance on Uncashed Distribution Checks

The IRS issued new guidance on the tax treatment of uncashed distribution checks from qualified retirement plans. In Revenue Ruling 2019-19, the IRS ruled that a participant's failure to cash the required distribution check she received from a qualified plan did not permit her to exclude the distribution from her taxable income or alter her employer's obligation to withhold taxes from the distribution and report it as taxable income.

Source: Hansonbridgett.com, October 2019

North Carolina Court Awards $41k for Failure to Produce Documents Requested by Plan Participants

A recent decision by the United States District Court for the Western District of North Carolina, Charlotte Division (Kinsinger v. Smartcore LLC, 2019 US Dist. LEXIS 145052 (August 27, 2019)), vividly illustrates the perils in failing to comply with document requests by participants.

Source: Benefitslawadvisor.com, October 2019

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 70-1/2, 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. This is a review of RMDs.

Source: Legacyrsllc.com, October 2019

IRS Finalizes Changes in Hardship Distribution Rules

On September 23, the IRS published final regulations amending the rules governing hardship distributions from 401k and 403b plans pursuant to changes contained in the Bipartisan Budget Act of 2018. The final regulations, summarized here, largely mirror the proposed regulations that the IRS published in November 2018, and include helpful clarifications on the changes and plan amendment timing.

Source: Groom.com, October 2019

When Must Summary Plan Descriptions and Summaries of Material Modifications Be Distributed?

All employee benefit plans subject to ERISA must distribute summary plan descriptions, which describe the material provisions of the employee benefit plan, and summaries of material modifications, which describe any material changes to plan provisions. These documents must be distributed to participants and beneficiaries within certain time periods following specified events.

Source: Boutwellfay.com, October 2019

Correcting Plan Mistakes

With all the rigorous rules surrounding qualified retirement plans and the minutiae associated with administering a plan, mistakes happen every now and then. Years ago, the IRS determined that plan sponsors need guidance on how to fix these errors to make things right for the participants in the plan, so they created a voluntary correction program. The program's rules are laid out in a Revenue Procedure referred to as the Employee Plans Compliance Resolution System.

Source: Tri-ad.com, September 2019

2019 Regulatory Update

A regulatory update that features a steady stream of cases from the courts, including multiple cases making their way to the United States Supreme Court for review as well as the lingering cases against colleges and universities that began in 2016. This update also includes new guidance from the regulatory agencies, including the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation.

Source: Multnomahgroup.com, September 2019

Top 10 Fiduciary Misconceptions Among 401k Plan Sponsors

While mistakes may result in fines and penalties, misconceptions can lead to bad results for the organization and its employees. Bad advice from a plan sponsor's trusted third party, whether intentional or negligent, can produce inertia and a lack of trust in the entire system. Here are the top 10 fiduciary misconceptions based on importance or what is most common.

Source: Investmentnews.com (registration may be required), September 2019

How Do I Calculate How Much Money is Available for a 401k Loan?

There are a number of factors beyond the plan document that determine how much a 401k participant can withdraw in the form of a loan. The laundry list includes IRS limits, a participant's vested balance, whether they currently have a loan, and whether they've had an outstanding loan within the last twelve months. This article provides a quick look at each of these factors to help you determine how much a participant can borrow and why.

Source: Dwc401k.com, September 2019

DOL Provides Guidance on Retirement Plan Obligations When Employees Return From Military Service

The Department of Labor recently issued a fact sheet intended to help employers understand their retirement plan obligations under the Uniformed Services Employment and Reemployment Rights Act of 1994. The law provides that eligible employees that return to employment following qualified military service must be treated as though their military service was not a break in service for purposes of participation, vesting and benefit accrual under their employer's retirement plan.

Source: Benefitslawadvisor.com, September 2019

Final Hardship Regulations Published

This document contains final regulations that amend the rules relating to hardship distributions from section 401(k) plans. The final regulations reflect statutory changes affecting section 401(k) plans, including changes made by the Bipartisan Budget Act of 2018.

Source: Federalregister.gov, September 2019

The Check Is in the Mail, or Not

The IRS recently issued somewhat helpful guidance to plan administrators on what to do about the constant problem of uncashed benefit checks from qualified retirement plans. The initial excitement upon hearing the news, however, was quickly met with disappointment as the realization set in that the guidance was limited.

Source: Erisa-employeebenefitslitigationblog.com, September 2019

IRS Issues Guidance Regarding Uncashed Check

The IRS issued Revenue Ruling 2019-19 which provided guidance regarding the tax treatment of certain types of uncashed checks issued from a tax-qualified retirement plan. The facts presented within the Guidance involved an individual who received a check representing a taxable distribution from a tax-qualified plan and, while able to cash it in 2019, chose not to do so. The Guidance presents and answers three separate tax questions about such circumstances.

Source: Legacyrsllc.com, September 2019

IRS Expands Its Correction Program (EPCRS) for Qualified Plans

Recently the IRS expanded the EPCRS (Rev. Proc. 2019-19) in large measure to facilitate additional self-correction (i.e., correction without IRS approval) for certain types of failures, including for the first time in the history of the program, certain plan loan violations which are common errors that plan sponsors routinely face. This article, in F&Q format, is a summary of the changes to the program.

Source: Groom.com, September 2019

Qualified Plan Uncashed Check Guidance Issued Related to Tax Obligations

The ruling lays out a specific situation where a plan administrator is required to make a distribution under $1,000 to a plan participant in 2019. The plan administrator sends a check to the participant for the amount of the mandatory distribution, less applicable withholding taxes. The participant receives the check but does not cash it or roll over any portion of the distribution. The ruling addresses three concerns relating to the uncashed check, one related to income inclusion for the participant and two addressing the plan administrator's withholding and reporting obligations.

Source: Seyfarth.com, August 2019

Electronic Disclosure Proposal Lands at OMB

The DOL has sent a proposed rule for electronic disclosures to 401k participants to the Office of Management and Budget. The proposal comes in response to President Trump's 2018 Labor Day weekend Executive Order. That order directed the Labor Department to "explore ways to reduce the costs and burdens imposed on employers and other plan fiduciaries responsible for the production and distribution of retirement plan disclosures" required under title I of ERISA, as well as "ways to make these disclosures more understandable and useful for participants and beneficiaries."

Source: Napa-net.org, August 2019

IRS Clarifies Uncashed Check Taxation

New IRS guidance confirms how plan administrators should handle reporting and income tax withholding for distributions to participants who are not "missing" by affirming the principle that a taxpayer cannot change the timing of taxation merely by refusing to cash a check. IRS says they are still analyzing other situations such as those that involve missing individuals with plan benefits remaining to be paid.

Source: Buck.com, August 2019

IRS Answers FAQs That Arise When Participants Are Slow to Cash Distribution Checks

Participants and beneficiaries are sometimes slow to cash qualified retirement plan distribution checks, especially when the checks are relatively small. This may result in the check being cashed in a year after the year the check was received. Sometimes it is not cashed at all. The IRS clearly concluded that when or whether the recipient cashes the check is not relevant for tax purposes.

Source: Benefitsnotes.com, August 2019

IRS Updates VCP Electronic Submission Procedures, Revises Form

On June 28, 2019, the IRS issued its June Employee Plans News, in which the agency announced comparatively minor changes to the submission procedures applicable to the IRS Employee Plans Compliance Resolution System. The changes include revisions to required Forms 8950 and 8951, along with technical changes to the electronic submission process itself.

Source: Compliancedashboard.net, August 2019

Quick Fixes for a 401k Plan Sponsor's Errors and Problems

The beauty of 401k plans is that no matter the problem that a plan sponsor may have, there is a rational solution to that problem. The only problem is that most plan sponsors are unaware of these fixes because they're unaware that what they have in their 401k plan may be a problem. This article is about quick fixes that a 401k plan sponsor may utilize to fix a problem they should be aware of.

Source: Jdsupra.com, August 2019

Rollover Period for Retirement Plan Loan Offsets

If a participant defaults on a retirement plan loan after they separate from service, the plan will "offset" the outstanding balance of the loan, deducting it from the participant's account and treating it as a distribution. Prior to the Tax Cuts and Jobs Act of 2017, if a participant wanted to defer taxes on that unpaid loan balance, they had 60 days to roll the cash value to another eligible retirement plan or IRA. With the update in December 2017, that deadline was extended to the due date for the participant's tax return, including extensions, for the year in which the loan offset occurred.

Source: Fidelity.com, August 2019

Retirement plans: 2019 Summer Recap

This article recaps recent defined benefit and defined contribution retirement plan developments. Highlights include IRS backing down on prohibiting voluntary retiree cash outs, PBGC tweaks to reporting and disclosure for single and multiemployer plans, SEC finalizing their broker-dealer investment recommendations rule, and several compliance refinements and reminders.

Source: Buck.com, August 2019

Tackling the Missing Participant Problem

Missing participants, and the problems they cause, are becoming a more prominent problem for plan administrators, argues ERISA attorney Heather B. Abrigo. "It's really come to the forefront," said Abrigo, a partner at Drinker Biddle & Reath LLP, in a July 16 webcast offered by ASPPA. "Plan sponsors really need to start addressing the issue," she told attendees.

Source: Napa-net.org, August 2019

DOL Move Expands Definition of Employer for Multiple Employer Plans

The DOL published its highly anticipated Final Rule, which allows working owners with no employees and companies in unrelated industries to band together to create a single defined contribution retirement plan for their employees, known as a multiple employer plan (MEP). Specifically, the Final Rule expands the definition of "employer" under Section 3(5) of ERISA to allow bona fide employer groups and professional employer organizations to act as an "employer" for purposes of sponsoring a MEP.

Source: Ballardspahr.com, August 2019

Service Provider's Auto-Portability Proposal Receives DOL Blessing

The DOL has published in the Federal Register a prohibited transaction exemption granted to a service provider that has proposed what it describes as an automatic portability program for retirement plan assets. This exemption -- PTE 2019-02 -- was considered necessary so that Retirement Clearinghouse could receive fee compensation in connection with the services it intends to provide in this automatic portability program.

Source: Ascensus.com, August 2019

Making Sense of the New Auditing Standard for ERISA Plans

SAS 136 clarifies and formalizes current best practices that auditors working with employee benefit plans should already be familiar with. It also provides detailed requirements unique to employee benefit plans, which will help auditors meet their obligations. Some of the most significant provisions found in SAS 136 are described here.

Source: Ascensus.com, July 2019

DOL Issues Association Retirement Plan (a.k.a. MEP) Final Regulations

Scheduled for publication in the Federal Register this week are Department of Labor (DOL) final regulations on association retirement plans, a name that in very general terms equates to multiple employer plans, or MEPs. In addition to the final regulations, the DOL has issued a companion request-for-information document, "Open MEPs" and other issues.

Source: Ascensus.com, July 2019

Traps for the Unwary: Code Section 410(b) Coverage Testing Concerns in Transactions

With a recent uptick in mergers and transactions, it's worthwhile to provide a refresher on some coverage testing issues related to retirement plans. Although a seemingly mundane topic, coverage testing should be kept in mind in corporate transactions where the buyer is acquiring an entity that sponsors a 401k plan and the fate of that plan is not resolved prior to the closing of the transaction. Failure to consider coverage testing concerns in the years following an acquisition can lead to qualification failures in retirement plans, which potentially can require millions of dollars to correct.

Source: Napa-net.org, July 2019

DOL Issues Temporary Form 5500 Relief for ERISA MEPs

The Department of Labor has issued temporary penalty relief related to certain Form 5500 requirements for multiple employer plans (MEPs) subject to ERISA Section 103(g). The relief is contained in Field Assistance Bulletin 2019-01, which the DOL issued on July 24.

Source: Asppa.org, July 2019

IRS Determination Letters Are Back in Play for Certain Ongoing Plans

In response to periodic requests to expand the determination letter program, the IRS has issued welcome guidance in Rev. Proc. 2019-20.1 The guidance reopens the determination letter program for statutory hybrid plans (e.g., cash balance plans) and merged plans, and provides sanction relief from plan document failures identified and corrected as part of those determination letter applications. The prior program is reviewed and the new Revenue Procedure is summarize in this article.

Source: Groom.com, July 2019

IRS Issues Guidance to Plan Document Providers, TPAs, and Plan Sponsors

Over recent weeks, the IRS has issued several items of guidance that are important to plan document providers, TPAs, plan sponsors, and others involved with qualified retirement plans. The guidance includes the 2019 Operational Compliance List, revisions to the plan correction (EPCRS) procedures, and a limited expansion of the determination letter program for individually designed plans. The guidance is reviewed here.

Source: Asc-net.com, July 2019

Top 10 Areas of Focus in IRS Investigations of Retirement Plans

At any point an IRS agent may contact a plan sponsor that its plan has been selected for audit. Audits are never pleasant, but to minimize the pain, a plan sponsor may consider a compliance self-review to ensure that the plan is operating correctly, its plan documents comport with plan operation, and plan records are complete and organized before the IRS comes knocking. Here are the top 10 issues of IRS focus in its audit of qualified plans.

Source: Jdsupra.com, July 2019

It Could Happen to You: Tips for Acing a Benefit Plan Audit

Over the past several years, the IRS and DOL have significantly increased the number of benefit plans audits conducted each year. As a result, it is important for plan sponsors to understand the types of issues that often arise in connection with such audits. At the recent PSCA 2019 National Conference, Brian Tiemann explained what plan sponsors should expect if their benefit plan is selected for audited. This is his presentation.

Source: Employeebenefitsblog.com, July 2019

How to Find, Fix and Avoid Plan Loan Mistakes

Plan sponsors who choose to include a loan feature in their retirement plan must take care to ensure their loan program is operated in compliance with the tax rules and the plan's loan policies to avoid unintended consequences for loan recipients and the plan. To help you keep your loan program in compliance, here's an overview of the basic rules for plan loans and some best practices for finding, fixing and avoiding plan loan mistakes.

Source: Newportgroup.com, June 2019

Which 401k Plan Errors Can Be Self-Corrected?

Until recently, SCP was limited to the correction of operational failures, but in 2019, the IRS expanded SCP to permit the correction of certain plan document failures, i.e., plan provisions -- or missing plan provisions -- that cause the plan to be disqualified. Using SCP can simplify and speed up corrections, and lower their cost, but it is not always the best option.

Source: Thomsonreuters.com, June 2019

Orderly Dissolution: Best Practices for Bankruptcy Plan Terminations

Retail bankruptcies and corporate debt are on the rise, and economic contraction is inevitable after an unusually long bull market. With that in mind, retirement plan administrators should be mindful of procedures related to the orderly dissolution of their retirement plan in the event of a bankruptcy proceeding.

Source: Mtrustcompany.com, June 2019

Alternatives for Retirement Plan Participant With Insufficient Beneficiary Designation Forms

One of the key issues with respect to retirement plan distributions is proper handling of beneficiary designations. Issues that arise for retirement plan sponsors related to beneficiary designations include incomplete beneficiary designation forms, benefits being split among beneficiaries in unclear or mathematically impossible ways, or even pre-deceased beneficiaries. While your human resources department can take steps to eliminate these problems up front, and should check behind employees as they submit their forms, there are still situations that arise when the forms attached to a plan are simply insufficient.

Source: Hallbenefitslaw.com, June 2019

DOL Provides Needed Clarification on Authorized Representatives Acting for ERISA Claimants

There are times when an individual who has a claim under ERISA is unable to bring that claim on their own. In these situations, an authorized representative of the claimant can bring the claim instead. A recent DOL Information Letter, issued at the end of February, provides clarification regarding the ability of this individual to act on behalf of the claimant.

Source: Hallbenefitslaw.com, June 2019

They're Back... Form 5500 Filings

It's that time of the year again, 5500 filing season is in full swing. Form 5500 is required for employee benefit plans that started the plan year with 100 or greater enrolled employees. It is imperative that you, as plan sponsors, are handling this responsibility or have confirmed that it is being done on your behalf.

Source: Frenkelbenefits.com, June 2019

Do Your Participants Read Their Plan Documents? Why It May Matter

How long do participants have to sue for fiduciary breaches? Sometimes procedural cases can have a big impact on employee benefit plans. The Supreme Court has just agreed to review another case on the length of time participants have to sue for fiduciary breaches. This new case may also have a significant impact on fiduciary liability.

Source: Cohenbuckmann.com, June 2019

SEC Finalizes Broker-Dealer/Advisor Standard of Conduct Rule

On June 5, 2019, the SEC, by a 3-1 vote, (1) finalized its "Regulation Best Interest," providing new conduct standards for broker-dealers making recommendations to retail customers, (2) published an "Interpretation Regarding Standard of Conduct for Investment Advisers," and (3) finalized a new requirement that brokers and investment advisers provide retail investors a "Relationship Summary." The new rules are primarily of interest to investment professionals. They will, however, affect retirement plan sponsors in two ways.

Source: Octoberthree.com, June 2019

2019 DC Plan Compliance Calendar

This calendar is designed to provide a general overview of certain key defined contribution plan compliance dates.

Source: Findley.com, June 2019

DC Retirement Plan Oversight - Considerations for Terminated Participants

The process to force out terminated employees with balances under $5,000 does require thoughtful engagement by the plan sponsor; however, there could be significant benefits for plan sponsors and their employees, as well as for terminated participants. Regardless, managing terminated participants is an important retirement plan oversight topic that should be reviewed periodically and documented.

Source: Fiallc.com, June 2019

SEC Adopts Rules and Interpretations to Enhance Protection and Preserve Choice

The SEC voted to adopt a package of rulemakings and interpretations designed to enhance the quality and transparency of retail investors' relationships with investment advisers and broker-dealers, bringing the legal requirements and mandated disclosures in line with reasonable investor expectations, while preserving access (in terms of choice and cost) to a variety of investment services and products.

Source: Sec.gov, June 2019

Groups Ask DOL to Make 401k Electronic Delivery the Default

Eight organizations associated with defined contribution plans, including the Investment Company Institute and the SPARK Institute, have submitted a letter to the Department of Labor asking it to propose regulations that would permit plan sponsors to make electronic delivery the default method of delivery for retirement plan disclosures and notices. If employees did not want electronic delivery, they would have the ability to request paper copies.

Source: Planadviser.com, June 2019

SEC Adopts Best Interest Standard, Disclosure Duties

At an Open Meeting on June 5, 2019, and after over a year of consideration, approximately 6,000 comment letters and investor testing, the SEC formally adopted four regulatory measures intended to enhance the protection of retail investors while preserving existing investment industry business models and the ability of investors to choose among different types of providers. This is a summary of the Commission's actions.

Source: Klgates.com, June 2019

DOL Advisory Council to Meet in June

The 196th meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) will be held on June 25-27, 2019. The three-day meeting will take place at the U.S. Department of Labor in Washington, DC.

Source: Federalregister.gov, June 2019

For 401k Errors, It Seems to Be All Payroll These Days

For a 401k plan sponsor, many of the problems that also seems to be getting government attention are payroll issues. This article is about the many different issues from payroll that are causing headaches for plan sponsors.

Source: Jdsupra.com, June 2019

IRS Regulations Address Withholding on Retirement Payments Made Outside the U.S.

Scheduled for publication in the Federal Register are proposed IRS regulations on circumstances when income tax withholding must be applied to certain payments from retirement arrangements and commercial annuities. Specifically, these regulations address required withholding for payments made to destinations outside the United States, or made to a U.S. financial institution by a person with no U.S. address. The proposed regulations are intended to replace IRS Notice 87-7, the primary guidance currently governing such withholding.

Source: Ascensus.com, May 2019

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