Both Sides Now… Must Be Alert to Cybersecurity

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by Becky Achten

New guidance from the Employee Benefits Security Administration (EBSA) affirms that both sides—retirement plans and welfare plans—must take steps to secure participant data from cybercrime.

In 2021 the Department of Labor (DOL) introduced new guidance on best practices for maintaining cybersecurity, which included tips to participants who check their retirement accounts online. From this, many plan sponsors and service providers concluded that the guidance was only applicable to retirement benefits (such as 401(k), profit sharing, and pension plans). Read more

Vacation, All I Ever Wanted – But Don’t Forget Your July Compliance Deadlines

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by Benjamin Gibbons

Congratulations! You made it to summer, that wonderful time of year when things at work (hopefully) slow down a bit and you’re able to take some well-deserved time off. Though before you Go-Go(‘s) (do you see what I did there?), be sure your July employee benefits compliance deadlines are covered.

July 29 – Summary of Material Modifications (SMM) – Were any of your organization’s plans materially amended last year? If so, you may be required to furnish an SMM to participants (or a revised summary plan description). Those SMMs must be provided no later than 210 days after the end of the plan year in which the change was adopted. So, for a 2023 change, the SMM deadline would fall on July 29 (you get an extra day this year because 210 days falls on July 28, a weekend). Read more

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

ERISA, ERISA…Just an Old Sweet Song Keeps ERISA on my Mind

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by Becky Achten

“Georgia” on your mind? As we look towards the upcoming Masters golf tournament weekend, our minds turn to the condition of the greens (exquisite), the players tee off order (does afternoon help or hinder Tiger on an expected rainy day?), and who will make that amazing chip shot out of the bunker to save par. It may not get quite the level of TV viewership of other sporting events, but benefit plan administration is a lot like golf: a series of pars, birdies and bogies, and—oh my, not a double bogie!

If you’re hitting par with your benefit plans, they’re operating smoothly, participants are happy with the offerings, and you’re in compliance with the most obvious regulations. All is good, but you probably won’t earn a green jacket. Read more

You Live, You Learn… Correcting “Qualification Failures” under the Self-Correction Program

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by Leslie Thomson

 The Employee Plans Compliance Resolution System (“EPCRS”), as set forth in Revenue Procedure 2021-30, allows plan sponsors to correct “Qualification Failures,” which are defined as any plan document, operational, demographic or employer eligibility failures. Failure to follow the terms of a plan constitutes an operational failure.

Operational Failures can be corrected without IRS supervision under the Self-Correction Program (“SCP”) of EPCRS without paying a fee or sanction in two circumstances: (1) insignificant operational defects can be corrected at any time, even if the plan is under an IRS audit; and (2) significant operational defects can be corrected by the end of the third plan year following the plan year in which the defect arose. EPCRS summarizes the factors a plan sponsor may use to determine if a failure is insignificant or not. Moreover, SCP is only available if the plan sponsor has established practices and procedures reasonably designed to promote and facilitate overall compliance with applicable Internal Revenue Code requirements, and the failure occurred through an oversight or mistake in applying the procedures or because the procedures were not sufficient to prevent the occurrence of the failure. Read more

Take the Power Back . . . Negotiating Provider Contracts for Benefit Plans

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By Kevin Selzer

Disputes between plan sponsors and plan service providers are not new. As with any contractual relationship, things don’t always go according to “plan” or at least, as the sponsor expects. When that happens, one of the first things sponsors (and their attorneys) will do is review the provider’s contract. Some sponsors will be surprised to find some very provider-friendly provisions, such as:

  • a provision specifying that the provider is permitted by the contract to act negligently (as long as the conduct does not rise to gross negligence or intentional misconduct), or
  • a provision indicating that the sponsor has contractually waived its right to participate in a class against the provider.

Unfortunately for sponsors, a provider’s willingness to fix an error often comes down to how much the provider wants to continue working with the sponsor on a go forward basis. Read more

Don’t Think Twice, It’s All Right to Ignore That Late Form 8955-SSA Notice

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by Benjamin Gibbons

I have heard from a couple of clients recently who have received a penalty notice from the IRS for purportedly filing a late or incomplete 2022 Form 8955-SSA (the IRS form that plan sponsors use to report terminated participants with vested benefits), despite having timely filed Form 8955-SSA earlier this summer. While initially causing some concern, the IRS recently announced that due to a programming error, the IRS’s system automatically sent out Form 8955-SSA penalty notices to those plan sponsors who had already timely filed their 2022 Form 8955-SSA. Read more

You Make My Dreams Come True! IRS Delays Roth Catch-Ups

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by Elizabeth Nedrow

You don’t have to be a connoisseur of 1980s pop (we see you, Hall & Oates fans!) to appreciate the relief the IRS granted the retirement industry. In Notice 2023-62, the IRS announced a two-year delay on the Roth catch-up requirements for those earning more than $145,000. All eligible participants – regardless of income – may make catch-up contributions on a pre-tax basis (or Roth basis, at participant election but not required) until January 1, 2026. Read more

You Can Count On Me…But Check Your Math When Counting Participants for the 5500 Audit Rule!

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by 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

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