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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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Puerto Rico Issues Post-Earthquake Rules for Qualified Retirement Plan Distributions and Loans

The Puerto Rico Treasury Department issued Internal Revenue Circular Letter Number 20-09 to provide special rules and procedures applicable to distributions from qualified retirement plans and individual retirement accounts following the recent earthquakes. This is a summary of the most significant provisions.

Source: Littler.com, February 2020

Retirement Plan Changes Could Make Sponsors Feel Less SECURE

Retirement plan sponsors and their third-party administrator business partners need to understand the implications of two SECURE Act provisions involving complex changes to human resources administration systems and savings plan calculation engines. One is a mandatory change concerning long-time part-time employees who may qualify to participate in an employer’s retirement plan if they meet the requisite hours worked for three consecutive years. The second is a voluntary change related to qualified birth or adoption distributions. This article explains some of the complexities resulting from these provisions and highlight actions plan sponsors can take to avoid being caught off guard.

Source: Milliman.com, February 2020

What You Need to Know About the SECURE Act: Optional Provisions

The SECURE Act contains a number of provisions that affect individuals as well as employers with respect to their retirement programs. Some of the provisions are required and some are optional. This article will address the potentially optional provisions of the SECURE Act affecting retirement plans and IRAs.

Source: Mcdonaldhopkins.com, February 2020

401k Plan Filing Requirements - What to File and When to File It

If you are a fiduciary for your 401k Plan, keeping everything on track and meeting all of your duties regarding reporting and filing requirements can be quite daunting. The government requires returns and reports, and ERISA requires that participants be informed. This article provides a breakdown of what to file and when.

Source: Lindquistcpa.com, February 2020

Correcting Average Deferral Percentage Test Failures

The tax code governing 401k plans was written to prevent qualified retirement plans from overly favoring highly compensated employees. A series of non-discrimination tests were devised to measure whether a plan's design or operation tends to favor the HCEs over the non-highly compensated employees. This article dives into the different methods of correcting for an ADP test failure.

Source: Legacyrsllc.com, February 2020

Make Sure Those Hardship Changes Are in Place

For 401k plans that permit hardship distributions, the rules changed, beginning on January 1, 2020. Make sure that your plan sponsors clients are administering their plan to the following mandatory changes.

Source: Jdsupra.com, February 2020

Failure to Provide ERISA-Required Plan Document to Participant Costs Plan Sponsor $41,000

ERISA plan failures often result in corrective actions and monetary penalties. ERISA penalties apply to all types of benefit plans, so while the case at hand is a medical benefits plan, monetary fines for failure to provide plan documents could and do apply to retirement plans, disability plans, executive compensation, and other employer-provided benefit plans.

Source: Hallbenefitslaw.com, February 2020

Avoid the IRS's Nuclear Option - Sign That Plan Document

The IRS has stated that on audit, agents should pursue plan disqualification for a failure to produce a signed plan document. The IRS was responding to a 2018 Tax Court decision that held that the failure to produce the signed plan document would not subject the plan to disqualification upon the finding of creditable evidence that the document had been signed.

Source: Beneficiallyyours.com, February 2020

Getting Ready to Include Part-Time Employees in Retirement Plans

The SECURE Act includes a mandatory requirement for 401k plan sponsors to allow long-term part-time employees to participate in the plan. 401k plan sponsors need to understand all the parts of the new requirement and, for some, the long-term effects on plan administration.

Source: Plansponsor.com, February 2020

IRS Offers First Answers to Post-SECURE Act Reporting Questions

Most of the retirement enhancements in the SECURE Act have been well received. But some provisions of the Act took effect mere days after enactment making implementation more difficult. Industry groups have requested that the IRS expedite guidance on the most pressing questions. This article addresses the guidance that we have so far: some that is explicit and some that we can glean through draft instructions for required tax reporting.

Source: Ascensus.com, February 2020

Suggested Changes to 402(f) Notice Because of SECURE Act

This document contains suggested edits to the explanation required by Internal Revenue Code section 402(f), to reflect changes made to the Code by the SECURE Act. This document was developed by the SPARK Institute's Government Relations Committee. The document uses the most recent safe harbor explanation contained in IRS Notice 2018-74 as a base. Only those changes made by the SECURE Act that directly affect language in the safe harbor explanation have been included.

Source: Sparkinstitute.org, February 2020

Required Minimum Distributions and "Lost" Participants

Losing contact with former participants who have vested benefits remaining in your plan can be problematic for both the former participants and the plan sponsor. The issue becomes more urgent when it is time for them to begin receiving their required minimum distributions the year after they hit age 70-1/2 (72 under the new SECURE Act rules). Here is a look at why it is a problem and what plan sponsors can do about it.

Source: Orba.com, February 2020

The SECURE Act Changes the Rules for Employers on Retirement Plans

The SECURE Act brings many changes that affect employers of all sizes, including some that could be particularly beneficial for smaller employers that sponsor retirement plans. Some of the changes, however, may increase the burden on employers. Here are some of the most important developments for employers, many of which took effect for plan years beginning after December 31, 2019.

Source: Meadenmoore.com, February 2020

SECURE Act Leaves Questions About Distributions for Birth, Adoption

The SECURE Act allows parents to take early withdrawals of up to $5,000 from their retirement accounts without penalty within a year of a child's birth or adoption. Although retirement plans can permit these distributions starting January 1, 2020, employers may want to wait for much-needed guidance on a number of practical and technical questions.

Source: Mercer.com, January 2020

Uncashed Pension Checks

Revenue Ruling 2019-19 states that a recipient's failure to cash their distribution check neither changes the plan's obligation to withhold income tax or report the distribution on the Form 1099-R for the year of distribution. Here are three scenarios plan administrators commonly experience, and the proper course of action regarding Form 1099-R reporting.

Source: Withum.com, January 2020

2020 401k ERISA Retirement Plan Compliance Calendar

This 2020 401k ERISA retirement plan compliance calendar highlights the critical compliance deadlines for ERISA 401k defined contribution retirement plans. While all major dates are covered, some may only apply to particular plan types (and are noted accordingly) and there may be additional deadlines for specific plans that are not covered here. Plans with non-calendar plan years may be subject to different deadlines.

Source: Cammackretirement.com, January 2020

Participant Notices for Retirement Plans

Notice requirements for retirement plans can be daunting. It may seem that, between the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation, there is an unlimited array of notices that need to be provided. Luckily, many notices only need to be provided annually and many will not apply to a plan at all. Even better, if notices are missed, this can be corrected.

Source: Ferenczylaw.com, January 2020

How to Stay Prepared for Department of Labor Audits

When a company hears of a Department of Labor audit, they typically tend to panic. The best way to stay prepared for DOL audits is to ensure that you are handling your benefit plans appropriately on a regular basis. Here is a DOL audit guide to help ensure your plans are administered appropriately, as well as some questions to ask yourself throughout the process.

Source: Meadenmoore.com, January 2020

401k Testing: Deadlines Employers Should Know

To meet IRS qualification requirements, 401k plans must pass nondiscrimination testing annually to ensure plan contributions do not disproportionately benefit Highly Compensated Employees or exceed legal limits. While most employers hire a professional third-party administrator to complete this work, all employers should understand the deadlines that apply to the process, which generally relate to failed testing and contribution funding. This basic knowledge can help avoid the often-painful consequences of late testing, including missed tax deductions, IRS penalties, and plan disqualification.

Source: Employeefiduciary.com, January 2020

Definition of Compensation: More Complicated Than You Would Think

One of the most fundamental definitions for a qualified retirement plan is eligible compensation for plan purposes. The definition of compensation, as detailed in the plan's adoption agreement, determines many things. Employees may think that Box 1 of the Form W-2 or the gross wages line item on their pay stub defines their compensation. However, these amounts are not necessarily defined as compensation by the plan's adoption agreement. It's more complicated than you would think.

Source: Cshco.com, January 2020

Details of the SECURE Act: Withdrawals for Birth or Adoption

Section 72(t) of the Internal Revenue Code provides that withdrawals from a qualified retirement plan are subject to a 10% tax on early distributions, with certain exceptions. Included in the list of exceptions are distributions made after attainment of age 59 1/2; distributions on account of disability; distributions after separation from service after age 55; distributions for certain medical expenses; and distributions made to an individual called to active military duty. The SECURE Act amends the tax code to add an additional exception from the 10% early distribution tax: any qualified birth or adoption distribution.

Source: Consultrms.com, January 2020

How Will the SECURE Act Affect Plan Distributions? New Rules Challenge Sponsors and Recordkeepers in 2020

Many provisions of the SECURE Act passed at the end of last year will change the way qualified plans are run. Among the most significant changes are provisions creating new distribution options and new death distribution restrictions for qualified plans. Since these changes are effective now, plans should be preparing to comply in operation even though formal amendments are not yet required. However, this will be a challenge due to the need for guidance to answer many questions about how the statutory language is intended to work.

Source: Cohenbuckmann.com, January 2020

Puerto Rico Announces Retirement Plan Limits for 2020

On December 28, 2019, the Puerto Rico Treasury Department issued Circular Letter No. 19-17 notifying the retirement plan limits that will apply to retirement plans qualified under Section 1081.01 of the Puerto Rico Internal Revenue Code of 2011, as amended, for year 2020, including the cost-of-living adjustments published by the U.S. Internal Revenue Service in IRS Notice 2019-59 of November 6, 2019.

Source: Mcvpr.com, January 2020

Puerto Rico Announces 2020 Limits on Qualified Retirement Plans

On December 28, 2019, the Puerto Rico Department of the Treasury issued Internal Revenue Circular Letter No. 19-17 (CL IR 19-17) announcing the applicable limits for Puerto Rico qualified retirement plans for 2020. Here are the applicable 2020 limits for qualified retirement plans in Puerto Rico.

Source: Littler.com, January 2020

SECURE Act Requires Immediate Action by Plan Service Providers

Many of the provisions in the SECURE Act are effective on January 1, 2020 and will require significant changes to plan administration and recordkeeping. There are also a number of provisions in the Act that could impact retirement plan and product development. This article discusses the ten most pressing implementation issues.

Source: Groom.com, January 2020

Details of the SECURE Act: Rules Related to Safe Harbor Plans

Section 103 of the SECURE Act amends the Internal Revenue Code regarding the deadline for an employer to elect safe harbor status and eliminates the requirement for a safe harbor nonelective notice. Under the Act, employers will be given additional flexibility on the timing for electing a safe harbor nonelective contribution.

Source: Consultrms.com, January 2020

SECURE Act: Effective Dates of Key Provisions

Changes to current rules applicable to retirement plans made by the SECURE Act are (in most cases) already effective. This article reviews the effective dates of some of the key provisions of SECURE and sponsor issues they present.

Source: Octoberthree.com, January 2020

SECURE Act Generates Changes and Opportunities for Retirement Plans

The SECURE Act makes numerous changes (including a variety of enhancements) affecting qualified retirement plans, 403b and 457b plans, individual retirement accounts, and other employee benefits. Employers should understand these changes to prepare themselves for the resulting effect on retirement plan administration and financial planning. This article provides an overview of the most relevant provisions and their effective dates.

Source: Spencerfane.com, January 2020

2020 ERISA Plan Compliance Calendar

Being a retirement plan sponsor involves juggling many tasks including making sure your plan complies with all pertinent federal and local regulations. This compliance calendar will help you 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.

Source: Plansponsor.com, January 2020

Details of the SECURE Act: Covering Long-Term Part-Time Workers

Under prior law, an employee who never worked 1,000 hours or more in a 12-month eligibility computation period could be excluded from an employer sponsored 401k plan for all purposes. Under the new SECURE Act requirement, an employee must be allowed to make elective contributions to the 401k portion of a plan after he meets the EARLIER of (a) the plan’s normal eligibility requirements OR (b) the close of the first period of 3 consecutive 12-month periods during each of which the employee has completed at least 500 hours of service.

Source: Consultrms.com, January 2020

Highlights of Some of the Top New SECURE Act Provisions Affecting 401k Plans -- Part One

Passed by Congress and signed into law at the midnight hour as part of the 2019 comprehensive budget appropriation package, the SECURE Act is now the law of the land. This article, which is part one of a series of two, zeros in on a few of the main SECURE Act 401k plan provisions and provide some detail.

Source: Compliancedashboard.net, January 2020

Failing to File Form 5500 Just Became More Costly

Form 5500 is the information return that must be filed by most employee benefit plans subject to ERISA (unless an exception applies), and failure to file this annual return for a plan can result in assessment of penalties by both the IRS and DOL. Recently, the SECURE Act has given the IRS more teeth by increasing the maximum permitted penalties tenfold, but it still remains the case that the DOL penalties are more severe.

Source: Graydon.law, January 2020

A Short Guide to the SECURE Act for Retirement Plan Sponsors and Administrators

The SECURE Act, included as part of the Further Consolidated Appropriations Act, 2020, was signed into law on December 20, 2019. This new law contains many significant changes that may impact employer-sponsored benefit plans. Here is a chronological guide to the key retirement plan issues raised by the new law.

Source: Erisapracticecenter.com, January 2020

President Trump Signs SECURE Act Into Law

The SECURE Act is probably the most significant single piece of employer retirement plan legislation since the Pension Protection Act of 2006. As a result, it is important for plan sponsors to be aware of the different provisions of the SECURE Act, some of which became effective on January 1, 2020. This article addresses the SECURE Act provisions that are participant-facing, and then the provisions which affect plan administration, but do not necessarily impact participants directly.

Source: Seyfarth.com, January 2020

Sweeping Changes to Retirement Plan Rules Passed Under the SECURE Act -- Provisions Requiring Immediate Attention

The SECURE Act makes broad and sweeping changes to the retirement plan landscape and contains numerous new requirements and new optional planning and design opportunities. This 3-page alert focuses on certain changes in the new law that are required to be operationally implemented by employers who sponsor and maintain qualified retirement plans and 403b plans either immediately or shortly after the passage of the SECURE Act.

Source: Pbwt.com, January 2020

72 Is the New 70 1/2 for RMDs, but What If You Turned 70 1/2 This Year?

What if a participant attained age 70 1/2 during 2019? Does the passage of the SECURE Act mean these participants can delay distributions? Unfortunately, the answer is no. The SECURE Act only changes the age for participants who attain age 70 1/2 after December 31, 2019. Therefore, IRA owners, 5% or more owner-participants, and retired participants who attained 70 1/2 at any point during 2019 will still need to take their required minimum distributions by April 1, 2020.

Source: Graydon.law, December 2019

IRS Reiterates Requirement to Sign Plan Documents and Amendments

At the heart of tax qualified retirement plan compliance is a requirement to timely adopt plans and plan amendments. Failure to adopt plan amendments when required can result in plan disqualification. Accordingly, it is very important for plan sponsors to prove that amendments were properly executed in a timely manner. In a General Legal Advice Memorandum from the IRS’s Office of Chief Counsel dated December 13, 2019, the IRS provided a reminder of this important qualification requirement and the ramifications of noncompliance.

Source: Erisapracticecenter.com, December 2019

IRS 2019 Required Amendments List Requires Plan Amendment for Hardship Distribution Changes

The IRS has now included amendments for the final hardship distribution regulations in its 2019 RAL, thus requiring affected 401k and 403b plans to be amended by no later than Dec. 31, 2021.

Source: Clarkhill.com, December 2019

New E-Delivery Rules for ERISA Pension Plans on the Horizon

Adopting a so-called "notice and access" e-delivery structure, the DOL allows plans to save paper by emailing disclosures. The rule potentially would cover all ERISA required disclosures (i.e., Summary Plan Description, benefit statements, investment information) as long as the plan uses the proper email address of a participant. Disclosures can be made this way to beneficiaries and ex-employees as well. The new rule would act as a safe harbor to protect the plan and employer sponsor from liability. Keep in mind it is not required. This new proposed rule will be an addition to the DOL's existing safe harbor rules of electronic disclosures.

Source: Mcbrayerfirm.com, December 2019

Revenue Procedure Clarifies Which Hardship Amendments are Deemed Integral to a Qualification Provision

This revenue procedure clarifies which amendments are treated as integral to a plan provision that fails to satisfy the qualification requirements of the Internal Revenue Code by reason of a change to those requirements made by the recently published regulations under sections 401(k) and 401(m) relating to hardship distributions of elective deferrals. This revenue procedure also extends the deadline, applicable to pre-approved plans, for adopting an interim amendment relating to those regulations. The deadline is extended to December 31, 2021.

Source: Irs.gov, December 2019

IRS Extends Final Hardship Regulations Amending Deadline for Pre-Approved Plans

The IRS has issued Revenue Procedure 2020-09, guidance that extends the deadline for pre-approved retirement plans to amend for final IRS hardship regulations published in September 2019. The amending deadline for these plans is extended to December 31, 2021.

Source: Ascensus.com, December 2019

401k Administration Checklist for the 2020 Plan Year

Annual 401k administration tasks generally fall into one of four categories: nondiscrimination testing, Form 5500 reporting, participant disclosure, and plan document maintenance. If you're an employer, it's recommend that you manage the completion of these tasks using a checklist. A checklist can serve another important purpose, monitoring your 401k provider's job performance. As a 401k fiduciary, you can't simply assume your 401k provider is doing a good job. You must monitor them to ensure they're completing assigned tasks timely. A checklist can help you meet this important fiduciary responsibility.

Source: Employeefiduciary.com, December 2019

IRS Releases 2019 List of Required Amendments for Qualified Retirement Plans, Including 401k Plans

The IRS released Notice 2019-64, its annual list of required amendments for individually designed qualified retirement plans, including 401k plans. Demonstrating how little has been happening in the 401k world recently, this year the RA List includes only one qualification change applicable to 401k plans. Amendments required to be made in response to the final regulations that were issued on September 23, 2019 regarding hardship distributions.

Source: Compliancedashboard.net, December 2019

IRS Releases 2019 Required Amendments List for Individually-Designed Qualified and 403b Plans

The IRS has issued Notice 2019-64, the 2019 Required Amendments List for drafting individually designed retirement plan documents for plans intended to be qualified under Internal Revenue Code Sections 401(a) and 403b. In general, a Required Amendments List includes statutory and administrative changes in requirements that are first effective during the plan year in which the list is published, but does not include guidance that is issued or legislation that is enacted after the list has been prepared.

Source: Ascensus.com, December 2019

2019 Plan Year: Year-End Compliance Reminders

Every year, plan sponsors must make sure their plans meet certain compliance requirements, including those listed here. This publication identifies the materials you need to review and will help you prepare for year-end. This information applies to qualified defined contribution plans and 403b plans that are subject to Title I of ERISA.

Source: Retirepru.com, December 2019

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

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

Source: Dwc401k.com, December 2019

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

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

Source: Beneficiallyyours.com, December 2019

Understanding the Mindset of Participants Who Take Loans

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

Source: Asppa.org, December 2019

Short Plan Years: What They Are and What They Mean

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

Source: Asppa.org, December 2019

Ways to Make Default E-Delivery Even More Effective

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

Source: Planadviser.com, November 2019

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

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

Source: Milliman.com, November 2019

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

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

Source: Swlaw.com, November 2019

2020 Retirement Plan Compliance Calendar

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

Source: Mercer.com, November 2019

DOL Sues Ben Shinn Trucking Over Handling of 401k

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

Source: Landline.media, November 2019

Smarter and Not Harder: The New IRS Hardship Distribution Regulations

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

Source: Mwe.com, November 2019

Proposed Electronic Disclosure Rule Would Allow Greater Flexibility for Retirement Plans

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

Source: Hansonbridgett.com, November 2019

IRS Proposes Update to Minimum Required Distribution Rules

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

Source: Groom.com, November 2019

Advanced Copies of 2019 Form 5500 Released

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

Source: Compliancedashboard.net, November 2019

IRS and DOL Identify Fall Regulatory Guidance Priorities

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

Source: Ascensus.com, November 2019

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

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

Source: Dol.gov, November 2019

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

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

Source: Hallbenefitslaw.com, November 2019

DOL Proposes a More Practical Rule for Electronic ERISA Disclosures

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

Source: Employeebenefitslawreport.com, November 2019

Four Essential Tips to Simplify Year-End Plan Administration

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

Source: Alliant401k.com, November 2019

401k and Retirement Plan Limits for 2020

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

Source: 401khelpcenter.com, November 2019

Chart of Required Participant Notices

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

Source: Strategicbenefitservices.com, November 2019

DOL Proposes New Electronic Disclosure Option for Retirement Plans

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

Source: Buck.com, October 2019

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

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

Source: Bradley.com, October 2019

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

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

Source: Beneficiallyyours.com, October 2019

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

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

Source: Shrm.org, October 2019

Some Retirement Plans Need 2019 Year-End Amendments

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

Source: Mercer.com, October 2019

DOL Proposes Regulations to Expand Electronic Distribution Options

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

Source: Icemiller.com, October 2019

Final Hardship Distribution Regulations Issued: Potential Plan Sponsor Action Necessary

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

Source: Hawleytroxell.com, October 2019

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

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

Source: Compliancedashboard.net, October 2019

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

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

Source: Beneficiallyyours.com, October 2019

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

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

Source: Hansonbridgett.com, October 2019

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

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

Source: Groom.com, October 2019

Are We Required to Make Safe Harbor Contributions for HCEs?

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

Source: Dwc401k.com, October 2019

Fact Sheet on Proposed Electronic Disclosure Safe Harbor

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

Source: Benefitsforward.com, October 2019

Department of Labor Proposes New Electronic Disclosure Rule

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

Source: 401khelpcenter.com, October 2019

Projected 401k and Retirement Plan Limits for 2020

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

Source: 401khelpcenter.com, October 2019

Year-End Audit: Comply with Confidence

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

Source: Tra401k.com, October 2019

Plugging the Leak: Uncashed Distribution Checks

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

Source: Planadviser.com, October 2019

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

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

Source: Groom.com, October 2019

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

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

Source: Hallbenefitslaw.com, October 2019

Student Loan and Retirement Plan Guidance on IRS Priority List

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

Source: Ascensus.com, October 2019

IRS Issues Guidance on Uncashed Distribution Checks

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

Source: Hansonbridgett.com, October 2019

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

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

Source: Benefitslawadvisor.com, October 2019

Required Minimum Distributions

As we approach the end of the calendar year, it is important to be reminded about one frequently overlooked retirement plan requirement. Upon attainment of age 70-1/2, certain participants of a tax-qualified retirement plan may be required by federal tax law to withdraw a minimum amount from such plan each year. This is a review of RMDs.

Source: Legacyrsllc.com, October 2019

IRS Finalizes Changes in Hardship Distribution Rules

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

Source: Groom.com, October 2019

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

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

Source: Boutwellfay.com, October 2019

Correcting Plan Mistakes

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

Source: Tri-ad.com, September 2019

2019 Regulatory Update

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

Source: Multnomahgroup.com, September 2019

Top 10 Fiduciary Misconceptions Among 401k Plan Sponsors

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

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

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

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

Source: Dwc401k.com, September 2019

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

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

Source: Benefitslawadvisor.com, September 2019

Final Hardship Regulations Published

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

Source: Federalregister.gov, September 2019

The Check Is in the Mail, or Not

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

Source: Erisa-employeebenefitslitigationblog.com, September 2019

IRS Issues Guidance Regarding Uncashed Check

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

Source: Legacyrsllc.com, September 2019

IRS Expands Its Correction Program (EPCRS) for Qualified Plans

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

Source: Groom.com, September 2019

Qualified Plan Uncashed Check Guidance Issued Related to Tax Obligations

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

Source: Seyfarth.com, August 2019

Electronic Disclosure Proposal Lands at OMB

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

Source: Napa-net.org, August 2019

IRS Clarifies Uncashed Check Taxation

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

Source: Buck.com, August 2019

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

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

Source: Benefitsnotes.com, August 2019

IRS Updates VCP Electronic Submission Procedures, Revises Form

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

Source: Compliancedashboard.net, August 2019

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

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

Source: Jdsupra.com, August 2019

Rollover Period for Retirement Plan Loan Offsets

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

Source: Fidelity.com, August 2019

Retirement plans: 2019 Summer Recap

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

Source: Buck.com, August 2019

Tackling the Missing Participant Problem

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

Source: Napa-net.org, August 2019

DOL Move Expands Definition of Employer for Multiple Employer Plans

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

Source: Ballardspahr.com, August 2019

Service Provider's Auto-Portability Proposal Receives DOL Blessing

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

Source: Ascensus.com, August 2019

Making Sense of the New Auditing Standard for ERISA Plans

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

Source: Ascensus.com, July 2019


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