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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.

If you find a broken link or an items that you feel is outdate, irrelevant or no longer appropriate, please let us know.

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2021 Annual Plan Compliance Review

Offering a 401k plan can be challenging and meeting your important fiduciary responsibilities can seem overwhelming. Administering a plan and managing its assets require certain actions and involve specific fiduciary responsibilities. This 8-page checklist will help guide you through the process.

Source: Employeefiduciary.com, November 2020

Form 5500 Penalties Increased

By how much did the SECURE Act increased IRS Late Filing Penalties for Form 5500? How can you avoid them?

Source: Belfint.com, November 2020

Rules for Retaining Benefit Plan Records

When paper documents are overwhelming, electronic records can be a safe and convenient fix, as long as employers follow proper guidelines. This article reviews the legal requirements and suggests guidelines to follow.

Source: Plansponsor.com, November 2020

IRS Issues 2020 Required Amendments List for Qualified Retirement Plans and 403bs

The IRS on Nov. 20 issued the 2020 list of required amendments for individually designed plans qualified under Internal Revenue Code Sections 401(a) and 403(b). The list is contained in Notice 2020-83.

Source: Ntsa-net.org, November 2020

Year-End Compliance Update for Retirement Plans

As 2020 draws to a close, this is a good time for employers sponsoring retirement plans to wrap up year-end compliance issues and prepare for the upcoming year. Here is a quick list of topics that plan sponsors may want to consider as 2021 approaches.

Source: Millerjohnson.com, November 2020

How Do Furloughed Employees Impact Plans at Year-End?

Are there any plan-related issues concerning furloughed employees that need to keep in mind for year-end? This piece focuses on four ways furloughs impact your retirement plan.

Source: Dwc401k.com, November 2020

Safe Harbor Match Notice Not Distributed?

The barrage of changes introduced by the SECURE Act, closely followed by the CARES Act, along with furloughs, remote work, and all the work-life changes of the pandemic year 2020 may have resulted in administrative errors in plan operations, such as missed notice distributions. So now what?

Source: Belfint.com, November 2020

Pooled Plan Provider Registration Regulations Published

The final regulations from the DOL outlining registration requirements for pooled plan providers of pooled employer plans were published in the Federal Register. These regulations are effective upon this publication. Changes of primary interest are outlined here.

Source: Ascensus.com, November 2020

IRS Finalizes Life Expectancy Table Changes Affecting Required Minimum Distributions

The IRS has now finalized guidance that adjusts the life expectancy tables and applicable distribution period tables that plan administrators use to calculate the RMDs. The regulations apply to RMDs taken on or after January 1, 2022. The new regulations generally reflect longer life expectancies than the prior tables used. For example, a retired 401k participant whose RMD was calculated using the prior Lifetime Table was estimated to have a lifetime of 25.6 years (from age 72). Under the new tables, that same participant would be estimated to live 27.4 more years.

Source: Tri-ad.com, November 2020

DOL Announces 401k PEP Registration Requirements

The Department of Labor announced a final rule establishing registration requirements for pooled plan providers. The rule implements the registration requirements for pooled plan providers pursuant to the SECURE Act.

Source: 401kspecialistmag.com, November 2020

Final RMD Table Changes

As a result of a general trend toward longer life expectancies, the IRS issued final regulations for the life expectancy and distribution period tables used to calculate required minimum distributions from qualified retirement plans and individual retirement accounts and annuities.

Source: Principal.com, November 2020

Solutions for Missing Participants and Uncashed Checks

A SPARK Institute forum reviewed recommendations on missing participants and uncashed checks from the GAO and the ERISA Advisory Council. Until guidance is issued about transferring amounts to state unclaimed property funds, plan sponsors will have to rely on the limited guidance already given.

Source: Plansponsor.com, November 2020

IRS Increases User Fees for Various Qualified Retirement Plan Filings

The IRS has provided an early release of increases to user fees for certain letter ruling and determination letter requests submitted with Employee Plans Rulings and Agreements that are scheduled to take effect on January 4, 2021.

Source: Hallbenefitslaw.com, November 2020

IRS Proffers Proposed Regulations for Qualified Plan Loan Offsets

The IRS has issued proposed regulations for determining whether an offset for an outstanding retirement plan loan receives the extended rollover period for qualified plan loan offsets provided for by the Tax Cuts and Jobs Act of 2017.

Source: Hallbenefitslaw.com, November 2020

DOL Shifts Focus From ESG to Pecuniary Factors in Final Rule

The Final Rule requires that fiduciaries evaluate investment opportunities based upon pecuniary factors. However, if fiduciaries are unable to distinguish investments based on pecuniary factors, the Final Rule permits fiduciaries to consider non-pecuniary factors as a tie-breaker provided that they comply with the Final Rule's documentation requirement. Like the Proposed Rule, the Final Rule includes restrictive conditions for investments used as a plan's qualified default investment alternative. This article describes the Final Rule's key features, including notable differences from the Proposed Rule.

Source: Groom.com, November 2020

The DOL Strikes Back

For three years, there was relative peace in the land of Department of Labor guidance. DOL investigations continued apace and memories of the 2015-2017 battles over the DOL fiduciary rule began to fade. Then came the summer of 2020. Starting in early June and running at a breakneck pace through August, the DOL struck back in what may be one of its most productive guidance periods ever.

Source: Napa-net.org, November 2020

Seizing the Advantage With Plan Restatements

Plan Restatement is a regular event that catches many employers off-guard. With a little preparation, however, 401k sponsors can prepare for and even take advantage of this IRS requirement.

Source: Alliant401k.com, November 2020

Can You Destroy the Paper Records for an ERISA Plan and Retain the Records in Electronic Form?

If your company has run out of storage space for paper records, including those relating to our employee benefit plans, can you retain these records solely in electronic form and destroy the paper records for your ERISA plans? The answer is yes, ERISA plan records may generally be maintained electronically so long as you comply with certain rules. Those rules are summarized here.

Source: Thomsonreuters.com, October 2020

Your [Es]cheating Heart ... Might Be Useful to Retirement Plans Dealing With Missing Participants

Retirement plan administrators have for years sung the sad lament of what to do with missing participants. Ol' Hank Williams himself could have written a hit song about the problem. Recent guidance from the IRS may have the retirement community singing a slightly different tune, however.

Source: Jdsupra.com, October 2020

DOL Announces Final ESG Rule

The Department of Labor announced a final rule that updates and clarifies the Department's investment duties regulation in 29 CFR 2550.404a-1. The final rule intends to provide clear regulatory guideposts for fiduciaries of private-sector retirement and other employee benefit plans in light of recent trends involving environmental, social, and governance investing.

Source: Dol.gov, October 2020

DOL to Issue Guidance, Ramp up Investigations on Cybersecurity

The Department of Labor is working on a guidance package addressing cybersecurity issues as they relate to plan sponsors and third-party providers, a key official said Oct. 28. He also expects to see more focus in the department's investigations on the adequacy of various cybersecurity programs, especially for large plans in terms of making sure the providers they hire are observing good cybersecurity practices.

Source: Napa-net.org, October 2020

Solving the Mystery of What a TPA Does

Whether it's through poor marketing or a lack of understanding by plan sponsors, many people don't know what a TPA does. This article is written to solve some of the mysteries of TPAs and for you to understand their role and why it's so important to have one that will do a quality job.

Source: Jdsupra.com, October 2020

CARES Act 401k Compliance Clean Up

The CARES Act provides several optional coronavirus-related relief provisions that employers may choose to incorporate into their 401k and other retirement plans. Those provisions include penalty-free benefit distributions of up to $100,000, a doubled maximum participant loan amount, and a one-year suspension of loan repayments for coronavirus-affected participants. Other relief provisions apply to participants who are not CAPs, such as the right to skip required minimum distributions for 2020. This article provides details on these relief provisions.

Source: Gct.law, October 2020

IRS Updates Guidance on Qualified Plan Distributions to State Unclaimed Property Funds

The IRS recently published new guidance on the tax withholding and reporting consequences associated with qualified retirement plan distributions to state unclaimed property funds. In Revenue Ruling 2020-24, the IRS clarified that distributions from qualified retirement plans to state unclaimed property funds are subject to both federal income tax withholding and 1099-R reporting requirements.

Source: Twrblog.com, October 2020

EBSA Enforcement Statistics from Fiscal Year 2020

The Employee Benefits Security Administration enforces ERISA laws and regulations, including conducting civil and criminal investigations. EBSA investigations often result in recovering money from enforcement actions, voluntary fiduciary correction programs, abandoned plan programs, and informal complaint resolution. Enforcement statistics from the fiscal year 2020 provide some insights on future enforcement efforts by EBSA.

Source: Bsllp.com, October 2020

Few Powering Up With Electronic Disclosure

When the DOL finalized a rule in May that permitted default electronic delivery of retirement plan disclosures, recordkeepers, and plan sponsors welcomed the move by saying it will increase participant engagement and cut mailing costs. While those points still hold, since the rule went into effect July 27 there hasn't been much movement to implement default electronic disclosure programs.

Source: Pionline.com, October 2020

Few Retirement Plans Need Year-End Amendments

Most retirement plan sponsors won't face year-end amendment deadlines in 2020, but a few may need to adopt amendments to reflect changes in law or plan design. This article summarizes the amendments that may be required by year-end for qualified defined contribution and defined benefit plans, 403b plans, and one amendment for some nonqualified deferred compensation plans.

Source: Mercer.com, October 2020

401k Plans Have Options to Comply With New Mandate for Part-Time Employees

The SECURE Act was passed to increase participation in 401k plans. One way to reach that goal was a new mandate to track long-term, part-time employees and require that they be allowed to make salary deferrals. Now amid an ongoing pandemic, employers need to manage the implementation of this mandate, but some options may be simpler to use and even more favorable for participation by part-time employees.

Source: Dwt.com, October 2020

DOL Restores Over $3.1 Billion to Employee Benefit Plans, Participants, and Beneficiaries, the Most Ever

The DOL's Employee Benefits Security Administration issued its fiscal year 2020 enforcement fact sheet highlighting the Agency's recovery of over $3.1 billion in direct payments to plans, participants, and beneficiaries in FY 2020. In FY 2020, EBSA conducted 1,122 civil investigations. Moreover, EBSA's Benefits Advisors closed more than 171,000 inquiries, many of which came through EBSA's toll-free number and website.

Source: Dol.gov, October 2020

401k and Retirement Plan Limits for the Tax Year 2021

On October 26, 2020, the Internal Revenue Service announced that employees in 401k plans will be able to contribute up to $19,500 next year. The IRS announced this and other changes in Notice 2020-79. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2021.

Source: 401khelpcenter.com, October 2020*

401k Plan Sponsors -- Time to Focus on Compliance With the SECURE Act's Eligibility and Vesting Rules

The SECURE Act has new eligibility and vesting rules for long-term, part-time employees. This article summarizes these new requirements and offers some considerations for 401k plan sponsors to weigh as they turn their attention to compliance with these requirements, which are effective for plan years beginning after December 31, 2020.

Source: Verrill-law.com, October 2020

Qualified Birth or Adoption Distributions Q&As

The SECURE Act includes a provision permitting qualified childbirth and adoption expenses to be distributable events. And for its part, the IRS has issued guidance to provide some clarity on the new distributable event and how it works. This is a Q&As relevant to qualified childbirth and adoption expenses as distributable events.

Source: Ntsa-net.org, October 2020

Plan Participant Personal Information: Retirement Plan Asset?

A lawsuit filed in U.S. District Court for the Southern District of Texas, against Shell Oil Company by several participants in the company’s 401k plan, claimed that Shell allowed its plan recordkeeper to use the participants’ personal information to cross-sell other financial products and services outside the plan in breach of its fiduciary duties under ERISA. At the heart of the plaintiff’s case is their contention that 401k plan participant data is a plan asset and the use of that data for nonplan purposes constitutes a breach of fiduciary duty under ERISA. Is participant data a plan asset?

Source: Hallbenefitslaw.com, October 2020

No Signature, No Shoes, No Service

Signing an ERISA plan document or amendment is not a mere formality. Rather, the tax-qualified status of the plan is contingent on properly executed plan documentation and could be revoked were the unsigned document revealed in an IRS audit. This was made clear in a recent IRS Chief Counsel Memorandum that contradicts the holding in an earlier Tax Court Memorandum. Both are summarized here followed by some practical compliance steps.

Source: Eforerisa.wordpress.com, October 2020

IRS Issues Guidance on Payments to State Unclaimed Property Funds

The IRS on Oct. 16 modified guidance and clarified rules to address payments made to state unclaimed property funds. The IRS announced the changes in Revenue Procedure 2020-46 and Revenue Ruling 2020-24.

Source: Asppa.org, October 2020

IRS Publishes Guidance on Withholding and Reporting of Escheated Retirement Plan Accounts

The IRS has issued Revenue Ruling 2020-24, guidance for qualified retirement plans that pay or "escheat" certain accounts of unresponsive or missing participants or beneficiaries to state unclaimed property funds. The guidance addresses the issues of tax withholding and reporting when such amounts are escheated.

Source: Ascensus.com, October 2020

DOL Submits Final ESG Rule to OMB

Release of the DOL's final rule addressing environmental, social, and governance factors in selecting plan investments appears to be imminent. Following a 30-day comment window that ended July 30 and more than 8,000 comment letters, the DOL on Oct. 14 submitted a final rule to the Office of Management and Budget for review.

Source: Ntsa-net.org, October 2020

Qualified Plan Loan Offsets

The Tax Cuts and Jobs Act, enacted in December 2017, made significant changes to the plan loan offset rollover eligibility and tax reporting. The changes add a significant amount of complexity to tax reporting for these loans, and as a result, the industry has been slow to implement the changes. In August 2020, the IRS published proposed regulations that provide more detail on the requirements of the new provisions. Under the new regulations, there are now three different terms for a loan that is distributed, and each has rollover rules specific to it.

Source: Ntsa-net.org, October 2020

The To-Do List for 401k Plans: 2020-2021 Edition

Being a retirement plan sponsor is a tremendous responsibility and the problem is that most plan sponsors don't understand that. Plan sponsors often act passively because they hire retirement plan providers to help them. The problem is that fiduciary responsibility doesn't allow plan sponsors the luxury to be passive when the buck stops with them. So that means you need to be active and understand what's going in the retirement plan industry that can impact your plan. With changes in how retirement plans are run and constant concerns with rampant 401k litigation, here is a to-do list.

Source: Jdsupra.com, October 2020

New Rules Simplify Electronic Delivery to Plan Participants

The DOL has released a new, simplified method for electronically delivering ERISA-mandated notices and disclosures. The new method removes the initial consent requirement and the requirement to obtain new consent following hardware or software changes. The DOL now allows plan sponsors to set e-delivery (rather than print) as the plan's default delivery method. The DOL estimates these new procedures could reduce printing, mailing, and related plan costs by an estimated $3.2 billion over the next decade.

Source: Newportgroup.com, October 2020

IRS Offers Guidance on RMDs considering CARES Act and SECURE Act

The IRS issued Notice 2020-51, which gives guidance on the waiver of required minimum distributions for 2020 from certain retirement plans under the CARES Act and the required beginning date for RMDs under the SECURE Act. The Notice also provides two sample amendments that employers may use to give plan participants and beneficiaries whose RMDs are waived a choice of whether to receive the waived distribution.

Source: Hallbenefitslaw.com, October 2020

New IRS Guidance About New Long-Term Part-Time Employee Eligibility Rules for 401k Plans

This article focuses on perhaps the biggest responsibility for employers that will begin with their 2021 plan years, keeping track of long-term part-time employees and allowing them to make deferral elections under their 401k plans.

Source: Employeebenefitslawreport.com, October 2020

Puerto Rico Qualified Retirement Plans: 2020 Year-End Amendments Deadline Coming Soon

Unlike the Internal Revenue Service, which each year issues a list of required amendments to U.S.–qualified plans and their respective adoption due dates, the Puerto Rico Department of the Treasury seldom requires mandatory amendments to Puerto Rico–qualified plans. The year 2020, however, has been an exception to the general rule. Specifically, if during 2020, a Puerto Rico–qualified plan allowed participants to receive in-service hardship withdrawals on account of either the COVID-19 pandemic or the earthquakes that affected the island at the beginning of the year, the official plan document must be amended by December 31, 2020.

Source: Ogletree.com, October 2020

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 72, certain participants of a tax-qualified retirement plan may be required by federal tax law to withdraw a minimum amount from such a plan each year. These mandatory distributions are known as "required minimum distributions."

Source: Legacyrsllc.com, October 2020

What are the Available Safe Harbor Plan Formulas?

401k plans are subject to nondiscrimination tests to ensure that a disproportionate share of the elective participant deferral is not those of the HCEs. The discrimination tests can be avoided if the employer sponsors a safe harbor plan. Safe harbor plans allow employers to disregard the nondiscrimination test if they make a generous, pre-approved employer contribution amount to all eligible employees. The minimum safe harbor employer contribution formulas available are reviewed here.

Source: Belfint.com, October 2020

Correction Options for Retirement Plan Errors

In a highly regulated industry with complicated rules that always have exceptions (except when the exception does not apply) sooner or later a failure to follow the plan document will take place. Such operational errors can be corrected through the IRS Employee Plan Compliance Resolution System in one of three ways.

Source: Belfint.com, October 2020

Round One of SECURE Act IRS Guidance Clarifies Some Key Issues for Retirement Plans

IRS Notice 2020-68 provides the first round of guidance on several provisions under the SECURE Act and the Bipartisan American Miners Act of 2019. The key qualified plan provisions are highlighted and summarized here.

Source: Groom.com, September 2020

Interim Final Rule Published for Lifetime Income Projections

Published in the Federal Register is a DOL interim final rule to guide DC retirement plans that must begin to furnish projections of potential lifetime income streams to participants. Lifetime income projections are required under provisions of the SECURE Act, which mandates that a participant's accrued benefit must periodically be reflected on their benefit statements as an estimated lifetime income payment stream.

Source: Futureplan.com, September 2020

DOL Publishes New SECURE Act Guidance Regarding Lifetime Income Disclosures

The DOL has announced new guidance, in the form of an interim final rule, implementing the lifetime income disclosure requirement for DC plans that was added to ERISA by the 2019 SECURE Act.

Source: Insidecompensation.com, September 2020

IRS Provides Additional SECURE Act Guidance

The SECURE Act's primary goals include expanding retirement savings, simplifying existing rules, and preserving retirement income. As with any major legislation, the SECURE Act created numerous outstanding questions. While the IRS has previously provided some answers, no SECURE Act guidance has been as detailed as the recently released IRS Notice 2020-68.

Source: Ascensus.com, September 2020

Lifetime Income Disclosures for DC Plans: Interim Final Rule

The clock is ticking for DC plans to begin to provide a "lifetime income disclosure" on at least one benefit statement a year. Beginning in 2021, plan administrators must show each participant an estimate of the single life annuity and joint and 100% survivor annuity that the participant's current account balance could purchase. Importantly, account-based plans are still not required to offer an annuity form of distribution option or investment.

Source: Vorys.com, September 2020

New Defined Contribution Plan Disclosures

Retirement plan participants may soon better understand how account balances translate to retirement readiness. The SECURE Act requires DC plans to show participants the value of their account balances if converted into a monthly lifetime stream of income. The disclosures are aimed at reminding participants that retirement plan balances are meant to last for life and busting the "wealth illusion" that single sum account balances present. The details on the disclosures are starting to take form following an interim final rule recently released by the DOL.

Source: Employeebenefitslawblog.com, September 2020

IRS Issues Guidance on Qualified Birth or Adoption Distributions

In recent guidance, the IRS addressed several issues under the SECURE Act, including qualified birth or adoption distributions (QBOADs). While QBOADs have been permissible since January 2020, many employers have been waiting for some IRS guidance on how these distributions would be implemented before deciding as to whether to include a QBOAD as a plan feature.

Source: Wagnerlawgroup.com, September 2020

IRS Expands List of Qualified Individuals Eligible for Coronavirus-Related Distributions

The IRS issued Notice 2020-50 to update and clarify certain provisions of Section 2202 of the CARES Act, which deals with the tax treatment of coronavirus-related distributions from eligible retirement plans for qualified individuals. The Notice expands the definition of a "qualified individual" eligible to take coronavirus-related distributions from their retirement plans.

Source: Hallbenefitslaw.com, September 2020

UPDATE: SECURE Provides New Option to Help Pay for Birth or Adoption

The IRS has again directed our attention back to the SECURE Act by issuing guidance related to qualified birth or adoption distributions. Withdrawals from a qualified retirement plan before age 59 ½ are generally subject to a 10% tax for early distribution, but the SECURE Act created a new distribution option that permits plan participants to take distributions of up to $5,000 as a penalty-free early withdrawal to help cover expenses related to the adoption or birth of a child. The IRS has now issued further guidance on these qualified birth or adoption distributions in Notice 2020-68.

Source: Graydon.law, September 2020

Implementing Long-Term Part-Time Employee 401k Elective Deferrals

Notice 2020-68 includes guidance for implementing the mandatory participation of long-term part-time non-union employees in 401k plans for plan years beginning Jan. 1, 2021. The IRS also announces that it is seeking taxpayer questions and comments about the SECURE Act and Miner Act provisions referenced in the Notice. The deadline for submitting comments and questions is Nov. 2, 2020.

Source: Bhfs.com, September 2020

IRS Revenue Procedure 2020-40 Provides Extensions of Retirement Plan Amendment Deadlines

Revenue Procedure 2020-40 (Rev. Proc. 2020-40) expands the situations in which the plan amendment deadline may be extended for discretionary amendments made to pre-approved qualified retirement plans and pre-approved Internal Revenue Code Section 403b plans.

Source: Westlaw.com, September 2020

Retirement Plan Update: New DOL Disclosures and Updated IRS Notices

The DOL recently issued interim final regulations requiring new information to be included on ERISA-covered defined contribution plan participant account statements under the SECURE Act. The guidance only applies to defined contribution plans, such as 401k and 403b plans. The IRS also recently updated safe-harbor explanations that can be used to satisfy the tax notice requirements in Code Section 402(f). These requirements generally require plan administrators to provide a written explanation of tax consequences when making eligible rollover distributions from a qualified retirement plan.

Source: Shermanhoward.com, September 2020

IRS Q&As Tackle Auto-Enrollment Credit, Part-time Vesting, Adoption

The IRS has provided some answers to questions concerning the small employer automatic enrollment credit, part-time vesting rules, and other provisions under the SECURE Act. IRS Notice 2020-68, issued September 2, provides guidance on some of the outstanding SECURE Act issues in a questions and answers format.

Source: Napa-net.org, September 2020

DOL Releases Interim Final Rule on Lifetime Income Illustrations

The SECURE Act of 2019 modified the defined contribution plan benefits statement rules to require the inclusion of lifetime income. On August 18, the DOL released an interim final rule, including model disclosures and the assumptions plan administrators must use to calculate estimated lifetime income amounts. Using the model disclosures may limit fiduciary liability. The rule is expected to be effective by the end of the third quarter, 2021.

Source: Buck.com, September 2020

Retirement Plan Records: To Purge, or Not to Purge

Record retention rules are found in both the DOL Regulations and ERISA, plus there are statutes of limitation concerning plan sponsor liability for just about everything administrative in a retirement plan. While most plans have policies for loans, investments, and qualified domestic relations orders, very few plan sponsors seem to have a record retention policy to provide guidance on what to retain, what to purge, and when to do it all. Depending on the document category, there are different standards for how long documents need to be kept.

Source: Ferenczylaw.com, September 2020

Coronavirus and Retirement Plan Extension Relief

Due to the COVID-19 pandemic, new guidance from the U.S. Department of Labor, the IRS, and the Department of the Treasury extends several deadlines for retirement plan notifications and benefit plan claims required by Title I of ERISA.

Source: Hallbenefitslaw.com, August 2020

DOL Proposed Pooled Plan Provider Registration Rule

The SECURE Act created a new structure through which completely unrelated employers can participate in a single defined contribution plan beginning on January 1, 2021. These Pooled Employer Plans must have a Pooled Plan Provider, and each PPP must register with the Department of Labor prior to beginning operations. On August 20, 2020, DOL released a proposed regulation detailing the PPP registration requirements.

Source: Groom.com, August 2020

Changes to Retirement Plan Distribution and Disclosure Information

The IRS has updated its safe harbor Special Tax Notice required to be provided to plan participants about to receive a distribution from a tax qualified plan as part of the election package. Further out on the horizon, individual account plans will be required to provide "lifetime income illustrations" on at least one benefit statement provided to participants during a 12-month period as a result of provisions included in the SECURE Act. Here are five key points for plan fiduciaries.

Source: Troutman.com, August 2020

Participant Data: A Retirement Plan Asset?

In recent retirement plan litigation, a plaintiffs' counsel attempted to make the novel argument that retirement plan participant data is a plan asset that should be afforded the same protections of ERISA that apply to other plan assets, such as monetary assets. While the argument has not yet succeeded in the courts, some settlements have included terms involving restrictions as to the use of plan data. Is plan data considered a plan asset under ERISA?

Source: Cammackretirement.com, August 2020

DOL Presses Forward With Lifetime Income Disclosure in DC Plans

The DOL issued an interim final rule implementing Section 203 of the Setting Every Community Up for Retirement Enhancement Act of 2019, which requires an annual lifetime income disclosure for 401k and other ERISA defined contribution plan participants. This article reviews the key takeaways.

Source: Groom.com, August 2020

IRS Offers New Guidance for Qualified Plan Loan Offsets

Earlier this week the IRS issued proposed regulations regarding an extension of the rollover period for certain plan loan offset amounts. The proposed rules implement portions of the Tax Cuts and Jobs Act, which provides for an extended rollover period for a Qualified Plan Loan Offset, which is a type of plan loan offset. Even though the rules are proposed, they can be relied on immediately, and it is important to know what is in them.

Source: Graydon.law, August 2020

Proposed Regulations Issued on Pooled Plan Provider Registration

The DOL has issued highly-anticipated proposed regulations on registration requirements for entities that will function as "pooled plan providers" for retirement plans that will be known as pooled employer plans, or PEPs.

Source: Futureplan.com, August 2020

DC Plan Administration: A SECURE and CARES Act Reminder

The SECURE and CARES Acts provide a broad spectrum of required and optional changes that employers must evaluate for retirement plan administration. One impending change is the SECURE Act's broader eligibility requirement for part-time employees in 401k plans, which becomes effective on January 1, 2021. Also, employers may be surprised to learn that some CARES Act distribution options were added to their plans automatically by their record keepers through a default process. Thus, employers should review their plan's administrative procedures to determine if changes under the SECURE Act and CARES Act were implemented to ensure administrative compliance with the plan document.

Source: Spencerfane.com, August 2020

DOL Issues Interim Final Rule on Lifetime Income Disclosures for DC Plans

The SECURE Act required, for the first time, that administrators of DC plans provide participants with disclosures regarding estimated lifetime income payments. Such estimates are designed to help employees evaluate their ability to retire by giving them an educated estimate of how their savings in the plan might translate into lifetime income payments. The DOL recently announced an interim final rule to implement these provisions of the SECURE Act.

Source: Bradley.com, August 2020

Audit Information Request Template

If you're preparing for your first 401k plan audit, you may be wondering what information the auditor will need for the audit. To help you prepare, this template was created of an audit information request which conveys the overall level of detailed verification required in an audit.

Source: Belfint.com, August 2020

DOL Proposes Registration Requirements for Pooled Plan Providers

The DOL issued proposed regulations that would establish requirements for pooled plan providers to register with the DOL. The DOL says that it recognizes that there may be challenges associated with these new types of multiple employer plans that it, the Treasury Department, or IRS may need to address.

Source: Asppa.org, August 2020

Qualified Plan Loan Offset Rollover Rules Proposed by IRS

The IRS has released a notice of proposed rulemaking that takes into account changes made by the Tax Cuts and Jobs Act concerning rollover rules for qualified plan loan offset amounts.

Source: Ascensus.com, August 2020

DOL Unveils Lifetime Income Disclosure Rule

In the latest of a series of regulatory announcements, updates, and proposals, the DOL has unveiled an Interim Final Rule on lifetime income disclosures under the SECURE Act. Under the rule, retirement plans would provide lifetime income illustrations using prescribed assumptions designed, the Labor Department notes, "to give savers a realistic illustration of how much monthly retirement income they could expect to purchase with their account balance."

Source: Napa-net.org, August 2020

IRS Provides Guidance on 2020 Waiver of Retirement Plan Required Minimum Distributions

In June 2020, the IRS issued Notice 2020-51 giving guidance on how to interpret and administer the 2020 RMD waiver provisions in the CARES Act and the required beginning date provision in the SECURE Act. Here are highlights of this recent IRS Notice.

Source: Frostbrowntodd.com, August 2020

IRS Lends a Hand on 402(f) Notices

This week, the IRS has released updated safe harbor 402(f) notices to reflect the recent legislative change made, including changes in law made by the SECURE Act. These changes include qualified birth and adoption distributions and the change from age 70 1/2 to 72 for RMDs.

Source: Graydon.law, August 2020

Not "Wired at Work"? New DOL E-Disclosure Rule is Here to Help

The DOL announced final regulations that describe new "safe harbor" procedures for electronic delivery of required ERISA retirement plan disclosures such as Summary Plan Descriptions, quarterly or annual account statements, and other items. The new safe harbor procedures are an addition to the DOL e-disclosure rules that date back to 2002 and represent an improvement on the 2002 rules for employees who are not "wired at work," as defined in those regulations. The safe harbor procedures took effect on July 27, 2020. A plan administrator that relied on the safe harbor before that date wouldn't be subject to enforcement action, the DOL vowed.

Source: Eforerisa.wordpress.com, August 2020

IRS Updates 401k Model Rollover Notice

The IRS issued Notice 2020-62 which updates the information that must be provided to participants in retirement plans (including 401k plans) when they become eligible for a distribution. Also, Notice 2020-62 provides two model rollover notices (one solely for payments from Roth contribution accounts, and another for payments from traditional, non-Roth accounts) which, if used for this purpose, are deemed to satisfy the statutory requirement.

Source: Compliancedashboard.net, August 2020

IRS Issues Safe Harbor Explanations for Eligible Rollover Distributions

The IRS on Aug. 6 in Notice 2020-62 issued safe harbor explanations for eligible rollover distributions. The notice modifies the two model notices in Notice 2018-74. Those safe harbor explanations reflect relevant law as of Sept. 19, 2018: one safe harbor is for payments not from a designated Roth account, and the other is for payments from a designated Roth account.

Source: Asppa.org, August 2020

What Employers Should Know About the DOL Final Rule for Electronic Disclosure

On May 27, 2020, the DOL issued a final rule that makes it easier for employers to provide required disclosures to retirement plan participants and beneficiaries. The final rule provides two additional safe harbors for the production of retirement plan disclosures via electronic media: the "Notice and Access" safe harbor and the "Direct Delivery Via Email" safe harbor. Here are the key points that employers should know about the new safe harbors.

Source: Thompsoncoburn.com, August 2020

DOL's ESG Proposal Blasted by Commenters

The DOL's proposed rule addressing environmental, social, and governance factors in selecting plan investments received more than 1,500 comment letters during the 30-day comment window, with many taking issue with the proposal.

Source: Napa-net.org, August 2020

IRS Updates Operational Compliance List for Retirement Plans

IRS recently updated its Operational Compliance List for qualified retirement and 403b plans to identify changes in law and guidance affecting plan operations. The Operational Compliance List reminds sponsors about revised operational requirements taking effect during a calendar year, even though conforming amendments might not be due until a later date.

Source: Mercer.com, July 2020

Navigating RMD Waivers under the CARES Act

The CARES Act suspended required minimum distributions from certain retirement accounts for 2020. This waiver applies to any retirement account subject to RMDs, including 401ks, 403bs, 457bs, traditional IRAs, and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. Here are some of the rules you need to know regarding RMD waivers under the CARES Act.

Source: Hallbenefitslaw.com, July 2020

IRS Issues Guidance on 2020 Waiver of Required Minimum Distributions

Participants in defined contribution retirement plans can skip their required minimum distribution payments for 2020. If RMDs for 2020 have already been received, participants have until August 31, 2020 to rollover the RMD into an eligible retirement plan. The IRS issued sample plan amendments that employers may adopt to give participants and beneficiaries a choice as to whether or not to receive their 2020 RMD, and FAQs covering details of the 2020 RMD waiver.

Source: Hansonbridgett.com, July 2020

E-Delivery Paper Notices Can Be Deferred Under COVID-19 Relief

A key Department of Labor official confirmed that the DOL's deadline relief provided in response to the Coronavirus pandemic also applies to initial paper notices under the DOL's new electronic disclosure regulations.

Source: Asppa.org, July 2020

Qualified Plan Loans and Coronavirus Related Distributions

Pursuant to Notice 2020-50, CRD-qualified individuals who experience a loan offset may treat such amounts as CRDs, regardless of whether the plan offers CRDs. Deemed distributions of defaulted loans, in contrast, may not be treated as CRDs, and are not eligible for rollover.

Source: Retirementlc.com, July 2020

Required Distributions for 2020 Suspended for Many Plan Participants

The CARES Act creates a moratorium on required minimum distributions for 2020. The one-year required minimum distribution moratorium under the CARES Act applies to IRAs and defined contribution retirement plans, such as 401ks, money purchase pension plans, 403b plans and some government plans. Plans may need to be amended to accommodate the moratorium.

Source: Mcdonaldhopkins.com, July 2020

New IRS Guidance Expands Eligibility for 401k Plan COVID-19 Related Distributions and Loans

On June 19, 2020, the IRS issued Notice 2020-50, along with a related news release, that provides official guidance on coronavirus-related distributions and temporarily expanded loans taken from 401k plans due to the COVID-19 crisis. The Notice expands the eligibility criteria for such distributions and loans, thereby potentially increasing the number of 401k plan participants able to take advantage of these features.

Source: Compliancedashboard.net, July 2020

Return of 2020 RMDs Allowed by New IRS Announcement

On June 23, the IRS issued a notice that told taxpayers they could unwind any required minimum distributions from their retirement accounts that they had taken in 2020. This provides a significant opportunity for IRA beneficiaries who didn't need this money for expenses. They can put these distributions back into their IRAs to grow there tax-deferred, lowering their total tax bill.

Source: Wealthspire.com, July 2020

IRS Issues Operational Compliance List for 2020

The IRS issued the 2020 Operational Compliance List for tax-qualified retirement plans. The Operational Compliance List is mandated by IRS Rev. Proc. 2016-37 and notifies plan sponsors and service providers of changes to the tax-qualification requirements that became effective during the 2020 calendar year.

Source: Westlaw.com, July 2020

Recent Developments in ERISA Plan Investment Regulation

The Department of Labor has issued guidance on private equity in 401k plan designated investment alternatives and a proposed regulation on environmental, social, and governance investing.

Source: Morganlewis.com, July 2020

How Furloughs and Layoffs May Affect Company Retirement Plans

The coronavirus pandemic has forced many employers to implement some form of workforce reduction to continue operating. While furloughs and layoffs have a significant and immediate impact on a company's operations, plan sponsors also need to understand the longer-term effects workforce reductions have on participants' benefits and retirement accounts.

Source: Bdo.com, July 2020

Employee Benefit Plans: Internal Controls for Processes and Governance

While many plan sponsors outsource most of their plan's operations, they cannot fully farm out this responsibility. Therefore, strong plan governance and the implementation of internal controls will assist in a plan's compliance with applicable laws and regulations. Preventative controls are designed to discourage errors or fraud, while detective controls are designed to identify errors or fraud after they have occurred. This article examines sample plan controls and user controls related to third-party service providers of a plan.

Source: Eisneramper.com, July 2020

IRS Issues New Guidance for Mid-Year Changes to Safe Harbor 401k and 403b Plans

The IRS issued Notice 2020-52 addressing mid-year reductions and suspensions of contributions to Safe Harbor 401k and 403b plans. In response to the COVID-19 pandemic, the Notice provides some temporary relief for plan sponsors that wish to reduce or eliminate safe harbor contributions mid-year.

Source: Spotlightonbenefits.com, July 2020

Get Beneficiary Designation and Missing Participant Practices in Order

COVID-19 has led to employee layoffs, employee health issues, and changed rules for required minimum distributions, all of which make it increasingly important for plan sponsors to have good procedures in place for maintaining updated beneficiary designations and finding missing participants.

Source: Plansponsor.com, July 2020

The Five "Ws" of a 401k Plan Audit

If you've just been informed that your 401k plan needs an audit, you probably have many questions if you have never been through a 401k audit. Hopefully by answering the five "Ws" (Who? What? When? Where? Why?), this article will cover most of your questions.

Source: Belfint.com, July 2020

IRS Grants 401k Safe Harbor Suspension Relief

The IRS released Notice 2020-52 which grants certain COVID-19 related relief to retirement plan sponsors who employ a safe harbor 401k plan design feature. The majority of the guidance is temporary relief which expires on August 31, 2020. However, the IRS Notice also includes a clarification that shall remain effective after August 31, 2020.

Source: Legacyrsllc.com, June 2020

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