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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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2019 Compliance Calendar for Defined Contribution Plans

Abstract: A qualified retirement plan must meet various requirements throughout the year in order to retain the qualified status. If you are responsible for administering your company's defined contribution plan, it's critical to meet these deadlines. From processing failed ADP/ACP test refunds to delivering the participant fee disclosures, it can feel overwhelming. This DC plan compliance calendar will help you stay on track.

Source: Watkinsross.com, February 2019

Nitty Gritty Tasks That 401k Plan Sponsors Must Complete

Abstract: Despite how tedious some plan sponsors tasks are, they are all required tasks and failure to complete a task can cause a whole host of problems and money. This article is about tedious tasks that plan sponsors need to make sure is done and done correctly.

Source: Jdsupra.com, February 2019

2019 Hardship Distribution Rules Are Changing

Abstract: Occasionally an employee may experience a serious financial need. With no other help available, raiding a retirement plan may be the only option. Prior to 2019, employees and employers alike may have faced hurdles when wrestling with a hardship distribution. Due to new laws, however, hardship distribution rules are changing in 2019.

Source: Hallbenefitslaw.com, February 2019

Take Advantage of ERISA Safe Harbors: They Can Help Penetrate the ERISA Fog

Abstract: Attorneys would define a Safe Harbor as a provision of a statute or a regulation that specifies that certain conduct will be deemed not to violate a given rule. In our ERISA world, a Safe Harbor is a provision of the retirement plan law that can cut through the sometimes fog of ERISA and provide fiduciary protection to plan sponsors and at the same time make their retirement plans more efficient and effective. Here is a brief description of some of them.

Source: Retirementplanblog.com, February 2019

Updated 401k Plan Fix-It Guide - Participant Loans Don't Conform to IRC Section 72(p)

Abstract: Many 401k plans permit loans to participants. But often participant loans don't conform to the requirements of IRC Section 72(p) or are prohibited transactions under IRC Section 4975. This article reviews how to avoid and fix such mistakes.

Source: Irs.gov, February 2019

Correcting Average Deferral Percentage Test Failures

Abstract: 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 favoring the HCEs over the nonhighly compensated employees. This article dives into the different methods of correcting for an ADP test failure.

Source: Legacyrsllc.com, February 2019

401k Administration: Your Responsibilities Explained

Abstract: 401k plan administration is the process of maintaining a retirement plan and keeping it compliant with the Employee Retirement Income Security Act of 1974. Basically, all the day-to-day tasks that keep the 401k running. To help keep things as simple as possible, this article breaks the work into two types: Ongoing Administration, and Annual Compliance.

Source: Forusall.com, February 2019

EBSA Enforcement for 2019

Abstract: The Employee Benefits Security Administration enforces ERISA laws and regulations, including conducting civil and criminal investigations. EBSA enforcement of ERISA laws often results in recovering money from enforcement actions, voluntary fiduciary correction programs, abandoned plan programs, and informal complaint resolution. Enforcement statistics from 2018 and the Department of Labor strategic plan for the future provide some insights on enforcement for 2019.

Source: Bsllp.com, February 2019

Online VCP Filing System Up and Running

Abstract: IRS Revenue Procedure 2018-52 mandates online filing of VCP submissions starting April 1, 2019. The IRS opened the online filing system for voluntary use starting January 1 of this year. Paper filing is optional through March 31, 2019. This article reports on first experiences with the online filing system.

Source: Eforerisa.wordpress.com, February 2019

2019 Key Administrative Dates and Deadlines for Calendar-year DC Plans

Abstract: The calendar lists relevant 2019 administrative dates encountered by most defined contribution retirement plans, including deadlines for government filings and participant disclosures. The calendar also provides short descriptions of the actions required to meet each deadline.

Source: Milliman.com, January 2019

Advance Informational Copies of 2018 Form 5500 Annual Return/Report

Abstract: The Department of Labor, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation released advance informational copies of the 2018 Form 5500 annual return/report and related instructions. Here are some of the changes that the instructions highlight.

Source: Ubabenefits.com, January 2019

Plan Fiduciaries Pay $538,248 for Failure to Timely Remit Contributions

Abstract: Plan Fiduciaries withheld tens of thousands of dollars from employees' paychecks, but did not forward these employee contributions to the plans, or did not forward them in a timely manner. The DOL also alleged in a lawsuit that fiduciaries to two retirement plans failed to administer the plans, leaving participants unable to gain information about their funds or gain access to their plan accounts.

Source: Planadviser.com, January 2019

Painless 401k Compliance in 2019? Avoid These Five Mistakes

Abstract: In a study of over 350 companies nationwide, the average company makes 53 payroll mistakes each year. If left unfixed, these mistakes can have some big ramifications, both in terms of compliance risk, as well as needless work during your annual audit. This article will walk you through five of the biggest 401k compliance mistakes.

Source: Forusall.com, January 2019

FAQS About Retirement Plan Hardship Distributions

Abstract: Typically, retirement plan sponsors intend for the funds contained in a retirement plan to be held until the participant retires. Under some circumstances, a participant may need the money now. Some retirement plans allow participants to receive hardship distributions, though they are not required to do so. This article examines some common questions about hardship distributions.

Source: Hallbenefitslaw.com, January 2019

IRS Increases User Fees for Certain Requests

Abstract: The IRS issued Revenue Procedure 2019-1, Revenue Procedure 2019-2, Revenue Procedure 2019-3, Revenue Procedure 2019-4, Revenue Procedure 2019-5 and Revenue Procedure 2019-7. These Revenue Procedures became effective January 2, 2019, and update the annual Revenue Procedures, which set forth the procedures for Determination Letter requests and Private Letter Ruling requests. Importantly, these Revenue Procedures increase the user fees for certain requests.

Source: Icemiller.com, January 2019

The Definitive 401k Compliance Calendar for 2019

Abstract: When it comes to 401k compliance, you probably already know that there's a lot you need to stay on top of. You probably also don't have time to spend hours researching online or digging through ERISA codes to figure out what you have to do and when you have to do it by. This simple 401k compliance calendar allows you to quickly see the compliance deadlines you should be aware of in 2019.

Source: Forusall.com, January 2019

To Err Is Human; to Forgive Is Only a Correction Program Away

Abstract: No matter how diligent you are around plan administration, occasional mistakes are nonetheless inevitable. The good news is they can be fixed. Both the IRS and the DOL have established programs to help plan sponsors correct defects, allowing you to maintain the tax-qualified status of your plans or get back on the fiduciary straight and narrow.

Source: Fidelity.com, January 2019

Agreement on ERISA Auditing Standard Reached, but Delayed

Abstract: AICPA's Auditing Standards Board has agreed on changes to auditing standards to respond to DOL's 2015 review of plan audits, but will likely delay the implementation of the changes until periods ending on or after December 15, 2020. The proposal was aimed at improving audit quality in response to DOL's 2015 review of audits in which deficiencies were found in a significant number of cases.

Source: Buck.com, January 2019

Five Tips for 401k Administration in 2019

Abstract: I think you'll agree that 401k administration can be tedious and complex. And it's easy to mess up. And every time you make a mistake, even if it's just a tiny one, it can add a lot of frustration and hassle during your year-end compliance work. This article walks you through five 401k administration tips used by top companies to save time and keep their 401ks compliant, without wanting to pull their hair out.

Source: Forusall.com, January 2019

401k Contribution Deadlines -- You Don't Want to Miss Them

Abstract: This is a summary of the deposit deadlines applicable to all 401k plan contributions, including how to correct late contributions. If you're a 401k fiduciary, you can use this information to understand your plan's contribution deadlines and what you need to do in case you miss one.

Source: Employeefiduciary.com, January 2019

Puerto Rico Announces 2019 Limits on Qualified Retirement Plans

Abstract: The Puerto Rico Department of the Treasury issued Internal Revenue Informative Bulletin No. 18-24 (IB 18-24) announcing the 2019 applicable limits for Puerto Rico qualified retirement plans.

Source: Littler.com, January 2019

IRS Releases Determination Letter Guidance in RP 2019-04

Abstract: The IRS has released its annual guidance including Revenue Procedure 2019-4 providing guidance on obtaining a determination letter.

Source: Irs.gov, January 2019

IRS Releases 2019 Form 1099-R and 5498 Reporting Instruction

Abstract: The IRS has released the 2019 Instructions for Forms 1099-R and 5498. These detailed instructions describe the reporting requirements for IRA and employer-sponsored retirement plan distributions, IRA contributions, rollovers, conversions, recharacterizations, and fair market values.

Source: Ascensus.com, December 2018

2019 Reporting and Disclosure Requirements Under Ongoing Calendar-Year Qualified Plans

Abstract: This chart provides reporting and disclosure requirements under ongoing calendar-year qualified retirement plans in the United States.

Source: Willistowerswatson.com, December 2018

IRS Issues Proposed Regulations to Relax 401k Plan Hardship Distribution Rules

Abstract: The IRS recently issued proposed regulations to implement changes to the rules for hardship distributions from 401k plans made by the Bipartisan Budget Act of 2018 that will take effect on January 1, 2019. The proposed changes will make hardship distributions more widely available and will ease administration of hardship distributions for plan sponsors.

Source: Hansonbridgett.com, December 2018

Podcast: Proposed IRS Regulations Affecting 401k and 403b Plans

Abstract: In this episode of the Proskauer Benefits Brief, Paul Hamburger co-chair of Proskauer's Employee Benefits & Executive Compensation Group, and associate Steven Einhorn discuss the recently proposed IRS regulations addressing the hardship withdrawal rules affecting 401k and 403b plans.

Source: Erisapracticecenter.com, December 2018

DOL Proposes Prohibited Transaction Exemption for Certain 401k Plan Transfers

Abstract: The DOL issued a proposed exemption related to the consolidation of small retirement savings accounts in 401k plans and IRAs when workers change jobs. The proposed individual exemption would permit automatic transfers of small 401k account balances (less than $5,000) from a "rollover" IRA containing an employee's former employer's plan balance, to his or her new employer's 401k plan, provided the employee does not opt out.

Source: Compliancedashboard.net, December 2018

AICPA Issues New Benefit Plan Audit Rules

Abstract: The American Institute of CPAs has taken another step toward improving the quality of audits of financial statements of employee benefit plans. The institute said its Auditing Standards Board voted to issue a new standard that addresses the auditor's responsibility to form an opinion and report on the audit of financial statements of plans subject to ERISA.

Source: Cfo.com, December 2018

A Guide to Enrollment Notices for New 401k Participants

Abstract: There are good times and bad times to be noticed. Most 401k plan sponsors don't want to be noticed (and then investigated) by the U.S. Department of Labor. But employers need to provide notices to employees as they become eligible to join a 401k plan or face potential employee complaints and DOL investigation.

Source: Alliant401k.com, December 2018

What is the Deadline to Deposit Safe Harbor Matching Contributions?

Abstract: Facts: Our company sponsors a safe harbor 401k plan that provides a matching contribution equal to 100% of the first 4% each participant defers. I had always thought that the deadline for us to deposit the match is the due date of our company tax return (with extensions), but my TPA mentioned something about a quarterly deposit requirement.

Source: Dwc401k.com, December 2018

DOL Addresses Small Retirement Account Balance Auto-Portability Program

Abstract: DOL recently issued an advisory opinion and proposed a prohibited transaction exemption concerning a program designed to automatically move an individual's small account from a prior employer's defined contribution plan to a default IRA and then ultimately into that individual's account in a new employer's defined contribution plan. The program, which would charge asset-based fees for accounts over $50, aims to eliminate duplicative fees for small retirement savings accounts and reduce leakage of retirement savings. While the proposed prohibited transaction exemption is pending, plan sponsors should consider whether they might want to participate in this program.

Source: Buck.com, December 2018

2018 End of Year Plan Sponsor "To Do" List for Qualified Retirement Plans

Abstract: This "to do" list covers qualified plan issues. It is broken into five categories.

Source: Swlaw.com, December 2018

No 2018 "Required Amendments" for Individually-Designed Plans

Abstract: The Internal Revenue Service issued the 2018 Required Amendments List under IRS Notice 2018-91 on November 21, 2018. The Required Amendments List establishes the date by which plan amendments must be made for changes in qualification requirements contained on the list. There are no entries listing changes in qualification requirements on the 2018 Required Amendments List.

Source: Icemiller.com, December 2018

Plan Administrators' 2018 Year-End Checklist

Abstract: Plan administrators should review the following actions to be taken before the end of 2018 and focus on what to expect for 2019. This 7-page checklist addresses plan amendments, notices and other considerations for qualified retirement plans, welfare plans, and stock-based and performance-based plans.

Source: Williamsmullen.com, November 2018

2018 Plan Year: Year-End Compliance Reminders

Abstract: Every year, plan sponsors must make sure their plans meet certain compliance requirements. This 5-page 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: Prudential.com, November 2018

2018 California Wildfires - Guidance and Relief for Employee Benefit Plans

Abstract: The DOL recognizes that these wildfires may impede efforts by plan fiduciaries, employers, labor organizations, service providers, and participants and beneficiaries to comply with ERISA over the next few months. The Department has published employee benefit plan compliance guidance and relief for victims of the California Camp, Hill, Woolsey and other 2018 California wildfires.

Source: Dol.gov, November 2018

DOL Addresses Retirement Plan Concerns for California Wildfire Victims

Abstract: The Department of Labor released an FAQ for participants and beneficiaries in benefit plans impacted by the recent California wildfires.

Source: Dol.gov, November 2018

New Regulations on Hardship Distributions: What Plan Sponsors and Administrators May Do Now and Must Do Later

Abstract: Many plan administrators of 401k and 403b plans permitting hardship distributions will want to implement some of the changes soon to take advantage of the liberalized hardship distribution standards, and virtually all sponsors of such plans will be required to amend their plans in the not-so-distant future as a result of these changes.

Source: Bradley.com, November 2018

The 401k Adoption Agreement Explained

Abstract: Maybe you're looking into establishing a 401k for your company. Or perhaps you've realized it is time to make a change to how your plan is run. Both are often excellent, if tough, decisions. In this easy-to-read 401k plan document reference guide is just about everything you need to know about 401k adoption agreements.

Source: Forusall.com, November 2018

401k Plan Administration Checklist for the 2019 Plan Year

Abstract: 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 is 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.

Source: Employeefiduciary.com, November 2018

Here's How to Fix 401k Elective Deferral Failures

Abstract: In order to encourage employers to use plan designs that include automatic contribution features (such as auto enrollment and auto escalation of elective deferrals), the IRS allows special "safe harbor" correction methods for plans that experience elective deferral failures related to these types of features.

Source: 401kspecialistmag.com, November 2018

Cuomo Forced to Court in 401k Financial Farce

Abstract: New York Gov. Andrew Cuomo had, through the Department of Financial Services, ordered state regulators to suggest to 401k and similar financial firms they "review any relationships they may have with the National Rifle Association and other similar organizations. Upon this review, the companies are encouraged to consider whether such ties harm their corporate reputations and jeopardize public safety."

Source: 401kspecialistmag.com, November 2018

DOL Guidance on Auto Portability

Abstract: Under an auto portability program, employees would be told that their 401k savings will be moved to tax-favored IRAs when they leave a job or if the plan is terminated, and that the employee's savings in the IRA would then be automatically transferred to the 401k plan or other individual account plan of the new employer when the employee finds a new job. However, because the prohibited transaction provisions of ERISA and the Internal Revenue Code prohibit a plan fiduciary from using its discretion to cause the plan or IRA to pay the fiduciary a fee, implementation of this type of program would require a prohibited transaction exemption.

Source: Wagnerlawgroup.com, November 2018

Corrections of Elective Deferral Failures in Automatic Contribution Arrangements

Abstract: This 1-page article examines the correction methods for the most common downside of automatic contribution arrangements: elective deferral failures.

Source: Boutwellfay.com, November 2018

Student Loan Programs Top List of Plan Design Warnings

Abstract: With Student Loan Repayment programs so popular and with the blessing of the IRS in the case of at least one 401k SLR program, why is caution advisable? Steve Riordan notes that SLR contributions are subject to all qualification requirements; however, he said that he is more concerned about coverage, non-discrimination and contribution limits. Each component, he noted, is separately tested regarding coverage and non-discrimination. If one population receives a match and the other receives a non-elective contribution, that increases the potential for coverage and non-discrimination failures, he warned.

Source: Asppa.org, November 2018

Have You Noticed? A Guide to Year-End (and other) 401k Disclosures

Abstract: There's often confusion about the many required 401k plan notices including the purpose of each notice, when each must be distributed, and to whom each must be sent. This short article explains some of the most common notices and clarify the distribution requirements.

Source: Alliant401k.com, November 2018

401k Plan Notice Issues of Which to Be Aware (or Beware)

Abstract: There are detailed laws and regulations regarding the content and when/how the plan participant notices are delivered. For most plans, the next plan year will begin on January 1, 2019, which means that December 1 is generally the last date by which those notices may be provided. This article touches on some bigger picture issues for an employer’s attention as we enter notice season.

Source: Hawleytroxell.com, November 2018

2019 401k Plan Limits

Abstract: The Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019. The contribution limit for employees who participate in 401k, 403b, most 457 plans, and the federal government's Thrift Savings Plan is increased from $18,500 to $19,000. Full details provided.

Source: 401khelpcenter.com, November 2018

Best Practices for Managing Participant Data

Abstract: Plan sponsors could save a lot of time, expense and stress by implementing a thorough system for managing participant data. Having the appropriate procedures in place can limit potential liability in an audit. Most companies don't realize the pertinence of maintaining adequate, compliant records until there is a need.

Source: Planpilot.com, October 2018

2019 Calendar of Significant DC Plan Compliance Tasks

Abstract: This calendar will help you set up your own schedule of activities to address as the year progresses so that you do not miss important deadlines for your qualified plans. As you evaluate the various tasks, you can confirm suitable deadlines with your vendors for their completion.

Source: Buckglobal.com, October 2018

2019 Planning for ERISA Single-Employer DC Plan Operations

Abstract: In addition to verifying that routine tasks are monitored in accordance with plan terms and administrative policies -- such as making required minimum distributions, sending safe harbor notices, and attending to the myriad annual reporting and disclosure requirements -- administrators must be on the alert for some important tasks. Here are some key areas to watch.

Source: Buckglobal.com, October 2018

DOL Announces Guidance and Relief for Plans Impacted by Recent Hurricanes

Abstract: The U.S. Department of Labor recognizes that plan fiduciaries, employers, labor organizations, service providers, and participants and beneficiaries may encounter issues complying with ERISA over the next few months as the consequences of Hurricane Florence and Hurricane Michael unfold. It has published this employee benefit plan compliance guidance.

Source: 401khelpcenter.com, October 2018

DOL Develops Compliance Assistance Resources

Abstract: The U.S. Department of Labor's Employee Benefits Security Administration has developed compliance assistance resources to help protect employee benefits. EBSA's goal is to help workers by restoring plan assets and securing the payment of promised benefits, and to help employee benefit officials understand the law. These tools give employee benefit plans the ability to self-correct violations.

Source: 401khelpcenter.com, October 2018

Podcast: 401k Pitfalls and How to Avoid Them

Abstract: Employee Benefit Plans are common among most businesses. But just as common are the small mistakes employers can make that end up creating big problems. This podcast discusses the pitfalls surrounding 401k plans, and the steps you can take to avoid them.

Source: Dgccpa.com, October 2018

Top Five 401k Compliance Mistakes and Best Practices

Abstract: A series of articles discussing the five most common compliance mistakes made by 401k plan administrators and fiduciaries, the potential liability associated with such mistakes, and steps you can take to avoid making them yourself.

Source: Benefitsbclp.com, October 2018

Determination of Proper Earnings When Correcting a Qualification Mistake

Abstract: The determination of proper earnings may seem like a small issue when correcting a qualification mistake. However, both the IRS and the DOL treat this part of your correction seriously, so you should, too.

Source: Ferenczylaw.com, October 2018

IRS Updates the EPCRS Plan Correction Procedure

Abstract: Through Revenue Procedure 2018-52, the IRS has just updated its system of correction programs for retirement plans known as the Employee Plans Compliance Resolution System (EPCRS). The principal change in the new procedure is to require that submissions under the Voluntary Correction Program (VCP) be made online through the www.pay.gov website.

Source: Bradley.com, October 2018

IRS Issues Draft 2018 Form 5500-EZ

Abstract: The draft of the 2018 Form 5500-EZ does not show any changes from the 2017 Form 5500-EZ, with the exception of the calendar year the data being reported concerns. The IRS cautions, however, that while it generally does not release draft forms until it believes that all changes have been incorporated in the form in question, "unexpected issues sometimes arise, or legislation is passed, necessitating a change to a draft form."

Source: Asppa.org, September 2018

A Hidden Hazard of Plan Administration -- A Mishandled Power of Attorney

Abstract: As plan sponsors and administrators, you are the plan's fiduciaries who are ultimately responsible for determining the validity of a power of attorney. When it comes to a power of attorney, state laws govern, and your work becomes a bit more burdensome. If you haven’t already done so, determine who is reviewing the POAs submitted to your plan. Make sure there is a process that considers the state law applicable to POAs and notarization.

Source: Findley.com, September 2018

IRS Updates Safe Harbor Explanations for Eligible Rollover Distributions

Abstract: IRS has updated the model notices retirement plan use to inform participants receiving eligible rollover distributions about tax information applicable to their benefits. Plan administrators -- particularly those who had not independently updated notices to reflect recent law changes -- will want to implement the new model as soon as possible.

Source: Buckglobal.com, September 2018

Safe Harbor Explanations on Eligible Rollover Distributions, IRS Notice 2018-74

Abstract: This IRS notice modifies two safe harbor explanations plan sponsors may use to satisfy the IRC Section 402(f) requirement to provide information to eligible rollover distribution recipients.

Source: Irs.gov, September 2018

Avoid Making Incomplete VCP Submissions

Abstract: The IRS Employee Plans Voluntary Compliance area has streamlined its processes to identify Voluntary Correction Program submissions that can be closed quickly. During the process they noticed mistakes applicants make that result in incomplete submissions. This article explains how to avoid common mistakes in Voluntary Compliance Program submissions.

Source: Irs.gov, September 2018

IRS Issues Modified Section 402(f) Notices

Abstract: This notice modifies the two safe harbor explanations in Notice 2014-74, 2014-50 I.R.B. 937, that may be used to satisfy the requirement under section 402(f) of the Internal Revenue Code that certain information be provided to recipients of eligible rollover distributions. The safe harbor explanations as modified by this notice take into consideration certain legislative changes and recent guidance, including changes related to qualified plan loan offsets.

Source: Benefitsforward.com, September 2018

Update of DOL Weblinks Needed in Participant Communications

Abstract: Last year, DOL overhauled its website. If your electronic or printed participant communications link to DOL materials, you may need to revise those communications so your participants will be directed to the appropriate pages on the revamped DOL site.

Source: Buckglobal.com, September 2018

Borrowing Limits for Participants With Multiple Plan Loans

Abstract: In situations in which they are approving plan loans, plan sponsors should understand how the maximum loan amount available to a plan participant is calculated to ensure that violations of IRC section 72(p)(2)(A) do not occur. If the plan sponsor is not required to approve loans, they should ensure that the third-party recordkeeper is appropriately limiting loans to participants as the plan sponsor is ultimately responsible for the plan's compliance with the rules.

Source: Eisneramper.com, September 2018

Prudent Practices for Assessing Bundled Services in This Era of 401k Plan Fee Litigation

Abstract: Given the prevalence of ERISA fee litigation, 401k plan sponsors are very concerned about identifying and implementing best fee practices to insulate themselves from liability against such claims. Over 50 so-called "fee cases" have been filed to date, with the majority pursued as class actions. Like most fiduciary benefit claims, however, the liability risk can be substantially mitigated through preventive practices.

Source: Bna.com, September 2018

New Changes in 2018 for Form 1099-R Reporting

Abstract: The Internal Revenue Service has issued the updated 2018 Form 1099-R and the updated 2018 Instructions for Forms 1099-R and 5498, containing some important changes compared to the 2017 instructions. Significantly, many of the updates to Form 1099-R reflect the changes made by The Tax Cuts and Jobs Act.

Source: Icemiller.com, September 2018

Retention Practices: Fiduciary Records Are (Almost) Forever

Abstract: The question now is how long should fiduciary records be kept? It is not difficult to make the argument that reviewing and monitoring plan investment portfolios is an annual affair and a best practice. If you accept this premise and do the math, plan fiduciaries are exposed for a significantly long period. This extended period of risk means that for records relating to that original investment should be preserve for a significantly period.

Source: Fiduciaryplangovernance.com, September 2018

Employing the Proper Definition of Compensation

Abstract: One of the operational failures that is always at or near the top of the DOL's list concerns plan sponsors failing to employ the correct definition of compensation for purposes of performing necessary compliance testing and/or determining benefit allocations. The following article is intended to briefly highlight some of the issues that can occur when the incorrect definition of compensation is employed as well as to provide an explanation of some of the differences between the most commonly employed definitions of compensation.

Source: Legacyrsllc.com, September 2018

Late or Missing Deposits

Abstract: Timing is everything. You've no doubt heard this phrase, but it holds especially true when it comes to depositing employee deferrals into your 401k plan. Depositing each employee's salary deferral into their 401k plan account may seem like a small piece of the 401k puzzle, but failing to meet the deadlines for depositing the contributions, or not making the deposit at all, can have long-lasting and costly ramifications.

Source: Tristarpension.com, August 2018

Frequent 401k Audit Finding - Use of Forfeitures

Abstract: During 401k audits, one of the operational failures often encountered are forfeitures that are not used in accordance with the method selected in the Plan's adoption agreement. These failures can be significant and cause corrective action that spread across many years.

Source: 5500audit.com, August 2018

401k Nondiscrimination Testing: A Simple Guide for Improving Your Results

Abstract: Whether you're new to 401k administration, starting a new 401k for your business, or trying to fix failed testing for your existing 401k, understanding and dealing with nondiscrimination testing can be a major hassle. This guide to be an end-to-end resource on the topic.

Source: Forusall.com, August 2018

IRS Private Letter Ruling Will Help Clear the Way for 401k Plan Student Loan Benefits

Abstract: The IRS released a private letter ruling which will help clear the way for employers to provide a new type of student loan repayment benefit as part of their 401(k) plans. This ruling is important because many employers have been looking for ways to help their employees manage student loan repayment obligations, but to date the options available for doing so have been rather limited.

Source: Mwe.com, August 2018

The Right Way to Manage Taxed Uncashed Retirement Checks

Abstract: If you think uncashed pension checks are a hassle to manage, it gets more difficult if the taxes have been taken out at distribution. There is a practical solution discussed in this article authored by PenChecks Trust President and CEO Peter Preovolos.

Source: Penchecks.com, August 2018

IRS Issues 2018 Version of Form 1099-R for Retirement Plan Distributions

Abstract: Retirement plan administrators (including administrators of 401k plans) are required to report plan distributions on Form 1099-R, which they file with the IRS and deliver to the plan participant or beneficiary. While the 2018 form and instructions largely mirror the 2017 version, there are a few changes.

Source: Thomsonreuters.com, August 2018

What Every Advisor and Plan Sponsor Should Consider When It Comes to 404(c) Compliance

Abstract: One of the keys to good fiduciary practices is understanding that nothing can ever be put on autopilot. In order to receive the benefits of ERISA Section 404(c), plan fiduciaries must comply with certain requirements. This article's recommendations will help advisors and plan sponsors evaluate their efforts.

Source: Vestwell.com, August 2018

Funding 401k Corrective Contributions With Forfeitures

Abstract: The IRS has issued final regulations allowing forfeitures under a 401k plan to be used to fund corrective contributions. IRS rules require forfeitures under a plan to be used as soon as possible to pay administrative expenses, to reduce the employer's contributions or otherwise to be allocated among participants.

Source: Ktserisacorner.com, August 2018

Partial Termination of Your Qualified Retirement Plan: Don't Let It Sneak Up on You

Abstract: What some plan sponsors may not be aware of is that it is possible for a plan to experience a "partial termination" even if the plan sponsor did not intentionally initiate a termination. Because this can occur over time, partial terminations frequently sneak up on plan sponsors. The fact that a partial termination may be discovered long after it occurs can complicate taking necessary measures and require correction to maintain the plan's tax qualified status.

Source: Boutwellfay.com, August 2018

401k Participant Disclosures - What Employers Need to Know

Abstract: 401k plan sponsors have a fiduciary responsibility to distribute certain information to plan participants from time to time. These important participant disclosures can also be many and spread throughout the year, which can make their distribution seem like an overwhelming fiduciary responsibility. This is a description of the various participant disclosures that can apply to a participant-directed 401k plan with guidelines for their distribution.

Source: Employeefiduciary.com, July 2018

You Improperly Excluded an Employee From Your 401k Plan -- Now What?

Abstract: One error that can arise during the life of a 401k retirement plan is for an employee to be improperly excluded from making elective deferrals for a period. If you are an employer that has found this mistake, what are the necessary questions to ask and steps to take to get your plan back in compliance? This article is the first of several in a series that goes through several examples.

Source: Graydon.law, July 2018

IRS Blesses Use of Forfeitures for QNEC/QMAC/Safe Harbor Contributions

Abstract: The IRS has finalized regulations that allow employers to use forfeitures as qualified nonelective and qualified matching contributions to help pass nondiscrimination tests and as safe harbor contributions. The change is effective for plan years beginning on or after July 20, but, as previously offered in IRS' proposed regulation, can be relied on for earlier periods.

Source: Conduent.com, July 2018

IRS Issues Final Regulations Approving Forfeitures to Fund QNECs, QMACs

Abstract: The IRS and Department of the Treasury have issued final regulations amending the definitions of qualified nonelective contribution and qualified matching contribution, settling the issue of whether participant forfeitures can be used to fund QNECs and QMACs.

Source: Ascensus.com, July 2018

Hardship Distribution Cannot Be Taken for Repayment of Student Loans

Abstract: In Information Letter 2018-1, the IRS responded to a U.S. Congressman who asked why his constituent could not take a hardship distribution from his 401k plan to pay off his daughter’s college student loans. The IRS explained that a hardship distribution must, among other things, be necessary to satisfy an immediate and heavy financial need. The IRS confirmed in the Letter that because a safe harbor hardship distribution may be made only for the prospective payment of education expenses, it cannot be made for the repayment of student loans.

Source: Drinkerbiddle.com, July 2018

Changes to DOL Late Deferral Remittance Enforcement Procedure

Abstract: This article is intended to share a recent change to the DOL's enforcement procedures regarding the late remittance of participant elective deferrals by plan sponsors. Unfortunately, the DOL appears to have adopted a more aggressive and threatening approach about plan sponsors who attempt to correct such failures without pursuing "pristine" correction under the DOL's Voluntary Fiduciary Correction Program.

Source: Legacyrsllc.com, July 2018

Time for 401k Plan Sponsors to Revisit Your Hardship Withdrawal Provisions

Abstract: The Bipartisan Budget Act of 2018 includes several changes to the rules governing hardship withdrawals from 401k plans. Because the changes apply to plan years beginning after December 31, 2018, plan sponsors should start considering their options now and make decisions regarding which changes, if any, to implement to allow plenty of time to develop and timely distribute participant communications, update procedures and re-program plan administrative systems (including coordination with the plan recordkeeper's systems) and amend their plan documents.

Source: Employeebenefitsupdate.com, July 2018

Stakeholders Propose Ideas for Expanding the Determination Letter Program

Abstract: IRS received comments from trade organizations, law firms, and other stakeholders on what special circumstances beyond initial plan qualification and plan termination should merit a review of plan changes. It remains to be seen whether the IRS will allow determination letter applications for significant design changes, mergers, multiemployer plans, governmental plans, or other circumstances raised in these comments.

Source: Conduent.com, July 2018

What are the "Reasonable" Expenses That Can Be Paid Out From Plan Assets?

Abstract: Under ERISA, retirement plan sponsors have a fiduciary duty that requires them to act solely in the interest of plan participants and beneficiaries. Plan sponsors are also limited to using plan assets for the reasonable expenses of administering the plan. Using plan assets for other plan expenses could be a breach of the sponsor's fiduciary duty and lead to potential fines and costly litigation.

Source: Bsllp.com, July 2018

Frequent 401k Audit Finding Series - Hardship Distributions

Abstract: During a 401k audit, hardship distributions are a common area where failures are discovered. The plan sponsor is often unaware that they were required to gather supporting documentation, and they have approved the distribution without verifying that an immediate need existed.

Source: 5500audit.com, July 2018

IRS Appears Likely to Expand Determination Letter Program in 2019

Abstract: All signs point to the IRS expanding access to the determination letter program for individually designed plans in 2019. This would be a welcome move for employers and other plan sponsors, who have been unable to obtain determination letters with respect to most ongoing plans since the DL program as we knew it ended last year.

Source: Employeebenefitsupdate.com, July 2018

Podcast: Fixing Retirement Plan Overpayments

Abstract: This 8-minute podcast discusses how to fix retirement plan overpayments, based on (1) the type of plan, (2) whether the overpayment was with respect to a lump sum or ongoing payments, (3) the type of overpayment (whether it was to the wrong person or paid at the wrong time), and (4) who caused the overpayment. They discuss the requirements, the decisions involved, and certain ERISA and taxation issues that can arise when addressing these overpayments.

Source: Benefitsbrief.podbean.com, July 2018

Avoid Audit Flags: How to Lower Your Plan's Audit Risk

Abstract: Are only the largest plans audited? The truth is that plans of any size can be audited by the IRS and the DOL. Your plan could be selected for a random audit, or as a result of IRS datasets that target certain types of plans. However, lots of audits are triggered by specific events. Learning to avoid the red flags can help reduce your risk and increase the odds that you will survive any audit for which you are selected without major problems.

Source: Cohenbuckmann.com, June 2018

Beware of These Common ERISA Compliance Errors

Abstract: ERISA is a complex and continually changing federal law that applies to most private sector employee benefit plans. When companies unintentionally run afoul of ERISA regulations it can expose them to fines, penalties, and costly litigation. Understanding these ERISA problem areas can help you avoid making these common compliance mistakes.

Source: Bsllp.com, June 2018

Tips for Establishing and Maintaining Plan Documents

Abstract: ERISA Section 402 says every employee benefit plan must be established and maintained by a written instrument. Plan sponsors have a fiduciary duty to operate in accordance with that plan document, but an ERISA attorney shares common cases when mistakes are made.

Source: Planadviser.com, June 2018

Common Errors and Corrections in Retirement Plan Loans

Abstract: Although retirement plan loans can increase administrative responsibilities, many plan sponsors include them as a plan feature with the idea that offering participant loans can help to encourage a higher participation rate. Despite your best efforts in administering plan loans, mistakes can happen. Knowing what resources are available to fix errors can help.

Source: Fidelity.com, June 2018

Plan Sponsors Need to Give Special Tax Notice Update for 401ks

Abstract: One of the many fiduciary duties of plan sponsors is to provide disclosures to plan participants, including a summary of material modifications, annual reports, and notice of any applicable updates. The Tax Cuts and Job Act went into effect on January 1, 2018. Among the many changes made by the tax plan, the TCJA has changed the time period for making eligible rollover loan offsets for 401ks, which will require a notification for plan participants to understand the changes.

Source: Bsllp.com, June 2018

401k Testing Corrections

Abstract: If the test fails there are two options, one of which is to distribute funds to the Highly Compensated Employees. To correct a failed test using the distribution option includes some extra steps that can be very confusing. This article discusses the process required for correcting an ADP test using the corrective distribution option.

Source: Benefit-Resources.com, June 2018

TCJA's Defaulted Loan Extended Rollover Rules have a Serious Technical and Fiduciary Glitch

Abstract: Effective January 1 of this year was the right of participants to an extended period to rollover their defaulted loan amount, if the default arose following unemployment or the termination of a plan. The statue has a fundamental flaw: it confuses the rules related to the taxation of the loan with the distribution rules related to defaulted loans. The practical effect of this confusion is that it is virtually impossible to effectively use. Making it work requires the acceleration of the reduction of the plan's retirement benefit, which runs counter to the fiduciary obligations under a loan program.

Source: Businessofbenefits.com, June 2018

Plan Sponsors Must Now Analyze 401k Plan Administration

Abstract: Many 401k plans may need plan amendments to either bring them into compliance with TCJA and the Budget Act, offer the distribution opportunities now permitted following this legislation, or comply with regulations implementing these provisions that have yet to be written. The deadline for adopting these amendments may not be until December 31, 2019, or later and some plans may not require amendments at all.

Source: Blr.com, June 2018

Complying With Hardship Withdrawal Rules

Abstract: Recent IRS guidance and legislative changes discussed here show that this is an area where both plan sponsors and participants may still have questions.

Source: Laboremploymentperspectives.com, June 2018

Tax Reform Makes Now a Good Time for a 401k Plan Compensation Definition Audit

Abstract: The Tax Cuts and Jobs Act made several changes to the tax code that eliminated the ability for employers to deduct and employees to exclude from income certain fringe benefits received by the employee. As a result, plan administrators will need to review their 401k plan's definition of compensation and may need to make appropriate changes.

Source: Ktserisacorner.com, June 2018

401k Notices and Updates

Abstract: The Tax Cuts and Jobs Act enacted late in 2017 and the Bipartisan Budget Act enacted in early February this year both made changes to the laws regarding rollovers from retirement plans and when a plan must accept certain rollovers. The tax notices that all qualified retirement plans provide to participants when their employment terminates need to be updated to reflect the changes to these rules.

Source: Winstead.com, June 2018

Form 5500 Update

Abstract: As a plan sponsor or financial advisor, it is paramount that you maintain an open line of communication with your TPA or recordkeeper responsible for preparing this filing to avoid potential penalties and fines from both the IRS and the DOL. To avoid delays in the preparation and filing of the form, here are some things you can do as the plan sponsor to assist your service provider.

Source: Legacyrsllc.com, June 2018

Top Ten Workplace Retirement Plan Administration Mistakes

Abstract: Mistakes are made when running workplace retirement plans. Marcia Wagner, the founder of The Wagner Law Group, brings her over thirty years of experience working on ERISA matters to this podcast and shares her list of the top 10 mistakes she sees retirement plan sponsors make.

Source: 401kfridays.com, June 2018


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