On February 27, 2023, the Treasury issued proposed regulations intended to simplify and clarify the rules relating to forfeitures within qualified retirement plans.
Defined Benefit Plans
Similar to defined contribution plans, defined benefit plans may use forfeitures to pay eligible plan expenses. However, unlike defined contribution plans, defined benefit plans are prohibited from using forfeitures to reduce required employer contributions. In addition, forfeitures must be used as soon as possible. The proposed regulations eliminate this timing requirement because it conflicts with the minimum funding requirements. Instead, reasonable actuarial assumptions are to be used to determine how expected forfeitures will affect the present value of plan liabilities. The difference between expected and actual forfeitures will then increase or decrease the plan’s minimum funding requirement in future years. 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 Achten2023-03-03 09:41:252023-09-26 14:32:08One Way or Another … Forfeitures Will Have to Be Administered Under Your Retirement Plan, and the IRS Just Proposed New Regulations That Provide Simplified Guidance
It may be an understatement to say that compliance with benefit plan laws and regulations is becoming increasingly more complicated. In my experience, the COVID era has brought about some of the widest-sweeping changes on the burden of administering benefit plans in some time.
There has been major evolution around service provider fee disclosure, DOL reporting and disclosure on mental health parity and disclosure of plan costs, new claims procedure rights, expanded expectations around Cyber Security protections, and expansion of the use of ESG and crypto currency (and on-again, off-again regulatory efforts). Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Bret Busackerhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBret Busacker2023-02-27 09:23:552023-09-26 14:32:25It Doesn’t Have To Be That Way: Negotiating Good Service Provider Agreements Is More Important than Ever
While case law regarding the enforceability of arbitration provisions in ERISA retirement plans has been mixed, since the Ninth Circuit’s 2019 decision in Dorman v. Charles Schwab Corp. enforcing a 401(k) plan’s arbitration provision, some employers and plan sponsors have given increased consideration to adding arbitration provisions to their retirement plans based on that decision and the proliferation of class action ERISA lawsuits. However, following the Tenth Circuit’s February 9 decision in Harrison v. Envision Management Holding, Inc. Board, which appears to be the first time the Tenth Circuit considered the issue, employers based in the Tenth Circuit’s jurisdiction (Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming) may want to think twice before adding an arbitration provision to their plans.
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 Smith2023-02-20 09:12:302023-09-26 14:32:34What Happens In A Small Town Stays In A Small Town … Until The Tenth Circuit Rejects ERISA Arbitration Provision
If a 401(k) or 403(b) plan permits employees to take in-service hardship withdrawals in the event of an immediate and heavy financial need, new legislation provides that, effective for plan years beginning in 2023, employers may rely on an employee’s self-certification of the hardship. Prior to this change, an employee was required to substantiate such hardship expenses to receive a distribution on account of financial hardship. 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 Thomson2023-02-10 09:33:192023-09-26 14:32:42Easy Money…Self-Certify Your Hardships Away
The Biden administration announced on January 30 that the COVID-19 national emergency and the public health emergency will be coming to an end after May 11, 2023. The national emergency is currently set to expire on March 1, while the public health emergency is set to expire on April 11. The President intends to extend both of these emergency declarations through May 11, at which point in time he will issue a declaration to end the emergencies. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Benjamin Gibbonshttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBenjamin Gibbons2023-02-01 12:16:472023-09-26 14:32:52Closing Time…for the COVID-19 National Emergency and Public Health Emergency
By now you have probably seen countless summaries of the recently enacted legislation that includes what is commonly known as SECURE 2.0. One of the new features that has been brewing for a while is the concept of a 401(k) plan match based on qualified student loan payments for its eligible employees. Because this is effective January 1, 2024, interested plan sponsors should begin now evaluating the merits of adding such a program. The student loan match provision permits (but does not require) a plan to contribute matching contributions based on the amount of qualified student loan payments made by its employees who are otherwise eligible to make deferrals under the 401(k) plan. The plan must match qualified student loan payments on the same basis as elective deferrals under the plan, including the application of any plan or IRS limits on the amount that is matched and on the match itself. If a participant is making both elective deferrals and paying on a student loan, the matching formula would be applied to both (subject to applicable limits). Eligible participants would self-certify that they are making qualified student loan payments, which avoids the need for the sponsor to verify payment. Student loan matching contributions may also be implemented in a 403(b) plan or governmental 457(b) plan. 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 Domenick2023-01-18 10:28:302023-09-26 14:33:04Money’s Too Tight to Mention…But Maybe a Student Loan Match Would Help
During the pandemic, the IRS on multiple occasions provided relief from the requirement that a person be physically present for certain paperwork associated with retirement plan distributions. (See our blog posts of June 4, 2020 and January 25, 2021, and also IRS Notices 2020-42, 2021-3, 2021-40 and 2022-27.) Apparently acknowledging that the new remote procedures are sufficiently reliable, the IRS is proposing to make them permanent. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Beth Nedrowhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBeth Nedrow2023-01-05 10:44:402023-09-26 14:33:17You’re So Far Away From Me … But You Can Still Sign This Retirement Plan Distribution Form
One Way or Another … Forfeitures Will Have to Be Administered Under Your Retirement Plan, and the IRS Just Proposed New Regulations That Provide Simplified Guidance
/in 401(k) Plans, Defined Benefit Plans, ERISA, IRS, Retirement Plansby Becky Achten
On February 27, 2023, the Treasury issued proposed regulations intended to simplify and clarify the rules relating to forfeitures within qualified retirement plans.
Defined Benefit Plans
Similar to defined contribution plans, defined benefit plans may use forfeitures to pay eligible plan expenses. However, unlike defined contribution plans, defined benefit plans are prohibited from using forfeitures to reduce required employer contributions. In addition, forfeitures must be used as soon as possible. The proposed regulations eliminate this timing requirement because it conflicts with the minimum funding requirements. Instead, reasonable actuarial assumptions are to be used to determine how expected forfeitures will affect the present value of plan liabilities. The difference between expected and actual forfeitures will then increase or decrease the plan’s minimum funding requirement in future years. Read more
It Doesn’t Have To Be That Way: Negotiating Good Service Provider Agreements Is More Important than Ever
/in 401(k) Plans, 403(b) plans, 457(b) plans, 457(f) plans, Cafeteria Plans, Corporate Governance in Benefits, Defined Benefit Plans, Employee Stock Purchase Plans (ESPPs), ESOPs, Executive Compensation, Fees, Fiduciary Duties, Fringe Benefits, Governmental Plans, Health & Welfare Plans, Investments, Litigation, Retirement Plans, Severance Plansby Bret F. Busacker
It may be an understatement to say that compliance with benefit plan laws and regulations is becoming increasingly more complicated. In my experience, the COVID era has brought about some of the widest-sweeping changes on the burden of administering benefit plans in some time.
There has been major evolution around service provider fee disclosure, DOL reporting and disclosure on mental health parity and disclosure of plan costs, new claims procedure rights, expanded expectations around Cyber Security protections, and expansion of the use of ESG and crypto currency (and on-again, off-again regulatory efforts). Read more
What Happens In A Small Town Stays In A Small Town … Until The Tenth Circuit Rejects ERISA Arbitration Provision
/in 401(k) Plans, Corporate Governance in Benefits, DOL, ERISA, ESOPs, Fiduciary Duties, Legislation, Retirement Plansby Alex Smith
While case law regarding the enforceability of arbitration provisions in ERISA retirement plans has been mixed, since the Ninth Circuit’s 2019 decision in Dorman v. Charles Schwab Corp. enforcing a 401(k) plan’s arbitration provision, some employers and plan sponsors have given increased consideration to adding arbitration provisions to their retirement plans based on that decision and the proliferation of class action ERISA lawsuits. However, following the Tenth Circuit’s February 9 decision in Harrison v. Envision Management Holding, Inc. Board, which appears to be the first time the Tenth Circuit considered the issue, employers based in the Tenth Circuit’s jurisdiction (Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming) may want to think twice before adding an arbitration provision to their plans.
Read more
Easy Money…Self-Certify Your Hardships Away
/in 401(k) Plans, 403(b) plans, Legislationby Leslie Thomson
If a 401(k) or 403(b) plan permits employees to take in-service hardship withdrawals in the event of an immediate and heavy financial need, new legislation provides that, effective for plan years beginning in 2023, employers may rely on an employee’s self-certification of the hardship. Prior to this change, an employee was required to substantiate such hardship expenses to receive a distribution on account of financial hardship. Read more
Closing Time…for the COVID-19 National Emergency and Public Health Emergency
/in DOL, ERISA, Health & Welfare Plans, IRSby Benjamin Gibbons
The Biden administration announced on January 30 that the COVID-19 national emergency and the public health emergency will be coming to an end after May 11, 2023. The national emergency is currently set to expire on March 1, while the public health emergency is set to expire on April 11. The President intends to extend both of these emergency declarations through May 11, at which point in time he will issue a declaration to end the emergencies. Read more
Money’s Too Tight to Mention…But Maybe a Student Loan Match Would Help
/in 401(k) Plans, 403(b) plans, 457(b) plans, ERISA, Governmental Plans, IRS, Legislation, Retirement Plansby Lyn Domenick
By now you have probably seen countless summaries of the recently enacted legislation that includes what is commonly known as SECURE 2.0. One of the new features that has been brewing for a while is the concept of a 401(k) plan match based on qualified student loan payments for its eligible employees. Because this is effective January 1, 2024, interested plan sponsors should begin now evaluating the merits of adding such a program. The student loan match provision permits (but does not require) a plan to contribute matching contributions based on the amount of qualified student loan payments made by its employees who are otherwise eligible to make deferrals under the 401(k) plan. The plan must match qualified student loan payments on the same basis as elective deferrals under the plan, including the application of any plan or IRS limits on the amount that is matched and on the match itself. If a participant is making both elective deferrals and paying on a student loan, the matching formula would be applied to both (subject to applicable limits). Eligible participants would self-certify that they are making qualified student loan payments, which avoids the need for the sponsor to verify payment. Student loan matching contributions may also be implemented in a 403(b) plan or governmental 457(b) plan. Read more
You’re So Far Away From Me … But You Can Still Sign This Retirement Plan Distribution Form
/in 401(k) Plans, 403(b) plans, 457(b) plans, 457(f) plans, Defined Benefit Plans, ERISA, ESOPs, Governmental Plans, IRS, Retirement Plansby Elizabeth Nedrow
During the pandemic, the IRS on multiple occasions provided relief from the requirement that a person be physically present for certain paperwork associated with retirement plan distributions. (See our blog posts of June 4, 2020 and January 25, 2021, and also IRS Notices 2020-42, 2021-3, 2021-40 and 2022-27.) Apparently acknowledging that the new remote procedures are sufficiently reliable, the IRS is proposing to make them permanent. Read more