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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.

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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

Top 10 Areas of Focus in DOL Investigations of Retirement Plans

In light of the DOL's active enforcement program and the resulting recoveries, retirement plan administrators should consider a compliance self-review, including on the issues that the DOL appears to focus the most. To that end, here are the top 10 issues of DOL focus with respect to retirement plan fiduciary compliance. This list is a reminder of the importance of a proactive self-review by plan administrators, even before the DOL initiates an investigation.

Source: Morganlewis.com, May 2019

Does Your Retirement Plan Incorporate State Law Into the Plan? Check Your Spousal Benefit Obligations

A recent, unpublished Ninth Circuit court opinion held that the Plan's choice of California law required the plan to provide spousal survivor rights to registered domestic partners, because California law affords registered domestic partners the same legal status as spouses, and because doing so did not conflict with any provision of the plan document, ERISA or the Internal Revenue Code. In light of the opinion, plan sponsors should examine their plan documents to determine whether or not choice of law provisions carry state domestic partner rights into their plan document, and if this is the case, should consult with counsel as to how that might impact their plan distribution and plan loan approval procedures, and QDRO procedures as well.

Source: Eforerisa.wordpress.com, May 2019

How to Understand and Review Form 5500

There is no doubt that operating an ERISA retirement plan can be costly and time-consuming, and it may be burdensome to devote company resources to understanding complex rules and regulations. Reviewing trustee reports, reconciling payroll deposits, and meeting employee needs related to the plan is time-consuming. On top of all that, there is the annual requirement to report plan information to the DOL via Form 5500. Here are the important items you need to review on your Form 5500-SF (short form) or Form 5500 (long form).

Source: Consultrms.com, May 2019

ERISA Advisory Council to Review State Unclaimed Property Fund Procedures

The 2019 Advisory Council on Employee Welfare and Pension Benefit Plans, has said that it will be reviewing transfers of uncashed checks from ERISA plans to state unclaimed property funds and the procedures states use with those funds. The review is relevant to the effort to locate plan missing participants and provide them their funds.

Source: Napa-net.org, May 2019

IRS Expands Determination Letter Program

The IRS has expanded the determination letter program for individually designed plans. Under Revenue Procedure 2019-20, the IRS will now accept determination letter applications for statutory hybrid plans (e.g., cash balance plans) during the 12-month period beginning September 1, 2019, and ending August 31, 2020. In addition, the IRS will now accept such applications for certain merged plans on an ongoing basis.

Source: Bradley.com, May 2019

IRS Updates EPCRS Plan Correction Procedure

Through Revenue Procedure 2018-52, the IRS has updated its system of correction programs for retirement plans known as the Employee Plans Compliance Resolution System. EPCRS permits plan sponsors to correct certain operational and other failures in order to preserve the tax-favored status of their plan. It has become an increasingly important tool for plan sponsors to maintain compliance and avoid substantial penalties in an IRS audit.

Source: Bradley.com, May 2019

New IRS Rules Allow Retirement Plan Sponsors to Self-Correct Broader Range of Plan Failures

The IRS recently issued a new version of its Employee Plans Compliance Resolution System that gives sponsors of tax-qualified retirement plans additional options for self-correcting plan failures. The new EPCRS allows plan sponsors to use the Self-Correction Program in several circumstances, rather than requiring a Voluntary Compliance Program filing with the IRS and payment of the applicable user fee.

Source: Hansonbridgett.com, May 2019

IRS Provides Welcome Relief From High VCP Fees

With Revenue Procedure (Rev. Proc.) 2019-19, the IRS updates the Employee Plans Compliance Resolution System by expanding the availability of self-correction options for more kinds of plan failures. The IRS anticipates that this expanded guidance will increase plan compliance and reduce some costs for employers.

Source: Ascensus.com, May 2019

What's the Difference Between a Limited Scope and an ERISA Section 103(a)(3)(C) audit?

Possibly the biggest change as a result of the new SAS is the removal of the "limited scope" audit terminology and the related disclaimer. Once effective, SAS 13X will create a concept known as a "103(a)(3)(C)" audit, where the auditor is not disclaiming an opinion, but is instead opining on the non-certified audit areas and performing limited procedures on the investments. The term isn't as quick to say or as easy to remember as the limited scope audit. At first glance it only appears to be a name change to the same concept, but that is not the case.

Source: Belfint.com, May 2019

IRS Reveals Plans to Enable Electronic Filing of Form 5500-EZ

The IRS has informally revealed that it intends to enable owner-only retirement plans to file Form 5500-EZ electronically through the web-based EFAST2 Electronic Filing System. Form 5500-EZ, Annual Return/Report of One-Participant Retirement Plan or a Foreign Plan is a simplified plan return that can be filed by sole proprietors and spouses or partners and spouses that have no common law employees.

Source: Ascensus.com, May 2019

IRS Expands Determination Letter Program - Revenue Procedure 2019-20

In 2018, the IRS requested comments on the potential expansion of the scope of the determination letter program for individually-designed plans. On May 1, 2019, the IRS issued Revenue Procedure 2019-20 which describes two additional limited situations in which plan sponsors may request determination letters.

Source: Wagnerlawgroup.com, May 2019

DOL Enforcement Priorities and Terminated Participants

The DOL has National Enforcement Priorities. For the past few years their Major Case Enforcement Priority has centered on professional fiduciaries and service providers with large amounts of AUC (assets under custody) or AUA (assets under administration) and, on delinquent contributions. But the DOL also has National Enforcement Projects, enforcement focused on protecting plan assets and participants’ benefits via field office investigations. One of the DOL's National Enforcement Projects is Protecting Benefits Distribution. The distribution focused PBD has three components.

Source: Penchecks.com, May 2019

IRS Issues Retirement Plan "Operational Compliance" Checklist for 2019

The Operational Compliance List is intended to identify changes in qualification requirements that are effective during a particular calendar year. Now, plan sponsors can review the list to ensure their plans achieve operational compliance by identifying changes in qualification requirements effective during a calendar year. The IRS has issued its 2019 Operation Compliance List.

Source: Michaelbest.com, May 2019

IRS Expands Determination Letters for Hybrid, Merged Plans

Just-released Rev. Proc. 2019-20 provides a limited expansion of IRS's determination letter (DL) program for individually designed retirement plans to allow reviews of hybrid or merged plans. The guidance also extends open remedial amendment periods for sponsors that can submit DLs under this procedure and offers sanction relief for plan document failures discovered during IRS's review of the DL application.

Source: Mercer.com, May 2019

IRS Expands Self-Correction Program for Certain Plan Failures

Rev. Proc. 2019-19 expands the Self-Correction Program eligibility to permit certain Plan Document Failures and certain plan loan failures to be self-corrected and also to provide an additional method under the SCP to correct Operational Failures by plan amendment. Importantly, the SCP allows the correction of certain plan failures without the need to contact the IRS or pay a user fee.

Source: Icemiller.com, May 2019

IRS Expands Self-Correction Program Primarily to Facilitate Plan Loan Corrections

The IRS recently provided some welcome relief by expanding the types of failures eligible for self-correction. Revenue Procedure 2019-19, which contains an updated Employee Plans Compliance Resolution System, provides that certain plan document and operational failures, including some plan loan failures, may now be corrected through self-correction, without the added burden and expense of making voluntary correction program filings with IRS.

Source: Groom.com, May 2019

DOL Enforcement Results and Priorities

The DOL's Employee Benefits Security Administration recently released 2018 statistics for its enforcement of ERISA. When combined with EBSA's recent commentary on its enforcement initiatives, fiduciaries can be better prepared to address compliance issues before a DOL audit. This is an analysis of the recently released 2018 statistics, as well as a look at the "national enforcement projects" for EBSA investigators.

Source: Euclidspecialty.com, April 2019


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