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.

401k Plans and Audits

Generally, retirement plans sponsored by companies with 100 or more participants are required to submit an independent audit report along with their annual Form 5500 filing. Furthermore, both the DOL and the IRS have the authority to audit retirement plans. Therefore, it is advisable for plan sponsors to always be prepared for an audit. This article provides tips on how to get ready, including what to anticipate when notified of an audit.

Source: Colonialsurety.com, September 2025

Is Your Retirement Plan Correction Playbook Ready?

Retirement plans offer significant advantages to employees, but their administration can be quite complex. Even the most attentive plan sponsors can encounter errors. Since it's likely that mistakes will happen at some point during your retirement plan's duration, it's essential to have a strategy in place to effectively and promptly address any issues that arise.

Source: Brickergraydon.com, September 2025

Final Catch-Up Rules: What Now? (Spoiler Alert: There is No Extension)

The IRS has released final regulations regarding changes to catch-up contribution provisions under SECURE 2.0, following earlier proposed regulations. These final regulations address various administrative questions and clarify ambiguities that arose after the enactment of SECURE 2.0. This overview highlights key issues that have been resolved by these regulations.

Source: Beneficiallyyours.com, September 2025

Key Provisions of SECURE Act 2.0 and Implementation Challenges for Defined Contribution Plans

The SECURE Act 2.0, passed in late 2022, is significantly transforming the retirement landscape with a range of phased-in provisions. As we move through 2025, plan sponsors, payroll providers, and administrators will encounter new operational and compliance challenges. This article highlights the key provisions and provides insights on how to navigate their effective implementation for defined contribution plans.

Source: Withum.com, September 2025

New DOL Agenda Includes New ESG, Fiduciary Rules

The DOL has released its regulatory agenda for Spring 2025. This updated agenda includes topics such as Environmental, Social, and Governance issues, the fiduciary rule, auto-portability, pharmacy benefit managers, electronic disclosure, lost and found programs, employee stock ownership plans, and interpretative bulletin 95-1. The DOL emphasized that these actions aim to alleviate burdens on employers and employees, with a focus on regulatory changes regarding ESG, independent contractors, and PBMs.

Source: Psca.org, September 2025

PR Treasury Issues Rules to Retirement Plan Sponsors That Adopted SECURE 2.0 Act Amendments

Puerto Rico qualified retirement plans must meet the qualification requirements of the Puerto Rico Internal Revenue Code and may also need to comply with U.S. Code requirements for participants who are residents of the U.S. On August 26, 2025, the Secretary of the Puerto Rico Treasury Department issued Administrative Determination No. 25-03 to outline the qualification rules related to the amendments from the Setting Every Community Up for Retirement Enhancement Act of 2022 Act) for these retirement plans.

Source: Mcvpr.com, September 2025

PR Amends Tax Rules That Impact Certain Distributions From Retirement Plans

On July 17, 2025, Governor Jenniffer Gonzalez Colon signed Act 65-2025, amending Section 1021.02 of the Puerto Rico Internal Revenue Code. The amendment exempts lump sum distributions from Puerto Rico qualified retirement plans from the Alternative Basic Tax, provided they are subject to the preferential tax rate of 10% under Section 1081.01(b) of the PR Code. This is a short review.

Source: Mcvpr.com, September 2025

Long-Term Part-Time Employees

The "long-term part-time employee" rules have been in effect for almost two years, and most retirement plan sponsors and service providers should be familiar with them by now. However, some may still be in the process of implementing these rules or reviewing their current practices. This summary aims to clarify the current LTPT requirements to ensure understanding among all parties involved.

Source: Legacyrsllc.com, September 2025

2025 Statistics for 401k Plan Benchmarking

Benchmarking employee benefits plans allows companies to evaluate their offerings against others, revealing trends in recruiting and retention while highlighting areas for improvement in plan design. This process goes beyond fiduciary concerns, encompassing aspects like deferrals, participation rates, and overall competitiveness of the 401k plan. The article includes links to various benchmarking statistics from 2025 surveys to aid in this evaluation.

Source: Ifebp.org, September 2025

Understanding Plan Participant Disclosures and Notices (Pt. 1 of 3)

Plan sponsors must provide essential communications and disclosures to plan participants to ensure transparency and protect their interests. Watkins Ross has compiled a list of key required notices and disclosures for defined contribution plans, along with distribution deadlines to support plan sponsors in their responsibilities.

Source: Watkinsross.com, August 2025

IRS Guidance on Uncashed and Reissued Checks: An Opportunity to Review Payment Practices

The IRS issued Revenue Ruling 2025-15, which clarifies tax withholding and reporting obligations for stale and reissued retirement plan distribution checks. The ruling reaffirms that payors who have been following previous guidance (Revenue Ruling 2019-19) do not need to change their existing practices. It also states that payors cannot reverse required withholding or adjust notifications due to checks not being cashed. While the content was expected, the Ruling provides necessary clarity for payors and plan administrators by summarizing these principles in one release.

Source: Morganlewis.com, August 2025

IRS Issues Proposed Automatic Enrollment Guidance

The IRS recently released proposed guidance regarding the automatic enrollment requirements introduced by SECURE 2.0 for new 401k and 403b plans established after December 29, 2022. This guidance, referred to as "Mandatory Auto Enroll," mandates that employers automatically enroll employees at a minimum rate of 3% of their compensation, with annual increases of at least 1% up to a cap of 10%. Since the original legislation lacked detailed operational specifics, this IRS Guidance aims to clarify those details. However, it's important to note that the guidance is still in proposed form, and changes may occur before it is finalized.

Source: Legacyrsllc.com, August 2025

The New Priorities: Why Plan Sponsors Are Shifting Focus from Cost-Cutting to Cybersecurity and AI

The focus of 401k plan sponsors is shifting away from prioritizing cost reduction, which was previously their top concern. According to Escalent's 2025 Retirement Planscape report, only 40% of plan sponsors now list cutting expenses as a priority, down from 50% the previous year. Instead, concerns about cybersecurity and artificial intelligence have taken center stage, indicating a significant change in priorities driven by fear rather than cost.

Source: Jdsupra.com, August 2025

Oh, Fine! Keep the Money: The New IRS Overpayment Guidance

Given the substantial amounts of money that circulate within a retirement plan and are allocated to various participants, it's not unusual for excessive funds to be deposited into an individual’s plan account. This article examines the existing correction methods for addressing overpayment failures and highlights the new guidance provided in Notice 2024-77 regarding such overpayments.

Source: Ferenczylaw.com, July 2025

The Essential Role of Plan Sponsors in Participant Beneficiary Designations

As a plan sponsor, your responsibilities go beyond managing retirement plans; you also play a crucial role in securing the financial future of participants and their beneficiaries. A key part of this role involves assisting participants with the designation and regular updating of their beneficiaries. This article emphasizes the significance of accurate beneficiary designations, the risks associated with neglecting this aspect, and the proactive measures sponsors can take to educate and support participants.

Source: Psca.org, July 2025

DOL Supports Employers in Forfeiture Allocation Litigation

In a notable turn of events regarding ERISA forfeiture allocation cases, the DOL has submitted an amicus brief supporting the employer in Hutchins v. Hewlett Packard, a Ninth Circuit case, the first forfeiture case to reach an appellate court. This marks the DOL's first formal stance on the issue, which is usually disfavored by courts, as they prefer legal positions to be established through regulations rather than litigation.

Source: Wagnerlawgroup.com, July 2025

DOL's Plan Forfeiture Amicus Brief "Significant," Legal Experts Say

Legal experts view the DOL's recent amicus brief supporting HP Inc. in a 401k-forfeiture complaint as a significant development that could lead to more favorable court rulings for plan sponsors. The DOL stated that the alleged use of forfeited employer contributions in this case would not violate ERISA. Experts note that this marks a shift in the DOL's historical stance towards a more employer-friendly approach, which could influence future legal outcomes.

Source: Plansponsor.com, July 2025

IRS Clarifies Tax Rules for Uncashed Retirement Plan Distribution Checks

The IRS has released updated guidance in Revenue Ruling 2025-15 regarding federal tax withholding and reporting for uncashed retirement plan distribution checks. This ruling specifically addresses situations where an individual receives a distribution check that remains uncashed and is later voided, leading to the issuance of a second check. This guidance aims to standardize the treatment of these scenarios and enhance compliance related to retirement distributions that recipients do not cash immediately.

Source: Planadviser.com, July 2025

IRS Issues Further Guidance on Withholding and Reporting of Uncashed Checks

Revenue Ruling 2025-15, issued by the IRS on July 16, provides guidance for retirement plan administrators regarding withholding and reporting obligations related to uncashed distribution checks. This ruling builds on earlier guidance from Revenue Ruling 2019-19 and addresses issues surrounding uncashed checks that are canceled and later reissued. While the ruling offers helpful insights, the complexities of uncashed check situations mean it may not fully resolve the difficulties faced by plans.

Source: Groom.com, July 2025

IRS Clarifies That Failure to Cash Checks Does Not Affect Withholding or Reporting

Revenue Ruling 2025-15 offers guidance on the withholding and reporting responsibilities related to plan participants or beneficiaries who do not cash their distribution checks and subsequently receive replacement checks. The ruling aligns with general constructive receipt principles, indicating that individuals cannot alter their tax obligations by ignoring or failing to cash compensation. Although the ruling does not explicitly discuss constructive receipt, its implications are consistent with these established principles.

Source: Erisapracticecenter.com, July 2025

IRS Issues Guidance on Uncashed Retirement Plan Checks

The IRS has issued Revenue Ruling 2025-15, providing important clarification on the federal tax withholding and reporting obligations of retirement plan administrators when a distribution check is issued but not cashed, and a subsequent check is later issued to the participant. This guidance is especially significant for plan administrators managing situations involving missing participants or unclaimed distribution checks. The article highlights the main aspects of the ruling.

Source: Huschblackwell.com, July 2025

Guide to Dealing With DOL Investigations of Retirement Plans: Updated

The DOL frequently investigates fiduciaries and service providers of plans under ERISA to ensure compliance with Title I of ERISA. Understanding the DOL's enforcement authority and investigative procedures can help alleviate the administrative burden, costs, and stress associated with such investigations. The article provides guidance on what to expect during a DOL investigation and offers practical tips for effectively managing the process.

Source: Groom.com, July 2025

IRS Issues Guidance on Treatment of Uncashed Retirement Plan Distribution Checks

On July 16, the IRS released guidance regarding withholding and reporting related to uncashed retirement plan distribution checks, as detailed in Revenue Ruling 2025-15.

Source: Asppa-net.org, July 2025

Fiduciary Breach Suit Results From Beneficiary Disclosures

A lawsuit questioning whether providing information about designated beneficiaries on a participant statement could result in a fiduciary breach has been dismissed by the U.S. Court of Appeals for the Fifth Circuit. The case, LeBoeuf v. Entergy Corp., involved claims that the quarterly plan statements sent to participant Alvin Martinez contained "materially misleading information" about his beneficiary designations following his remarriage. Ultimately, the court ruled in favor of the defendants, dismissing the allegations.

Source: Asppa-net.org, July 2025

401k Forfeiture Litigation: Implications for Plan Sponsors

Since 2023, there has been a surge of class-action lawsuits alleging violations of fiduciary duties under ERISA concerning the management of 401k forfeitures. Plaintiffs claim that those responsible for deciding the use of forfeited funds have a fiduciary duty to the plan participants who remain in the plan. They argue that ERISA mandates these decisions prioritize the interests of participants, particularly in reducing administrative costs. Some plaintiffs have had limited success in overcoming motions to dismiss their cases, highlighting the legal vulnerabilities in the handling of 401k forfeitures. Fortunately, if you sponsor a plan that allows discretion in how to use forfeitures, there are several options to reduce litigation risk concerning their use.

Source: Bsk.com, July 2025

Timely Use Forfeitures

The IRS has made its stance clear: if you have plan forfeitures from 2024 or earlier, you must use them by December 31, 2025, or you could face compliance issues. Acknowledging that many plan sponsors may be unaware of this requirement -- whether due to lack of knowledge or oversight -- the IRS is providing a one-time grace period.

Source: Jdsupra.com, July 2025

EBSA Nixes Obsolete Interpretive Bulletins Relevant to Retirement Plan Admin

On June 30, the Department of Labor's Employee Benefits Security Administration announced the removal of certain interpretive bulletins related to the administration of retirement plans, deeming them obsolete and potentially confusing. This action, formalized in a Direct Final Rule, targets specific bulletins under ERISA that the DOL no longer considers necessary due to subsequent guidance and the implications of the 1978 Reorganization Plan No. 4. The DOL's objective is to reduce confusion and complexity in the regulatory framework.

Source: Asppa-net.org, July 2025

Legislative Change on the Horizon: What Plan Sponsors Need to Know

As we enter the latter half of 2025, plan sponsors and professionals in the retirement industry are keeping a vigilant eye on various legislative proposals that could influence the future of 401k plans in the coming years. This year, two notable bills were introduced in the Senate -- the Helping Young Americans Save for Retirement Act and the Protecting Americans' Retirement Savings Act -- underscore the federal government's continued commitment to broadening access to retirement plans while ensuring the protection of these vital investments.

Source: Savantwealth.com, June 2025

Mid-Year Regulatory and Legislative Update for DC Plan Sponsors

With regulatory and legislative priorities starting to take form, it's important to consider potential developments for the remainder of 2025 and into 2026. Initial drafts of the One Big Beautiful Bill Act did not propose any changes to retirement plan contributions or taxation. However, a key area to monitor is the inclusion of permissible investments in defined contribution plan menus, particularly regarding alternative investments and values-based investment strategies. This is a review of major issues.

Source: Ifebp.org, June 2025

Important Retirement Plan Compliance Roadmap

Recent confirmation hearings for the potential head of the Employee Benefits Security Administration highlighted likely future issues for retirement plans. The nominee emphasized that retirement plans and fiduciaries should operate within established fiduciary guidelines. Key regulatory priorities mentioned include: deregulating the enforcement of employee stock ownership plans, modernizing 401k investment options, enhancing cybersecurity, addressing plan forfeitures and missing participants, and expanding access to retirement and health plans.

Source: Oregonbusinessreport.com, June 2025

Form 5500 Season is in Full Swing: Are Wheels Turning (or are They Spinning)?

The Form 5500 is an annual report required by the DOL and the IRS for most retirement plans, like 401k plans, and certain health care plans. Accurate and timely filing is crucial, as both the DOL and IRS can impose substantial penalties for errors or late submissions. These agencies use Form 5500 to identify plans for potential audits, often targeting those with entries that are inconsistent or illogical. The article provides reminders and tips to help decrease the likelihood of being selected for an audit by the DOL or IRS.

Source: Hawleytroxell.com, June 2025

VFCP and Late Deposit of Contributions

The DOL's Voluntary Fiduciary Correction Program helps employers and plan officials rectify certain breaches of fiduciary duties under ERISA, enabling them to avoid civil enforcement actions and penalties. A key update effective March 17, 2025, allows for the self-correction of delinquent contributions and loan payments within 180 days of withholding or receipt, as long as lost earnings do not exceed $1,000. This change simplifies the process for plan sponsors to address common operational issues without a formal VFCP application.

Source: Consultrms.com, June 2025

QACA and EACA: Considerations for Plan Sponsors

When considering a Qualified Automatic Contribution Arrangement or an Eligible Automatic Enrollment Arrangement for a plan, plan sponsors need to be aware of several factors. While these arrangements offer benefits, they are complex and involve specific timing requirements, which may necessitate additional administration. Plan sponsors need to understand these complexities during the evaluation process before committing to an arrangement.

Source: Fidelity.com, June 2025

Don't Forget About the IRS When Correcting Delinquent Plan Contributions

Employers who fail to promptly deposit participant deferrals and loan contributions into their employer-sponsored retirement plans may face penalties from the DOL for violating their fiduciary responsibilities. Beyond DOL penalties, delays in deferring contributions can lead to prohibited transactions, subjecting employers to an excise tax under Section 4975 of the Internal Revenue Code. While relief from this excise tax is available, it necessitates proactive measures from plan sponsors.

Source: Brickergraydon.com, June 2025

New DOL/EBSA Opinion Letter Program Offers a Path to Clarity for Plan Sponsors

On June 2, 2025, the DOL introduced an Opinion Letter Program to enhance compliance assistance across five key enforcement agencies, including the Employee Benefits Security Administration. This initiative aims to offer employers and stakeholders clear guidance on complex employee benefit plan issues. Deputy Secretary of Labor Keith Sonderling highlighted the program's significance, noting that opinion letters provide essential, practical guidance for both workers and businesses.

Source: Benefitslawadvisor.com, June 2025

DC Retirement Plan Default Beneficiary Hierarchy

Many participants in defined contribution retirement plans often neglect to designate a beneficiary to receive their remaining account balance after their death, despite efforts by plan sponsors and administrators to emphasize its importance. When a valid beneficiary designation is not in place, the plan's default beneficiary hierarchy is utilized. This also applies if designated beneficiaries do not survive the participant or if they refuse their interest in the account. This article discusses key considerations for plan sponsors concerning their plan's default beneficiary hierarchy.

Source: Verrill-law.com, June 2025

Avoiding Litigation in the Aftermath of Cunningham v. Cornell University: Procedural Protections for Plan Sponsors

Following the Supreme Court's ruling related to fiduciary duties in Cunningham v. Cornell University, there's speculation about a surge in litigation, but a significant increase in meritless claims is unlikely. Instead, fiduciary lawsuits are expected to commonly include prohibited transaction claims along with other allegations such as excessive fees or breaches of duty. The lower threshold set by the ruling may enable these prohibited transaction claims to move past the initial pleading stage, extending litigation into discovery and further proceedings. However, plan sponsors can reduce litigation risk and associated costs by consistently following specific procedural practices, regardless of the ruling's overall impact on litigation rates.

Source: Reinhartlaw.com, June 2025

En Garde! The Challenge With Forfeitures

Recent news has highlighted an increase in ERISA class action lawsuits concerning the use of forfeitures in retirement plans. This issue impacts plans with employer contributions that have a vesting schedule. To mitigate the risk of being targeted by these lawsuits, many employers are amending their plans or establishing clear written administrative policies outlining the handling of forfeitures. The goal is to eliminate discretion in managing forfeitures, thereby reducing the potential for claims of fiduciary breach.

Source: Ferenczylaw.com, June 2025

DOL Rolls Out Updates to Opinion Letter Program

The DOL's Employee Benefits Security Administration has modernized its opinion letter program to improve compliance support. Announced on June 2, these changes aim to enhance the assistance provided to the public in understanding their rights and responsibilities under the law. Opinion letters offer official interpretations from the DOL on how laws apply to specific situations, providing clarity on regulations. Deputy Secretary of Labor Keith Sonderling emphasized the importance of these letters in offering clear and practical guidance for both workers and businesses.

Source: Napa-net.org, June 2025

New Voluntary Fiduciary Correction Program

The new Voluntary Fiduciary Correction Program introduces a Self-Correction Component that allows practitioners to use the DOL Calculator for self-correction of errors. In return for the self-correction, plan sponsors will receive an email acknowledgment of receipt rather than a "no-action" letter. The key difference between self-correction submissions and traditional VFCP filings is that self-correction only requires the retention of supporting documents, while filings necessitate the submission of those documents. Despite the difference, self-correctors must still prepare and keep all documentation as if filing a regular VFCP application.

Source: Belfint.com, May 2025

How Much Do Companies Typically Match on 401k

Employee matching contributions are a prevalent feature in employer-sponsored retirement plans, with 98% of employers offering some form of match to enhance employee savings. Beyond being a benefit, matching contributions serve as a strategic tool for employers to attract and retain top talent, boost productivity, and increase engagement. By linking matches to vesting schedules, employers can incentivize employees to remain with the company longer, resulting in increased savings for employees and better utilization rates for employers.

Source: Myubiquity.com, May 2025

Timely Use of Forfeitures

The IRS mandates that forfeitures in defined contribution plans must be utilized within 12 months after the end of the plan year in which they occur. Failure to comply with this timeline is deemed a compliance issue. Many plan sponsors unknowingly violate this requirement, leading to potential problems. However, the IRS is currently providing a temporary reprieve for affected plan sponsors, allowing them to resolve these compliance failures if they take action promptly.

Source: Legacyrsllc.com, May 2025

Mandatory Automatic Enrollment for New 401k/403b Plans Gets Much Needed Guidance

SECURE 2.0 mandated, for the very first time, a special automatic enrollment arrangement be added to all new 401k and 403b plans. In this comprehensive article, Groom principals Elizabeth Thomas Dold and David Levine explore essential facets of the IRS proposed regulations covering this new mandate. They discuss which plans fall under the regulations, the functioning of automatic enrollment features, and any applicable exceptions. Additionally, the article details the necessary compliance steps and highlights specific considerations regarding mergers, acquisitions, and multiple employer plans.

Source: Groom.com, May 2025

DOL Issues Temporary Enforcement Policy for Small Amount Transfers to State Unclaimed Property Funds

The DOL recently released Field Assistance Bulletin 2025-01, which offers a temporary enforcement policy concerning the transfer of small retirement plan benefits to state unclaimed property funds. This guidance aims to assist fiduciaries in meeting their ERISA obligations to locate participants and ensure they receive their retirement benefits, especially regarding uncashed checks and amounts that have been involuntarily distributed. However, plan fiduciaries are advised to carefully consider and consult legal counsel on the appropriateness of escheatment in different situations.

Source: Morganlewis.com, May 2025

Controlled Group or Affiliated Service Group? What That Means for Your 401k Plan Compliance

If your business is part of a Controlled Group or an Affiliated Service Group, it may face compliance issues concerning its 401k plan. Misunderstandings about these affiliations can lead to severe consequences, including plan disqualification, costly corrections, IRS penalties, and employee dissatisfaction. The positive aspect is that many of these issues can be resolved if addressed promptly. The article outlines the potential consequences, corrective actions, and strategies to safeguard your plan against audit risks.

Source: Employeebenefitslawgroup.com, May 2025

New VFCP on Late Deposits

The issue of timely deferral deposits remains a contentious topic in the industry, largely due to the vague language used in regulations that leaves room for interpretation. According to DOL Regulation, deferral deposits should be made at the "earliest" reasonable time but must be completed by the fifteenth business day following the month of withholding. This regulation also applies to loan repayments withheld from employee pay. After discussions with regulators, it appears that most pension professionals avoid delaying deposits until the mandated deadline. However, the debate continues regarding whether there can be some flexibility for late deposits.

Source: Belfint.com, May 2025

DOL Updates Voluntary Fiduciary Correction Program to Add a New Self-Correction Option

The DOL has updated its Voluntary Fiduciary Correction Program to introduce a new Self-Correction Component. This allows plan sponsors and fiduciaries to self-correct certain prohibited transactions, such as delinquent contributions and loan repayments, without submitting a full VFCP application, under specific circumstances. They can do this by providing a notice and required information to the DOL. Additionally, the DOL has amended the related Prohibited Transaction Exemption to broaden the excise tax relief available for transactions corrected under the SCC.

Source: Robertsandholland.com, May 2025

Missing Participants

When a company sponsors a 401k plan, it can help attract top talent, retain employees, and improve morale. However, after an employee leaves, the plan administrator is still responsible for delivering plan notices and communications until the participant's account is fully paid out. This ongoing obligation can be frustrating when participants become unresponsive or difficult to locate, as fiduciary duties require continued efforts to find and engage them. This article reviews some effective best practices to minimize and address the challenges posed by missing or nonresponsive participants.

Source: Consultrms.com, April 2025

Uncashed Distribution Checks

Uncashed distribution checks pose a growing fiduciary risk and administrative burden for qualified plan sponsors, especially as small-balance and separated participant accounts increase. These uncashed checks remain plan assets until cashed or resolved, with balances returning to participant accounts after 180 days, potentially triggering additional plan audits. Plan administrators should proactively minimize uncashed checks and address unresolved cases to reduce costs and compliance risks. This article reviews the issue and offers suggestions to minimize it.

Source: Consultrms.com, April 2025

Two Approaches to the Roth Catch-Up Mandate: Implications for Plan Sponsors

The SECURE 2.0 Act's Section 603, effective January 1, 2026, requires employees earning above a certain threshold (originally $145,000) to make catch-up contributions only as Roth (after-tax) contributions rather than pre-tax. This new "Roth catch-up mandate" is prompting DC plan sponsors to reconsider their current catch-up contribution methods, typically either a separate election or single election approach, as each has advantages and disadvantages affected by this change. Both methods are reviewed here.

Source: Alight.com, April 2025

More Discretion, More Documentation: Recovering Overpayments Under Secure 2.0

Under SECURE 2.0, plan sponsors can decide whether to recoup inadvertent benefit overpayments but are no longer required to do so. However, they must document and monitor their decision-making process to fulfill fiduciary duties. Maintaining a consistent process for handling and recording all overpayment decisions helps ensure proper oversight and simplifies audits.

Source: Brickergraydon.com, April 2025

2026 401k Contribution Limit on Track for $1,000 Increase: Milliman

The maximum 401k contribution limit, currently $23,500 for 2025, is projected to increase by $1,000 to $24,500 in 2026, according to Milliman's latest IRS limits forecast. This forecast, based on Consumer Price Index data, predicts the annual adjustment that the IRS typically announces in late fall.

Source: 401kspecialistmag.com, April 2025

Report Raises Eyebrows About Claims of Rampant "Red Flags" in Retirement Plans

An expert criticized a recent analysis highlighting extensive ERISA noncompliance as "scaremongering." In January, the New York-based consulting firm Abernathy Daley released a report claiming that approximately 84% of U.S. retirement plans exhibited at least one "red flag" indicative of a potential violation of ERISA. However, some industry professionals have disputed the firm's assertions regarding the prevalence of compliance risks.

Source: Hrdive.com, April 2025

The DOL's Lost and Found Database Is Live

The DOL has developed a database as part of SECURE 2.0 to assist in locating missing retirement plan participants and beneficiaries. This initiative aims to address the ongoing issue of missing participants, which is a key focus for both the DOL and the IRS. While participation in the database is voluntary for plan sponsors, it can serve as additional evidence that they are fulfilling their fiduciary duty to locate eligible participants for benefits.

Source: Brickergraydon.com, April 2025

IRA Bankruptcy Exemption Increases

Effective April 1, 2025, the maximum bankruptcy exemption for IRAs will increase from $1,512,350 to $1,711,975. This amount will be adjusted for cost-of-living increases and reflects an increase from the original limit of $1,000,000 set by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Source: Ascensus.com, April 2025

User's Guide to SECURE 2.0

Navigating SECURE 2.0 is challenging due to its complexity and lack of a table of contents. To help employers and plan sponsors understand its implications, this guide provides a summary of SECURE 2.0 provisions organized thematically, including distinctions between changes for defined contribution and defined benefit plans. The six accompanying tables outline statutory changes, their effective dates, and whether changes are mandatory or optional for employers. The guide also includes observations from Mercer regarding potential implementation challenges and notes drafting errors that Congress plans to correct.

Source: Mercer.com, April 2025

What Documents Do I Need for a 401k Audit?

Preparing for a 401k audit can raise questions about required documentation. A sample checklist can help guide you, but note that your auditor will tailor requests based on your specific retirement plan. While the checklist might appear extensive, many items will likely be supplied by your plan's third-party administrator or recordkeeper. To facilitate the audit, it's recommended to provide your auditor with online view-only access to the plan. Here is a sample checklist.

Source: Belfint.com, April 2025

Time Is Running Out to Utilize Forfeiture Relief (And How to Avoid Lawsuits)

Lawsuits regarding the misuse of forfeitures in retirement plans are ongoing, with outcomes varying. However, individuals and advisors can proactively implement strategies to avoid these lawsuits. Additionally, there is a limited opportunity to benefit from IRS relief related to built-up forfeitures that haven't been utilized in prior years, with a deadline set for the end of 2025. This article outlines ways to take advantage of this IRS forfeiture relief while also providing guidance on preventing potential lawsuits. By helping clients stay compliant and avoid legal issues, advisors can position themselves as valuable resources.

Source: Penchecks.com, April 2025

Cheats Sheets and Hacks for 401k Plan Sponsors

The author reflects on the significant impact of the Internet in their life, noting its ability to provide vast information and time-saving hacks, particularly in fixing things. They share some lesser-known tips and tricks for 401k plan sponsors to simplify their tasks and enhance efficiency.

Source: Jdsupra.com, April 2025

Roth Treatment of Employer Contributions

SECURE 2.0 includes an optional provision allowing Roth treatment for employer contributions in addition to participant deferrals. In a recent survey, nearly half of plan sponsors indicated they are open to adding this provision, a significant increase from the previous year. Currently, about 20% have already adopted it, while over 25% are considering doing so.

Source: Psca.org, April 2025

SECURE 2.0 in 2025: Here Comes a Big Plan Design Change

As we enter 2025, the implementation of new SECURE 2.0 provisions is imminent. Understanding how these provisions will impact plan design, administration, and costs is essential for effectively advising clients. This knowledge allows you to inform clients about upcoming changes, strategize any necessary administrative adjustments, and coordinate communications with participants.

Source: Penchecks.com, April 2025

What Plan Administrators Need to Know About the 2025 RMD Age Increase

Plan administrators are increasingly focusing on the accuracy of participant birthdates due to upcoming changes in Required Minimum Distributions (RMDs) effective April 1, 2025. Participants who turn 73 in 2024 will need to start taking RMDs from their employer-sponsored retirement plans by this date unless still employed and allowed to defer. Failure to meet this deadline can result in steep penalties: 25% of the missed distribution, or 10% if corrected within two years. Consequently, plan administrators are essential in ensuring compliance and helping participants avoid these penalties. This article reviews several steps towards RMD compliance.

Source: Berwyngroup.com, April 2025

Mandatory Catch-Up Contribution "Rothification" Is Coming to U.S. Savings Plans

The SECURE 2.0 Act mandates that participants aged 50 or older in 401k retirement plans, who are classified as highly compensated (earning at least $145,000, indexed), must make catch-up contributions as Roth contributions rather than pretax contributions. Roth contributions are taxable in the contribution year but allow for tax-free distributions, including earnings. Initially set to take effect in 2024, the implementation has been delayed to 2026 due to administrative readiness concerns. The IRS has introduced proposed regulations to provide guidance on the Roth catch-up contribution requirement for highly compensated participants.

Source: Sidley.com, March 2025

DC Plan Annual Review: Key Steps for Plan Administrators

Regular plan reviews are essential for ensuring compliance and improving performance in Defined Contribution Plans, ultimately helping participants meet their retirement goals. As a plan administrator, you play a key role in managing these plans by overseeing compliance, financial management, and participant engagement. This includes verifying accurate contribution processing, maintaining fee transparency, and providing educational resources to participants, all of which contribute to the efficient operation of the plan. This is a list of items that must be reviewed.

Source: Watkinsross.com, March 2025

DOL Expands Voluntary Fiduciary Compliance Program

Earlier this year, the DOL unveiled updated regulations for its Voluntary Fiduciary Compliance Program. Notably, these new rules introduce a long-anticipated self-correction option for plan sponsors.

Source: Spconsultants.com, March 2025

DOL Publishes New VFCP Model Participant Notice

On March 18, the DOL released a model notice for applicants to the Voluntary Fiduciary Correction Program to inform plan participants about their application to the program. This model notice is specifically for applicants and is not meant for those using self-correction to address errors. The DOL’s Employee Benefits Security Administration anticipates that completing the notice will take plan administrators about one hour on average.

Source: Napa-net.org, March 2025

Written Requests for ERISA Documents

Employers are required to respond to written requests for certain ERISA documents within 30 days to avoid penalties of up to $110 per day. However, there is often ambiguity regarding which documents fall under this mandatory disclosure requirement and what specific plan materials should be provided. This can create challenges for employers in determining their obligations in response to these requests.

Source: Newfront.com, March 2025

SPARK Institute Comment Letter on the Proposal for Roth Catch-Up Contributions

The SPARK Institute has sent this comment letter to the Internal Revenue Service regarding the proposed regulations on catch-up contributions. They say that administering the Roth catch-up mandate will be difficult, particularly in the initial years, and further simplification and clarification would be greatly beneficial. As mentioned towards the end of this letter, SPARK is also requesting that the IRS consider a postponement or offer additional good faith relief, as the final regulations will not be ready in time for implementation in 2026.

Source: Sparkinstitute.org, March 2025

Don't Forget the Disclosures: What's Required to Keep Plan Participants and Beneficiaries Informed

This educational fiduciary training webinar emphasizes the responsibilities needed to keep participants and beneficiaries well-informed. Tailored for committee members and fiduciaries engaged in retirement plan management, the session explores crucial elements of employee engagement, necessary disclosures, and effective fiduciary governance practices. Key topics covered include: Understanding Fiduciary Responsibilities, Required Disclosures, Optional Engagement Strategies, Digital and Paper Notices, and Selecting Service Providers.

Source: Multnomahgroup.com, March 2025

ICI Comment Letter on the Proposal for Roth Catch-Up Contributions

The Investment Company Institute has sent this comment letter to the Treasury Department and the Internal Revenue Service regarding the proposed regulations on catch-up contributions. This proposal aims to amend the regulations under section 414(v) of the Internal Revenue Code to incorporate several changes to catch-up contributions introduced by sections 109, 117, and 603 of the SECURE 2.0 Act.

Source: Ici.org, March 2025

New Self-Correction Option for Voluntary Fiduciary Correction Started March 17, 2025

On March 17, 2025, the DOL introduced a "self-correction" option within its Voluntary Fiduciary Correction Program. This new option allows fiduciaries to correct certain violations without waiting for formal approval of their correction submissions. However, participating fiduciaries are still required to fulfill a notice obligation and provide information to the DOL. The self-correction option applies to two specific types of transactions that would usually be considered prohibited: late contributions for participants and loan repayments, as well as eligible inadvertent failures relating to participant loans.

Source: Erisapracticecenter.com, March 2025

ERIC Comment Letter on the Proposal for Roth Catch-Up Contributions

The ERISA Industry Committee has sent this comment letter to the Internal Revenue Service regarding the proposed regulations on catch-up contributions. In this letter, ERIC supports SECURE 2.0 but acknowledges the challenges in implementing certain provisions, particularly Section 603, which mandates that catch-up retirement plan contributions be made on a Roth basis. While the guidance in Notice 2023-62 and the Proposal are generally helpful, ERIC has suggested improvements as the Treasury and IRS work on finalizing the rules.

Source: Eric.org, March 2025

Adoption of SECURE 2.0 Optional Provisions

The SECURE 2.0 Act of 2022 was significant retirement plan legislation that introduced various required and optional provisions for retirement accounts and employer-sponsored plans. However, plan sponsors have been slow to upgrade their programs due to the complexity of the legislation. Many have chosen to implement only those provisions that require minor adjustments, such as expanded catch-up contributions for participants aged 60-63. While some features have been adopted, there is hesitation around others, primarily due to a lack of available technology for implementation and uncertainty regarding the administration of the various provisions.

Source: Planpilot.com, March 2025

Preventive Measure: Self-Audits Help Your Plan Stay in Compliance

Morgan Lewis partners Amy Pocino Kelly and Dan Salemi and associate Rachel Mann wrote an article for Benefits Magazine about internal compliance self-audits of employee benefit plans. The article discusses the self-audit process, highlights common areas of compliance that plans should target, and notes changes affecting self-audits included in the SECURE 2.0 Act.

Source: Ifebp.org, March 2025

New 401k Plan Requirements End Pre-Tax Catch-Up Contributions for High Earners

On January 10, 2025, the IRS issued proposed regulations regarding age-based catch-up contributions for retirement plans. These contributions, which are available to participants aged 50 or older in 401k plans, allow for additional contributions beyond regular deferrals, regardless of other limits on elective deferrals. The proposed regulations are based on changes made by the SECURE 2.0 Act of 2022 and affect retirement plan participants, beneficiaries, employers, and administrators. Plan sponsors need to consider necessary design or operational changes, consult with plan administrators and recordkeepers for administrative updates, and seek advice from benefits counsel regarding implementation and required amendments to their plans.

Source: Quadecircle.com, March 2025

401k ADP Test Basics

The tax code for 401k plans includes non-discrimination tests to ensure that retirement plans do not disproportionately benefit Highly Compensated Employees over Non-Highly Compensated Employees. The testing process begins with the coverage test, as outlined in IRS Code section 410(b). If the coverage test is passed, or if adjustments are made to pass it, the Average Deferral Percentage test follows. The ADP test uses mathematical comparisons of participation and contribution rates between HCEs and NHCEs to assess potential discrimination in favor of HCEs. This article provides a basic review of the test.

Source: Legacyrsllc.com, March 2025

Early Preparation Tips to Streamline Your Employee Benefit Plan Audit

Plan sponsors should consider their organization's employee benefit plan audit well in advance. Typically, audits cannot commence until spring, when recordkeepers supply the necessary audit package containing detailed reports on the plan's operations for the year. Here is a list of items auditors will require over the coming months, along with steps plan sponsors can take to prepare.

Source: Withum.com, March 2025

What Self-Correction Options Are Available for 401k Plan Fiduciary Mistakes?

The DOL introduced a self-correction component to the Voluntary Fiduciary Correction Program, effective March 17, 2025. This allows retirement plans to self-correct specific failures, such as the late transmission of participant contributions or loan repayments, and certain inadvertent loan failures. To self-correct, a plan official or authorized representative must notify the EBSA by submitting a notice through an online tool, which includes essential information about the plan and the correction made. Unlike regular VFC submissions, self-correctors will receive an automatic acknowledgment email but will not get a "no action" letter.

Source: Thomsonreuters.com, March 2025

Document Retention is an Employer's Duty, Not the TPA's

It's crucial to clarify your third-party administrator's document retention practices, as they may not keep signed copies of plan documents, older versions, or those prepared by previous TPAs. Understand the scope of retention covered in your contract with the TPA and your ultimate responsibilities under ERISA. TPAs are responsible for document compliance from their engagement until they disengage, which includes drafting required restatements every six years, handling interim amendments, and any discretionary amendments the Plan Sponsor chooses to implement.

Source: Klblawgroup.com, March 2025

Sham Employment Terminations and Plan Distributions

To receive a distribution from a qualified retirement plan due to severance of employment, a participant must have a genuine termination of their employment. Sham terminations can create compliance issues for the plan. Usually, qualified retirement plan assets can't be distributed until a specific distribution triggering event occurs, as defined in the plan document. Severance of employment is a common triggering event. However, processing a distribution based on a sham termination can lead to operational failures, risking the plan's qualification and potentially resulting in negative tax consequences for both the participant and the employer.

Source: Retirementlc.com, March 2025

IRS Issues Proposed Regulations Regarding Mandatory Auto-Enrollment Under SECURE 2.0

The IRS has issued proposed regulations regarding the mandatory automatic enrollment requirements under the SECURE 2.0 Act of 2022, which builds on previous interim guidance from IRS Notice 2024-02. Starting with plan years after December 31, 2024, new 401k and 403b plans established after December 29, 2022, must include an eligible automatic enrollment arrangement. The recently proposed regulations clarify that a plan is considered established on the adoption date, irrespective of its effective date, and also provide guidance on how these automatic enrollment requirements will affect plan mergers and spin-offs.

Source: Ktslaw.com, March 2025

Mandatory Automatic Enrollment Is Here

Employers have long had the option to automatically enroll employees in their 401k or 403b plans to boost participation and encourage retirement savings. Due to the success of these automatic enrollment strategies, Congress has decided to make them mandatory. Starting in 2025, many plans that allow participants to make deferral elections will be required to automatically enroll their participants. This article reviews the key points regarding the new requirements.

Source: Ferenczylaw.com, March 2025

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