Just Because I’m Missing, Doesn’t Mean I’m Lost: Should Plan Sponsors Provide Data for the DOL’s Missing Participant Database?

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by Brenda Berg

“Missing participants” have long been a thorn in the side of plan sponsors and administrators, as they are owed a retirement benefit, but are unable to be found or unresponsive to plan communications. As a partial solution, Congress directed the DOL in the SECURE 2.0 Act of 2022 to create a “Retirement Savings Lost and Found”—an online searchable database that would connect missing participants with their retirement benefits—by December 29, 2024. The DOL had contemplated populating the database with information from Form 8955-SSA, which plans already submit to the IRS. However,  the IRS has refused to provide the information to the DOL, citing privacy concerns regarding confidential tax information. This has caused the DOL to look to sponsors of ERISA plans to voluntarily provide participant information to populate the database. While this may be a good idea in principle, it creates many obstacles. Read more

Bring me a Higher Limit…2024 IRS Limits Announced

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by Lyn Domenick

The IRS has announced the 2024 cost of living adjustments to qualified plan limits. Below are the highlights, and our full historical chart can be found here for easy reference. Read more

Simply Irresistible…To Not Seek Recoupment of Overpayments

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by Lyn Domenick

Many retirement plan errors are inadvertent and involve small dollar amounts. However, the work involved in correcting such errors can be time consuming and burdensome. Fortunately, SECURE 2.0 provides that for certain overpayment errors a responsible plan fiduciary can now decide not to seek repayment. While plan fiduciaries are entitled to seek recoupment of overpayments, subject to some limitations, many plan sponsors will welcome this guidance since it allows them to forego seeking recoupment of overpayment errors.

For example, if a 401(k) plan incorrectly included PTO payouts upon termination in eligible compensation, and thus, applied plan contributions to such ineligible portion, the affected participants would probably not notice and in fact might not reasonably be expected to know whether or not the PTO payout should have been included in eligible compensation in their final paycheck. The dollar amounts of the overpayments would in many cases be small and also would include the participants’ own deferrals. In such a case, the plan fiduciary might reasonably choose to not seek recoupment, while correcting the payroll error going forward. Read more

Video Killed the Radio Star… and RMDs Changed Too

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by 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

Oceans Rise, Empires Fall, It’s Much Harder When It’s All Your Call … SECURE 2.0—What Comes Next?

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By 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

It Doesn’t Have To Be That Way: Negotiating Good Service Provider Agreements Is More Important than Ever

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by 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

Easy Money…Self-Certify Your Hardships Away

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by 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

Money’s Too Tight to Mention…But Maybe a Student Loan Match Would Help

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by 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

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by 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

It’s All About the Benjamins…2023 IRS Limits Announced

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by Lyn Domenick

The IRS has announced the 2023 cost of living adjustments to qualified plan limits. As expected, many of the limits increased substantially compared with prior years. Below are the highlights, and our full historical chart can be found here for easy reference.

2023 2022 2021
Annual Compensation 330,000 305,000 290,000
Elective Deferrals 22,500 20,500 19,500
Catch-up Contributions 7,500 6,500 6,500
Defined Contribution Limit 66,000 61,000 58,000
ESOP Distribution Limits 1,330,000
265,000		 1,230,000
245,000		 1,165,000
230,000
Defined Benefit Limit 265,000 245,000 230,000
HCE Threshold 150,000 135,000 130,000
Key Employee 215,000 200,000 185,000
457 Elective Deferrals 22,500 20,500 19,500
Taxable Wage Base 160,200 147,000 142,800