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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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Retirement Plan Fiduciary Duties Under DOL Missing Participant Guidance

The DOL's new missing participant guidance confirms that the DOL expects to see written policies and procedures regarding these terminated vested participants and puts in writing many, if not all, of the various suggestions DOL investigators have made for locating these participants during investigations. In certain respects, the documents also offer welcome transparency, in particular regarding the investigative processes and case-closing practices that investigators should be following when conducting these investigations.

Source: Thompsonhine.com, February 2021

The Godfather and Your 401k Plan

The Godfather is a movie about family, friends, relationships, and business. It can also teach you lessons about how to properly operate a 401k plan. Read this and find out how.

Source: Jdsupra.com, February 2021

Doing the Math: Partial Plan Terminations and the Consolidated Appropriations Act

The Consolidated Appropriations Act, 2021, signed into law on December 27, 2020, changes a myriad of different rules for employer-sponsored retirement plans and health and welfare benefits. Among the more significant of the Act's changes is a temporary rule to provide relief for certain events related to COVID-19 that would otherwise be considered partial retirement plan terminations. This article provides background, analysis, and action steps.

Source: Hallbenefitslaw.com, February 2021

Chart: Inflation-Adjusted ERISA Penalties Announced by the DOL

The Federal Civil Penalties Inflation Adjustment Act of 2015 directs the DOL to make annual inflation adjustments to specified ERISA violations. The increased penalties generally apply to reporting and disclosure failures if the penalty is assessed after January 15, 2021, and if the violation occurred after November 2, 2015.

Source: Mwe.com, February 2021

Excess Deferrals: What is Required of a Plan Sponsor?

Plan Sponsors should do everything in their power to ensure that the employees who are participating in their retirement plan do not exceed the annual 402(g) limit, including catch-up contributions. This article discusses how to avoid this pitfall and what to do if contributions accidentally do exceed the limits.

Source: Lindquistcpa.com, February 2021

The DOL's New Missing Participant Guidance: Tips for Applying It in the Real World

The DOL's guidance on locating missing retirement plan participants, issued January 12, 2021, includes a host of best practices plan sponsors and other fiduciaries can use to locate missing or non-responsive participants. Unfortunately, not every Best Practice will be appropriate for every plan. This article will help you sort through the best practices to determine which ones may work best for your plan.

Source: Foley.com, February 2021

What Is a Soc-1 Report and Why Is It Important to Your Plan? From the Auditor Perspective

Plan sponsors of 401k plans, both large audited plans, as well as smaller plans, have most likely run into a key document that remains a mystery as to what it is for and what are plan sponsors supposed to do with it. The document is the annual SOC-1 report for the key service providers to your retirement plan. Let's take a few minutes to look at this report and gain a better understanding of what it is for, as well as what plan sponsors should be doing with it.

Source: Linkedin.com, February 2021

It's The 401k Plan Sponsor's Responsibility, Just Because It Is

There are many times that plan sponsors have to be told that they are responsible for "such and such a thing" and they are on the hook "just because." This article is about the stuff that a 401k plan sponsor is responsible for, whether it's fair or not.

Source: Jdsupra.com, February 2021

Watch Employee Turnover Rate to Avoid Partial Termination

If you have laid off more than 20% of your plan participants over your plan year -- an unfortunate necessity for many employers during the COVID-19 pandemic -- the IRS could deem that your retirement plan has undergone a partial termination. Such a partial termination would trigger the immediate vesting of all employer contributions made to the plan on behalf of the laid-off participants, even if they had not satisfied your regular vesting requirements. IRS guidance and the Consolidated Appropriations Act provide instruction and relief.

Source: Orba.com, February 2021

DOL Proffers Final Regulations for Pooled Plan Providers

The DOL has issued final regulations on registration requirements for pooled plan providers administering pooled employer plans. The final regulations retain much of the same structure as the proposed rule issued last August, with some added clarification on registration requirements.

Source: Hallbenefitslaw.com, February 2021

DOL Final Rule on Use of Financial Factors in Selecting Plan Investments

The DOL has issued its final rule regarding the use of financial factors in selecting investments in plans subject to ERISA. The final rule clarifies certain provisions in the proposed rule. The regulatory text of the final rule does not specifically refer to investments in environmental, social, and governance funds by retirement plan fiduciaries and participants. However, the explanatory comments issued with the Final Rule indicate that it is intended to apply to the use of ESG funds in ERISA plans.

Source: Dimeoschneider.com, February 2021

DOL Issues Guidance for Locating Missing Participants and Beneficiaries

The DOL issued guidance to assist plan fiduciaries in fulfilling their ongoing obligation of locating missing or nonresponsive participants and distributing benefits to such participants or beneficiaries. In response to this guidance, employers and plan fiduciaries should review their internal retirement plan policies and procedures for locating missing participants and beneficiaries. They should enhance or revise their policies, as necessary, to incorporate the steps identified in the guidance as best practices.

Source: Ballardspahr.com, February 2021

DOL Issues Guidance for Locating Missing Participants and Beneficiaries

The DOL issued guidance to assist plan fiduciaries in fulfilling their ongoing obligation of locating missing or nonresponsive participants and distributing benefits to such participants or beneficiaries. In response to this guidance, employers and plan fiduciaries should review their internal retirement plan policies and procedures for locating missing participants and beneficiaries. They should enhance or revise their policies, as necessary, to incorporate the steps identified in the guidance as best practices.

Source: Ballardspahr.com, February 2021

U.S. and Puerto Rico Issue Rules on Non-COVID-19 Disaster Relief for Retirement Plans

Last year, in response to the COVID-19 pandemic, the United States Congress and the Puerto Rico Department of Treasury granted favorable tax treatment to coronavirus-related distributions and participant loans from U.S. and Puerto Rico qualified plans. Recently, both jurisdictions extended similar tax treatment to certain distributions, hardship withdrawals, and plan loans related to non-COVID-19 disasters.

Source: Ogletree.com, February 2021

The New E-Delivery Rule: The Price of Simplification

The DOL has simplified the delivery of retirement plan information to participants through its new electronic disclosure rule. Although the E-Delivery Rule promises to expand the use of electronic delivery, retirement plans still retain a fiduciary duty to protect participants' personal information from cybertheft. Thus, retirement plans taking advantage of the new rule may face increased exposure to ERISA fiduciary breach claims alleging inadequate cybersecurity measures. This article discusses the DOL's E-Delivery Rule and the fiduciary considerations applicable to plans that rely on the new rule.

Source: Asppa.org, February 2021

Dealing With Missing Participants in Terminating Puerto Rico 401k Plans

For a host of legal and practical reasons, the only feasible alternative for disposing of the accounts of missing participants in a terminating 401k or other defined contribution retirement plan qualified only in Puerto Rico is, after making reasonable efforts to locate the missing participants, depositing with the proper state unclaimed property fund(s) the retirement money of those participants who cannot be located.

Source: Ogletree.com, January 2021

New DOL Guidance on Missing Participants in Retirement Plans

Investigations of missing retirement plan participants have been a major component of the DOL's plan audit program for many years. For most of that time, plan sponsors have been requesting that the DOL clarify what procedures and information it is looking for and that there be regional consistency.

Source: Segalco.com, January 2021

DOL Guidance to Aid Retirement Plans Facing Missing Participant Issues

The DOL has released a three-part guidance package to assist retirement plan fiduciaries in dealing with issues of missing or unresponsive participants. These issues typically involve terminated participants who have vested benefits remaining in an employer-sponsored plan, or terminating or abandoned plans. The guidance package consists of several components.

Source: Ascensus.com, January 2021

Tips to Prepare for Your Upcoming 401k Plan Audit: From the Auditor Perspective

Audit request lists will soon be going out to Plan Sponsors to confirm audit dates and information request dates. 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, and make the audit process smoother. Whether you are a plan sponsor, TPA, or advisor, here are some tips which will help to make the audit process go smoother for all parties involved.

Source: Linkedin.com, January 2021

DOL Issues Missing Participants Guidance

On January 12, 2021, the DOL issued three pieces of guidance detailing the DOL's view of what steps plan fiduciaries should take to locate and distribute retirement benefits to missing or non-responsive participants. The guidance is largely consistent with positions taken by DOL in investigations.

Source: Groom.com, January 2021

Love Hurts: Have Your QDRO Procedures at the Ready

Retirement Plans should ensure they are ready in case the pandemic also leads to an increase in QDROs. Qualified plans that are subject to ERISA are required to have written QDRO procedures to determine whether a domestic relations order submitted to the plan meets the requirements for approval as a QDRO.

Source: Employeebenefitslawblog.com, January 2021

SECURE Act Guidance for 401k Plan Sponsors to Remember in the New Year

The IRS continues to provide important guidance for 401k plan sponsors regarding the Setting Every Community Up for Retirement Enhancement Act of 2019. Most immediately impactful is additional guidance concerning long-term, part-time employee eligibility for 401k plans and qualified birth and adoption distributions from 401k plans.

Source: Thompsonhine.com, January 2021

Form 5500: The Body Language of ERISA Compliance

Last month, the DOL, the IRS, and the PBGC released advance copies of the 2020 Form 5500 Series. When filed, they will join those of prior years' morphing into the body language of ERISA compliance. Here's how.

Source: Retirementplanblog.com, January 2021

IRS Rev. Proc. 2021-4 Updates the Determination Letter Program

The Internal Revenue Service (IRS) issued Revenue Procedure 2021-4, which makes several changes to the determination letter program and Voluntary Correction Program fees.

Source: Westlaw.com, January 2021

Annual Plan Deadlines for the Plan Year Ending December 31, 2021

This 7-page chart explains key plan events and the deadline for each for Section 401(a) and 401k defined contribution plans with a plan year ending December 31, 2021. Off-calendar year plans should adjust the deadlines accordingly based on the time frames described in the chart. The chart is intended as a tool to assist employers with monitoring the key annual plan requirements.

Source: Voya.com, January 2021

Why Should Taking a Hardship Distribution Be a Hardship?

Self-certification facilitates automation of the hardship approval by the recordkeeper. However, electronic approval of hardship distribution requests through the plan website is not always the default. Thus, there continue to be instances in which neither backup nor compliant self-certifications were obtained for hardship distributions. Unfortunately, self-certification does not mean that an email or a phone call from the participant is sufficient.

Source: Belfint.com, January 2021

Partial Employee Benefit Plan Terminations

The AICPA Employee Benefit Plan Audit Quality Center has prepared this 18-page advisory to provide plan sponsors, administrators, or trustees with an understanding of partial plan terminations under ERISA and your related responsibilities. As a plan fiduciary, you are subject to certain responsibilities, such as following the plan document and prudently carrying out your responsibilities.

Source: Aicpa.org, January 2021

Benefits-Plan Sponsors Face a Tough Year on Compliance

The pandemic, remote work, and changing needs have created unique and novel challenges that have necessarily dominated employer attention in the past nine months. The pandemic hasn't affected, however, the constant drum of change to employee benefit plan requirements. Here are some things for plan sponsors to look out for this year.

Source: Wagnerlawgroup.com, January 2021

Retirement Fiduciary Calendar for 2021

TRI-AD seeks to make it fast, simple, and easy for plan fiduciaries to keep their retirement plans in compliance with the Internal Revenue Service, Department of Labor, and ERISA regulations. They have created this useful calendar to help you stay in front of such administrative deadlines and submission complexities.

Source: Tri-ad.com, January 2021

Employers Beware! Retirement Plan Disclosures Are Required Under 408(b)(2)

To fulfill their fiduciary obligations, plan sponsors need to ensure that service providers subject to 408(b)(2) rules satisfy their disclosure requirements under ERISA. If a service provider fails to meet their reporting requirements under 408(b)(2), the plan sponsor is required to act by sending the service provider a written request for compliance.

Source: Hallbenefitslaw.com, January 2021

2021 ERISA Plan Compliance Calendar

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

Source: Plansponsor.com, December 2020

Partial Plan Termination Relief Provided in New Stimulus Bill

The latest COVID-19 relief bill, attached to the Consolidated Appropriations Act, 2021, enables certain retirement plan sponsors that laid off or furloughed employees due to the economic effects of the pandemic to avoid a partial plan termination.

Source: Plansponsor.com, December 2020

IRS Guidance on SECURE Act Provides More Detail on Changes to Safe Harbor Plans

The SECURE Act made several changes to the rules for certain safe harbor 401k plans. One change increased the cap on automatic enrollment safe harbor plans to 15%. Another eliminated certain safe harbor notice requirements for plans that make safe harbor nonelective contributions and added new provisions for the retroactive adoption of safe harbor plans that make nonelective contributions. On December 9, the IRS issued Notice 2020-86 to elaborate on these changes as summarized here.

Source: Groom.com, December 2020

IRS Extends Relief From Physical Presence Requirement

The physical presence requirement for spousal consents and participant elections under qualified retirement plans will be lifted through June 30.

Source: Planadviser.com, December 2020

IRS Extends Relief on Remote Notarization

In response to the continuing public health emergency caused by the COVID-19 pandemic, the Internal Revenue Service has extended remote notarization relief issued in June. Specifically, Notice 2021-03 extends from Jan. 1, 2021, through June 30, 2021, the temporary relief provided in Notice 2020-42, 2020-26 I.R.B. 986, from the physical presence requirement for participant elections to be witnessed by a plan representative or a notary public.

Source: Asppa.org, December 2020

Missing Participants: What Are You Missing?

Missing participants are a problem: for employers, for plans, for beneficiaries, and even for the participants themselves. A November 11, 2020, session of ASPPA All Access offered a look at the challenge missing participants pose, and what can -- and must -- be done to meet it.

Source: Asppa.org, December 2020

IRS Addresses SECURE Act Changes Affecting Safe Harbor Plans

The IRS has issued Notice 2020-86 to answer frequently asked questions about the SECURE Act's provisions affecting safe harbor plans. Section 102 of the SECURE Act raised the maximum deferral percentage for plans using the safe harbor for qualified automatic contribution arrangements from 10% to 15%.

Source: Thomsonreuters.com, December 2020

IRS Finalizes Regulations on Extended Rollover Period for Qualified Plan Loan Offset Amounts

The IRS has released final regulations on the extended rollover period for qualified plan loan offset amounts. A QPLO occurs when a participant's account balance in a qualified retirement plan (such as a 401k plan) is reduced to repay a plan loan, and that reduction occurs solely due to termination of the plan or the participant's failure to meet the loan's repayment terms because of severance from employment. The final regulations -- and, in particular, the bright-line test -- should eliminate some of the ambiguity surrounding the identification of QPLOs and their reporting and taxation.

Source: Thomsonreuters.com, December 2020

Final Regulations Substantially Alter DOL's Proxy Voting Guidance

The DOL has issued final regulations establishing standards for determining whether and how to exercise shareholder rights, including the right to vote proxies, for stock held by ERISA-covered plans (including 401k plans). The principles-based approach of the final regulations will allow the rules to adapt to the circumstances and avoid substantial burdens and risks raised by the original proposal.

Source: Thomsonreuters.com, December 2020

Legislation SECUREs 401k Plan Access for Long-Term Part-Time Employees

Prior to the passage of the SECURE Act, U.S. 401k plans could exclude employees who had completed less than 1,000 hours of service in a plan year. However, beginning in 2021, in an effort to expand retirement plan participation, the SECURE Act will require 401k plans to expand eligibility to long-term, part-time employees.

Source: Sidley.com, December 2020

Calendar of Key Dates and Deadlines

This is a list of the most common recurring plan events and filing deadlines for a 401k plan operating on a calendar year basis. Your plan may have additional requirements; therefore, you should consult with a qualified plan consultant for more information.

Source: Pensionmark.com, December 2020

Chart: Required Participant Disclosures

Plan sponsors are required to provide certain disclosure documents and notices to plan participants (including terminated participants and alternate payees with a balance). This chart is designed to help you understand and meet these requirements.

Source: Pensionmark.com, December 2020

IRS Expands Discretionary Amendment Deadline for Pre-Approved Retirement Plans

On September 2, 2020, the IRS released Revenue Procedure 2020-40, which modifies prior guidance set forth in Revenue Procedure 2016-37 and Rev. Proc 2019-39 to expand the circumstances under which deadlines for discretionary amendments may be extended for pre-approved qualified plans and 403b plans.

Source: Hallbenefitslaw.com, December 2020

IRS New Guidance on State Unclaimed Property Laws and IRS Helpful Reminders on Missing Participants

After years of public commentary, the IRS addresses whether a plan should withhold income tax when making a transfer of a participant's accrued benefit to a state unclaimed property fund, and whether, after such a transfer occurs, the participant is barred from making a rollover of those amounts. There also has been a great need for this guidance because retirement plans have a perennial problem with missing participants, especially when the plan is required to make a distribution. Now the IRS has addressed the tax consequences when these transfers occur, although not whether such transfers in ongoing plans are permissible under Title I.

Source: Wagnerlawgroup.com, December 2020

SECURE Act Safe Harbor Guidance

The IRS issued guidance in Notice 2020-86 intended to address the safe harbor changes made in sections 102 and 103 of the SECURE Act. This guidance impacts 401k safe harbor plans as well as 403b plans that apply Code section 401(m) safe harbor rules.

Source: Principal.com, December 2020

SECURE Act Update: IRS Issues Guidance With Respect to Safe Harbor Plans

On December 9, 2020, the IRS issued Notice 2020-86 which provides guidance relating to certain changes to the safe harbor rules that apply to 401k plans made by the SECURE Act. The IRS Notice interprets the SECURE Act's provisions to apply to some, but not all, aspects of the rules regarding safe harbor plans, limiting the applicability of the recent liberalizations to the safe harbor rules.

Source: Pbwt.com, December 2020

Preparing for the End of the Plan Year

Generally, retirement plans have compliance requirements that must be met annually, quarterly, or when some event happens. The end of the plan year tends to be a busy time for administration, as plan sponsors and service providers work to ensure that all requirements are met before another plan year has ticked away. But 2020 has presented unbelievably unique challenges. The CARES Act has provided us with some solutions to COVID-related problems, as well as several new twists to our usual operations.

Source: Ferenczylaw.com, December 2020

IRS Issues Guidance on SECURE Act Provisions Easing Safe Harbor Plan Burdens

The IRS on Dec. 9 issued guidance that addresses certain provisions of the SECURE Act that increase the automatic enrollment cap percentage and affect safe harbor plans, including safe harbor 401k plans and certain 403b plans. The guidance is contained in Notice 2020-86.

Source: Asppa.org, December 2020

IRS Releases Final Regulations on Rollovers of 401k Qualified Plan Loan Offsets

The final regulations largely mirror the proposed regulations, with the notable exception of a change in effective date. Instead of applying to plan loan offset amounts treated as distributed on or after the date the final regulations are published in the Federal Register, the revised applicability date now generally applies to plan loan offset amounts, including "qualified plan loan offset" amounts treated as distributed on or after January 1, 2021.

Source: Compliancedashboard.net, December 2020

IRS Issues Final Rollover Rules for Qualified Plan Loan Offsets

The Internal Revenue Service released final regulations on December 7th relating to amendments made by the Tax Cuts and Jobs Act providing an extended rollover period for a qualified plan loan offset (QPLO).

Source: Asppa.org, December 2020

IRS Notice Addresses 401k/403b Safe Harbor SECURE Act Provisions

The IRS has issued Notice 2020-86, providing guidance for implementing provisions of the SECURE Act of 2019. Specifically, the SECURE Act provisions addressed deal with features and procedures of 401k and 403b plans that incorporate safe harbor designs for satisfying nondiscrimination testing requirements, and automatic enrollment and automatically increased deferral rates.

Source: Ascensus.com, December 2020

Advance Copies of 2020 Form 5500 Released

The DOL, IRS, and the Pension Benefit Guaranty Corporation have released advance copies of the 2020 Form 5500 and Form 5500-SF, as well as their schedules. They will be used for reporting information about the 2020 plan year.

Source: Asppa.org, December 2020

Who Is a Long-Term, Part-Time Employee? 401k Plans Will Need to Know

Historically, 401k plans could exclude individuals who worked less than 1,000 hours in the plan year. However, the SECURE Act, in its effort to expand access to employer retirement plans, introduced the concept of a "long-term, part-time employee." Starting in 2021, plans will need to consider these employees for eligibility, vesting, and company contribution purposes.

Source: Shrm.org, December 2020

December 31 Sunset of Safe Harbor Correction Method

A special IRS-approved correction method available for elective deferral failures in 401k and 403b plans with automatic contribution features will sunset on December 31, 2020, meaning it will not be available to correct elective deferral failures that begin after that date. The loss of this favorable correction method going forward serves as a good reminder to plan sponsors to confirm that their plans, in operation, are correctly implementing employee elective deferrals.

Source: Jdsupra.com, December 2020

The Basics of Terminating a DC Plan

It's possible that more retirement plans could be terminated this year as a result of the economic impact of COVID-19 and business closures. But there are many details to attend to when terminating a defined contribution plan, from updating the plan with statutory amendments to filing the final Form 5500.

Source: Plansponsor.com, November 2020

DOL Drops Off Final Proxy Voting Rule at OMB

It was a short week, but a busy one for the Labor Department, as it dropped off a second final rule at the OMB for evaluation. The final rule on "Fiduciary Duties Regarding Proxy Voting and Shareholder Rights" was received at the Office and Management Budget on Nov. 25, just a day after the final rule on its proposed advice package, "Improving Investment Advice for Workers & Retirees," had been delivered there.

Source: Napa-net.org, November 2020

2020 Required Amendments Have Little Impact on 401k Plans

The IRS released Notice 2020-83. But the news this year for many 401k plans is "no news," as there is only one change required this time around. And that single change affects only 401k plans that are affected by a new law provision that counts "difficulty of care payments" as "compensation" for purposes of annual additions.

Source: Compliancedashboard.net, November 2020

2021 Annual Plan Compliance Review

Offering a 401k plan can be challenging and meeting your important fiduciary responsibilities can seem overwhelming. Administering a plan and managing its assets require certain actions and involve specific fiduciary responsibilities. This 8-page checklist will help guide you through the process.

Source: Employeefiduciary.com, November 2020

Form 5500 Penalties Increased

By how much did the SECURE Act increased IRS Late Filing Penalties for Form 5500? How can you avoid them?

Source: Belfint.com, November 2020

Rules for Retaining Benefit Plan Records

When paper documents are overwhelming, electronic records can be a safe and convenient fix, as long as employers follow proper guidelines. This article reviews the legal requirements and suggests guidelines to follow.

Source: Plansponsor.com, November 2020

IRS Issues 2020 Required Amendments List for Qualified Retirement Plans and 403bs

The IRS on Nov. 20 issued the 2020 list of required amendments for individually designed plans qualified under Internal Revenue Code Sections 401(a) and 403(b). The list is contained in Notice 2020-83.

Source: Ntsa-net.org, November 2020

Year-End Compliance Update for Retirement Plans

As 2020 draws to a close, this is a good time for employers sponsoring retirement plans to wrap up year-end compliance issues and prepare for the upcoming year. Here is a quick list of topics that plan sponsors may want to consider as 2021 approaches.

Source: Millerjohnson.com, November 2020

How Do Furloughed Employees Impact Plans at Year-End?

Are there any plan-related issues concerning furloughed employees that need to keep in mind for year-end? This piece focuses on four ways furloughs impact your retirement plan.

Source: Dwc401k.com, November 2020

Safe Harbor Match Notice Not Distributed?

The barrage of changes introduced by the SECURE Act, closely followed by the CARES Act, along with furloughs, remote work, and all the work-life changes of the pandemic year 2020 may have resulted in administrative errors in plan operations, such as missed notice distributions. So now what?

Source: Belfint.com, November 2020

Pooled Plan Provider Registration Regulations Published

The final regulations from the DOL outlining registration requirements for pooled plan providers of pooled employer plans were published in the Federal Register. These regulations are effective upon this publication. Changes of primary interest are outlined here.

Source: Ascensus.com, November 2020

IRS Finalizes Life Expectancy Table Changes Affecting Required Minimum Distributions

The IRS has now finalized guidance that adjusts the life expectancy tables and applicable distribution period tables that plan administrators use to calculate the RMDs. The regulations apply to RMDs taken on or after January 1, 2022. The new regulations generally reflect longer life expectancies than the prior tables used. For example, a retired 401k participant whose RMD was calculated using the prior Lifetime Table was estimated to have a lifetime of 25.6 years (from age 72). Under the new tables, that same participant would be estimated to live 27.4 more years.

Source: Tri-ad.com, November 2020

DOL Announces 401k PEP Registration Requirements

The Department of Labor announced a final rule establishing registration requirements for pooled plan providers. The rule implements the registration requirements for pooled plan providers pursuant to the SECURE Act.

Source: 401kspecialistmag.com, November 2020

Final RMD Table Changes

As a result of a general trend toward longer life expectancies, the IRS issued final regulations for the life expectancy and distribution period tables used to calculate required minimum distributions from qualified retirement plans and individual retirement accounts and annuities.

Source: Principal.com, November 2020

Solutions for Missing Participants and Uncashed Checks

A SPARK Institute forum reviewed recommendations on missing participants and uncashed checks from the GAO and the ERISA Advisory Council. Until guidance is issued about transferring amounts to state unclaimed property funds, plan sponsors will have to rely on the limited guidance already given.

Source: Plansponsor.com, November 2020

IRS Increases User Fees for Various Qualified Retirement Plan Filings

The IRS has provided an early release of increases to user fees for certain letter ruling and determination letter requests submitted with Employee Plans Rulings and Agreements that are scheduled to take effect on January 4, 2021.

Source: Hallbenefitslaw.com, November 2020

IRS Proffers Proposed Regulations for Qualified Plan Loan Offsets

The IRS has issued proposed regulations for determining whether an offset for an outstanding retirement plan loan receives the extended rollover period for qualified plan loan offsets provided for by the Tax Cuts and Jobs Act of 2017.

Source: Hallbenefitslaw.com, November 2020

DOL Shifts Focus From ESG to Pecuniary Factors in Final Rule

The Final Rule requires that fiduciaries evaluate investment opportunities based upon pecuniary factors. However, if fiduciaries are unable to distinguish investments based on pecuniary factors, the Final Rule permits fiduciaries to consider non-pecuniary factors as a tie-breaker provided that they comply with the Final Rule's documentation requirement. Like the Proposed Rule, the Final Rule includes restrictive conditions for investments used as a plan's qualified default investment alternative. This article describes the Final Rule's key features, including notable differences from the Proposed Rule.

Source: Groom.com, November 2020

The DOL Strikes Back

For three years, there was relative peace in the land of Department of Labor guidance. DOL investigations continued apace and memories of the 2015-2017 battles over the DOL fiduciary rule began to fade. Then came the summer of 2020. Starting in early June and running at a breakneck pace through August, the DOL struck back in what may be one of its most productive guidance periods ever.

Source: Napa-net.org, November 2020

Seizing the Advantage With Plan Restatements

Plan Restatement is a regular event that catches many employers off-guard. With a little preparation, however, 401k sponsors can prepare for and even take advantage of this IRS requirement.

Source: Alliant401k.com, November 2020

Can You Destroy the Paper Records for an ERISA Plan and Retain the Records in Electronic Form?

If your company has run out of storage space for paper records, including those relating to our employee benefit plans, can you retain these records solely in electronic form and destroy the paper records for your ERISA plans? The answer is yes, ERISA plan records may generally be maintained electronically so long as you comply with certain rules. Those rules are summarized here.

Source: Thomsonreuters.com, October 2020

Your [Es]cheating Heart ... Might Be Useful to Retirement Plans Dealing With Missing Participants

Retirement plan administrators have for years sung the sad lament of what to do with missing participants. Ol' Hank Williams himself could have written a hit song about the problem. Recent guidance from the IRS may have the retirement community singing a slightly different tune, however.

Source: Jdsupra.com, October 2020

DOL Announces Final ESG Rule

The Department of Labor announced a final rule that updates and clarifies the Department's investment duties regulation in 29 CFR 2550.404a-1. The final rule intends to provide clear regulatory guideposts for fiduciaries of private-sector retirement and other employee benefit plans in light of recent trends involving environmental, social, and governance investing.

Source: Dol.gov, October 2020

DOL to Issue Guidance, Ramp up Investigations on Cybersecurity

The Department of Labor is working on a guidance package addressing cybersecurity issues as they relate to plan sponsors and third-party providers, a key official said Oct. 28. He also expects to see more focus in the department's investigations on the adequacy of various cybersecurity programs, especially for large plans in terms of making sure the providers they hire are observing good cybersecurity practices.

Source: Napa-net.org, October 2020

Solving the Mystery of What a TPA Does

Whether it's through poor marketing or a lack of understanding by plan sponsors, many people don't know what a TPA does. This article is written to solve some of the mysteries of TPAs and for you to understand their role and why it's so important to have one that will do a quality job.

Source: Jdsupra.com, October 2020

CARES Act 401k Compliance Clean Up

The CARES Act provides several optional coronavirus-related relief provisions that employers may choose to incorporate into their 401k and other retirement plans. Those provisions include penalty-free benefit distributions of up to $100,000, a doubled maximum participant loan amount, and a one-year suspension of loan repayments for coronavirus-affected participants. Other relief provisions apply to participants who are not CAPs, such as the right to skip required minimum distributions for 2020. This article provides details on these relief provisions.

Source: Gct.law, October 2020

IRS Updates Guidance on Qualified Plan Distributions to State Unclaimed Property Funds

The IRS recently published new guidance on the tax withholding and reporting consequences associated with qualified retirement plan distributions to state unclaimed property funds. In Revenue Ruling 2020-24, the IRS clarified that distributions from qualified retirement plans to state unclaimed property funds are subject to both federal income tax withholding and 1099-R reporting requirements.

Source: Twrblog.com, October 2020

EBSA Enforcement Statistics from Fiscal Year 2020

The Employee Benefits Security Administration enforces ERISA laws and regulations, including conducting civil and criminal investigations. EBSA investigations often result in recovering money from enforcement actions, voluntary fiduciary correction programs, abandoned plan programs, and informal complaint resolution. Enforcement statistics from the fiscal year 2020 provide some insights on future enforcement efforts by EBSA.

Source: Bsllp.com, October 2020

Few Powering Up With Electronic Disclosure

When the DOL finalized a rule in May that permitted default electronic delivery of retirement plan disclosures, recordkeepers, and plan sponsors welcomed the move by saying it will increase participant engagement and cut mailing costs. While those points still hold, since the rule went into effect July 27 there hasn't been much movement to implement default electronic disclosure programs.

Source: Pionline.com, October 2020

Few Retirement Plans Need Year-End Amendments

Most retirement plan sponsors won't face year-end amendment deadlines in 2020, but a few may need to adopt amendments to reflect changes in law or plan design. This article summarizes the amendments that may be required by year-end for qualified defined contribution and defined benefit plans, 403b plans, and one amendment for some nonqualified deferred compensation plans.

Source: Mercer.com, October 2020

401k Plans Have Options to Comply With New Mandate for Part-Time Employees

The SECURE Act was passed to increase participation in 401k plans. One way to reach that goal was a new mandate to track long-term, part-time employees and require that they be allowed to make salary deferrals. Now amid an ongoing pandemic, employers need to manage the implementation of this mandate, but some options may be simpler to use and even more favorable for participation by part-time employees.

Source: Dwt.com, October 2020

DOL Restores Over $3.1 Billion to Employee Benefit Plans, Participants, and Beneficiaries, the Most Ever

The DOL's Employee Benefits Security Administration issued its fiscal year 2020 enforcement fact sheet highlighting the Agency's recovery of over $3.1 billion in direct payments to plans, participants, and beneficiaries in FY 2020. In FY 2020, EBSA conducted 1,122 civil investigations. Moreover, EBSA's Benefits Advisors closed more than 171,000 inquiries, many of which came through EBSA's toll-free number and website.

Source: Dol.gov, October 2020

401k and Retirement Plan Limits for the Tax Year 2021

On October 26, 2020, the Internal Revenue Service announced that employees in 401k plans will be able to contribute up to $19,500 next year. The IRS announced this and other changes in Notice 2020-79. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2021.

Source: 401khelpcenter.com, October 2020*

401k Plan Sponsors -- Time to Focus on Compliance With the SECURE Act's Eligibility and Vesting Rules

The SECURE Act has new eligibility and vesting rules for long-term, part-time employees. This article summarizes these new requirements and offers some considerations for 401k plan sponsors to weigh as they turn their attention to compliance with these requirements, which are effective for plan years beginning after December 31, 2020.

Source: Verrill-law.com, October 2020

Qualified Birth or Adoption Distributions Q&As

The SECURE Act includes a provision permitting qualified childbirth and adoption expenses to be distributable events. And for its part, the IRS has issued guidance to provide some clarity on the new distributable event and how it works. This is a Q&As relevant to qualified childbirth and adoption expenses as distributable events.

Source: Ntsa-net.org, October 2020

Plan Participant Personal Information: Retirement Plan Asset?

A lawsuit filed in U.S. District Court for the Southern District of Texas, against Shell Oil Company by several participants in the company’s 401k plan, claimed that Shell allowed its plan recordkeeper to use the participants’ personal information to cross-sell other financial products and services outside the plan in breach of its fiduciary duties under ERISA. At the heart of the plaintiff’s case is their contention that 401k plan participant data is a plan asset and the use of that data for nonplan purposes constitutes a breach of fiduciary duty under ERISA. Is participant data a plan asset?

Source: Hallbenefitslaw.com, October 2020

No Signature, No Shoes, No Service

Signing an ERISA plan document or amendment is not a mere formality. Rather, the tax-qualified status of the plan is contingent on properly executed plan documentation and could be revoked were the unsigned document revealed in an IRS audit. This was made clear in a recent IRS Chief Counsel Memorandum that contradicts the holding in an earlier Tax Court Memorandum. Both are summarized here followed by some practical compliance steps.

Source: Eforerisa.wordpress.com, October 2020

IRS Issues Guidance on Payments to State Unclaimed Property Funds

The IRS on Oct. 16 modified guidance and clarified rules to address payments made to state unclaimed property funds. The IRS announced the changes in Revenue Procedure 2020-46 and Revenue Ruling 2020-24.

Source: Asppa.org, October 2020

IRS Publishes Guidance on Withholding and Reporting of Escheated Retirement Plan Accounts

The IRS has issued Revenue Ruling 2020-24, guidance for qualified retirement plans that pay or "escheat" certain accounts of unresponsive or missing participants or beneficiaries to state unclaimed property funds. The guidance addresses the issues of tax withholding and reporting when such amounts are escheated.

Source: Ascensus.com, October 2020

DOL Submits Final ESG Rule to OMB

Release of the DOL's final rule addressing environmental, social, and governance factors in selecting plan investments appears to be imminent. Following a 30-day comment window that ended July 30 and more than 8,000 comment letters, the DOL on Oct. 14 submitted a final rule to the Office of Management and Budget for review.

Source: Ntsa-net.org, October 2020

Qualified Plan Loan Offsets

The Tax Cuts and Jobs Act, enacted in December 2017, made significant changes to the plan loan offset rollover eligibility and tax reporting. The changes add a significant amount of complexity to tax reporting for these loans, and as a result, the industry has been slow to implement the changes. In August 2020, the IRS published proposed regulations that provide more detail on the requirements of the new provisions. Under the new regulations, there are now three different terms for a loan that is distributed, and each has rollover rules specific to it.

Source: Ntsa-net.org, October 2020

The To-Do List for 401k Plans: 2020-2021 Edition

Being a retirement plan sponsor is a tremendous responsibility and the problem is that most plan sponsors don't understand that. Plan sponsors often act passively because they hire retirement plan providers to help them. The problem is that fiduciary responsibility doesn't allow plan sponsors the luxury to be passive when the buck stops with them. So that means you need to be active and understand what's going in the retirement plan industry that can impact your plan. With changes in how retirement plans are run and constant concerns with rampant 401k litigation, here is a to-do list.

Source: Jdsupra.com, October 2020

New Rules Simplify Electronic Delivery to Plan Participants

The DOL has released a new, simplified method for electronically delivering ERISA-mandated notices and disclosures. The new method removes the initial consent requirement and the requirement to obtain new consent following hardware or software changes. The DOL now allows plan sponsors to set e-delivery (rather than print) as the plan's default delivery method. The DOL estimates these new procedures could reduce printing, mailing, and related plan costs by an estimated $3.2 billion over the next decade.

Source: Newportgroup.com, October 2020

IRS Offers Guidance on RMDs considering CARES Act and SECURE Act

The IRS issued Notice 2020-51, which gives guidance on the waiver of required minimum distributions for 2020 from certain retirement plans under the CARES Act and the required beginning date for RMDs under the SECURE Act. The Notice also provides two sample amendments that employers may use to give plan participants and beneficiaries whose RMDs are waived a choice of whether to receive the waived distribution.

Source: Hallbenefitslaw.com, October 2020

New IRS Guidance About New Long-Term Part-Time Employee Eligibility Rules for 401k Plans

This article focuses on perhaps the biggest responsibility for employers that will begin with their 2021 plan years, keeping track of long-term part-time employees and allowing them to make deferral elections under their 401k plans.

Source: Employeebenefitslawreport.com, October 2020

Puerto Rico Qualified Retirement Plans: 2020 Year-End Amendments Deadline Coming Soon

Unlike the Internal Revenue Service, which each year issues a list of required amendments to U.S.–qualified plans and their respective adoption due dates, the Puerto Rico Department of the Treasury seldom requires mandatory amendments to Puerto Rico–qualified plans. The year 2020, however, has been an exception to the general rule. Specifically, if during 2020, a Puerto Rico–qualified plan allowed participants to receive in-service hardship withdrawals on account of either the COVID-19 pandemic or the earthquakes that affected the island at the beginning of the year, the official plan document must be amended by December 31, 2020.

Source: Ogletree.com, October 2020

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 72, certain participants of a tax-qualified retirement plan may be required by federal tax law to withdraw a minimum amount from such a plan each year. These mandatory distributions are known as "required minimum distributions."

Source: Legacyrsllc.com, October 2020

What are the Available Safe Harbor Plan Formulas?

401k plans are subject to nondiscrimination tests to ensure that a disproportionate share of the elective participant deferral is not those of the HCEs. The discrimination tests can be avoided if the employer sponsors a safe harbor plan. Safe harbor plans allow employers to disregard the nondiscrimination test if they make a generous, pre-approved employer contribution amount to all eligible employees. The minimum safe harbor employer contribution formulas available are reviewed here.

Source: Belfint.com, October 2020

Correction Options for Retirement Plan Errors

In a highly regulated industry with complicated rules that always have exceptions (except when the exception does not apply) sooner or later a failure to follow the plan document will take place. Such operational errors can be corrected through the IRS Employee Plan Compliance Resolution System in one of three ways.

Source: Belfint.com, October 2020

Round One of SECURE Act IRS Guidance Clarifies Some Key Issues for Retirement Plans

IRS Notice 2020-68 provides the first round of guidance on several provisions under the SECURE Act and the Bipartisan American Miners Act of 2019. The key qualified plan provisions are highlighted and summarized here.

Source: Groom.com, September 2020

Interim Final Rule Published for Lifetime Income Projections

Published in the Federal Register is a DOL interim final rule to guide DC retirement plans that must begin to furnish projections of potential lifetime income streams to participants. Lifetime income projections are required under provisions of the SECURE Act, which mandates that a participant's accrued benefit must periodically be reflected on their benefit statements as an estimated lifetime income payment stream.

Source: Futureplan.com, September 2020

DOL Publishes New SECURE Act Guidance Regarding Lifetime Income Disclosures

The DOL has announced new guidance, in the form of an interim final rule, implementing the lifetime income disclosure requirement for DC plans that was added to ERISA by the 2019 SECURE Act.

Source: Insidecompensation.com, September 2020

IRS Provides Additional SECURE Act Guidance

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

Lifetime Income Disclosures for DC Plans: Interim Final Rule

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

New Defined Contribution Plan Disclosures

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

IRS Issues Guidance on Qualified Birth or Adoption Distributions

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

IRS Expands List of Qualified Individuals Eligible for Coronavirus-Related Distributions

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

UPDATE: SECURE Provides New Option to Help Pay for Birth or Adoption

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

Implementing Long-Term Part-Time Employee 401k Elective Deferrals

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

IRS Revenue Procedure 2020-40 Provides Extensions of Retirement Plan Amendment Deadlines

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

Retirement Plan Update: New DOL Disclosures and Updated IRS Notices

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


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