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All News > 401(k) Plans

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SECURE 2.0: Matching Contributions Based on Student Debt Repayments and Financial Incentives
Jackson Lewis P.C. Link to more items from this source
[Guidance Overview]
Jan. 30, 2023

"[A]ny match must be based on student debt repayments for higher education expenses. Eligibility, match rate, and vesting also must be the same as that for the match on elective deferrals. The employee must annually certify that the loan payments have been made. Employers may rely on this self-certification. From an administrative perspective, it is significant to note that the statute anticipates possible issues for nondiscrimination testing of elective contributions."

Tags: 401(k) Plans  •  Retirement Plan Design  •  SECURE 2.0

Pension-Linked Emergency Savings Accounts Available in 2024
Verrill Dana LLP Link to more items from this source
[Guidance Overview]
Jan. 25, 2023

"The [pension-linked emergency savings account (PLESA)] provision in SECURE 2.0: [1] breaks away from the traditional notions of when funds can be distributed from retirement plans  ... [2] borrows from and builds on features from Roth contributions, non-Roth after-tax employee contributions ... and savings accounts; and [3] requires plan sponsors to make matching contributions on participant PLESA contributions if the employer otherwise makes matching contributions to the plan."

Tags: 401(k) Plans  •  Retirement Plan Design  •  SECURE 2.0

SECURE 2.0: Contribution-Related Provisions
Ogletree Deakins Link to more items from this source
[Guidance Overview]
Jan. 25, 2023

"[1] Plan amendment deadline.... [2] Automatic enrollment and automatic escalation.... [3] Super-duper catch-up contributions.... [4] Treatment of student loan payments as elective deferrals for purposes of matching contributions.... [5] Small immediate financial incentives for contributing to a plan.... [6] Emergency savings to the rescue.... [7] Long-term part-time workers: three years to two years.... [8] Amendments to increase benefit accruals in 401(k) plan for previous plan year allowed until employer's tax return due date.... [9] Automatic contribution failures: goodbye sunset, hello permanence.... [10] 'Rothification' of matching, nonelective, and catch-up contributions."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

New York District Court Rejects ERISA Excessive Fee Claims as Insufficient
Proskauer Link to more items from this source
Jan. 25, 2023

"The court's decision adds to the growing number of Second Circuit district courts relying on out-of-circuit appellate decisions to dismiss excessive recordkeeping and investment management fee claims for failure to plead proper benchmarks against which to measure fees. It also lends support to a standing argument advocated by the defense bar that, if it were to gain more traction, could substantially reduce the financial exposure in similar lawsuits." [Singh v. Deloitte LLP, No. 21-8458 (S.D.N.Y. Jan. 13, 2023)]

Tags: 401(k) Plans  •  Retirement Plan Investment Costs

401(k) Matching for Student Loan Payments Finally Arrives
McAfee & Taft Link to more items from this source
[Guidance Overview]
Jan. 24, 2023

"Employees would not have to choose between paying down student loans and ... making 401(k) deferrals in order to receive the match. For employers, although it might mean making a matching contribution when it otherwise would not ... it would almost certainly be a unique benefit offering, and the matching contributions are deductible in the same manner as a traditional match."

Tags: 401(k) Plans  •  SECURE 2.0

Annual Notice of Discretionary Match in 'Pre-Approved' 401(k) Plans May Be Required Soon
Ogletree Deakins Link to more items from this source
Jan. 24, 2023

"[A] common approach used in the updated Cycle 3 documents is to include language requiring a notice to be provided to the 'plan administrator' describing the matching contribution formula approved by the governing body in detail, including the period for which it applies ... These Cycle 3 documents also require an annual notice to plan participants summarizing the information that is included in the notice provided to the plan administrator.... In most cases, the annual notice will be required for the first time in 2023 for the plan's 2022 discretionary matching contributions."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design

The 401(k)'s Past Is Not Its Future
Fiduciary News; free registration required Link to more items from this source
Jan. 24, 2023

"ven before SECURE 2.0, today's retirement savings plans bear little resemblance to the versions first adopted when Code Section 401(k) ('401k') was added to the tax code.... Retirement income security continues to improve, not worsen as predicted. Why? One reason is that DOL data shows the combination of worker and employer contributions have risen from less than 6% of wages to more than 8.5% of wages. Americans are also working longer, and more are delaying the commencement of Social Security."

Tags: 401(k) Plans  •  Retirement Plan Design

SECURE 2.0: Emergency Savings in Your 401(k)
Jackson Lewis P.C. Link to more items from this source
[Guidance Overview]
Jan. 23, 2023

"Effective for plan years starting on or after January 1, 2024, 401(k) plans ... may allow participants to access up to $1,000 of their account balance (including pre-tax contributions) without penalty, in the event of an 'unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses.' ... Participants need only self-certify their need for the emergency distribution in order to request it.... Also effective in 2024, plans may allow participants who are non-highly compensated employees ... to contribute up to $2,500 in post-tax deferrals to an emergency savings account under such plan, which will be treated as Roth contributions."

Tags: 401(k) Plans  •  Misc. Distribution Issues  •  Retirement Plan Design  •  SECURE 2.0

American Views on Defined Contribution Plan Saving, 2022 (PDF)
Investment Company Institute [ICI] Link to more items from this source
Jan. 23, 2023

24 pages. "Survey responses indicated that Americans value the discipline and investment opportunity that 401(k) plans represent and that individuals were largely opposed to changing the tax preferences or investment control in those accounts. A majority of respondents also affirmed a preference for control of their retirement accounts and opposed proposals to require a portion of retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company."

Tags: 401(k) Plans  •  Retirement Plan Design  •  Retirement Plan Policy

SECURE 2.0: Changes to Plan Corrections Guidance
Haynes and Boone, LLP Link to more items from this source
[Guidance Overview]
Jan. 23, 2023

"Although plan correction guidelines are usually addressed by the IRS through its Employee Plans Compliance Resolution System (EPCRS), Congress included several related provisions to provide relief to plan sponsors and owners of Individual Retirement Accounts (IRAs) due to the ever growing complexity of plan administration, as summarized [in this article.]"

Tags: 401(k) Plans  •  IRAs  •  Retirement Plan Administration  •  SECURE 2.0

SECURE 2.0 Requires Auto-Enrollment, Auto-Escalation For Most New Plans
Murphy Austin Link to more items from this source
[Guidance Overview]
Jan. 23, 2023

"[A]ll Plans existing on the date of enactment are grandfathered from the requirement as an exception.... [N]ew employers, in existence for less than 3 years, are excepted from the requirement, until their fourth year. There is also an exception for Plans of employers who normally employ 10 or fewer employees until the year after the employer normally employs more than 10 employees.... [If] an employer with an existing plan on the date of enactment joins a multiple employer plan (MEP), the grandfathering disappears. Each Plan of an employer in the MEP is treated as a separate plan."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

Editor's Pick User's Guide to SECURE 2.0 (PDF)
Mercer Link to more items from this source
[Guidance Overview]
Jan. 19, 2023

36 pages. "[T]his guide provides a high-level summary of SECURE 2.0 provisions grouped topically ... including separate treatment of provisions specific to DC and DB plans. The six tables in this guide describe statutory changes and their effective dates, identify whether the changes are mandatory or optional for employers, and provide initial observations, including implementation challenges for which agency guidance would be helpful."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

401(k) Plan Catch Up Contributions After SECURE 2.0
KLB Benefits Law Group Link to more items from this source
[Guidance Overview]
Jan. 19, 2023

"Starting in 2025, participants who are age 60 to 63 will be able to make up to $10,000 in catch-up contributions, or, if greater, an amount that is 50% more than the regular catch-up limit.... Beginning in 2024, all catch-up contributions must be made as Roth contributions, unless the participant's compensation is $145,000 or less."

Tags: 401(k) Plans  •  Retirement Plan Design  •  SECURE 2.0

SECURE 2.0 Brings Significant 401(k) Plan Changes (PDF)
Willkie Farr & Gallagher Link to more items from this source
[Guidance Overview]
Jan. 17, 2023

7 pages. "[A]ll 401(k) plans will be impacted by the Act in some way. Although many of the changes in SECURE 2.0 are not effective until 2024 or 2025, some changes will affect plans in 2023.... [P]lan sponsors should begin examining operational compliance considerations  ... Plan sponsors will have until the last day of the plan year beginning on or after January 1, 2025 (i.e., December 31, 2025 for a calendar year plan) to adopt SECURE 2.0 plan amendments."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

Highlights of SECURE 2.0 Act and Impact on Retirement Plans
TRI-AD Link to more items from this source
[Guidance Overview]
Jan. 17, 2023

"The provisions included in this legislation will take effect in varying years. This staggered approach gives plan sponsors and service providers more time to understand and implement these changes to their plans and recordkeeping systems.... [T]he IRS and the DOL must provide guidance on how to administer most of these provisions.... Employers may want to delay the implementation of any optional provisions until guidance is provided."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

Editor's Pick SECURE 2.0 Provisions Impacting Employer-Sponsored Retirement Plans (PDF)
Trucker Huss Link to more items from this source
[Guidance Overview]
Jan. 16, 2023

13 pages. "SECURE 2.0 contains more than 90 substantive changes to retirement plan law; the key provisions impacting employer-sponsored retirement plans are discussed [in this article].... SECURE 2.0 will have a significant impact on employer-sponsored retirement plan for years to come and, just like SECURE 1.0, will require guidance from the IRS and the DOL."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

Notable Provisions from SECURE 2.0: Perspectives and Observations
McDonald Hopkins Link to more items from this source
[Guidance Overview]
Jan. 13, 2023

"[1] Expanded automatic enrollment ... [2] Saver's match ... [3] Deferral of tax upon sale of S corporation stock to an ESOP ... [4] Emergency expense withdrawals; Emergency savings accounts ... [5] Age increase for required minimum distributions (RMD) ... [6] Increase in catch-up contribution limit; Catch-up contributions Roth requirement ... [7] Matching contributions on student loan repayments ... [8] Long-term part-time workers ... [9] Increase in mandatory cash-out limit."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

Editor's Pick Pocket Guide to SECURE 2.0 (PDF)
Proskauer Link to more items from this source
[Guidance Overview]
Jan. 12, 2023

10 pages. "Parts I through XIII of the Pocket Guide are organized chronologically by effective date, and the final part (Part XIV) summarizes provisions with varying effective dates after SECURE 2.0 enactment."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  IRAs  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

SECURE 2.0: 401(k) Plan Eligibility for Part-Time Employees
Jackson Lewis P.C. Link to more items from this source
[Guidance Overview]
Jan. 12, 2023

"SECURE 2.0 requires that employees who work 'two consecutive 12-month periods during each of which the employee has at least 500 hours of service' must be permitted to participate in the plan.... This provision of SECURE 2.0 is effective for plan years beginning after December 31, 2024."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

Editor's Pick SECURE 2.0: Chart of Retirement Plan Provisions, Effective Dates and More (PDF)
Seyfarth Shaw LLP Link to more items from this source
[Guidance Overview]
Jan. 12, 2023

20 page chart summarizes SECURE 2.0 provisions impacting retirement plans, including 401(k) plans, 403(b) plans, 457(b) plans and defined benefit plans, as well as individual retirement accounts (IRAs).  Chart includes description, effective date, whether the provision is optional or required, and whether a plan amendment is required.

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  IRAs  •  Retirement Plan Amendments  •  Retirement Plan Design  •  SECURE 2.0

Would You Like a Latte with That 401(k) Deferral?
E is for ERISA Link to more items from this source
[Guidance Overview]
Jan. 12, 2023

"Effective immediately under a provision of the recently-passed SECURE 2.0 retirement reform legislation, employers may offer their employees gift cards or other 'de minimis financial incentives' for enrolling in a 401(k) plan."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

Editor's Pick SECURE Act 2.0 Summary of Changes to Retirement Plans (PDF)
Williams Mullen Link to more items from this source
[Guidance Overview]
Jan. 11, 2023

9 pages. This article summarizes the changes that impact: [1] Access to retirement plans; [2] Withdrawals and distributions; [3] Individual Retirement Accounts (IRAs); [4] Small employers, SIMPLE plans and SEPs; [5] Pooled Employer Plans (PEPs) and Multiple Employer Plans (MEPs); [6] Employee Stock Ownership Plans (ESOPs); and [7] 403(b) plans and governmental plans.

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  ESOPs  •  IRAs  •  MEP/PEP  •  Misc. Distribution Issues  •  SECURE 2.0  •  SIMPLE 401(k), SIMPLE IRA Plans

SECURE 2.0 Highlights for Retirement Plan Sponsor
Ice Miller LLP Link to more items from this source
[Guidance Overview]
Jan. 11, 2023

"The changes outlined [in this chart] will require all existing plans to make operational changes in order to administer their plans in compliance with mandatory provisions in the law, some of which take effect as early as 2023."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  IRAs  •  Required Minimum Distributions (RMDs)  •  SECURE 2.0

The SECURE Act 2.0: The Most Impactful Provisions, Part 1 -- Automatic Plans
FredReish.com Link to more items from this source
[Guidance Overview]
Jan. 10, 2023

" 'New' 401(k) and 403(b) plans must be automatically enrolled, with automatic deferral increases, no later than the plan year beginning after December 31, 2024 (e.g., 2025 for calendar year plans). Any plan 'established' on or after December 29, 2022 is considered a new plan. Defaulting participants must be invested in a QDIA. There are exceptions for government plans, church plans, SIMPLE 401(k) plans, employers with 10 or fewer employees, and employers during their first 3 years of existence."

Tags: 401(k) Plans  •  Retirement Plan Design  •  Retirement Plan Investments  •  SECURE 2.0

SECURE 2.0 in 2023 and Beyond
Eversheds Sutherland Link to more items from this source
[Guidance Overview]
Jan. 10, 2023

"Effective immediately, employers can permit participants ... to elect that matching or non-elective contributions are made as Roth (after-tax) contributions.... Roth matching or non-elective contributions will, of course, result in taxable income to the participant, including a tax withholding requirement. Employers will need to work out how to satisfy this tax withholding from other compensation paid to the employee or through other means[.]"

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  457 Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

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