Bruno Mars may be crooning “Count on me,” but make sure you don’t overcount your retirement plan participants! New rules may allow you to leave some employees out of the count, which could save you the expense of the annual audit.
If your retirement plan is considered “large” – generally 100 or more participants – you’re probably in the middle of the Department of Labor required annual independent audit of the financial statements that must accompany the Form 5500. There are a few exceptions to the audit requirement – plans that have less than 100 participants at the beginning of the year and those with between 80 and 120 who filed as a small plan in the prior year. If your plan is just over that 100-participant level, there may be relief on the horizon from the required audit and another reason to keep track of those separated participants. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Becky Achtenhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBecky Achten2023-06-28 14:55:222023-09-26 14:30:39You Can Count On Me…But Check Your Math When Counting Participants for the 5500 Audit Rule!
Secure Act 2.0 requires certain plans to automatically enroll participants once they become eligible to participate. Plans that were established prior to December 29, 2022 are exempt from this new requirement. Plans that are established after December 29, 2022 are subject to the automatic enrollment requirement but not until the 2025 plan year. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Leslie Thomsonhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngLeslie Thomson2023-05-19 09:24:182023-09-26 14:30:49Crazy Little Thing Called . . . Automatic Enrollment
Today’s Benefits Dial post was written in part by a special guest author, ChatGPT. With all of the buzz surrounding AI chatbots, I decided to see how ChatGPT would do composing a blog post on a somewhat technical but fairly common executive compensation scenario. As discussed below, the results were not so good. Here is our guest author’s blog on the ability to make subsequent deferral elections in a nonqualified deferred compensation plan:
Making a Section 409A subsequent deferral election can be a complex process, but it is an important step for individuals who have previously deferred compensation under a nonqualified deferred compensation plan. The subsequent deferral election allows these individuals to change the timing of their future payments, providing greater flexibility and control over their income streams.
To make a subsequent deferral election under Section 409A, an individual must first meet certain eligibility requirements. Specifically, the individual must have originally deferred compensation under a nonqualified deferred compensation plan that complies with Section 409A, and the election must be made at least 12 months before the original payment date. Once eligibility is established, the individual must submit a written election to the plan administrator outlining the new deferral election terms.
It is important to note that making a subsequent deferral election is not a decision to be taken lightly. There may be significant tax consequences associated with a change in payment timing, and it is important to consult with a tax professional before making any changes to a nonqualified deferred compensation plan. In addition, the plan document may contain specific rules and procedures for making a subsequent deferral election, and failure to follow these rules could result in adverse tax consequences.
In summary, a subsequent deferral election under Section 409A can provide valuable flexibility for individuals who have previously deferred compensation under a nonqualified deferred compensation plan. However, it is important to carefully consider the tax implications and procedural requirements before making any changes to a plan. For more information on making a subsequent deferral election, consult with a benefits attorney or tax professional.
If you remember that title song then you might remember a time before RMDs. Required minimum distributions (RMDs) have been a fixture of retirement plan operations ever since passage of the Tax Reform Act of 1986. One of the provisions in that law was the implementation of the RMD age starting with age 70-1/2; this partially offset lost revenue from the tax cuts in the bill. Many years later SECURE 1.0 increased the RMD age to 72 effective January 1, 2020. SECURE 2.0 increased the RMD age yet again and enacted other RMD-related changes that impact plan operations as described below. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Lyn Domenickhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngLyn Domenick2023-04-17 13:22:462023-09-26 14:31:13Video Killed the Radio Star… and RMDs Changed Too
Since the Affordable Care Act (“ACA”) became law in 2010, numerous groups have attempted to invalidate the ACA or specific parts of the ACA through litigation. Even after a number of plaintiffs unsuccessfully attempted to invalidate the ACA over the past dozen years, a Federal district court judge in Texas recently invalidated the ACA’s requirement that non-grandfathered group health plans provide preventive care services with an “A” or “B” rating in the current recommendations from the United States Preventive Services Task Force (e.g., certain cancer screenings, depression screening, statins to prevent heart disease, etc.) with no cost sharing. In addition, the court ruled that the requirement that plans cover PrEP HIV medications cannot be enforced against plan sponsors with religious objections. The ACA’s other preventive care mandates remain in effect. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Alex Smithhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngAlex Smith2023-04-06 14:35:272023-09-26 14:31:25It’s a Roller Coaster … Employer Considerations After Court Invalidates ACA Preventive Care Mandate
We have now had a couple of months to review and digest SECURE 2.0 (and its roughly 90 provisions impacting retirement plans). If plan sponsors haven’t done so already, it is time to roll up their sleeves and put a triage list together on these law changes. Below are some suggestions on where to start: Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Kevin Selzerhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngKevin Selzer2023-03-20 10:20:372023-09-26 14:31:48Oceans Rise, Empires Fall, It’s Much Harder When It’s All Your Call … SECURE 2.0—What Comes Next?
One question that often comes up is whether an expense related to an ERISA plan can be paid with plan assets. The decision of whether to use ERISA plan assets to pay an expense is an ERISA fiduciary decision. With the recent IRS guidance clarifying the timing of use of forfeitures, this question may come up even more.[1] Using plan assets inappropriately is a fiduciary breach and subject to possible DOL and IRS penalties. It is important to have a fiduciary process in place for reviewing expenses and determining whether a payment is proper. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Brenda Berghttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBrenda Berg2023-03-10 13:04:082023-09-26 14:31:58Should I Pay Or Should I No(t) Now: Which Expenses Can be Paid with Plan Assets?
You Can Count On Me…But Check Your Math When Counting Participants for the 5500 Audit Rule!
/in 401(k) Plans, DOL, ERISA, IRS, Retirement Plansby Becky Achten
Bruno Mars may be crooning “Count on me,” but make sure you don’t overcount your retirement plan participants! New rules may allow you to leave some employees out of the count, which could save you the expense of the annual audit.
If your retirement plan is considered “large” – generally 100 or more participants – you’re probably in the middle of the Department of Labor required annual independent audit of the financial statements that must accompany the Form 5500. There are a few exceptions to the audit requirement – plans that have less than 100 participants at the beginning of the year and those with between 80 and 120 who filed as a small plan in the prior year. If your plan is just over that 100-participant level, there may be relief on the horizon from the required audit and another reason to keep track of those separated participants. Read more
Crazy Little Thing Called . . . Automatic Enrollment
/in Executive Compensation, IRSby Leslie Thomson
Secure Act 2.0 requires certain plans to automatically enroll participants once they become eligible to participate. Plans that were established prior to December 29, 2022 are exempt from this new requirement. Plans that are established after December 29, 2022 are subject to the automatic enrollment requirement but not until the 2025 plan year. Read more
Can’t Stop the AI*
/in Executive Compensation, IRSby Benjamin Gibbons
Today’s Benefits Dial post was written in part by a special guest author, ChatGPT. With all of the buzz surrounding AI chatbots, I decided to see how ChatGPT would do composing a blog post on a somewhat technical but fairly common executive compensation scenario. As discussed below, the results were not so good. Here is our guest author’s blog on the ability to make subsequent deferral elections in a nonqualified deferred compensation plan:
Making a Section 409A subsequent deferral election can be a complex process, but it is an important step for individuals who have previously deferred compensation under a nonqualified deferred compensation plan. The subsequent deferral election allows these individuals to change the timing of their future payments, providing greater flexibility and control over their income streams.
To make a subsequent deferral election under Section 409A, an individual must first meet certain eligibility requirements. Specifically, the individual must have originally deferred compensation under a nonqualified deferred compensation plan that complies with Section 409A, and the election must be made at least 12 months before the original payment date. Once eligibility is established, the individual must submit a written election to the plan administrator outlining the new deferral election terms.
It is important to note that making a subsequent deferral election is not a decision to be taken lightly. There may be significant tax consequences associated with a change in payment timing, and it is important to consult with a tax professional before making any changes to a nonqualified deferred compensation plan. In addition, the plan document may contain specific rules and procedures for making a subsequent deferral election, and failure to follow these rules could result in adverse tax consequences.
In summary, a subsequent deferral election under Section 409A can provide valuable flexibility for individuals who have previously deferred compensation under a nonqualified deferred compensation plan. However, it is important to carefully consider the tax implications and procedural requirements before making any changes to a plan. For more information on making a subsequent deferral election, consult with a benefits attorney or tax professional.
Read more
Video Killed the Radio Star… and RMDs Changed Too
/in 401(k) Plans, 403(b) plans, 457(b) plans, Defined Benefit Plans, ERISA, Governmental Plans, IRS, Legislation, Retirement Plansby Lyn Domenick
If you remember that title song then you might remember a time before RMDs. Required minimum distributions (RMDs) have been a fixture of retirement plan operations ever since passage of the Tax Reform Act of 1986. One of the provisions in that law was the implementation of the RMD age starting with age 70-1/2; this partially offset lost revenue from the tax cuts in the bill. Many years later SECURE 1.0 increased the RMD age to 72 effective January 1, 2020. SECURE 2.0 increased the RMD age yet again and enacted other RMD-related changes that impact plan operations as described below. Read more
It’s a Roller Coaster … Employer Considerations After Court Invalidates ACA Preventive Care Mandate
/in ERISA, Health & Welfare Plans, Litigationby Alex Smith
Since the Affordable Care Act (“ACA”) became law in 2010, numerous groups have attempted to invalidate the ACA or specific parts of the ACA through litigation. Even after a number of plaintiffs unsuccessfully attempted to invalidate the ACA over the past dozen years, a Federal district court judge in Texas recently invalidated the ACA’s requirement that non-grandfathered group health plans provide preventive care services with an “A” or “B” rating in the current recommendations from the United States Preventive Services Task Force (e.g., certain cancer screenings, depression screening, statins to prevent heart disease, etc.) with no cost sharing. In addition, the court ruled that the requirement that plans cover PrEP HIV medications cannot be enforced against plan sponsors with religious objections. The ACA’s other preventive care mandates remain in effect. Read more
Oceans Rise, Empires Fall, It’s Much Harder When It’s All Your Call … SECURE 2.0—What Comes Next?
/in 401(k) Plans, 403(b) plans, 457(b) plans, Defined Benefit Plans, Governmental Plans, Legislation, Retirement PlansBy Kevin Selzer
We have now had a couple of months to review and digest SECURE 2.0 (and its roughly 90 provisions impacting retirement plans). If plan sponsors haven’t done so already, it is time to roll up their sleeves and put a triage list together on these law changes. Below are some suggestions on where to start: Read more
Should I Pay Or Should I No(t) Now: Which Expenses Can be Paid with Plan Assets?
/in 401(k) Plans, Corporate Governance in Benefits, Defined Benefit Plans, DOL, ERISA, Fees, Fiduciary Duties, PBGC, Retirement Plansby Brenda Berg
One question that often comes up is whether an expense related to an ERISA plan can be paid with plan assets. The decision of whether to use ERISA plan assets to pay an expense is an ERISA fiduciary decision. With the recent IRS guidance clarifying the timing of use of forfeitures, this question may come up even more.[1] Using plan assets inappropriately is a fiduciary breach and subject to possible DOL and IRS penalties. It is important to have a fiduciary process in place for reviewing expenses and determining whether a payment is proper. Read more