Easy Money…2022 IRS Limits Announced Today

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by Lyn Domenick

The IRS has announced the 2022 cost of living adjustments to qualified plan limits. As expected, many of the limits increased significantly compared with prior years. Below are the highlights, and our full historical chart can be found here for easy reference.

401(k), 403(b), Profit-Sharing Plans, etc.
2022 2021 2020
Annual Compensation 305,000 290,000 285,000
Elective Deferrals 20,500 19,500 19,500
Catch-up Contributions 6,500 6,500 6,500
Defined Contribution Limit 61,000 58,000 57,000
ESOP Distribution Limits 1,230,000
245,000		 1,165,000
230,000		 1,150,000
230,000
Defined Benefit Limit 245,000 230,000 230,000
HCE Threshold 135,000 130,000 130,000
Key Employee 200,000 185,000 185,000
457 Elective Deferrals 20,500 19,500 19,000
Taxable Wage Base 147,000 142,800 137,700

Stronger . . . Services Agreements for Benefit Plans

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By Kevin Selzer

With the exception of certain small businesses, being an employer generally means offering an array of benefits to remain competitive in the worker marketplace.  As the employer grows, typically so does the list of employee benefit plans being offered.  This naturally translates into more service providers, and for good reason.  Employers typically don’t possess the knowledge and skillset to offer these benefits in-house, and ERISA, which applies to most employee benefit arrangements, requires the plans to be administered in accordance with some of the highest standards of care under law. As a result, employers are frequently hiring and replacing service providers.

Today’s post focuses on some tips for employers in a sometimes-overlooked aspect of the process of hiring a service provider – the contract between the employer and the provider.  In concept, the service provider agreement is relatively simple – it needs to set out each party’s role and responsibility in delivering the employee benefit.  As always though, the devil is in the details.  Below are some tips for employers:

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Oh Won’t You Stay…A Little Bit Longer…Because There’s No Need to Sign Your Distribution Form in Person

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by Elizabeth Nedrow and Becky Achten

In June 2020, the IRS issued Notice 2020-42 providing temporary relief from the physical presence requirement for certain participant distribution and beneficiary designation elections required to be witnessed by a notary public or plan representative.  This temporary relief was scheduled to expire June 30, 2021, and now has again been extended by the IRS.

As the COVID-19 pandemic continues, the IRS issued Notice 2021-40, again extending the temporary relief through the 12-month period ending June 30, 2022, as long as the prior requirements are met.  See our January 25, 2021 blog posting for a summary of the requirements. Read more

Once in a Lifetime – Make that a Year – for Lifetime Income Illustrations of 401(k) Plan Benefits

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by Brenda Berg

Plan sponsors of defined contribution plans such as 401(k) plans will soon have to provide participants with illustrations of just how much a participant’s account balance might produce on a monthly basis if converted to a single life annuity and, for married participants, a qualified joint and survivor annuity. Many plan sponsors already provide some sort of income illustration on their quarterly benefit statements to help participants with their retirement planning.

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E-P-C-R-S, find out what it means to me … new IRS Correction Guidance

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by Lyn Domenick

On July 16, 2021, the IRS released updated Employee Plans Compliance Resolution System (EPCRS) guidance for Plan corrections in the form of Rev. Proc. 2021-30. The changes affect the three programs offered by the IRS for correction of plan failures: Self-Correction Program (SCP), Voluntary Correction Program (VCP) and Audit Closing Agreement Program (Audit CAP). The principal changes outlined below are effective as of July 16, 2021, unless otherwise indicated. Read more

I Just Called to Say…I Have a Benefit Claim

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by Lyn Domenick

ERISA provides that when an individual makes a claim for benefits under an employer’s plan, they are entitled to copies of all documents, records, and other information relevant to the claimant’s claim for benefits. The Department of Labor (DOL) recently issued an information letter that concludes that an audio recording of a telephone conversation (in this case, between the claimant and a representative of the plan’s insurer) must be among the materials provided to a claimant upon request. The DOL letter was provided in response to a request from a representative of a claimant who was denied an audio recording because the plan administrator considered it to be made only for quality assurance purposes, and not “created, maintained or relied upon for claim administration purposes.” Read more

Time Has Come Today…For Form 5500 Season

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By Benjamin Gibbons

Days are getting longer, temperatures are getting warmer, plants are looking greener, schools are letting out, Brood X cicadas are emerging…it can only mean one thing…5500 season is approaching.

However, unlike the cicadas and their 17-year cycle, the Form 5500 filing requirements arise every summer for calendar year-end ERISA covered retirement plans and health and welfare plans that cover at least 100 participants.  While it may be easy enough to file an extension and hit the snooze button until October, now is great time for plan sponsors to start thinking about their 5500 obligations. Read more

Hello. Is It Me You’re Looking For? Missing Participant Best Practices

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by Leslie Thomson

The Employee Benefits Security Administration (EBSA) has developed a list of best practices plan fiduciaries can implement to reduce missing participant issues and ensure participants and beneficiaries receive their plan benefits. According to EBSA, the first step in addressing any problem is knowing there is one. If your plan has one or more of the following “red flags,” you potentially have a missing participant issue:

  • More than a small number of missing or nonresponsive participants.
  • More than a small number of terminated vested participants who have reached normal retirement age but have not started receiving their pension benefits.
  • Missing, inaccurate, or incomplete contact information, census data, or both (e.g., incorrect or out-of-date mail, email, and other contact information, partial social security numbers, missing birthdates, or missing spousal information).
  • Absence of sound policies and procedures for handling mail returned marked “return to sender,” “wrong address,” “addressee unknown,” or otherwise, and undeliverable email.
  • Absence of sound policies and procedures for handling uncashed checks (as reflected for example, by the absence of an accounting journal or similar record of uncashed checks, a substantial number of stale uncashed distribution checks, or failure to reclaim stale uncashed check funds in distribution accounts).

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Matchmaker, Matchmaker, Make Me a Match … Based on my Student Loan Repayments

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by Beth Nedrow

For the last several years, a hot topic for policymakers has been how to address the nation’s massive student loan debt. At the same time, the pressure remains to develop ways to encourage Americans to save for their own retirement. Legislation is in the works that proposes marrying those two goals.

Earlier this week, the U.S. House of Representatives Ways and Means Committee passed a bipartisan retirement reform bill, the Securing a Strong Retirement Act of 2021 (or “SECURE 2.0,” to reflect its role in following in the footsteps of the SECURE Act passed in December 2019). Among other provisions, SECURE 2.0 would permit employers to make matching contributions under a 401(k) plan, 403(b) plan or SIMPLE IRA with respect to “qualified student loan payments.” Such arrangements have been touted as a way to make sure employees burdened with student loans don’t miss out on employer retirement contributions since they may be unable to afford both student loan repayments and elective deferrals to a retirement plan. Read more

In the Darkness at the Edge of Town…Cybersecurity Guidance for Plan Participants, Record-Keepers, and Plan Sponsors From The EBSA

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by John Ludlum

On April 14, 2021, the Employee Benefits Security Administration (“EBSA”) published guidance for plan sponsors, plan fiduciaries, record-keepers, and plan participants on best practices for maintaining cybersecurity. This is the first time that the EBSA has given cybersecurity guidance to the estimated 34 million defined benefit plan and the 106 million defined contribution plan participants with an estimated $9.3 trillion in assets. Read more