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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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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

Projected 2019 401k Plan Limits

Abstract: Based upon the actual and projected CPI, there is little doubt that we will see increases in the pension limits for 2019. Here are our projected changes. Remember, these are unofficial projections. The IRS hasn't officially announced the 2019 limits and will not do so until later in October.

Source: 401khelpcenter.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

Tax Reform Requires Plan Sponsors to Update 401k Plan Special Tax Notices

Abstract: In several places in the 2009 IRS model 402(f) special tax notice as modified by Notice 2014-74, references are made to the 60-day rollover requirement and consequences that flow from failing to make a rollover within that time. Because TCJA creates an exception to these consequences, the model special tax notice no longer accurately describes the relevant law and needs to be updated to avoid any inaccuracies or correct any statements that have now become misleading due to the new legislation.

Source: Ktserisacorner.com, May 2018

Have You Checked Your Plan's Definition of Compensation Lately?

Abstract: If it has been awhile since you have compared your payroll files to the definition of compensation in your plan document, it's recommended that you do an internal audit of payroll now. Don't assume that you know your plan's definition of compensation, but check the actual document. The earlier that any mistakes are detected the less the error will cost you.

Source: Graydon.law, May 2018

The Complete Guide to 401k Corrective Distributions

Abstract: Making corrective distributions is an administrative burden, can lead to fines and excise taxes if not done promptly, and, perhaps most notably, frustrates HCEs. If you find yourself needing to make corrective distributions, don't worry. This is a very common problem. This guide will walk you through everything you need to know about corrective distributions.

Source: Forusall.com, May 2018

Can a Company Freeze a 401k Account If an Employee Is Suspected of Stealing From the Company?

Abstract: This is one of the very rare instances when there is a clear-cut answer, and it is a resounding "no." One of the unique features of company-sponsored retirement plans is that they are protected from legal judgments and bankruptcies. They also cannot be used as collateral and cannot be assigned to another individual. This article reviews a few exceptions.

Source: Dwc401k.com, May 2018

The Quick-Start Guide to 401k Plan Documents and Records

Abstract: Whether you're staring down the barrel of a DOL audit or just being proactive, knowing the details on your 401k plan documents (and keeping them organized) can save you a lot of pain. Here is a breakdown of your key 401k plan documents, including some industry-insider tips.

Source: Forusall.com, May 2018

Missing Participants Procedure

Abstract: Some search steps involve so little cost and such high potential for success that a fiduciary should always take them before abandoning efforts to find a missing participant, regardless of the size of the participant's account balance. The failure to take such steps would violate the fiduciary obligations of prudence and loyalty, as set forth in section 404(a) of ERISA.

Source: Qbillc.com, May 2018

Top 10 Issues Found in 401k Plans

Abstract: Compiled from lists published by the IRS and plan auditors, here are 10 items to check and review to make sure your 401k plan is operating in line with IRS expectations.

Source: Qbillc.com, May 2018

401k Notice Distribution: Hard Copy vs. Electronic Delivery

Abstract: It seems like 401k plans require a lot of different notices and disclosures be provided to participants each year. We have safe harbor and default investment notices at the end of the year, fee disclosure notices and participant statements each quarter, and the summary annual report when we file our Form 5500. Are we allowed to distribute all of these 401k notices to our participants electronically?

Source: Dwc401k.com, May 2018

Avoiding the Curveball of a Taxable 401k Loan Under New Law

Abstract: Under the new Tax Act, the 60-day period was extended to the filing due date for the participant's tax return for the year in which the loan offset amount arises. This means the deadline for any offset that arises during the tax year will not be until April 15 of the following year, which can be extended to October 15 with a tax return extension. Participants now have a much larger window of time to come up with the funds to deposit the offset into an IRA or another qualified plan to avoid taxation.

Source: Belfint.com, May 2018

Four Tips for Preventing Uncashed Retirement Checks

Abstract: No plan sponsor or TPA likes dealing with uncashed retirement checks. However, when a former employee fails to cash their distribution, the employer still has fiduciary responsibility for the funds. Here are four ways to decrease the burden involving ex-employees and uncashed checks.

Source: Penchecks.com, April 2018

DOL and ESG Investing: Evolving Guidance

Abstract: This article describes the key points from FAB 2018-01 and then provide a summary of the ever changing regulatory framework ERISA fiduciaries have been instructed to use when considering proxy voting and investing in ETIs.

Source: Groom.com, April 2018

Labor Department Says ESG investments Aren't Always "Prudent"

Abstract: The Trump administration unveiled guidance aimed at the burgeoning socially responsible investment industry that left some investors scratching their heads. The Department of Labor, which oversees retirement-plan funds, published guidelines that said investments based on environmental, social and governance issues aren't always a "prudent choice" and that such factors shouldn't "too readily" be considered as economically relevant by fiduciaries.

Source: Investmentnews.com (registration may be required), April 2018

What Is the Deadline to Correct a Failed ADP/ACP Test?

Abstract: Every couple of years, our 401k plan fails the ADP/ACP test by a small margin. Since we don't always fail the test, gathering our year-end census information to send to our TPA sometimes isn't as high a priority as some of the other projects necessary to close out the year. Is there a timing deadline to run the tests each year and to make any corrections if there is a failure?

Source: Dwc401k.com, April 2018

Field Assistance Bulletin No. 2018-01

Abstract: DOL Field Assistance Bulletin 2018-01 provides guidance in addressing questions raised by Interpretive Bulletin 2016-11 and 2015-12 regarding the exercise of shareholder rights and written statements of investment policy and relating to economically targeted investments.

Source: Dol.gov, April 2018

IRS Updates Substantiation Procedures for Hardship Distributions

Abstract: None of the IRM requirements for substantiating hardship distributions have been set forth in formal regulations that have been subject to notice and comment. But, the IRS believes substantiation that a distribution is for one of the safe-harbor hardships is required to determine that a hardship distribution is deemed to be on account of an immediate and heavy financial need. As a result, plan sponsors seeking to avoid disputes with IRS auditors may wish to follow the hardship substantiation requirements outlined.

Source: Ktserisacorner.com, April 2018

IRS Requests Input on Possible Expansion of Determination Letter Program in 2019

Abstract: In Notice 2018-24, the Treasury Department and IRS request comments on the potential expansion of the determination letter program for individually designed plans during 2019. As part of their commitment to annually review the scope of the program, they are looking for comments on the types of plans that should be allowed to seek a determination letter as well as specific issues for those plans that would justify the need for review.

Source: Groom.com, April 2018

Missing Retirement Plan Participants -- Employer Risk

Abstract: Former employees will often have account balances or benefits due them under an employer's retirement plan and are still considered to be participants. Regulatory guidance makes it clear that distributing the retirement accounts and accrued benefits of former employees is the employer's responsibility. Employers who maintain retirement plans are required to have procedures in place for finding missing participants.

Source: Stevenslee.com, April 2018

What to Do With Missing Participants and Required Minimum Distributions

Abstract: Issues related to missing and nonresponsive retirement plan participants are causing more problems and creating more uncertainty for plan sponsors and administrators. RMDs and missing participants aren't going away any time soon. This article provides an overview and search steps.

Source: Penchecks.com, April 2018

Strategies to Help HCEs Maximize 401k Contributions

Abstract: When employees aren't participating in the 401k or saving enough, non-discrimination testing can severely limit how much highly compensated employees can contribute. Limits imposed by non-discrimination testing are tough to overcome, but far from impossible. This article walks you through three highly effective strategies for overcoming these limits and acing your non-discrimination tests.

Source: Forusall.com, April 2018

Reporting And Disclosure Requirements Checklist

Abstract: Qualified retirement plans are subject to many reporting and disclosure requirements under ERISA and related regulations. Although there may be additional requirements that apply to special circumstances, the Reporting And Disclosure Requirements checklist provides an overview of the requirements that typically apply.

Source: Watkinsross.com, April 2018

Helping Plan Sponsors Deal With the Missing Participant Problem

Abstract: When participants terminate employment, either through turnover or retirement, many often leave their DC accounts with their former employers. However, if the employer has lost track of the participant's location, it now has a missing participant. It may not be the fault of the sponsor, but it remains the responsibility of the sponsor to find the participant.

Source: Napa-net.org, March 2018

Contingent Workers -- Consequences for Qualified Retirement Plans

Abstract: Distinguishing common-law employees from independent contractors can be challenging. Mistakes in this area can trigger dire consequences for qualified retirement plans, like plan disqualification and participant lawsuits under ERISA. Plans should periodically review worker classifications for compliance purposes, paying particular attention to eligibility terms and definitions, as well as proper inclusions and exclusions of classifications for testing purposes. Article reviews some proactive strategies.

Source: Conduent.com, March 2018

Which 401k Plan Fees Can Be Paid Out of Plan Assets?

Abstract: Are we allowed to pay 401k plan-related expenses out of the plan assets? This is another one of those questions with a short answer and a longer answer. The short answer is yes, it is perfectly allowable for some 401k plan expenses to be paid out of plan assets, but the flip side of that is that there are some expenses that are not allowed to be paid from the plan.

Source: Dwc401k.com, March 2018

Can Bonuses Be Excluded From Retirement Plan Compensation?

Abstract: This article answers the question: "Is it possible to disregard signing bonuses from plan compensation or do we have to treat those the same as all other bonuses? If they must all be treated the same, could we carve out all bonus payments?"

Source: Dwc401k.com, March 2018

IRS to Issue Letters to Master and Prototype, Volume Submitter Plans

Abstract: The IRS on March 9 said in Announcement 2018-05 that it plans to issue opinion and advisory letters for master and prototype and volume submitter defined benefit plans that were restated for changes in plan qualification requirements listed in Notice 2012-76 and that were filed with the IRS during the submission period for the second remedial amendment cycle.

Source: Asppa.org, March 2018

Summary Plan Descriptions Required for All ERISA Retirement, Health and Welfare Plans

Abstract: Misconceptions of the ERISA rules can lead plan administrators to believe that they either have provided an ERISA-compliant SPD when they have not, or that an SPD is not required at all. Administrators of all employee benefit plans subject to ERISA should ensure their plans' compliance with ERISA's Summary Plan Description (SPD) requirement.

Source: Hklaw.com, March 2018

Congress Enacts Changes to Hardship Withdrawal Rules

Abstract: The recently enacted Bipartisan Budget Act of 2018 included some unanticipated provisions that directly affect retirement plans. One such provision relates to the availability and amount of hardship withdrawals made under 401k plans. This article summarizes the impact of these new rules.

Source: Legacyrsllc.com, March 2018

Missing Participants and Required Minimum Distributions Cause Headaches for Plan Fiduciaries

Abstract: Unfortunately for employers, the DOL has been aggressively challenging the adequacy of employer efforts to locate and contact missing participants. Numerous plan sponsors have received letters from the DOL during missing participant audits that threaten sanctions against plan fiduciaries for alleged violations of ERISA, despite a lack of definitive guidance on exactly how employers should follow up on a variety of challenges.

Source: Winston.com, February 2018

Compliance Checklist 2018 for Plans That Are Subject to ERISA

Abstract: This 43-page Compliance Checklist incorporates defined benefit, defined contribution, and ERISA 403b requirements and provides information on the materials that will need to be file, filing due dates, and agencies to which the filings should be made.

Source: Prudential.com, February 2018

Retirement Plan Sponsors Looking to Protect Themselves From Litigation

Abstract: Fee lawsuits have exponentially increased over the past two years. Retirement plan sponsors of all sizes must be vigilant this year to protect themselves from plan litigation relate to high fees, lack of investment options or poor investment options and breach of fiduciary duty.

Source: Benefitnews.com, February 2018

Budget Act of 2018 Brings Changes for Hardship Distributions

Abstract: The Bipartisan Budget Act of 2018 was passed into law on Feb. 9, 2018 and introduces some unexpected changes for retirement plans. The most significant of the Act's changes for retirement plans reduces the existing restrictions on hardship distributions from 401k and 403b plans.

Source: Icemiller.com, February 2018

How Should We Handle It If We Accidentally Overfund Our 401k Match?

Abstract: This year, when the plan's TPA calculated the total match and profit sharing contributions for the year, it was discovered that employer funded more than was needed. What are the options for applying the amount overfunded? Can it be carried over and apply it to next year's contribution?

Source: Dwc401k.com, February 2018

2018 Key Administrative Dates and Deadlines for Calendar-Year DC Retirement Plans

Abstract: This calendar provides key administrative dates and deadlines for defined contribution plans subject to ERISA and the Internal Revenue Code.

Source: Milliman.com, February 2018

Hardship Withdrawal Changes Under the New Budget Act

Abstract: The Bipartisan Budget Act of 2018 contains changes to the ways in which hardship withdrawals from qualified retirement plans are administered. The changes reviewed here are effective for plan years beginning after December 31, 2018.

Source: Consultrms.com, February 2018

401k Plan Documents: Keeping All Your Ducks In a Row

Abstract: Many 401k tasks either require documents that should be retained or require documentation for future reference. This table lists several important documents that are smart to keep handy, either in the event of an audit, or to reference during the ongoing administration of the 401k.

Source: Forusall.com, February 2018

401k Plan Nondiscrimination Testing

Abstract: To ensure a 401k plan is not favoring owners or highly paid employees, the IRS requires certain nondiscrimination testing is performed. The ADP measures the employee deferral contributions and the ACP measures the employer matching contributions. ADP/ACP testing must be completed annually. Here is a quick review.

Source: Watkinsross.com, February 2018

ADP Test Basics 2017

Abstract: The tax code governing 401k plans was written to prevent qualified retirement plans from overly favoring Highly Compensated Employees. The ADP test uses mathematical equations to compare the participation and contribution rates of the HCEs to the NHCEs to determine whether the plan is discriminating in favor of the HCEs. This article reviews the test and how it works.

Source: Legacyrsllc.com, February 2018

IRS Wants Hurricane Distributions Reported as Penalty Tax Exception on 2017 Forms 1099-R

Abstract: The IRS mandates the use of Code 2 on Form 1099-R to report hurricane Harvey, Irma, or Maria distributions made in 2017, known as "qualified hurricane distributions" under the relief provided to victims by both the IRS and Congress.

Source: Ascensus.com, February 2018

DOL Extremely Active in Enforcement, With Terminated Vested Participant Investigations a High Priority

Abstract: The DOL compiles statistics every year to measure its activities as the agency responsible for investigating and enforcing the fiduciary duties under ERISA. Statistics for the agency's 2017 Fiscal Year enforcement activities are now available. These statistics affirm that the DOL's enforcement program remains extremely active, with a particular focus on terminated vested participant investigations.

Source: Morganlewis.com, January 2018

Hunting for Retirement Plan Participants?

Abstract: The DOL has reportedly commenced a national audit campaign targeting plans with missing participants, and just last month, the Pension Benefit Guaranty Corporation issued final regulations expanding its existing missing participant program (previously limited to certain defined benefit plans) to a defined contribution plan.

Source: Foxrothschild.com, January 2018

2018 401k ERISA Retirement Plan Calendar

Abstract: This Retirement Plan Compliance Calendar highlights the critical compliance deadlines for ERISA 401k defined contribution retirement plans.

Source: Cammackretirement.com, January 2018

Revised VCP Fees -- Simple Isn't Always Better

Abstract: The IRS has described its recent changes to its Voluntary Correction Program user fees as "simplification." This simplification is achieved by significantly changing the way user fees are determined and by eliminating alternative and reduced fees that were previously available. At first blush, this simplification appears to result in a general reduction in user fees, however, in certain circumstances, the changes will actually result in significantly higher fees.

Source: Benefitsbryancave.com, January 2018

The Impact of Tax Reform on Qualified Plans and Fringe Benefits

Abstract: The Act makes changes to the rules governing qualified plans (such as 401k plans and pension plans) and fringe benefit plans. These changes generally apply to plan years beginning after December 31, 2017. This is a review of those changes.

Source: Drinkerbiddle.com, January 2018

2018 Compliance Calendar for Defined Contribution Plans

Abstract: This is a month-by-month chart of compliance items that a DC plan sponsor should address throughout the year in order to retain the qualified status.

Source: Watkinsross.com, January 2018

IRS Modification of User Fees for VCP Submissions Will Negatively Impact Small Plans

Abstract: The new fee structure is based on a plan's total asset value and represents a significant departure from the historical methods the IRS used to assess VCP user fees. While the new structure will significantly lower the user fee for some applicants, it raises the fees for others (particularly small plans).

Source: Relius.net, January 2018

Why the New IRS VCP Fees Are Bad for Small Business, TPAs, and Retirement Plans

Abstract: At a time when employers need more encouragement to help employees save for retirement, the trend at the IRS does the exact opposite. The increased risk that the employer takes on due to a lack of communication with the IRS, coupled with the increased expense of correcting any failure, is a move in the wrong direction.

Source: Ferenczylaw.com, January 2018

Voluntary Correction Program User Fees Changes

Abstract: The IRS has simplified the user fees charged for most submissions made under the Voluntary Correction Program. The total amount of net plan assets determines the applicable user fee. Most alternative or reduced fees that were part of previous revenue procedures no longer apply.

Source: Irs.gov, January 2018

Hurricane Relief for Distributions and Loans to Participants in Puerto Rico Retirement Plans

Abstract: The Puerto Rico Treasury Department is providing special relief for distributions and loans from Puerto Rico qualified and dual-qualified retirement plans following Hurricane Maria. Under Administrative Determination No. 17-29, Puerto Rico residents affected by the hurricane may take distributions from their qualified retirement plans at lower tax rates. Additional relief is available for outstanding plan loans.

Source: Towerswatson.com, January 2018

Some Benefit Limits for Puerto Rico Plans Are Different From U.S. Plans

Abstract: The Puerto Rico Treasury Department issued Circular Letter of Tax Policy 17-02 formally announcing the key pension limits for 2018, as required by the Puerto Rico Internal Revenue Code. Different limits and rules for retirement plans qualified in Puerto Rico may cause some operational issues for plan sponsors.

Source: Planadviser.com, January 2018

Details From the Retirement Plan Simplification and Enhancement Act

Abstract: Alongside numerous proposed changes, employees who work for three consecutive years with at least 500 hours of service each year would have to be made eligible to participate in an employer's plan, but would be excluded from top-heavy and nondiscrimination testing.

Source: Planadviser.com, January 2018

Annual IRS Revenue Procedure Includes Surprising Change to User Fees

Abstract: This year's update includes a significant fee change surprise for the VCP program; and while changes in past years typically went into effect about a month after they were announced, this year's changes are effective immediately.

Source: Erisapracticecenter.com, January 2018

DOL 2018 Inflation-Adjusted Penalties

Abstract: The DOL has published its final rule to adjust for inflation the civil monetary penalties assessed or enforced in its regulations.

Source: Benefitsforward.com, January 2018


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