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<< Older News  |  January 24, 2021

News

All News > 401(k) Plans

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Definition of Compensation When Safe Harbor Match Eliminated Mid-Year
Retirement Learning Center, LLC Link to more items from this source
Jan. 21, 2021

"The company is a safe harbor 401(k) match plan and they pay the match in a lump sum after the plan year. The company amended the plan to remove the safe harbor matching contribution mid-year. What definition of compensation should the plan use to determine the amount of match to make -- full year or partial year?"

Tags: 401(k) Plans  •  Retirement Plan Administration

Editor's Pick IRS Provides SECURE Act Guidance on Traditional and QACA Safe Harbor Plans
Ascensus Link to more items from this source
[Guidance Overview]
Jan. 21, 2021

"While more than half of [Notice 2020-86] deals with a variety of specific notice issues, the following items are the most relevant. [1] The 15 percent cap on QACA default deferrals ... [2] Notice requirements ... [3] Amendment requirements ... [4] Contribution deductibility."

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

Text of First Circuit Opinion: Wife Not Entitled to Portion of Husband's 401(k) Plan That Government Had Garnished (PDF)
U.S. Court of Appeals for the First Circuit Link to more items from this source
Jan. 20, 2021

"Shilo Abell does not challenge the government's authority to garnish her husband's account in this appeal. Rather, she renews her claim that Massachusetts law gives her a vested legal interest in Edward Abell's 401(k) account. She also argues for the first time on appeal that the contingent death benefit in the plan gives her some current interest in the account. Her remaining arguments rely on this initial premise that she has a current vested legal interest in the 401(k) account under Massachusetts divorce law and/or under the terms of the 401(k) plan itself. Because we reject both of these arguments we do not reach her other claims. Nor do we reach any broader argument as to [ERISA], the Mandatory Victim Restitution Act (MVRA), or preemption." [U.S. v. Abell, No. 20-1120 (1st Cir. Jan. 15, 2021)]

Tags: 401(k) Plans  •  ERISA Preemption  •  QDROs

With 401(k) Plans, What You Don't Know Can Hurt You
John Rekenthaler, via Morningstar Link to more items from this source
[Opinion]
Jan. 19, 2021

"401(k) investors who use plans that have revenue-sharing agreements subsidize investors who do not. That is illogical. Why should one firm's employees have a weaker retirement plan because that organization's benefits department failed to understand the implications of revenue-sharing arrangements? Surely it would be better to require recordkeepers to bid for exactly what they will receive. No undercover payments, no surprises."

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

401(k) Firm Merger Mania Will Continue
401(k) Specialist Link to more items from this source
[Opinion]
Jan. 19, 2021

"If you look at the multiples right now, they are at an all-time peak and have gone up from the end-of-year-deals last year.... [It's] still a seller's market because, by simple definition, you have more firms chasing fewer sellers. That will change at some point. Advisors aren't getting any younger.... Whatever the reasons, [Dick Darian, of Wise Rhino Group,] says it will continue, with 2021 much like 2020. "

Tags: 401(k) Plans

Top Employee Benefits Trends for 2021 (PDF)
Fidelity Investments Link to more items from this source
Jan. 19, 2021

"[1] Workplace giving and volunteer programs to help employees support their community and the causes important to them.... [2] Increased help with student debt for women, employees of color.... [3] Resources to help employees create an emergency savings fund.... [4] More self-directed brokerage windows in 401(k) and 403(b) plans.... [5] Broader support for employee total well-being with an increased focus on employee caregiving roles.... [6] Emotional/mental health support for employees in a 'virtual' work environment."

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

How 401(k) Planning and Saving Differs with Remote Workers
401(k) Specialist Link to more items from this source
Jan. 14, 2021

"Remote employees are 7.4% less likely to use the plan default investment in target-date funds, and 1.3% more likely to use managed accounts, seeking personalized advice. While some of these changes may be due to demographic differences, the effects persist even after controlling for demographics. Participants who use managed accounts tend to save more for retirement, ... despite the use of managed accounts options historically having been relatively low."

Tags: 401(k) Plans  •  Retirement Plan Design

Appropriations Act Includes Several Provisions Applicable to Qualified Retirement Plans
Reinhart Boerner Van Deuren s.c. Link to more items from this source
[Guidance Overview]
Jan. 11, 2021

"[1] Relief from partial plan termination rules ... [2] Money purchase plan coronavirus related distributions ... [3] Relief for overfunded pensions with a current 420(f) election ... [4] Limited relief regarding in-service distributions for certain building trade multiemployer plans ... [5] Disaster provisions ... [6] Qualified disaster distributions ... [7] Recontributions of hardship withdrawals for purchase or construction of home ... [8] Plan loan provisions."

Tags: 401(k) Plans  •  Consolidated Appropriations Act, 2021   •  Coronavirus (COVID-19)  •  Retirement Plan Administration  •  Retirement Plan Design

Stable Value Funds: A Risk-Free Dilemma
Retirement Plan Advisors [RPA] Link to more items from this source
Jan. 8, 2021

"Insurance company fixed (or general) accounts and stable value funds are prevalent across defined contribution retirement plans. Stable value funds often account for a large portion of a plan's total assets, particularly in governmental retirement plans where they commonly account for 20-40% or more. But, is that a sound and rational choice for most investors? What role should stable value play for a person saving and investing for retirement?"

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Investments

Why Should Taking a Hardship Distribution Itself Be a Hardship?
Belfint Lyons Shuman Link to more items from this source
Jan. 8, 2021

"Although obtaining documentation to substantiate a hardship is not, in itself, difficult, missing hardship backup is one of the most common operational errors [found] during financial statement audits. The reason is that every party involved thinks someone else is responsible for obtaining the backup, so nobody does it."

Tags: 401(k) Plans  •  Retirement Plan Administration

Editor's Pick Year-End COVID-19 Stimulus Legislation Becomes Law, Includes Numerous Employee Benefit and Executive Compensation Provisions
Thomson Reuters Practical Law Link to more items from this source
[Guidance Overview]
Dec. 28, 2020

"The Act includes numerous provisions affecting health and welfare plans -- including, most notably, extensive group health plan requirements on surprise medical billing ... The Act requires plans and insurers to provide price comparison tools by telephone and through the plan's website.... Under the Act, for plan years ending in 2020, health flexible spending arrangements (health FSAs) and dependent care FSAs may permit participants to carry over any unused amounts or contributions from the 2020 plan year to the plan year ending in 2021.... The Act expands the ERISA Section 408(b)(2) service provider compensation disclosure rules to group health plans....

"The Act includes the following retirement plan-related provisions: [1] Permits distributions to individuals in certain industries during working retirement. [2] Provides temporary relief from the partial plan termination rules. [3] Provides special disaster relief for distributions and loans from qualified retirement plans. [4] Clarifies the applicability of coronavirus-related distributions and loans to money purchase pension plans. [5] Provides relief for defined benefit plans relating to certain 'qualified future transfers."

Tags: 401(k) Plans  •  Consolidated Appropriations Act, 2021   •  Executive comp  •  Health Plan Administration  •  Health Plan Costs  •  Health Plan Design  •  Misc. Distribution Issues

IRS Guidance on SECURE Act Provides More Detail on Changes to Safe Harbor Plans
Groom Law Group Link to more items from this source
[Guidance Overview]
Dec. 28, 2020

"Notice 2020-86 addresses some open questions regarding the expanded cap on QACA automatic deferrals, the mid-year adoption of a safe harbor plan with nonelective contributions, and the elimination of the safe harbor notice for these types of plans."

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

Drawbacks to Using Only a 401(k) for Retirement
Fox Business Link to more items from this source
[Opinion]
Dec. 24, 2020

"401(k)s aren't all created equal, and using a bad one to save for your retirement could make your job a lot more difficult. Different types of retirement accounts have different strengths and weaknesses, so it helps to have more than one. Here's a closer look at some of the ways you might be shortchanging yourself if you're only using a 401(k)."

Tags: 401(k) Plans  •  Retirement Plan Information for Employees

IRS Issues Final Guidance for Retirement Plan Loan Offset Rollovers
EisnerAmper Link to more items from this source
Dec. 24, 2020

"Consistent with the TCJA provision and the proposed regulations, the final regulations extend the period allowed for a qualified plan loan offset amount received by a participant to be contributed to an eligible retirement plan or an IRA as a rollover contribution from the normal 60 days period to the due date, including extensions, for filing the individual's federal income tax return for the tax year in which the loan offset occurs."

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

An Outline of Important Provisions in the SECURE ACT (PDF)
PASI Link to more items from this source
[Guidance Overview]
Dec. 23, 2020

"[K]ey provisions [of the SECURE Act] become effective in 2021: ... [1] Plans with eligibility provisions that exclude part-time employees must now expand eligibility for 401(k) contributions to include those employees; if they are credited with 500 hours of service in at least 3 years.... [2] Participants (and their spouse) who give birth to, or adopt a child are eligible to withdraw $5,000 on a tax-favored basis from their IRAs or retirement plans.... [3] The age at which RMDs must commence has been increased from age 70½ to 72.... [4] Significant new tax credits were created to encourage the establishment of new plans as well as the addition of Automatic Enrollment (effective in 2020)."

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

A Staple of 401(k) Plans Investing Is Challenged
401(k) Specialist Link to more items from this source
Dec. 21, 2020

"One way ... participants can mitigate risk and market volatility within their retirement plan is through the use of a Quality Low Volatility (QLV) portfolio.... In addition to using low volatility stocks to smooth the investment ride, ... investing in the highest quality companies -- those with strong cash flows, profitability and management efficiency -- may further mitigate market drawdowns and potentially improve performance."

Tags: 401(k) Plans  •  Retirement Plan Investments

The 'Terror' of 401(k) Litigation
Data 'Points' Link to more items from this source
[Opinion]
Dec. 21, 2020

"When the dust 'settles' in these cases ... most still produce nothing but a monetary 'arrangement' -- the amount nearly always significantly less than the damages alleged, and the per participant recovery relatively small.... Those suits that do go to trial generally seem to turn out in favor of the plan fiduciary(ies), either because the substance behind the plaintiffs' claims is found to be insufficient, or the actions of the plan fiduciaries are determined to clear the admittedly high bar of ERISA's prudence."

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Administration  •  Retirement Plan Investments

Thousands of Businesses Cut 401(k) Contributions During COVID Pandemic
CNBC Link to more items from this source
Dec. 18, 2020

"About 8% of employers cut 401(k) contributions during the COVID pandemic, according to a Plan Sponsor Council of America survey. Another 1% are considering doing so. That would equate to more than 51,000 plans, according to federal data. Small businesses were the most likely to take such cost-cutting measures."

Tags: 401(k) Plans  •  Coronavirus (COVID-19)  •  Retirement Plan Design

Why Are Retirement Plan Administrative Policies Important?
Retirement Management Services, LLC Link to more items from this source
Dec. 17, 2020

"The administrative policy and procedures should be an objective set of rules by which the plan is administered and decisions are made. They also help establish the legitimacy of management action by ensuring the application of retirement committee rules and ensure that decisions are made in an objective, fair, and consistent manner. Finally, they help ensure that the people making these decisions are held accountable for decisions that may deviate from the procedures and the best interest of the participants."

Tags: 401(k) Plans  •  Retirement Plan Administration

Calendar of Key Dates and Deadlines for 401(k) Plans (PDF)
Pensionmark Link to more items from this source
Dec. 17, 2020

"[This document provides] a list of the most common recurring plan events and filing deadlines for a 401(k) plan operating on a calendar year basis. Your plan may have additional requirements[.]"

Tags: 401(k) Plans  •  Retirement Plan Administration

Another Record Year for Retirement Savings
Plan Sponsor Council of America [PSCA] Link to more items from this source
Dec. 17, 2020

"More than 90% of eligible employees have an account balance, and most (87.3%) of those made contributions in 2019.... Roth contributions are now permitted in three-fourths of plans, up from 69.1 percent in 2018.... Eighty percent of plans offered a target-date fund in their menu, up from 68.6 percent in 2018.... Forty percent of plans now offer a professionally managed investment alternative to participants, up from 36.3 percent in 2018.... Nearly 60 percent of plans now offer plan access via mobile technology, up from 47.5 percent in 2018."

Tags: 401(k) Plans  •  Retirement Plan Design

SECURE Act Update: IRS Issues Guidance with Respect to Safe Harbor Plans (PDF)
Patterson Belknap Webb & Tyler LLP Link to more items from this source
[Guidance Overview]
Dec. 16, 2020

"[Notice 2020-86] interprets the SECURE Act's provisions to apply to some, but not all, aspects of the rules regarding safe harbor plans, limiting the applicability of the recent liberalizations to the safe harbor rules."

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

401(k) Plan Access 'SECUREd' for Long-Term Part-Time Employees
Sidley Austin LLP Link to more items from this source
[Guidance Overview]
Dec. 16, 2020

"Plan sponsors need to start tracking the service of nonunion, long-term, part-time employees who have attained age 21 as they must be eligible to make elective deferrals to their employer's 401(k) plan after three consecutive plan years. Plan years beginning prior to January 1, 2021, will not be taken into account for eligibility purposes ... Any year in which a long-term, part-time employee has attained age 18 and completed at least 500 hours of service must be considered for vesting purposes, including years beginning prior to January 1, 2021."

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

Editor's Pick New SECURE Safe Harbor 401(k) Plan Rules: You Can Do the Safe Harbor Nonelective Hokey Pokey!
Ferenczy Benefits Law Center Link to more items from this source
[Guidance Overview]
Dec. 15, 2020

"[O]ne of the consequences of the IRS waiting until now to issue [Notice 2020-86] is that, if the plan sponsor wants to retroactively re-adopt a safe harbor nonelective contribution for the 2020 calendar year, we are within 30 days of the year end so the nonelective contribution must be 4% for 2020.... [T]he SECURE-amended Internal Revenue Code prohibits the retroactive safe harbor amendment for a plan that had matching contributions anytime during the plan year. Therefore, this 'hokey pokey' process of going out and then back into the safe harbor for the year is available only if the plan originally provided (and is reinstating) safe harbor nonelective contributions."

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

Suspended 401 (K) Matches Are Being Restored
MarketWatch Link to more items from this source
Dec. 15, 2020

"Of 260 companies that cut or halted 401(k) matching contributions during the downturn, 75% have now restored them ... Of these, 74%, reinstated matches at prior levels, 23% restored matches at a lower level and 3% boosted them."

Tags: 401(k) Plans  •  Coronavirus (COVID-19)  •  Retirement Plan Design


<< Older News  |  January 24, 2021

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