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.
The SECURE Act's primary goals include expanding retirement savings, simplifying existing rules, and preserving retirement income. As with any major legislation, the SECURE Act created numerous outstanding questions. While the IRS has previously provided some answers, no SECURE Act guidance has been as detailed as the recently released IRS Notice 2020-68.
Source: Ascensus.com, September 2020
The clock is ticking for DC plans to begin to provide a "lifetime income disclosure" on at least one benefit statement a year. Beginning in 2021, plan administrators must show each participant an estimate of the single life annuity and joint and 100% survivor annuity that the participant's current account balance could purchase. Importantly, account-based plans are still not required to offer an annuity form of distribution option or investment.
Source: Vorys.com, September 2020
Retirement plan participants may soon better understand how account balances translate to retirement readiness. The SECURE Act requires DC plans to show participants the value of their account balances if converted into a monthly lifetime stream of income. The disclosures are aimed at reminding participants that retirement plan balances are meant to last for life and busting the "wealth illusion" that single sum account balances present. The details on the disclosures are starting to take form following an interim final rule recently released by the DOL.
Source: Employeebenefitslawblog.com, September 2020
In recent guidance, the IRS addressed several issues under the SECURE Act, including qualified birth or adoption distributions (QBOADs). While QBOADs have been permissible since January 2020, many employers have been waiting for some IRS guidance on how these distributions would be implemented before deciding as to whether to include a QBOAD as a plan feature.
Source: Wagnerlawgroup.com, September 2020
The IRS issued Notice 2020-50 to update and clarify certain provisions of Section 2202 of the CARES Act, which deals with the tax treatment of coronavirus-related distributions from eligible retirement plans for qualified individuals. The Notice expands the definition of a "qualified individual" eligible to take coronavirus-related distributions from their retirement plans.
Source: Hallbenefitslaw.com, September 2020
The IRS has again directed our attention back to the SECURE Act by issuing guidance related to qualified birth or adoption distributions. Withdrawals from a qualified retirement plan before age 59 ½ are generally subject to a 10% tax for early distribution, but the SECURE Act created a new distribution option that permits plan participants to take distributions of up to $5,000 as a penalty-free early withdrawal to help cover expenses related to the adoption or birth of a child. The IRS has now issued further guidance on these qualified birth or adoption distributions in Notice 2020-68.
Source: Graydon.law, September 2020
Notice 2020-68 includes guidance for implementing the mandatory participation of long-term part-time non-union employees in 401k plans for plan years beginning Jan. 1, 2021. The IRS also announces that it is seeking taxpayer questions and comments about the SECURE Act and Miner Act provisions referenced in the Notice. The deadline for submitting comments and questions is Nov. 2, 2020.
Source: Bhfs.com, September 2020
Revenue Procedure 2020-40 (Rev. Proc. 2020-40) expands the situations in which the plan amendment deadline may be extended for discretionary amendments made to pre-approved qualified retirement plans and pre-approved Internal Revenue Code Section 403b plans.
Source: Westlaw.com, September 2020
The DOL recently issued interim final regulations requiring new information to be included on ERISA-covered defined contribution plan participant account statements under the SECURE Act. The guidance only applies to defined contribution plans, such as 401k and 403b plans. The IRS also recently updated safe-harbor explanations that can be used to satisfy the tax notice requirements in Code Section 402(f). These requirements generally require plan administrators to provide a written explanation of tax consequences when making eligible rollover distributions from a qualified retirement plan.
Source: Shermanhoward.com, September 2020
The IRS has provided some answers to questions concerning the small employer automatic enrollment credit, part-time vesting rules, and other provisions under the SECURE Act. IRS Notice 2020-68, issued September 2, provides guidance on some of the outstanding SECURE Act issues in a questions and answers format.
Source: Napa-net.org, September 2020
The SECURE Act of 2019 modified the defined contribution plan benefits statement rules to require the inclusion of lifetime income. On August 18, the DOL released an interim final rule, including model disclosures and the assumptions plan administrators must use to calculate estimated lifetime income amounts. Using the model disclosures may limit fiduciary liability. The rule is expected to be effective by the end of the third quarter, 2021.
Source: Buck.com, September 2020
Record retention rules are found in both the DOL Regulations and ERISA, plus there are statutes of limitation concerning plan sponsor liability for just about everything administrative in a retirement plan. While most plans have policies for loans, investments, and qualified domestic relations orders, very few plan sponsors seem to have a record retention policy to provide guidance on what to retain, what to purge, and when to do it all. Depending on the document category, there are different standards for how long documents need to be kept.
Source: Ferenczylaw.com, September 2020
Due to the COVID-19 pandemic, new guidance from the U.S. Department of Labor, the IRS, and the Department of the Treasury extends several deadlines for retirement plan notifications and benefit plan claims required by Title I of ERISA.
Source: Hallbenefitslaw.com, August 2020
The SECURE Act created a new structure through which completely unrelated employers can participate in a single defined contribution plan beginning on January 1, 2021. These Pooled Employer Plans must have a Pooled Plan Provider, and each PPP must register with the Department of Labor prior to beginning operations. On August 20, 2020, DOL released a proposed regulation detailing the PPP registration requirements.
Source: Groom.com, August 2020
The IRS has updated its safe harbor Special Tax Notice required to be provided to plan participants about to receive a distribution from a tax qualified plan as part of the election package. Further out on the horizon, individual account plans will be required to provide "lifetime income illustrations" on at least one benefit statement provided to participants during a 12-month period as a result of provisions included in the SECURE Act. Here are five key points for plan fiduciaries.
Source: Troutman.com, August 2020
In recent retirement plan litigation, a plaintiffs' counsel attempted to make the novel argument that retirement plan participant data is a plan asset that should be afforded the same protections of ERISA that apply to other plan assets, such as monetary assets. While the argument has not yet succeeded in the courts, some settlements have included terms involving restrictions as to the use of plan data. Is plan data considered a plan asset under ERISA?
Source: Cammackretirement.com, August 2020
The DOL issued an interim final rule implementing Section 203 of the Setting Every Community Up for Retirement Enhancement Act of 2019, which requires an annual lifetime income disclosure for 401k and other ERISA defined contribution plan participants. This article reviews the key takeaways.
Source: Groom.com, August 2020
Earlier this week the IRS issued proposed regulations regarding an extension of the rollover period for certain plan loan offset amounts. The proposed rules implement portions of the Tax Cuts and Jobs Act, which provides for an extended rollover period for a Qualified Plan Loan Offset, which is a type of plan loan offset. Even though the rules are proposed, they can be relied on immediately, and it is important to know what is in them.
Source: Graydon.law, August 2020
The DOL has issued highly-anticipated proposed regulations on registration requirements for entities that will function as "pooled plan providers" for retirement plans that will be known as pooled employer plans, or PEPs.
Source: Futureplan.com, August 2020
The SECURE and CARES Acts provide a broad spectrum of required and optional changes that employers must evaluate for retirement plan administration. One impending change is the SECURE Act's broader eligibility requirement for part-time employees in 401k plans, which becomes effective on January 1, 2021. Also, employers may be surprised to learn that some CARES Act distribution options were added to their plans automatically by their record keepers through a default process. Thus, employers should review their plan's administrative procedures to determine if changes under the SECURE Act and CARES Act were implemented to ensure administrative compliance with the plan document.
Source: Spencerfane.com, August 2020
The SECURE Act required, for the first time, that administrators of DC plans provide participants with disclosures regarding estimated lifetime income payments. Such estimates are designed to help employees evaluate their ability to retire by giving them an educated estimate of how their savings in the plan might translate into lifetime income payments. The DOL recently announced an interim final rule to implement these provisions of the SECURE Act.
Source: Bradley.com, August 2020
If you're preparing for your first 401k plan audit, you may be wondering what information the auditor will need for the audit. To help you prepare, this template was created of an audit information request which conveys the overall level of detailed verification required in an audit.
Source: Belfint.com, August 2020
The DOL issued proposed regulations that would establish requirements for pooled plan providers to register with the DOL. The DOL says that it recognizes that there may be challenges associated with these new types of multiple employer plans that it, the Treasury Department, or IRS may need to address.
Source: Asppa.org, August 2020
The IRS has released a notice of proposed rulemaking that takes into account changes made by the Tax Cuts and Jobs Act concerning rollover rules for qualified plan loan offset amounts.
Source: Ascensus.com, August 2020
In the latest of a series of regulatory announcements, updates, and proposals, the DOL has unveiled an Interim Final Rule on lifetime income disclosures under the SECURE Act. Under the rule, retirement plans would provide lifetime income illustrations using prescribed assumptions designed, the Labor Department notes, "to give savers a realistic illustration of how much monthly retirement income they could expect to purchase with their account balance."
Source: Napa-net.org, August 2020
In June 2020, the IRS issued Notice 2020-51 giving guidance on how to interpret and administer the 2020 RMD waiver provisions in the CARES Act and the required beginning date provision in the SECURE Act. Here are highlights of this recent IRS Notice.
Source: Frostbrowntodd.com, August 2020
This week, the IRS has released updated safe harbor 402(f) notices to reflect the recent legislative change made, including changes in law made by the SECURE Act. These changes include qualified birth and adoption distributions and the change from age 70 1/2 to 72 for RMDs.
Source: Graydon.law, August 2020
The DOL announced final regulations that describe new "safe harbor" procedures for electronic delivery of required ERISA retirement plan disclosures such as Summary Plan Descriptions, quarterly or annual account statements, and other items. The new safe harbor procedures are an addition to the DOL e-disclosure rules that date back to 2002 and represent an improvement on the 2002 rules for employees who are not "wired at work," as defined in those regulations. The safe harbor procedures took effect on July 27, 2020. A plan administrator that relied on the safe harbor before that date wouldn't be subject to enforcement action, the DOL vowed.
Source: Eforerisa.wordpress.com, August 2020
The IRS issued Notice 2020-62 which updates the information that must be provided to participants in retirement plans (including 401k plans) when they become eligible for a distribution. Also, Notice 2020-62 provides two model rollover notices (one solely for payments from Roth contribution accounts, and another for payments from traditional, non-Roth accounts) which, if used for this purpose, are deemed to satisfy the statutory requirement.
Source: Compliancedashboard.net, August 2020
The IRS on Aug. 6 in Notice 2020-62 issued safe harbor explanations for eligible rollover distributions. The notice modifies the two model notices in Notice 2018-74. Those safe harbor explanations reflect relevant law as of Sept. 19, 2018: one safe harbor is for payments not from a designated Roth account, and the other is for payments from a designated Roth account.
Source: Asppa.org, August 2020
On May 27, 2020, the DOL issued a final rule that makes it easier for employers to provide required disclosures to retirement plan participants and beneficiaries. The final rule provides two additional safe harbors for the production of retirement plan disclosures via electronic media: the "Notice and Access" safe harbor and the "Direct Delivery Via Email" safe harbor. Here are the key points that employers should know about the new safe harbors.
Source: Thompsoncoburn.com, August 2020
The DOL's proposed rule addressing environmental, social, and governance factors in selecting plan investments received more than 1,500 comment letters during the 30-day comment window, with many taking issue with the proposal.
Source: Napa-net.org, August 2020
IRS recently updated its Operational Compliance List for qualified retirement and 403b plans to identify changes in law and guidance affecting plan operations. The Operational Compliance List reminds sponsors about revised operational requirements taking effect during a calendar year, even though conforming amendments might not be due until a later date.
Source: Mercer.com, July 2020
The CARES Act suspended required minimum distributions from certain retirement accounts for 2020. This waiver applies to any retirement account subject to RMDs, including 401ks, 403bs, 457bs, traditional IRAs, and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. Here are some of the rules you need to know regarding RMD waivers under the CARES Act.
Source: Hallbenefitslaw.com, July 2020
Participants in defined contribution retirement plans can skip their required minimum distribution payments for 2020. If RMDs for 2020 have already been received, participants have until August 31, 2020 to rollover the RMD into an eligible retirement plan. The IRS issued sample plan amendments that employers may adopt to give participants and beneficiaries a choice as to whether or not to receive their 2020 RMD, and FAQs covering details of the 2020 RMD waiver.
Source: Hansonbridgett.com, July 2020
A key Department of Labor official confirmed that the DOL's deadline relief provided in response to the Coronavirus pandemic also applies to initial paper notices under the DOL's new electronic disclosure regulations.
Source: Asppa.org, July 2020
Pursuant to Notice 2020-50, CRD-qualified individuals who experience a loan offset may treat such amounts as CRDs, regardless of whether the plan offers CRDs. Deemed distributions of defaulted loans, in contrast, may not be treated as CRDs, and are not eligible for rollover.
Source: Retirementlc.com, July 2020
The CARES Act creates a moratorium on required minimum distributions for 2020. The one-year required minimum distribution moratorium under the CARES Act applies to IRAs and defined contribution retirement plans, such as 401ks, money purchase pension plans, 403b plans and some government plans. Plans may need to be amended to accommodate the moratorium.
Source: Mcdonaldhopkins.com, July 2020
On June 19, 2020, the IRS issued Notice 2020-50, along with a related news release, that provides official guidance on coronavirus-related distributions and temporarily expanded loans taken from 401k plans due to the COVID-19 crisis. The Notice expands the eligibility criteria for such distributions and loans, thereby potentially increasing the number of 401k plan participants able to take advantage of these features.
Source: Compliancedashboard.net, July 2020
On June 23, the IRS issued a notice that told taxpayers they could unwind any required minimum distributions from their retirement accounts that they had taken in 2020. This provides a significant opportunity for IRA beneficiaries who didn't need this money for expenses. They can put these distributions back into their IRAs to grow there tax-deferred, lowering their total tax bill.
Source: Wealthspire.com, July 2020
The IRS issued the 2020 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 2020 calendar year.
Source: Westlaw.com, July 2020
The Department of Labor has issued guidance on private equity in 401k plan designated investment alternatives and a proposed regulation on environmental, social, and governance investing.
Source: Morganlewis.com, July 2020
The coronavirus pandemic has forced many employers to implement some form of workforce reduction to continue operating. While furloughs and layoffs have a significant and immediate impact on a company's operations, plan sponsors also need to understand the longer-term effects workforce reductions have on participants' benefits and retirement accounts.
Source: Bdo.com, July 2020
While many plan sponsors outsource most of their plan's operations, they cannot fully farm out this responsibility. Therefore, strong plan governance and the implementation of internal controls will assist in a plan's compliance with applicable laws and regulations. Preventative controls are designed to discourage errors or fraud, while detective controls are designed to identify errors or fraud after they have occurred. This article examines sample plan controls and user controls related to third-party service providers of a plan.
Source: Eisneramper.com, July 2020
The IRS issued Notice 2020-52 addressing mid-year reductions and suspensions of contributions to Safe Harbor 401k and 403b plans. In response to the COVID-19 pandemic, the Notice provides some temporary relief for plan sponsors that wish to reduce or eliminate safe harbor contributions mid-year.
Source: Spotlightonbenefits.com, July 2020
COVID-19 has led to employee layoffs, employee health issues, and changed rules for required minimum distributions, all of which make it increasingly important for plan sponsors to have good procedures in place for maintaining updated beneficiary designations and finding missing participants.
Source: Plansponsor.com, July 2020
If you've just been informed that your 401k plan needs an audit, you probably have many questions if you have never been through a 401k audit. Hopefully by answering the five "Ws" (Who? What? When? Where? Why?), this article will cover most of your questions.
Source: Belfint.com, July 2020
The IRS released Notice 2020-52 which grants certain COVID-19 related relief to retirement plan sponsors who employ a safe harbor 401k plan design feature. The majority of the guidance is temporary relief which expires on August 31, 2020. However, the IRS Notice also includes a clarification that shall remain effective after August 31, 2020.
Source: Legacyrsllc.com, June 2020
The DOL is proposing a new regulation to govern investment advice in retirement accounts to replace a rule that was vacated more than two years ago by a federal appeals court. The proposed regulation would provide exemptions under federal retirement law that would allow fiduciaries to receive compensation for advice that would otherwise be prohibited, such as third party payments, as long as they act in a retirement savers' best interests.
Source: Investmentnews.com (registration may be required), June 2020
The CARES Act permitted plan sponsors to make several discretionary amendments, giving participants greater access to their retirement savings, including the special coronavirus-related distributions, increased plan loan limits, and delayed plan loan repayments. The relief provided by these three discretionary amendments was only available for "qualified individuals." The IRS has recently amended the definition of a qualified individual through Notice 2020-50, expanding the relief to cover more individuals.
Source: Graydon.law, June 2020
Many retirement plans are written using the IRS preapproved documents. Preapproved plans must be restated every six years to add language for any new rules and regulations that have been enacted since the previous restatement. The upcoming cycle, known as Cycle 3, will run from August 1, 2020, to July 31, 2022. This is a 2-year window during which all preapproved plans must be restated.
Source: Consultrms.com, June 2020
After much anticipation, the DOL published their final rule on electronic disclosure. The rule allows for plans to transition to an electronic environment for the delivery of required disclosures and most other plan communications to participants, eliminating a significant waste of time, money, and paper. While the ruling may appear obvious, it will have a significant impact on retirement plan communication.
Source: Cammackretirement.com, June 2020
This 7-page paper will help defined contribution plan sponsors consider the administration of forfeitures within their plans. It also outlines the timing and approved uses of forfeitures and provides additional considerations for forfeiture-related events.
Source: Vanguard.com, June 2020
This notice provides guidance relating to the waiver of 2020 required minimum distributions from certain retirement plans under section 2203 of the CARES Act. In particular, this notice: permits rollovers of waived required minimum distributions and certain related payments, including an extension of the 60-day rollover period for certain distributions to August 31, 2020; answers questions relating to the waiver of 2020 RMDs; and provides a sample plan amendment that, if adopted, would provide participants a choice whether to receive waived RMDs and certain related payments.
Source: Irs.gov, June 2020
The retirement plan community got a shock five years ago when the IRS dramatically cut back its 60-year-old program of providing employers with the comfort of a determination letter on the tax qualification of their plans. With the IRS's limited re-opening of its determination letter program, this summary highlights upcoming deadlines and recent developments.
Source: Groom.com, June 2020
When your workforce undergoes significant changes -- due to layoffs, turnover, or furloughs -- your retirement plan could suffer a partial plan termination. Learn what measurements indicate your plan is at risk and what to do in the event a termination takes place.
Source: Francisinvco.com, June 2020
DOL Information Letter Outlines Fiduciary Considerations for Including Private Equity in DC Plan Investments
The Letter emphasizes that selection and monitoring of an investment option with private equity are subject to the same fiduciary considerations as other investments (including the duties to be prudent and loyal, and the duty to avoid prohibited transactions). At a high level, this includes evaluating whether the potential upside from the investment justifies the added risk, fees, complexity, and valuation and liquidity issues. The Letter lists specific considerations.
Source: Erisapracticecenter.com, June 2020
The final rule sanctions a "notice and access" disclosure method, whereby the administrator notifies the participant by email or text message that an important document is available on a designated website. The final rule also permits administrators to send documents to participants directly via email. This safe harbor could significantly reduce the costs of furnishing required disclosures.
Source: Bsk.com, June 2020
The DOL's new rule allowing for electronic delivery only applies to those notices and disclosures that the DOL requires. Most retirement plan notices and disclosures are described here and those covered by this new rule are marked with an asterisk. The IRS has also indicated they intend to provide more guidance in the future about the electronic disclosure of the notices they oversee.
Source: Benefit-Resources.com, June 2020
In response to immediate requests from participants for tax-favored coronavirus-related distributions and loans, the IRS has issued Notice 2020-42, which provides temporary relief from the physical presence requirement for any participant election that needs to be witnessed by a notary public or a plan representative. The Notice gives plans and participants greater flexibility for participant elections, including spousal consents, that must be signed in person and witnessed by a notary or plan representative to be valid.
Source: Beneficiallyyours.com, June 2020
While Third Party Administrators prepare the form and often submit it on behalf of employers, it is the sponsors who are plan fiduciaries and responsible for accurate and timely filing of the Form 5500. Here are some suggestions for carefully reviewing the Form 5500 before signing.
Source: Alliant401k.com, June 2020
In a case of first impression, the US Court of Appeals for the Sixth Circuit held that a Chapter 13 debtor may exclude from her bankruptcy petition disposable income the post-petition 401(k) plan contribution dollar amount if she contributed that amount to her plan before her bankruptcy.
Source: Westlaw.com, June 2020
The IRS issued Notice 2020-42 to provide temporary relief for certain participant elections required to be witnessed in the "physical presence" of a plan representative or notary public, including spousal consents. The Notice is a welcomed response to the major challenges posed by the social distancing measures put in place due to the COVID-19 pandemic, and it provides plan administrators with additional flexibility to use remote notarization and similar services for all of 2020.
Source: Groom.com, June 2020
The IRS has issued Notice 2020-42, ending the uncertainty surrounding spousal consents to retirement plan distributions and loans in the socially distanced COVID-19 world.
Source: Erisapracticecenter.com, June 2020
On May 27, 2020, the DOL issued a new safe harbor for electronic retirement plan disclosures that supplement existing regulations to allow an additional method to electronically deliver certain disclosures to plan participants, beneficiaries, and other individuals.
Source: Buck.com, June 2020
In response to the COVID-19 pandemic, the IRS has issued a notice providing temporary relief from the physical presence requirement for participant elections required to be witnessed by a Plan representative or a notary public. Notice 2020-42 provides relief for participant elections made from January 1, 2020, through December 31, 2020.
Source: Bradley.com, June 2020
Plan administrators have long bemoaned the narrow parameters of the DOL's current safe harbor for electronic delivery. The new rule establishes another voluntary safe harbor for retirement plan administrators who wish to furnish "Covered Documents" to "Covered Individuals" electronically as the default means of delivery.
Source: Benefitslawadvisor.com, June 2020
Following up on proposed rules issued in October 2019, the DOL just issued final regulations addressing an employer's or plan administrator's ability to send certain retirement plan notices to participants electronically. These methods have generally included email or posting to an employer or plan intranet site, but now can include text messaging or other electronic delivery to smartphones.
Source: Beneficiallyyours.com, June 2020
Audit request lists are going out to plan sponsors for the annual audits of their 401k plans. While the receipt of these request lists can cause blood pressure to rise at the plan sponsor, there are some simple tasks the plan sponsor can perform to prepare for the annual audit of their 401k plan. Here are some tips for plan sponsors which will help to make the audit process go smoother.
Source: Linkedin.com, June 2020
According to the DOL, there are approximately 137 million participants in approximately 700,000 retirement plans covered by ERISA. Since 2002, plan administrators could rely on a regulatory safe harbor to deliver printed disclosures. The DOL finally agrees it is expensive, a burden, and involves a lot of paper, printing, and mailing costs to comply with the old safe harbor.
Source: Lindquistcpa.com, June 2020
The final regulation will likely provide welcome relief for plan sponsors and administrators frustrated by the limitations of the current DOL safe harbor for employees with work-related computer access or who have consented to electronic delivery. However, there are detailed content, notice, and timing requirements in the new electronic delivery safe harbor that require careful review before implementation.
Source: Erisapracticecenter.com, May 2020
In EBSA Disaster Relief Notice 2020-01, the DOL provided sponsors of DC plans subject to ERISA relief from DOL enforcement action for failure to timely forward participant contributions and loan repayments to the plan during the period from March 1, 2020, and to the 60th day following the announced end of the National Emergency. This DOL relief, however, appears to be limited to ERISA violations and does not appear to protect from the excise taxes under the Internal Revenue Code. This article summarizes the relief provided by the Notice and highlights legal risks that remain for plan sponsors.
Source: Workforcebulletin.com, May 2020
In the last three months, many employers have had significant decreases in their top-line revenue and have attempted to cut costs to offset that revenue decrease. The IRS has provided relief to retirement plans through the CARES's act to assist plan participants to manage through these difficult times. This article shares some strategies for managing cash flows as it relates to defined contribution retirement plans from an employer perspective.
Source: Meadenmoore.com, May 2020
The DOL finalized a new rule that allows ERISA retirement plan sponsors to provide certain required disclosures to participants and beneficiaries electronically. The final rule adds an option to email covered disclosures directly to recipients, but otherwise is substantially the same as the proposed rule. Employers should start collecting valid email addresses from plan participants, including terminating employees still covered by the plan.
Source: Hansonbridgett.com, May 2020
Many of the SECURE Act provisions seek to expand retirement plan coverage for Americans. This includes the new requirement for 401k plans to permit long-term part-time employees the right to make elective deferrals. While this is a positive step for employees, for retirement plan sponsors, it is likely to be the SECURE Act provision with the most significant administrative burden.
Source: Cammackretirement.com, May 2020
The DOL has now finalized the electronic disclosure regulations on the new safe harbor -- including a new safe harbor option for email delivery -- that plan administrators may begin using immediately. Plans that satisfy an electronic delivery safe harbor will be deemed to have satisfied the requirement under ERISA to use delivery methods that are reasonably calculated to ensure actual receipt of information by participants, beneficiaries, and other individuals.
Source: Bradley.com, May 2020
The final regulation establishes a new, voluntary safe harbor for retirement plan administrators who want to use electronic media, as a default, to furnish covered documents to participants and beneficiaries, rather than providing paper documents through mail or hand delivery. The new safe harbor should be welcome news to virtually all employers who sponsor ERISA-covered retirement plans.
Source: Spencerfane.com, May 2020
The new rule dramatically liberalizes DOL's electronic communication rules, which (with certain exceptions) previously required that the individual receiving the electronic communication either had access to the employer/sponsor electronic information system as an integral part of her duties or had affirmatively consented to electronic receipt. This article reviews the final regulation.
Source: Octoberthree.com, May 2020
The DOL announced the publication of a final rule that permits default electronic delivery of retirement plan disclosures. The rule allows employers to deliver disclosures to plan participants primarily electronically, which will reduce printing, mailing, and related plan costs by an estimated $3.2 billion over the next decade, the DOL said in a statement announcing the final rule. The rule will also make disclosures more readily accessible and useful for participants while preserving the rights of those who prefer paper disclosures.
Source: 401kspecialistmag.com, May 2020
The IRS posted 14 Questions and Answers on its website regarding the special retirement plan distribution options and loan provisions made available to certain qualified participants under the CARES Act. These Q&As answer many of the questions that plan sponsors and third-party administrators have been grappling with since the CARES Act was enacted.
Source: Spencerfane.com, May 2020
For many households, COVID-19 distributions from qualified plans and IRAs may be a welcome backstop against the financial challenges of the Coronavirus pandemic. But those receiving those distributions (and those who process them) need to be aware of the potential sting of state tax liability due to differences between federal and state tax rules.
Source: Napa-net.org, May 2020
Providing sweeping relief to employee benefit plan sponsors, participants, and beneficiaries impacted by the COVID-19 emergency, the Employee Benefits Security Administration joined with the IRS to extend deadlines to effectively pause the compliance clock for the duration of the outbreak. The guidance was released in three documents.
Source: Foxrothschild.com, May 2020
On May 4, 2020, the IRS provided guidance on coronavirus-related distributions and coronavirus-related loans and loan payment delays in the form of FAQs. In those FAQs, the IRS answered a few of the questions that many practitioners, administrators, and employers have been asking.
Source: Benefitsnotes.com, May 2020
The IRS has issued some initial guidance on the coronavirus-related relief for retirement plans under the CARES Act in the form of Q&As on its website. Most of the Q&As address coronavirus-related distributions, while one Q&A provides some IRS insight relating to the loan relief, referencing an old IRS Notice that answered questions about the loan relief issued after Hurricane Katrina.
Source: Beneficiallyyours.com, May 2020
Fiduciaries and administrators of private-sector retirement plans will be relieved to learn that the Department of Labor has issued guidance in response to the COVID-19 public health emergency. This disaster relief guidance was published on April 28, 2020, in Notice 2020-01 and is reviewed here.
Source: Segalco.com, May 2020
As a plan sponsor or financial advisor, it is paramount that you maintain an open line of communication with your TPA or recordkeeper responsible for preparing the 5500 filings to avoid potential penalties and fines from both the Internal Revenue Service and the Department of Labor. To avoid delays in the preparation and filing of the form, here are some things you can do as the plan sponsor to assist your service provider.
Source: Legacyrsllc.com, May 2020
The DOL and IRS have recently issued coordinated guidance that provides relief for benefit plans by extending certain deadlines. This article examines the limited relief granted to retirement plans by extending the amount of time a plan has to distribute participant contributions and loan repayments into participant accounts to still be considered timely.
Source: Graydon.law, May 2020
Are there any issues with getting rid of older filings and distribution records? While Marie Kondo may tell you to throw out something if it doesn't bring you joy, the answer is quite different when it comes to records and reports for your 401k plan. One of the key reasons is that the IRS and Department of Labor have specific document retention rules for retirement plans.
Source: Dwc401k.com, May 2020
On April 29, 2020, key governmental agencies issued two separate pieces of official guidance further expanding COVID-19-related relief for 401k retirement plans and other employee benefit plans and arrangements. This guidance supplement and expand upon earlier official pronouncements that extended various deadlines concerning 401k plans in response to the global crisis.
Source: Compliancedashboard.net, May 2020
Layoffs and furloughs as a result of COVID-19 can trigger vesting obligations that may surprise plan sponsors unfamiliar with the IRS rules on partial plan terminations. Failure to treat participants correctly can jeopardize the plan's qualified status and, if the employer has been using forfeitures to reduce its contributions, may also have a financial impact. Here is an overview of the issue.
Source: Cohenbuckmann.com, May 2020
Employers wishing to reduce or eliminate a matching contribution during the middle of the plan year must be careful in assessing whether this is possible. Even where possible, there may be special requirements that must be met.
Source: Boutwellfay.com, May 2020
In response to the coronavirus pandemic, on April 10, 2020, the Internal Revenue Service issued Notice 2020-23, extending the deadlines for the time-sensitive actions set forth in Revenue Procedure 2018-58 to July 15, 2020. These extensions apply to certain retirement plan payment and filing obligations that have deadlines on or after April 1, 2020 and before July 15, 2020.
Source: Truckerhuss.com, May 2020
To help pay for the changes that the SECURE Act will bring to the retirement system, as well as to increase compliance with filing reports and providing notices, the legislature also included a significant increase in penalties for late filing of plan returns and plan notices. These new penalties apply to all returns, plan statements, and require plan notices that must be provided after the end of 2019.
Source: Hallbenefitslaw.com, May 2020
On April 28th, the Employee Benefits Security Administration of the Department of Labor, together with the Department of the Treasury, issued helpful guidance for retirement plans that extends certain deadlines and provides other relief in light of the national coronavirus outbreak. The guidance will significantly affect ERISA-covered retirement plans, plan sponsors, fiduciaries, plan participants and beneficiaries, and plan service providers.
Source: Groom.com, May 2020
The Department of Labor recognizes that the COVID-19 outbreak may temporarily impede efforts to comply with various requirements and deadlines under ERISA. This notice provides guidance and relief for employee benefit plans due to the covid-19 outbreak and applies to employee benefit plans, employers, labor organizations, and other plan sponsors, plan fiduciaries, participants and beneficiaries, and service providers subject to ERISA from March 1, 2020, until 60 days after the announcement of the end of the COVID-19 national emergency.
Source: Dol.gov, May 2020
The DOL, joined and coordinated in part by the Department of Treasury, Internal Revenue Service, and Department of Health and Human Services, has released several documents providing deadline extensions for employee benefit plans during the COVID-19 disaster period and enforcement relief concerning certain compliance requirements. The changes were described generally in a DOL news release, and more formal guidance was outlined in new final regulations, and EBSA Disaster Relief Notice 2020-01.
Source: Bradley.com, May 2020
Due to widespread court closures as a result of the coronavirus pandemic, it may be difficult for participants or their attorneys to obtain a certified copy of a domestic relations order that many retirement plans require as part of the procedures for processing qualified domestic relations orders. To address this issue, plans might consider adopting temporary procedures that allow for the continued qualification and processing of QDROs during these extraordinary circumstances without creating permanent exceptions to their normal QDRO procedures.
Source: Morganlewis.com, April 2020
In enacting rules governing distributions from tax-qualified retirement plans, Congress has historically sought to strike a balance between encouraging retirement savings while at the same time recognizing that there are instances in which participants may have legitimate reasons to access funds before they retire. The CARES Act contains several provisions that enable plan sponsors to provide plan participants with access to funds in defined contribution retirement plans and individual retirement accounts to pay for unanticipated costs associated with the coronavirus pandemic.
Source: Mintz.com, April 2020
The SECURE Act, signed into law at the end of 2019, brought several significant changes to retirement planning. A major goal of the legislation was to enable and encourage the American worker to save for retirement. One significant change is that businesses are now required to allow long-term, part-time employees to participate in employer-sponsored 401k plans.
Source: Hallbenefitslaw.com, April 2020
The DOL's Employee Benefits Security Administration has issued "deadline relief and other guidance" related to the impact of the Coronavirus outbreak, including expanded "good faith" application of electronic delivery.
Source: Asppa.org, April 2020
With its broad impact across qualified retirement plans, it is important for plan sponsors to become familiar with the SECURE Act's changes, and to take appropriate action. The Act's administrative changes will likely require plan amendments, and participant notification practices will also need to change. This article reviews a few key components of the Act.
Source: Tra401k.com, April 2020
Late deposits of employee 401k and 403b deferrals continue to be a common error and consistent with the top ten list of mistakes the IRS and DOL identify during their audits and investigations. When employee deferrals are not deposited timely, there are two available correction avenues: self-correction or completing a filing through the DOL's Voluntary Fiduciary Correction Program. This article discusses the rules regarding the timely deposit of salary deferral withholdings, when a timely deposit doesn't occur, and the steps the plan sponsor must take for each of the available correction options.
Source: Belfint.com, April 2020
In response to the current economic crisis caused by COVID-19, many companies are considering cost-savings measures to improve their companies' financial stability. One such cost-saving option is the reduction or suspension of company contributions to a company's 401k or 403b plan. The procedure for and the implications of such suspension will depend on the plan terms, including whether the contribution is intended to be a "safe harbor" contribution.
Source: Spotlightonbenefits.com, April 2020
The Internal Revenue Service released Notice 2020-23 which, among other things, extends several recent deadlines applicable to retirement plans (including 401k plans), as well as to other employee benefit plans and arrangements. Generally stated, Notice 2020-23 automatically extends deadlines for certain "time-sensitive acts" that would otherwise fall on or after April 1, 2020, and before July 15, 2020, until July 15, 2020.
Source: Compliancedashboard.net, April 2020
On April 16th, the Office of Management and Budget received the Department of Labor's long-anticipated final regulation updating and modernizing the rules for using electronic media to furnish ERISA-required disclosures and notices. DOL's existing electronic disclosure rule has been in place for nearly two decades and was developed long before the widespread adoption of many current electronic communications methods. The rule should not only modernize DOL's electronic disclosure standards but also address communication concerns specifically raised by the current health crisis.
Source: Groom.com, April 2020
It turns out that there is a quirk in the CARES Act provisions regarding COVID-19 loans that are giving plan sponsors a reason to pause. This issue is that while the CARES Act allows an increase in the loan limits for borrowers who qualify for a COVID-19 loan ($100,000 or 100% of a participant's vested account balance, if less), it did not extend the repayment terms. Thus, the loan must be repaid over five years, unless used to acquire a primary residence.
Source: Cammackretirement.com, April 2020
Coronavirus-Related Distributions Are NOT "Eligible Rollover Distributions" but They Can Be Rolled Over
To address the novel Coronavirus, the CARES Act has created a novel type of distribution from retirement plans: the Coronavirus-Related Distribution. It is a "rolloverable" distribution that is NOT considered an Eligible Rollover Distribution for certain purposes, such as withholding. Although a CRD can be rolled over to another qualified plan or IRA directly or within three years of its distribution, it is only subject to the optional 10% withholding applicable to distributions that are not eligible to be rolled over.
Source: Belfint.com, April 2020
As a plan sponsor, there are many things you don't know about your plan document and you really should. Why? Because the plan documents could be a major culprit in what ails your 401k plan. Here are five items you should be considering.
Source: Jdsupra.com, April 2020
Although some retirement plan recordkeepers and TPAs have reached out to plan sponsors on decisions regarding the optional provisions of the CARES Act, e.g., coronavirus-related withdrawal and loan relief options, others are waiting for additional guidance. Here is a checklist of issues to consider to help you navigate decision-making concerning optional CARES Act changes and determine whether your TPA has procedures in place to ensure compliance with the CARES Act provisions.
Source: Huschblackwell.com, April 2020
A recently-filed lawsuit describes in specific detail the efforts cybercriminals often take to pilfer assets from retirement accounts. As a complaint, the filing provides only the plaintiff's version of what happened, and we have not yet heard from the defendants. But the complaint is particularly interesting in its description of how the theft occurred and may point to some useful approaches to try to reduce future fraud.
Source: Groom.com, April 2020
Effective March 27, 2020, the CARES Act brings immediate changes and relief to 401k plans, similar to natural disaster relief issued in the past. This relief follows the relief available for natural disasters in the past (and the 2009 WRERA relief following the 2008 economic downturn), and as such is generally viewed as available at the option of the plan sponsor. Plan amendments are not required until the end of the 2022 plan year, provided that the plan is operated following the terms. A summary of the relief is set forth here.
Source: Groom.com, April 2020
This article discusses a second provision of the Act that can help participants who are affected by the coronavirus (called "qualified individuals"). This is a special coronavirus-related distribution. Though discussed this in the context of 401k plans, the CRD provision applies to all qualified plans, 403b plans, and IRAs as well.
Source: Fredreish.com, April 2020
While payroll-reducing strategies may be necessary during this time of substandard revenue, they may also present other costs or hurdles in the company’s pension, retiree medical, and retiree life insurance programs. Significantly changing employee demographics can trigger unexpected accounting, cash flow, and compliance issues that could be an unwelcome surprise given current market conditions.
Source: Findley.com, April 2020
The Internal Revenue Service has broadened the filing and payment relief provided under prior guidance. IRS Notice 2020-23 postpones, among other relief, the due date for employee benefit plans required to make the Form 5500 series filings due on or after April 1, 2020, and before July 15, 2020. Plans with original due dates or extended due dates falling within this period now have until July 15, 2020, to file their information reports.
Source: Benefitslawadvisor.com, April 2020
In pandemic times, employer contributions to retirement plans are not immune to cost-cutting initiatives, as corporate cash flows and liquidity dwindle. However, discontinuing discretionary contributions does not always eliminate all employer contribution requirements, and employers need to anticipate and budget for any contributions that cannot be eliminated.
Source: Belfint.com, April 2020
The SECURE Act increases the age at which required minimum distributions must begin. The law also largely eliminates "stretch" distributions to beneficiaries of defined contribution plans. Just over three months later, the enactment of the CARES Act waived most RMDs from DC plans for 2020. Although these changes also affect individual retirement account holders, this article focuses on the impact on employer-sponsored plans.
Source: Mercer.com, April 2020
The CARES Act creates a Paycheck Protection Program to help small businesses affected by the COVID-19 crisis by covering their near-term operating expenses and providing incentives to retain employees. Questions have arisen as to how "payments of retirement benefits" are considered when employers are making various payments to retirement plans.
Source: Asppa.org, April 2020
A common question regarding the CARES Act distribution, loan, and required minimum distribution waiver provisions is whether these provisions are optional or mandatory. In most cases, they are optional. But in the retirement world, there are very few questions where a short answer will suffice.
Source: Asppa.org, April 2020
Employers that sponsor retirement plans and their fiduciaries must continue to manage and make retirement plan decisions during these unprecedented and uncertain times. As a response, small businesses adversely affected by COVID-19 may be considering terminating their 401k plans to end their contribution obligations and cut costs. Here are some procedural notes to bear in mind when considering whether to suspend safe harbor contributions and implement other cost-saving measures.
Source: Aspireonline.com, April 2020
Congress provides a variety of tax incentives for employers to offer retirement plans and for individuals to save for their retirement. Also, several restrictions exist to ensure that retirement funds are used for retirement purposes. The CARES Act contains several provisions that affect pensions, retirement plans, and Individual Retirement Accounts. This 3-page document from the Congressional Research Service reviews them.
Source: Congress.gov, April 2020
Employers that reduce their workforce or discontinue defined contribution plan eligibility for certain employee groups may experience an inadvertent "partial plan termination." If not properly managed, this event could result in a disqualification of the entire plan.
Source: Callan.com, April 2020
The CARES Act includes several key provisions that will positively impact retirement plan participants and plan sponsors. The ARA has prepared this FAQs to highlight some of the most salient relief measures.
Source: Asppa-net.org, April 2020
The third COVID-19 stimulus package has provisions regarding retirement plans, including expanded and penalty-free withdrawal rights, expanded loan rights, extended rights to repay loans and withdrawals, and a deferral of mandatory distributions.
Source: Wagnerlawgroup.com, March 2020
The CARES Act offers new avenues for defined contribution retirement plan participants to withdraw funds from their accounts to pay COVID-19-related expenses if their employer elects to open those avenues. Some of the largest 401k and 403b plan recordkeepers are forcing employers to make that choice on just a few days' notice.
Source: Spencerfane.com, March 2020
This legislation contains several important provisions for employers and plan administrators regarding their retirement plans. The article discusses special withdrawal, loan, and required minimum distribution provisions in the CARES Act.
Source: Pbwt.com, March 2020
The CARES Act is a very extensive piece of legislation that is meant to provide emergency assistance to large and small distressed businesses, to stabilize the U.S. economy that has been hammered by this pandemic. This bill covers a lot more of the highly publicized economy provisions. This article specifically focuses on the provisions that directly impact tax-qualified retirement plans.
Source: Findley.com, March 2020
Congress has passed the CARES Act to help combat the impacts of COVID-19. This article is intended as a high-level overview of the employee benefit provisions of the Act. There are ambiguities and clarification on some of the details is still needed.
Source: Clarkhill.com, March 2020
Many companies have to reduce their expenses and improve cash flow in reaction to the current volatility in the economy due to Covid-19. A number plan sponsors are asking if it is permissible to suspend or reduce required safe-harbor contributions during the plan year. An employer can reduce or suspend its safe harbor contributions during a plan year, but only if certain conditions are met.
Source: Wagnerlawgroup.com, March 2020
The Federal Emergency Management Agency has declared several disaster areas around the United States as a result of the spread of the coronavirus. Under final regulations issued in 2019, a federal disaster declaration has become one of the safe harbor reasons that qualifies a 401k or 403b plan participant for a hardship distribution, so it appears that plan participants may now be able to take a hardship withdrawal if they are laid off, put on an unpaid leave of absence or incur other expenses and losses on account of COVID-19.
Source: Beneficiallyyours.com, March 2020
The new provision is optional, so plan sponsors will need to amend their plans to permit QBOADs and, as a separate option, to permit the repayment of QBOADs. Although discretionary plan amendments are due by the end of the plan year in which they take effect, the SECURE Act provides that plan amendments for its changes will not be due before December 31, 2022, for calendar year plans, or the last day of the first plan year beginning on or after January 1, 2022, for fiscal year plans.
Source: Belfint.com, March 2020
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