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

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

Love Hurts…Have Your QDRO Procedures at the Ready

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by Lyn Domenick

The year 2020 brought a lot of unexpected togetherness to families and couples.  While there have been some positive perks to spending so much time together, it has also added additional stress to relationships.  Retirement Plans should ensure they are ready in case the pandemic also leads to an increase in QDROs.  Qualified plans that are subject to ERISA are required to have written QDRO procedures to determine whether a domestic relations order submitted to the plan meets the requirements for approval as a QDRO.  Many employers also choose to prepare a model QDRO for participants and their attorneys to use as a guide.  A model QDRO can be very helpful to participants while at the same time facilitating a smoother review process for the Plan administrator.  Now might be a good time to review your QDRO forms and procedures to ensure they are ready for 2021, come what may.

The Maximum QACA Automatic Increase Percentage is Movin’ on Up

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A Brief Summary of Recently Issued IRS Safe Harbor 401(k) Plan Guidance

By Benjamin Gibbons

For those of you who have been following along at home (literally these days), you know that the SECURE Act, which was passed only at the end of last year (though it feels like forever ago), instituted a wide range of retirement plan changes, including a number of changes with respect to safe harbor 401(k) plans. On December 9, 2020, the IRS issued guidance on these safe harbor changes in the form of Notice 2020-86.

More specifically, the SECURE Act (in part): (1) increased the maximum automatic contribution percentage for qualified automatic contribution arrangement (QACA) safe harbor 401(k) plans from 10% to 15%; (2) provided plan sponsors the ability to implement a retroactive safe harbor nonelective contribution during a plan year (generally provided the plan is amended at least 30 days before the end of the plan year); and (3) eliminated the safe harbor notice requirement for most plans with safe harbor nonelective contributions. The Notice, in Q&A format, provides additional guidance on each of these SECURE Act changes. A brief summary of the key provisions of the Notice follows. Read more

In the Year 2021…IRS Limits Announced Today

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by Lyn Domenick

Today the IRS announced the 2021 cost-of-living adjustments to qualified plan limits. Please refer to our chart for easy reference.

I’m Just Waiting on an… End to the Extended ERISA Deadline Periods

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by Brenda Berg

Early in the pandemic, the IRS and DOL issued a temporary rule (published May 4, 2020) extending certain deadlines applicable to retirement plans and health and welfare plans. (See Deadlines and Commitments: DOL and IRS Temporary Rule for COVID for more information about that extension.) Under that temporary rule, the deadlines were generally extended until 60 days after the announced end of the National Emergency due to COVID-19, which was referred to as the “Outbreak Period.” The deadlines are essentially “tolled” during the Outbreak Period. The National Emergency began on March 1, 2020, as declared by President Trump’s Proclamation.

The examples in the temporary rule assumed an end date of April 30, 2020 for the National Emergency, which would have extended the Outbreak Period through June 29, 2020. As we all now know, this National Emergency did not end on April 30, and in fact it is still in place. So we are still waiting for the National Emergency period to end and trigger the normal deadlines.

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Staring at the Stars Above, Wonder What [Fiduciary Duties] Are We Made Of – Cybersecurity for Retirement Plans

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by John Ludlum

Noting that there has been an increase in computer crime in connection with the economic disruption caused by COVID-19, companies should remember that retirement plan accounts are attractive targets for cyber thieves because of the often larger account balances relative to ordinary financial accounts, the infrequency of checking on accounts by many of their owners, and the potential for some account owners to rely on the plan sponsor and record-keeper to provide security.

ERISA fiduciaries generally are subject to the prudent expert standard of care, and they owe a duty of loyalty to the plan participants. A prudent expert acts with the care, skill, and diligence that the circumstances call for a person of like character and like aims to use.

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Don’t You . . . Forget About Special Tax Notices

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by Leslie Thomson

The Internal Revenue Code requires plan administrators of qualified retirement plans (e.g., 401(k) plans, defined benefit plans and ESOPs), 403(b) plans, and eligible 457(b) plans maintained by a governmental employer to provide a written explanation to any recipient of an eligible rollover distribution. This notice is typically referred to as the Special Tax Notice.

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