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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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Prevent Problems by Using Auto Rollover IRAs for Force-Outs Below $1,000

Have you done something for a long time without really thinking about it, and when you finally do you realize you could be doing it better? Most service providers and plan sponsors continue to pay force-out distributions of less than $1,000 in cash via checks without recognizing there is a more efficient solution. Discussed here is why you should be using an automatic rollover IRA for all account balances: from $1 to $7,000.

Source: Penchecks.com, February 2024

DOL Gets Temporary Restraining Order Against TPA

The DOL has gone to court to protect retirement plan assets in a case of alleged embezzlement by a TPA. According to the DOL, RiversEdge is a third-party administrator of at least 240 retirement plans that hold millions of dollars in plan assets and acts as an agent to manage and administer plan assets, at least 229 of these retirement plans are covered by ERISA.

Source: Napa-net.org, February 2024

New Rules Make Tracking Long-Term, Part-Time Employee Service a Full-Time Job

Most employers with impacted plans reviewed their eligibility-tracking processes some time ago in anticipation of the initial effective date of the new LTPT rule. However, with that new rule now effective -- and last-minute guidance available -- employers need to review those processes to determine if further changes are needed or desired. Eventually, it may become easier to think of service tracking under the new rule as a largely set-it-and-forget-it process. However, for now, employers will likely want to continue revisiting, reviewing, and refining their eligibility-tracking processes around the new rule.

Source: Mwe.com, February 2024

PR Treasury Announces Plan Contribution Limits for 2024

On January 30, 2024, the Puerto Rico Treasury Department issued Internal Revenue Circular Letter No. 24-01 notifying the retirement plan limits that will apply to retirement plans qualified for the year 2024, including the cost-of-living adjustments published by the IRS. Here are the retirement plan limits applicable for taxable years beginning on or after January 1, 2024.

Source: Mcvpr.com, February 2024

The IRS's Pre-Examination Pilot Program Enters Phase Two

The IRS announced earlier this month that it is extending its pilot program under which retirement plan sponsors are given 90 days' notice that their plan has been selected for examination, with the opportunity to avoid a full audit by correcting certain errors and demonstrating compliance with the applicable Internal Revenue Code rules by the end of the 90-day pre-examination period. The key features of the pre-examination pilot program remain the same.

Source: Groom.com, February 2024

2024 Highly Compensated Employees: What You Need to Know to Pass Your Non-Discrimination Tests

If you have been offering a company 401k for more than a year, then you know your plan requires a lot of testing to stay compliant. That's because one of the primary duties of employers offering a 401k is to ensure that it's designed to benefit all employees, not just owners and highly paid employees. A series of annual tests is used to decide whether or not a plan discriminates. If the plan fails a test, the company must take corrective action until the plan is no longer discriminatory.

Source: Forusall.com, February 2024

Calculating Earnings for 401k and 403b Plan Corrections: Do Your Best to Do Better

Practitioners tend to use the DOL's online calculator for late deferral deposits since EPCRS permits estimates, but to the extent one is being practical and making participants whole, the cheaper result of the online calculator should not prevail over the participant's, the plan's, or the default investment alternative's actual rate of return. Some other alternatives are presented here.

Source: Belfint.com, February 2024

A More Enlightened Approach to Uncashed Distribution Checks

No retirement plan sponsor likes the idea of dealing with uncashed distribution checks, nor do they wish to draw unwanted regulatory attention or to become embroiled in costly litigation because of their uncashed check policies. Unfortunately, many plan sponsors place themselves in precisely that spot, becoming unnecessarily over-burdened with unresolved uncashed checks, while inviting unwanted regulatory scrutiny and/or legal challenges by embracing flawed uncashed check policies.

Source: 401kspecialistmag.com, February 2024

SPARK Institute Comment Letter on Long-Term, Part-Time Employee Proposal

Their letter includes comments seeking clarification and relief for various issues covered by the proposed regulations including a request to delay the proposal's applicability date and provide good faith relief; a request for changes and/or clarifications concerning the proposal's rules governing eligibility computation periods for LTPT employees; concerns and requests regarding the proposed regulations' impact on the elapsed time method for crediting service; and concerns and requests regarding the proposed definition of "long-term, part-time employee."

Source: Sparkinstitute.org, February 2024

DOL Guidance on Pension-Linked Emergency Savings Accounts

The DOL has provided guidance on pension-linked emergency savings accounts, a special type of short-term savings account within a 401k or 403b account. The SECURE 2.0 Act authorized PLESAs to encourage elective contributions to 401k or 403b accounts because the limited ability to access money from those accounts in the event of an emergency has tended to discourage those who are lower paid from making elective contributions and thereby receiving an employer match.

Source: Segalco.com, February 2024

Input Requested on Retirement Plan Disclosure and Reporting

The SECURE 2.0 Act requires the agencies responsible for administering ERISA to review existing reporting and disclosure requirements under both ERISA and the Internal Revenue Code and subsequently report to Congress on the effectiveness of those requirements. To help them fulfill those mandates, the agencies have published a broad, sweeping appeal for information on the adequacy and problems with current disclosure and reporting requirements for retirement plans, including comprehension, cost, and usefulness.

Source: Segalco.com, February 2024

DOL Proposes Rule on Automatic Portability

SECURE 2.0 Act added a prohibited transaction exemption under which an intermediary -- referred to as an automatic portability provider -- may receive a fee without violating prohibited transaction rules. As required by SECURE 2.0, the DOL has issued guidance on the prohibited transaction exemption in the form of a proposed rule. The DOL welcomes comments on the proposed rule, which are due by March 29, 2024.

Source: Segalco.com, February 2024

EBSA Recovered $1.4B in Retirement, Health Benefits in '23

In an annual fact sheet summarizing recoveries from enforcement actions and complaint resolutions, EBSA, a division of the DOL, reported that $854.7 million in recovery came from 731 civil investigations, with 505 (or 69%) resulting in monetary resolutions or other corrective actions. Another $444.1 million came from resolving complaints, $61.2 million from recovering abandoned plan assets, and $84.5 million from its voluntary fiduciary correction program.

Source: Planadviser.com, February 2024

When It Comes to Vesting, the IRS Says Once a Long-Term, Part-Time Employee, Always a LTPT Employee

Under the SECURE Act and the SECURE 2.0 Act, employers must provide long-term, part-time employees the opportunity to make elective deferrals under their 401k plans and, beginning in 2025, their 403b plans. However, long-term, part-time employees are not required to be eligible for employer matching or profit-sharing contributions until they satisfy the regular plan rules. Despite this fact, one of the most salient issues surrounding the implementation of the new rule is how it impacts -- and complicates -- tracking when employees become vested in such contributions.

Source: Mwe.com, February 2024

IRS Confirms Long-Term, Part-Time Employees Excludible From Certain Nondiscrimination Testing

Under the SECURE Act and the SECURE 2.0 Act, employers must provide long-term, part-time employees the opportunity to make elective deferrals under their 401k plans and, beginning in 2025, their 403b plans. When this occurs, certain special rules apply to such employees that impact whether they must be included in annual nondiscrimination testing or receive required top-heavy vesting and benefits. As a result, employers need to understand these requirements, as they may impact how annual testing is performed and the results.

Source: Mwe.com, February 2024

SECURE 2.0 Grab Bag: 401k's and De Minimis Financial Incentives

On December 20, 2024, the IRS released Notice 2024-2 (the "Grab Bag" guidance), which provided a Q&A format of guidance on certain provisions of the SECURE 2.0 Act of 2022. This article discusses the "de minimis" incentives for employees to defer, as outlined in SECURE 2.0 and for which the IRS just provided guidance in the Grab Bag. Here's how it may apply to your qualified plan.

Source: Ferenczylaw.com, February 2024

IRS Pre-Examination Retirement Compliance Pilot Program Is Extended

On February 7, 2024, the IRS announced the second phase of its Pre-Examination Retirement Compliance Program. Under this program, sponsors will be notified that their plan is selected for examination and will have 90 days to review and correct any plan document or operational errors, similar to the process for phase one. If a plan sponsor receives a letter notifying them of an upcoming examination, it is important to act quickly and loop in benefits counsel as soon as possible.

Source: Erisapracticecenter.com, February 2024

2024 Deadlines and Important Dates for Plan Sponsors

Sponsors of defined benefit and defined contribution retirement plans should keep these deadlines and other important dates in mind as they work toward ensuring compliance with their plans in 2024. Dates assume a calendar year plan. Some deadlines may not apply, or dates may shift based on the plan sponsor's fiscal year.

Source: Berrydunn.com, February 2024

New Guidance on Pension-Linked Emergency Savings Accounts

Over the past several years, there has been a growing interest in enhancing employee benefit programs to help employees save for emergencies. To facilitate this, Congress included a provision in the SECURE 2.0 Act of 2022 intended to provide a framework for integrating emergency savings accounts into defined contribution plans. The IRS and DOL recently released guidance intended to clarify several open legal questions related to pension-linked emergency savings accounts. The guidance is summarized here.

Source: Groom.com, February 2024

Form 5500 Updates: Participant Count Win and Large Plan Filer Warning

The Form 5500 series was recently updated with a key change to the participant counting methodology for determining if the plan is a small plan filer or a large plan filer. Not as widely publicized but affecting all filers, the Department of Labor released adjusted penalty rates effective January 15, 2024, which include an increase of $84 per day for failure to timely file a complete Form 5500. Are you prepared for the changes to the filing requirements?

Source: Newfront.com, February 2024

IRS Confirms Same Hours-Counting Rules Still Add Up for Long-Term, Part-Time Employees

The new long-term, part-time employee rule has generated questions about whether all employers will now be required to track the actual hours all employees work to ensure compliance with this rule. The recently proposed regulations released by the IRS confirm that the answer is no. Employers do not need to change how they count periods of service toward plan eligibility. However, employers should revisit how such service is currently counted under their plans and consider the impact that may have on if and how the long-term, part-time employee rules apply.

Source: Mwe.com, February 2024

IRS Proposes Long-Term, Part-Time Employee Regulations

On November 24, 2023, the IRS proposed long-awaited guidance on the required coverage of long-term, part-time employees under the SECURE 1.0 and the SECURE 2.0. This first piece of guidance to squarely address the LTPTE provisions arrived just weeks before the January 1, 2024, required LTPTE entry date under SECURE 1.0. Here is the background and a review of the guidance.

Source: Morganlewis.com, February 2024

Puerto Rico Announces 2024 Limits on Qualified Retirement Plans

On January 31, 2024, the Puerto Rico Department of the Treasury issued Internal Revenue Circular Letter No. 24-01 announcing the applicable 2024 limits for Puerto Rico qualified retirement plans. Here are the applicable 2024 limits for qualified retirement plans in Puerto Rico.

Source: Littler.com, February 2024

IRS Issues Guidance on Required Inclusion of Long-Term, Part-Time Employees in 401k Plans

SECURE 2.0, among other things, reduced the three-year requirement to two years, effective January 1, 2023, for such eligible long-term, part-time employees. This means, that for plan years beginning on or after January 1, 2025, an LTPT employee's eligibility will only require two consecutive 12-month periods of service of at least 500 hours, but less than 1000 hours and plans must begin counting hours to support this process as of January 1, 2023.

Source: Hansonbridgett.com, February 2024

DOL Guidance: Pension-Linked Emergency Savings Accounts (PLESAs)

On January 17, 2024, the DOL issued guidance in the form of Q&As on PLESAs. Under the SECURE 2.0 Act, employers are permitted (but not required) to offer PLESAs in conjunction with their 401k plans, effective for plan years beginning after December 31, 2023. The DOL separately issued a news release generally describing the Q&As. Among other things, the release discloses that the DOL and the IRS consulted with each other in developing their respective guidance.

Source: Compliancedashboard.net, February 2024

You Don't Have To Go Home, But You Can't Stay Here

It's 2024, which means a new batch of provisions from SECURE Act 2.0 have gone into effect. One of the more significant ones is an increase in the "cashout" limit that a qualified plan can impose to kick former employees with small balances out of their plans. For a while, this limit was $3,500 and was increased to $5,000 by the Taxpayer Relief Act of 1997. SECURE Act 2.0 bumps it up to $7,000 as of January 1, 2024. Plans aren't required to have a force-out provision, but nearly all do, and for good reason.

Source: Benefitslawadvisor.com, February 2024

The Maximum Contribution May Be Lower Than You Thought: ADP and ACP Test Basics for 401k and 403b Plans

Business owners and Highly Compensated Employees are often shocked to hear that they cannot contribute the maximum 401k or 403b deferral because their plan did not pass the discrimination tests. Much to their surprise, through the Actual Deferral Percentage and the Aggregate Contribution Percentage tests, the Internal Revenue Code prevents HCEs from benefiting from tax deferrals significantly more than NHCEs, unless the plan is a safe-harbor plan. Maria T. Hurd, CPA, provides a full review of the issue.

Source: Belfint.com, February 2024

A Long-Term, Part-Time Employee or Not a Long-Term, Part-Time Employee, That Is the Question

Under the SECURE Act and the SECURE 2.0 Act, employers must provide long-term, part-time employees the opportunity to make elective deferrals under their 401k plans and, beginning in 2025, their 403b plans. Because certain special rules apply to employees who enter an employer's plan as long-term, part-time employees, all employers need to understand when an employee is long-term, part-time.

Source: Mwe.com, January 2024

IRS Guidance: Pension-Linked Emergency Savings Accounts

On January 12, 2024, the IRS issued Notice 2024-22, initial guidance on emergency savings accounts linked to 401k plans under the SECURE 2.0 Act. The new provisions, effective for plan years beginning after December 31, 2023, generally permit (but do not require) employers to offer pension-linked emergency savings accounts to non-highly compensated employees as part of their defined contribution plans, subject to several rules and restrictions.

Source: Compliancedashboard.net, January 2024

New DOL Guidance on Pension-Linked Emergency Savings Accounts

On January 17, 2024, the DOL published a list of questions and answers to help plan sponsors administer pension-linked emergency savings accounts. The guidance provides important clarification on the administration of these emergency savings accounts.

Source: Captrust.com, January 2024

"Guiding" Student Loan Matches

One of the optional provisions in the SECURE 2.0 Act that some employers were very excited about is the provision to allow a 401k match based on a participant's student loan payment rather than deferrals. When asked about what guidance from the Treasury Department they would like to see before deciding on this provision or before implementing it, the responses varied from technical questions such as how to track employees' student loan payments, to regulatory questions such as how this would work with safe harbor plans, to not waiting on guidance but just waiting to work out the technical complexities with their providers.

Source: Asppa.org, January 2024

Student Loan 401k Matching: A Case Study

SECURE 2.0 was instrumental in focusing employers' attention on the issue and provided a guidepost as to how they might provide more financial support to address those payments. As a case in point, engineering consultancy Kimley-Horn and Associates Inc., which employs about 8,000 people, is now offering a 401k match based on student loan payments through a program run by SoFi at Work.

Source: Planadviser.com, January 2024

Impractical SECURE 2.0 "Sidecar" Emergency Savings Accounts Should Be Avoided

The DOL has issued guidance clarifying several components of the emergency savings provision of SECURE 2.0. The guidance highlights the complexity of creating and maintaining these accounts and should be enough to make most plan sponsors look for a better option. Here are some of the rules a plan sponsor must follow if considering this option.

Source: Multnomahgroup.com, January 2024

SECURE 2.0 Guidance - Auto Enrollment, SIMPLE, and Roth Provisions

On December 20, 2023, the IRS gave us a nice holiday present with the release of guidance on several provisions of the SECURE 2.0 Act. This article deals with the provisions that the author believe are of the highest interest to plan sponsors, advisors, and CPAs. The article provides a summary of the guidance for auto-enrollment, SIMPLE, and Roth provisions.

Source: Consultrms.com, January 2024

IRS Highlights Changes to Pre-Approved DC Plan Program

There have been significant changes to the IRS Pre-Approved Defined Contribution Plan Program, and two of the IRS officials involved in the thick of it recently provided a refresher on the program rules and recent developments. Central to recent developments is Revenue Procedure 2023-37, which the IRS issued in November 2023. It provided fresh guidance on qualified pre-approved plans and 403b pre-approved plans, and combined, conformed, clarified, and updated rules for those plans outlined in prior revenue procedures.

Source: Asppa.org, January 2024

Pension-Linked Emergency Savings Accounts: Qualified Plans Provide More Than Just Retirement Benefits

Although there are several options available for emergency savings accounts, this is the first one that provides both a way to encourage retirement savings and at the same time a tax-advantaged way to meet immediate financial needs that arise in one's day-to-day activities. This article examines the features of the Pension-Linked Emergency Savings Accounts under Section 127 of SECURE 2.0.

Source: Groom.com, January 2024

Safe-Harbor Leveraging for Small Business, Top-Heavy Retirement Plans - 2024

Many employers are debating how to most efficiently take advantage of the defined contribution limit increase to $69,000. However, few owners of small businesses are aware of the extent to which certain types of "leveraging" are now permitted in qualified retirement plans. The purpose of this article is to illustrate the provisions that allow owners of small businesses to get the most in return for what they are willing to contribute on behalf of their non-owner employees.

Source: Consultrms.com, January 2024

Long Term/Part Time Employees - Revised

SECURE 2.0 made technical corrections to the long-term/part-time rules, including clarifying that (1) long-term/part-time employees may be excluded from a plan's safe harbor provisions and (2) all periods of service before 2021 are excluded for both eligibility and vesting. SECURE 2.0 also clarified that the vesting rules that apply to a long-term/part-time employee continue to apply even if the employee later satisfies the regular service requirements. The provision concerning long-term/part-time employees applies to all 401k plans.

Source: Consultrms.com, January 2024

SECURE 2.0 Guidance Addresses Designated Roth Contributions

Under SECURE 2.0, 401k plans may choose to permit participants to elect to receive employer matching and/or discretionary (non-elective) contributions in the form of Roth (i.e., after-tax) contributions, effective for plan years beginning after December 29, 2022. Here are some details and clarifications.

Source: Compliancedashboard.net, January 2024

2024 Adjusted Penalties for ERISA Violations

On January 11, 2024, the DOL released a final rule that provides new figures reflecting the adjusted civil penalty amounts for 2024, under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The chart here shows the increased penalties for ERISA violations; however, please note that penalties under other federal laws are affected as well. The adjustments are effective January 15, 2024.

Source: Groom.com, January 2024

DOL Releases Proposed Auto-Portability Reg

The DOL announced on Jan. 18 that its Employee Benefits Security Administration released a proposed regulation on automatic portability transactions under SECURE 2.0. The DOL said automatic portability transactions aim to help workers keep track of their retirement savings accounts and improve retirement security by reducing cash-outs when they change jobs.

Source: Asppa.org, January 2024

DOL Proposes SECURE 2.0 Auto-Portability Regulation

The Employee Benefit Security Administration has released a proposed regulation on automatic portability transactions under the SECURE 2.0 Act of 2022, the DOL announced. According to an announcement from the federal agency, the regulation seeks to help workers keep track of their retirement savings accounts by reducing cash-outs when employees switch jobs.

Source: 401kspecialistmag.com, January 2024

"Cross-Testing" in Qualified Profit Sharing Plans - 2024

Cross-testing is a method of demonstrating that a defined contribution plan is not discriminatory in favor of Highly Compensated Employees by analyzing the retirement benefit generated by the annual contributions for the HCEs to the retirement benefit generated by the contributions to the non-HCEs (rather than looking at the contribution itself). Here is a brief overview of the 2024 Cross-testing rules.

Source: Consultrms.com, January 2024

New Requirement to Cover Long-Term Part-Time Employees in 401k Plans Enters Into Effect

Some executives may view this change as an issue that does not require their attention and that will be handled by their human resources staff and the 401k plan service providers. However not complying with the rules might be costly for the employer if corrective contributions for long-term, part-time employees who were not allowed to participate are required, along with ancillary costs.

Source: Bdo.com, January 2024

Mandatory Auto-Enrollment is Coming for Some Plans: What to Know

Studies show that auto-enrollment increases plan participation, and soon it will not be optional for some plans. Among the many changes enacted in SECURE 2.0 is a requirement that new 401k and 403b plans have auto-enrollment and auto-escalation beginning in 2025. As with most of the SECURE 2.0 changes, there were many questions about how the rules would work in practice. Part of the "grab bag" guidance issued in recent Notice 2024-02 fills in some of the blanks but also leaves important questions unanswered.

Source: Cohenbuckmann.com, January 2024

2024 Benefits Limits

Employee benefits limits for 2024 have been promulgated by the government. Here is a one-page 2023-2024 comparison chart of important employee benefits limits.

Source: Clarkhill.com, January 2024

New Form 5500 Released

The Department of Labor released on Monday changes to Form 5500 for plan year 2023 reporting. Form 5500 is updated annually to account for statutory and regulatory changes affecting pension and retirement plan disclosure. The new form contains modifications for both SECURE Acts.

Source: Planadviser.com, January 2024

IRS Notice 2024-2 Provides Guidance for Multiple SECURE 2.0 Provisions

On December 20, 2023, the IRS released guidance concerning certain provisions of the SECURE 2.0 Act of 2022. Notice 2024-2, which is in a Q&A format, is not intended to be comprehensive guidance but rather to offer assistance in commencing implementation of these provisions. The Treasury Department and IRS invite comments on the matters discussed in the Notice. Additional guidance is anticipated.

Source: Voya.com, January 2024

2024 Retirement Saver's Credit

The Saver's Credit, also known as the Credit for Qualified Retirement Savings Contributions, was designed to help low- to moderate-income individuals save for retirement by providing an additional credit toward tax liability on top of existing retirement savings incentives. Learn who is eligible and how it works.

Source: Usicg.com, January 2024

IRS Says Keep Those Class Exclusions Classy Under Long-Term, Part-Time Employee Rules

The new rules require that employers who maintain such plans provide employees who work at least 500 hours for three consecutive years (reduced to two in 2025) and are at least age 21, the opportunity to make elective deferrals under their 401k plans beginning in 2024 and their 403b plans beginning in 2025. This change has generated numerous questions about what employers need to do to comply.

Source: Mwe.com, January 2024

SECURE 2.0 Grab Bag: Naughty or Nice? Mandatory Automatic Enrollment

On December 20, 2023, the IRS reached into its bag of toys and bestowed upon the pension community a gift for the holidays: assorted guidance for certain provisions of the SECURE 2.0 Act of 2022. Included in this Guidance is information about several key provisions already in effect and several that are effective as of the New Year. The subject of this article is the required Automatic Enrollment provisions that become effective in 2025.

Source: Ferenczylaw.com, January 2024

EBSA Releases Form 5500 Series for 2023 Reporting

New year, new forms. The Department of Labor's Employee Benefits Security Administration on Jan. 1 released Form 5500, Form 5500-SF, and Form 5500-EZ for reporting concerning the 2023 plan year.

Source: Asppa.org, January 2024

Defined Contribution Retirement Plan: 2024 Compliance Calendar

Retirement plan sponsors are responsible for compliance with any ongoing reporting, disclosure, and notice requirements. This Retirement Plan Compliance Calendar summarizes the major requirements that apply to defined contribution plans for 2023. Due dates are based on a calendar plan year and apply to plans subject to ERISA.

Source: Usicg.com, December 2023

De Minimis Financial Incentives to Participate in a 401k or 403b Plan

On December 20, 2023, the IRS issued Notice 2024-2, which provides question-and-answer guidance on various aspects of the SECURE 2.0 Act. This article focuses on "de minimis financial incentives" under SECURE 2.0 Act Section 113.

Source: Spotlightonbenefits.com, December 2023

IRS 2023 Changes List for Pre-Approved Plans Is Out

The Internal Revenue Service issued the 2023 Cumulative List of Changes in Plan Qualification Requirements for Defined Contribution Qualified Pre-approved Plans; a list of plan amendments required for plans relying on a safe harbor plan. Many of the newest changes in the 18-page document relate to provisions of the SECURE 2.0 Act of 2022.

Source: Planadviser.com, December 2023

Using Force Out Distributions to Avoid a 401k Audit

If you seek avenues to avoid a costly 401k audit, your focus should be headcount. Why headcount? Because it is what the government uses as a measuring stick to determine which plans must be audited. Between recent Acts of Congress and rule changes implemented by the IRS, there are currently two unrelated changes to be aware of. Both can potentially reduce the number of plans subject to audit significantly.

Source: 5500audit.com, December 2023

Why SECURE 2.0 Act Auto Enrollment and Escalation Will Boost Financial Wellbeing

The SECURE Act 2.0 contains dozens of changes to retirement plans, but perhaps none bigger than these two: New 401k and 403b plans will be required to automatically enroll participants in the respective plans, and employee salary deferral rates will automatically escalate each year. Here's what you need to know.

Source: Hubinternational.com, December 2023

New Guidance Fills in the Blanks for Roth Employer Contributions

As a result of these new rules, allowing employees to elect to treat matching or nonelective contributions as Roth contributions has become more attractive, especially for plans that already permit Roth deferrals and in-plan Roth conversions. The elimination of lifetime RMD requirements means that participants will no longer have to roll their distributions into Roth IRAs to avoid the lifetime RMD rules, which has been a common practice.

Source: Cohenbuckmann.com, December 2023

The IRS's Grab Bag of SECURE 2.0 Guidance is Here

Adding to the holiday joy of employee benefits practitioners nationwide, the IRS issued guidance on several outstanding questions related to SECURE 2.0. At this time of year, we are especially thankful that the guidance was issued on a day other than the day before or following a national holiday.

Source: Beneficiallyyours.com, December 2023

SECURE 2.0 Grab-Bag Brings Holiday Treats

This holiday week, the IRS issued its long-anticipated guidance on miscellaneous changes under the SECURE 2.0 Act of 2022 that are effective now (or in short order). Specifically, Notice 2024-2, covers, in question and answer format, twelve provisions of SECURE 2.0. The guidance brings increased and much-needed clarity to several important provisions. This is a brief review of the guidance.

Source: Groom.com, December 2023

IRS Releases Q&A Guidance on Key SECURE 2.0 Provisions

The IRS has just released new guidance in the form of questions and answers addressing several key provisions contained in the SECURE 2.0 Act of 2022. The IRS advises that the notice (Notice 2024-02) is not intended to provide comprehensive guidance as to the specific provisions of the SECURE 2.0 Act, but rather is intended to guide on discreet issues to assist in commencing implementation of these provisions.

Source: Asppa.org, December 2023

IRS Issues 2023 Cumulative List of Changes in Pre-Approved DC Plan Requirements

The IRS, on Dec. 20th, issued their 2023 cumulative list of changes in plan qualification requirements for pre-approved defined contribution plans. The changes are contained in Notice 2024-03. The 2023 Cumulative List is intended to assist providers applying to the IRS for opinion letters for the fourth remedial amendment cycle for DC-qualified pre-approved plans (Cycle 4) under the IRS' pre-approved plan program.

Source: Napa-net.org, December 2023

Last-Minute Guidance Leaves Little Time for Long-Term, Part-Time Employee Changes

Though well-intentioned, implementing the new LTPTE rule has been fraught with complexity, driven in part by long-unanswered questions about how the requirement should be applied. Recently issued guidance provides insight into the rule and answers to many of those unanswered questions. However, with that new rule effective for 401k plans beginning January 1, 2024, the guidance leaves employers very little time to make changes.

Source: Mwe.com, December 2023

403b vs. 401k - 2024

403b plans are generally subject to fewer technical requirements and less administrative burdens than 401k plans. But there are other differences as well. Here is a 4-page chart comparing the two types of plans.

Source: Consultrms.com, December 2023

Year-End Plan Sponsor Roundup

The end of the year is fast approaching. Many plan sponsors are tying up loose ends and hopefully preparing for some downtime with family and friends. With competition for your time and attention in mind, this article provides a rapid-fire roundup of the retirement plan issues that have emerged over the last few weeks.

Source: Qualifiedplanadvisors.com, December 2023

A Benefits Wish List for 2024

The 50th anniversary of the passage of ERISA will occur in 2024, but there is still no definitive guidance on some of the provisions that were part of the original legislation. Guidance is needed on more recent legislation as well. Here is a list of steps that courts and Congress could take in the coming year to help stem meritless fiduciary breach litigation, better enable recordkeepers and plan sponsors to implement provisions of SECURE 2.0, and encourage the adoption of new plans.

Source: Cohenbuckmann.com, December 2023

Longstanding Internal Revenue Service Position Called Into Question

The Internal Revenue Service's longstanding position has been that forfeitures in a tax-qualified defined contribution plan can be used in only three ways: payment of reasonable plan expenses; reduction of employer contributions; or allocation to plan participants. Recently, several class action lawsuits have been filed challenging the permissibility of plan language providing discretion as to how forfeitures should be used.

Source: Wagnerlawgroup.com, December 2023

Long-Term, Part-Time Employee (LTPTE) Regulations Proposed by IRS

On November 27, 2023, the IRS released proposed regulations addressing the new rules for long-term, part-time employees under tax-qualified retirement plans, including 401k plans. Generally, effective for taxable years beginning after December 31, 2020, the SECURE Act requires plans to permit eligible employees who complete at least three consecutive 12-month periods of service, in which they complete more than 500 hours of service in each of the 12-month periods, to contribute to the plan.

Source: Compliancedashboard.net, December 2023

New LTPTE Proposed Regs Drop as Effective Date Looms

These rules on LTPTE become effective for most 401k plans on January 1, 2024, a mere 25 working days after the proposed regulations were issued. They may have a significant impact on design decisions and plan administration for many plan sponsors, so immediate action may be needed. This article highlights some of the key issues raised by the proposed regulations.

Source: Psca.org, December 2023

DOL Drops Off Proposed Auto-Portability Exemption at OMB

Proposed guidance implementing the SECURE 2.0 Act's provision providing an exemption for certain automatic portability transactions has moved one step closer to being publicly released. The DOL on Dec. 5 submitted to the White House Office of Management and Budget for review a Notice of Proposed Rulemaking to implement a statutory exemption under Section 4975 of the Internal Revenue Code allowing for the receipt of fees and compensation by an automatic portability provider for services provided in connection with automatic portability transactions.

Source: Napa-net.org, December 2023

IRS Proposes 401k Plan Regulations Implementing Long-Term Part-Time Employee Eligibility Requirements

The proposed rules include a significant level of detail and illustrate many of the operational challenges associated with administering the long-term part-time employee rules. Here is a review of the rules. Some plan sponsors may want to explore plan design changes that would permit them to comply with the long-term part-time employee requirements, but avoid some of the tricky service crediting and vesting requirements in the proposed rules. Given that the long-term part-time requirements take effect in 2024, plan sponsors should act quickly to evaluate next steps.

Source: Erisapracticecenter.com, December 2023

Proposed Regulation for Long-Term Part-Time Employees: Plan Sponsors Act Now

Effective Jan. 1, 2024, employers who sponsor 401k plans must allow employees who work at least 500 hours a year over consecutive years to be eligible to make deferrals into the plan. This change requires immediate action by plan sponsors to change the way they administer their plans, specifically, counting service hours and increasing eligibility for LTPT employees.

Source: Employeebenefitslawreport.com, December 2023

2023 End of Year Plan Sponsor To-Do List for Qualified Retirement Plans

As 2023 comes to an end, the law firm Snell & Wilmer presents their "End of Year Plan Sponsor To-Do Lists." It provides plan sponsors with a to-do list of items on which they may want to take action before the end of 2023 or in early 2024.

Source: Swlaw.com, December 2023

Long-Term, Part-Time Employees IRS Proposed Regulations

While the IRS uses the name "long-term, part-time employees" in the proposed regulations, these rules apply to part-time, seasonal, and other types of reduced-hours workers, and could potentially apply to even some full-time employees if a plan uses hours to determine eligibility to participate. More detailed information about the proposed regulations is included in this chart.

Source: Sgrlaw.com, December 2023

Plan Sponsors Need More Clarity on Optional SECURE 2.0 Provisions

A key theme that has emerged from Alight's annual "hot topics" survey is that employers need more guidance on key provisions in the SECURE 2.0 Act before fully embracing them. Alight notes that this is particularly true for some of the novel provisions. In fact, all employers in the survey say they would need more legal guidance before considering the Saver's match contribution. Notably, the least popular are the provisions with the most questions, like the $2,500 emergency fund and matches on a Roth basis.

Source: Napa-net.org, December 2023

2024 Key Administrative Dates and Deadlines for Calendar-Year DC Retirement Plans

This five-page compliance calendar for 2024 lists key administrative dates and deadlines for defined contribution plans, from January to December, with more than four dozen relevant entries for plan sponsors working in the DC space.

Source: Milliman.com, December 2023

IRS Issues Long-Term, Part-Time Employee Proposed Regulations

The proposed regulations provide several helpful answers that may reduce the implementation burdens for some employers. But there are also some nuances that are likely to be challenging to implement by the January 1, 2024, statutory effective date of SECURE 1.0, and the January 1, 2025 effective date of SECURE 2.0.

Source: Groom.com, December 2023

For Many, DOL's Fiduciary Proposal May Be "Less Daunting" Than at First Blush

Outside of the banking and insurance contexts, an overview of the proposed changes to PTE 2020-02 shows that the changes are somewhat less daunting than they may seem at first blush and are not drastic for many parts of the industry as some headlines have suggested.

Source: Asppa.org, December 2023

Can a Plan Sponsor Limit Hardship Distributions?

The article answers this question, "Our 403b plan currently allows for hardship distributions, but the number of such distributions has been on the uptick in recent years. We don't wish to eliminate hardship distributions, but is there any way we can restrict their availability?"

Source: Plansponsor.com, November 2023

The Long Wait for the Long-Term Part-Time Guidance is Over

The DOL and IRS released on Friday their proposed rules for long-term part-time employees. The proposal answers many of the burning questions since the new eligibility standards first came to be under the SECURE Act back in 2019.

Source: Seyfarth.com, November 2023

IRS Issues Guidance on Pre-Approved Plans

The IRS in Revenue Procedure 2023-37 has issued fresh guidance on qualified pre-approved plans and 403b pre-approved plans which combines, conforms, clarifies, and updates rules for those plans set forth in prior revenue procedures.

Source: Asppa.org, November 2023

IRS Proposes New LTPTE Regulations for 401ks

The DOL and the IRS released proposed regulations for 401k plans for long-term, part-time employees. As currently drafted, they would go into effect starting Jan. 1, 2024. The new guidelines seek to better define LTPTEs, eligibility conditions, and treatment of former LTPTEs under the SECURE Act rules.

Source: 401kspecialistmag.com, November 2023

IRS Releases Draft 2024 Form 1099-R

The IRS has released a draft of the Form 1099-R to be used in 2024. This is an early release draft of the form, as well as its instructions, which the IRS is providing only to inform taxpayers, including benefits recipients.

Source: Ntsa-net.org, November 2023

Agencies Release 2023 Form 5500 Series, Reflecting SECURE Act Changes

Federal agencies have released the 2023 Form 5500 series, including Form 5500, Form 5500-SF, Form 5500-EZ, Schedules, and Instructions. The key revisions for 2023 reflect Code and ERISA amendments made by the SECURE Act and were described in a previous agency action. The changes relevant to 401k plan reporting are reviewed here.

Source: Thomson Reuters/EBIA, November 2023

Tracking Compensation and Getting It Right

According to the IRS, one of the most common mistakes that employers make when administering their retirement plans is using the wrong employee compensation. If the wrong amount is sent to your provider, this will lead to incorrect contribution calculations, incorrect plan testing, and leave the plan not operating under the plan document. To administer your plan properly, it is important to understand how your plan defines compensation and to make sure your definition is properly set up in your payroll system.

Source: Consultrms.com, November 2023

Annual Limits on Qualified Plans for 2024

On November 1, 2023, the IRS released Notice 2023-75, which sets forth the 2024 cost-of-living adjustments affecting dollar limits on benefits and contributions for qualified retirement plans. This chart summarizes the 2024 limits for benefit plans.

Source: Benefitsnotes.com, November 2023

Informational Copies of the 2023 Form 5500 Series Released

The DOL's Employee Benefits Security Administration, the IRS, and the Pension Benefit Guaranty Corporation released informational copies of the 2023 Form 5500 Series. These versions of Form 5500, Form 5500-SF, and Form 5500-EZ to be used for reporting concerning the 2023 plan year, as well as Form 5558, are informational only.

Source: Asppa.org, November 2023

DOL's Lost and Found Database Gets a Boost

The SECURE 2.0 Act's creation of an online searchable lost and found database at the DOL to help American workers find lost retirement savings benefits has moved one step closer to becoming a reality. The Technology Modernization Fund -- which invests in technology projects across government, providing incremental funding, technical assistance, and oversight -- announced that it is investing nearly $3.5 million at the DOL to help establish the online registry.

Source: Napa-net.org, November 2023

Forfeitures Accounts -- The Next New Topic of ERISA Litigation Trends & Should You Be Concerned?

A handful of new ERISA litigation cases are aiming at forfeiture accounts and trying to pull them into the never-ending list of ways in which retirement plan fiduciaries have purported to breach their fiduciary duty to plan participants. The recent lawsuits argue that even though permitted by the plan document, it was a breach of fiduciary duty to exercise discretion to use the plan's forfeitures to reduce company contributions, rather than to offset expenses of the 401k plan.

Source: Graydon.law, November 2023

Guidance on Section 603 of the SECURE 2.0 Act Concerning Catch-Up Contributions

The IRS has issued Notice 2023-62, which gives guidance on Section 603 of the SECURE 2.0 Act concerning catch-up contributions. The Notice delays the requirement in Section 603 for highly compensated individuals to make catch-up contributions on a Roth basis -- with no pre-tax option -- to qualified retirement plans effective January 1, 2024. Instead, the Notice establishes a two-year administrative transition period, during which all catch-up contributions by these individuals will satisfy the terms of Section 603, whether they are made on a Roth basis or not.

Source: Hallbenefitslaw.com, November 2023

The Who, the When and the "Oh, No" of 401k Plan Notices

It's that time of year when calendar year 401k plans must send annual retirement plan notices. As you work with your service providers to make sure all notices are sent, now may be a good time to reacquaint yourself with the more common notices and related 401k plan documents that must be provided to employees. Mistakes can happen especially with the "Who and the When," so here is a chart of the common notices with timing and recipients.

Source: Graydon.law, November 2023

2024 Benefit and Contribution Limits

The IRS announced in Notice 2023-75 that many of the key retirement plan limits will increase next year. These limit increases are more modest than the 2023 increases, with some limits remaining the same. The Social Security Administration and PBGC also recently announced adjustments for the Social Security wage base, PBGC premiums, etc., for next year. This chart reflects the key limits for 2024, along with other frequently used benefit and compensation items.

Source: Groom.com, November 2023

IRS Bumps 2024 401k Contribution Limit to $23,000

The IRS today issued technical guidance regarding all of the cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2024 in Notice 2023-75. As predicted in forecasts earlier this year, the Internal Revenue Service announced that the amount individuals can contribute to their 401k plans in 2024 has increased to $23,000, up from $22,500 for 2023.

Source: 401kspecialistmag.com, November 2023

Secure an Employee Plan's Future by Proactively Self-Correcting

Retirement plan sponsors can take advantage of new and expanded self-correction remedies under the Employee Plans Compliance Resolution System even before the IRS releases updated guidance on it under SECURE 2.0. SECURE 2.0 provides retirement plan sponsors an avenue to control the narrative in resolving any compliance issues under EPCRS, say Grant Shuman and Anne Tyler Hall of Hall Benefits Law.

Source: Hallbenefitslaw.com, November 2023

New Wave of 401k Forfeiture Lawsuits May Hinge on Plan Terms

Qualcomm, Intuit, and Clorox are facing new lawsuits asking whether a common way of handling forfeited 401k money could violate federal law, a legal theory that could turn on the language used by a given plan.

Source: Wagnerlawgroup.com, October 2023

SECURE 2.0 Requires Operational Compliance, Not Amendments

As the end of the year approaches, sponsors of calendar-year retirement plans focus their attention on amendments and operational changes. Because SECURE 2.0 retroactive corrections require operational compliance, plans are likely to have to implement operational changes in 2024, along with those already applicable in 2023. Even though no amendments are required, some plans may want to make amendments.

Source: Segalco.com, October 2023

SECURE 2.0 Requires Operational Compliance, Not Amendments

As the end of the year approaches, sponsors of calendar-year retirement plans focus their attention on amendments and operational changes. Because SECURE 2.0 retroactive corrections require operational compliance, plans are likely to have to implement operational changes in 2024, along with those already applicable in 2023. Even though no amendments are required, some plans may want to make amendments.

Source: Segalco.com, October 2023

How SECURE 2.0 Changed the Hardship Rules

Employers may now establish policies and procedures allowing participants to self-certify that the hardship distribution is being made on account of a deemed immediate and heavy financial need. Employers are no longer required to collect documentation when approving hardship distributions, which should help streamline the hardship distribution process.

Source: Ascensus.com, October 2023

The SEC's 2024 Examination Priorities: Impact on IRAs and Retirement Plans

The SEC Division of Examinations is focused on advice to older investors and retirement investors. Advisors and their firms should review their practices for those investors. This article focuses on the priorities that could impact advice and recommendations by investment advisers and dual registrants to retirement investors.

Source: Fredreish.com, October 2023

Retirement Plan Assistance for Domestic Abuse Survivors

Employers are often at a loss on how to best support domestic abuse survivors at work; however, 21% of full-time employees have experienced domestic abuse, which has serious implications for employee safety, productivity, and morale. Secure 2.0 offers employers another option to support survivors.

Source: Compliancedashboard.net, October 2023

Talking DOL Retirement Saving Priorities with EBSA Head Lisa Gomez: Podcast

It's been about a year since the Honorable Lisa M. Gomez was sworn in as the Assistant Secretary of Labor, and quite a busy year. She joins the 401k Specialist Pod(k)ast to talk about topics including the high-profile rewrite of the conflict of interest rule, SECURE 2.0 and its ability to address the workplace retirement plan coverage gap, and what EBSA can do to help plan advisors, plan sponsors, and participants make the most of 401k plans to save for retirement.

Source: 401kspecialistmag.com, October 2023

No One Is Coming to Save You From Missing Participants

Missing participants is a highly predictable aspect of our defined contribution system. In the near term, there's likely nothing that will spare plan sponsors from addressing the missing participant problem head-on. In the face of uncertainty, they must take decisive action to avoid being overwhelmed, including implementing effective, common-sense search practices, and pairing those search practices with other actions that will minimize the incidence of missing participants over time.

Source: 401kspecialistmag.com, October 2023

Information on IRS's Compliance Program Priorities and VCP

Two recent IRS releases are of interest to retirement plan sponsors. The first updates information about its Voluntary Correction Program. The second provides information about alignment of the compliance program and priorities of the IRS's Tax Exempt & Government Entities Division, which includes employee plans, with the agency's broader Strategic Operating Plan that encompasses increased audits.

Source: Segalco.com, October 2023

404(a)(5) Participant Fee Disclosures: Rules and Requirements

The DOL requires 401k providers to send fee disclosures to employees and plan administrators. This helps both parties make informed decisions about the plan. This discusses the 404(a)(5) fee disclosure and key disclosure rules and requirements.

Source: Forusall.com, October 2023

SECURE 2.0 Brings Changes to Retirement Plans and Planning

The Setting Every Community Up for Retirement Enhancement 2.0 Act was signed into law in late 2022. Although some provisions are being phased in over time, the law includes many significant changes that take effect in 2023 and 2024. Here are some that may influence your, or your employees', retirement planning.

Source: Orba.com, October 2023

Changes for the Form 5500

Earlier this year, the Department of Labor, Internal Revenue Service, and the Pension Benefit Guaranty Corporation released two Federal Register Notices announcing changes to Form 5500 effective for plan years beginning on or after January 1, 2023. Here is a review of the five key changes.

Source: Fidelity.com, October 2023

Navigating the Number Jumble: A 403b, 401k, and 457b Comparison

Over the years, through regulation changes and plan design mandates, the three predominant types of defined contribution retirement plans have grown more similar. Still, understanding the nuances of employer-sponsored retirement plans can be daunting. This article explores the most significant distinctions of 403b, 401k, and 457b plans and their impact on the availability, benefits, and limitations of these plan types.

Source: Benefitslawadvisor.com, October 2023

The Time for Long-Term Part-Time Employee Eligibility Compliance Has Nearly Arrived

When the original SECURE Act was passed in 2019, compliance with its new long-term part-time employee rule seemed far in the future, way out to January 1, 2024. Well, that time is nearly upon us, so sponsors of 401k plans should be ready to let these long-term part-time employees start participating in their plans with the start of the New Year.

Source: Benefitslawadvisor.com, October 2023

2023 Retirement Plan Year-End Amendments and Operational Compliance

As the end of 2023 approaches, it's again time for plan sponsors to review their plan documents and plan operations to ensure compliance with increasingly complex qualification requirements and moving deadlines. While there are no mandatory plan amendments due this year, plan sponsors must remain diligent about discretionary amendment deadlines, operational compliance with changes in law, and ensuring later-adopted plan amendments accurately reflect plan operations.

Source: Groom.com, October 2023

Trust but Verify...But Not for Hardship Distributions

Years of experience have shown us that anytime Congress attempts to simplify the retirement plan rules, they often end up doing just the opposite. SECURE 2.0 is no exception, with many of the provisions purporting to make life easier while being far more convoluted than necessary. One area where they hit the mark, however, is concerning hardship distributions, and the SECURE 2.0 simplifications follow several others made in recent years.

Source: Dwc401k.com, October 2023

Important Details About 401k Plan Providers That Employers Never Ask About

For 401k plan sponsors, there are tons of things that they may ask of plan providers they hire, but there are important questions they never ask. This article is all about those important details that 401k plan sponsors never bother to ask about but should.

Source: Jdsupra.com, October 2023

Beneficiary Designations: Plan Sponsor Best Practices

Unlike other types of property that an individual owns, retirement plan accounts generally do not pass to an individual by a will, statute, or rights of survivorship designation. The plan document controls the disposition either through a valid beneficiary designation or through a plan provision. There are several things you can do to make sure the administration of beneficiary designations runs as smoothly as possible.

Source: Graydon.law, October 2023

IRS Freshens Discussion of Deductibility of Employer Contributions to a 401k

The IRS has updated the content it provides through an Issue Snapshot on the deductibility of employer contributions to a 401k plan made after the end of the tax year. The Issue Snapshot discusses the timing rules of the IRC and considers how those rules apply to employers that establish a new 401k plan after the end of the tax year.

Source: Napa-net.org, October 2023

Flexibility on the Use of Forfeitures: Not So Fast

Many (if not most) defined contribution plan documents provide that the plan administrator may use forfeitures to reduce contributions, pay plan expenses, or allocate to participants as additional benefits. The Treasury Department and IRS recently suggested that plans be drafted this way to avoid the impermissible accumulation of forfeitures. A recent complaint filed in a federal circuit court, however, raises fiduciary concerns when plan fiduciaries make decisions permitted by the provision.

Source: Napa-net.org, October 2023

Legislation Opens Door for Cannabis Companies to Sponsor Retirement Plans

Legally operated cannabis companies could soon be allowed to sponsor retirement plans under legislation recently approved by the Senate Banking, Housing, and Urban Affairs Committee. By a vote of 14-9 on Sept. 27, the committee approved the Secure and Fair Enforcement Regulation Banking Act (the SAFER Banking Act, S. 2860) to provide protections for federally regulated financial institutions that serve state-sanctioned marijuana businesses.

Source: Napa-net.org, October 2023

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 73, 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 article should help you understand this topic.

Source: Legacyrsllc.com, October 2023

Long-Term Part-Time Workers: More Questions than Answers for Defined Contribution Plans?

On December 29, 2022, the SECURE 2.0 Act was signed into law. SECURE 2.0 builds upon the retirement improvements made by SECURE 1.0. This article provides an overview of the LTPT rule and identifies outstanding questions that require additional guidance from the DOL and the IRS.

Source: Truckerhuss.com, October 2023

Recent IRS Snapshot Suggests Audit Interest in Timing of Employer Deductions of Retroactive Contributions to 401k Plans

The IRS recently released an Issue Snapshot, Deductibility of employer contributions to a 401k plan made after the end of the tax year, to review the timing rules for employer contribution deductions under Code section 404(a)(6) and the limits on "annual additions" under Code section 415. The SECURE Act may have heightened the interest of IRS agents in auditing employer deductions of retroactive contributions to 401k plans.

Source: Groom.com, October 2023

IRS Priority Guidance Plan Includes Retirement Items

The IRS has issued its 2023-2024 Priority Guidance Plan, in which it describes guidance projects in the current fiscal year. Many items in the plan have appeared in prior years' Priority Guidance Plans. A number of the guidance items deal with retirement savings arrangements that are outlined here.

Source: Ascensus.com, October 2023

Six SECURE 2.0 Changes Coming to Retirement Plans in 2024

As 2024 approaches, retirement plan advisors need to be aware of the various changes to retirement plans set to occur in the new year under the SECURE 2.0 Act of 2022. An Employee Benefits Alert from law firm Bradley highlights key changes to 401ks in the coming year.

Source: 401kspecialistmag.com, October 2023

Have You Been Counting Those Long-Term Part-Time Employee Hours?

In efforts to expand access to retirement savings programs for more Americans, the SECURE Act and SECURE 2.0 both included new rules that will require plans to allow long-term part-time employees to make elective deferrals into a 401k plan if they meet certain minimum hours requirements. This article reviews the subject because the effective date is fast approaching.

Source: Graydon.law, September 2023

UBTI and 401k Retirement Plans

A 401k plan will trigger Unrelated Business Taxable Income (UBTI) if the plan regularly carries on any business or invests in a pass-through tax entity that regularly carries on any business. This article helps explain UBTI and its ramifications for a 401k plan.

Source: Ferenczylaw.com, September 2023

SECURE 2.0: Retirement Plan Changes for 2024

The SECURE 2.0 Act of 2022 sets forth several changes affecting retirement plans that go into effect over several years. This article focuses on key changes for 2024 that may be implemented.

Source: Bradley.com, September 2023

What Information Do You Need for our 401k Audit?

Nervous apprehension tends to overwhelm plan sponsors new to 401k audits because they don't know how involved they will need to be in the document production for the audit. Often, they are hopeful that one or more of their service providers will "take care of everything" as they promised. The bottom line is that the extent of the plan sponsor's and each service provider's involvement in document production depends on how the plan was set up.

Source: Belfint.com, September 2023

SECURE 2.0: IRS Issues New Guidance on RMDs

On July 14, 2023, the Internal Revenue Service issued Notice 2023-54, providing much-welcomed guidance and transition relief relating to certain required minimum distributions. Specifically, the Notice provides the following: Relief for the change in the required beginning date for RMDs under SECURE 2.0; Guidance for certain RMDs for 2023; and Extension of the applicability date of the final RMD regulations.

Source: Truckerhuss.com, September 2023

How Does SECURE 2.0 Alter the IRS's Program for Correcting Plan Errors?

The article deals with this question: "I'm a little confused by the SECURE 2.0 Act's effect on the Employee Plans Compliance Resolution System program in the area of insignificant and significant operational errors. Is there still a difference between the two (e.g., there was a deadline to correct significant failures, but not insignificant ones)?"

Source: Plansponsor.com, September 2023

Could I Fail my First 401k/403b Plan Financial Statement Audit?

Death by a thousand cuts. That's what initial 401k and 403b audit clients fear their first financial statement audit will feel like. Fear of the unknown leads the human mind to worst-case scenarios. Could I fail the audit? Sure, anything is possible. Will I fail my first audit? Not likely. Here is a summary of the most typical audit findings encountered.

Source: Belfint.com, September 2023

The Evolution of Hardship Distributions

Hardship distributions can provide a lifeline when absolutely needed. Congress continues to pass laws allowing participants better access to their retirement accounts while actively working.

Source: Tri-ad.com, September 2023

Highly Compensated Employees

The determination of who is considered a Highly Compensated Employee is one of the most important factors in maintaining 401k plan compliance. The nondiscrimination tests applicable to 401k plans rely on a correct HCE determination. Mistakes made in HCE status can have adverse consequences and may jeopardize the tax-qualified status of the plan.

Source: Newfront.com, September 2023

IRS Grants Relief from Secure 2.0 Roth Catch-Up Provisions

On August 25, 2023, the IRS issued Notice 2023-62, which delays the implementation of a key, and administratively troublesome, SECURE 2.0 Act provision by two years, until tax years beginning after December 31, 2025. Here is the background and review.

Source: Compliancedashboard.net, September 2023

Avoiding the Cost of an Annual Plan Audit Just Got Easier for Thousands of Employers

The rule remains that retirement plans with 100 or more participants must obtain an annual audit report from an independent qualified public account. For plan years beginning on or after January 1, 2023, however, when counting the number of participants in the plan to determine if an audit is needed, only participants/beneficiaries who have an account balance must be taken into account. This is a change from the current rule which requires that you count all employees eligible to participate in the plan whether or not they participate in the plan.

Source: Graydon.law, September 2023

SECURE 2.0: IRS Issues 2023 Required Minimum Distribution Relief

The IRS issued Notice 2023-54 that provides relief from Code Sec. 401(a)(9) required minimum distribution compliance for certain 2023 lifetime and post-death distributions to participants and beneficiaries under individual retirement accounts and employer plans. The guidance largely tracks similar guidance that was previously under Notice 2020-51 and Notice 2022-53.

Source: Groom.com, September 2023

Prepare to Keep Vital Records Safe in a Disaster, IRS Reminds

Taking action in advance to protect vital documents can be helpful when a disaster strikes, a principle that applies to retirement plans and administration as well as other records and functions. The IRS issued a reminder in Tax Tip 2023-107 about the importance of such steps on the heels of Hurricane Idalia's travels through Florida and other parts of the southeast.

Source: Ntsa-net.org, September 2023

DOL Seeks Input on SECURE 2.0 Changes

On August 11, 2023, the DOL issued a Request for Information asking for stakeholder input on several regulatory issues related to the SECURE 2.0 Act. The wide-ranging RFI seeks feedback on issues primarily related to the reporting and disclosure requirements under ERISA. The issues are summarized here and comments are due by October 10, 2023.

Source: Groom.com, September 2023

The Roth Catch-up Requirement is Delayed, Making Time to Clarify the Rules

Pausing enforcement of a mandate that high-income earners must make catch-up contributions only on a post-tax basis gives Congress and Treasury time to better explain and simplify the process says our partner Carol Buckmann in an op-ed article for Bloomberg Tax Insights and Commentary.

Source: Cohenbuckmann.com, September 2023

SECURE 2.0: Roth Catch-Up Contribution Delay

Section 603 of the SECURE 2.0 Act implements changes to catch-up contributions. On August 25th, 2023, in response to many industry groups urging an extension of the section 603 provision, the IRS released Notice 2023-62 granting a two-year delay in the effective date. This relief means employers don't need to add Roth as an option to retirement plans for those earning $145,000 before 2026 to comply with Section 603.

Source: Workforcebulletin.com, September 2023

IRS Delays Roth Catch-Up Contribution Change to DC Plans

One of the changes made by the SECURE 2.0 Act requires that catch-up contributions made by employees with FICA compensation from an employer sponsoring a defined contribution plan of at least $145,000 in the prior calendar year, as indexed, be made as after-tax Roth catch-up contributions. This provision, which was supposed to become effective January 1, 2024, is problematic because the IRS has issued no guidance, and many service providers have stated they will be unable to update their systems by the end of the year.

Source: Wagnerlawgroup.com, September 2023

Abusive QDRO Scheme Messes With Texans' Retirement Savings

The American Retirement Association was recently informed of a legal scheme in Texas -- a community property state -- that allows younger workers to raid up to 100% of their defined contribution plan account balance without incurring the tax penalty for an early, in-service retirement plan distribution. The only catch is that the DC plan participant must be married.

Source: Napa-net.org, August 2023

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