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All News > 401(k) Plans

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Using a Nonqualified Plan to Overcome 401(k) Compliance Testing Issues Caused by COVID-19 Workforce Changes (PDF)
Fulcrum Partners LLC Link to more items from this source
Aug. 10, 2022

"The establishment of an NQDC plan for your HCEs provides an almost unlimited pre-tax deferral opportunity for your HCEs.... The refunds from a 401(k) can be eliminated if you establish a lower deferral percentage for HCEs that will ensure compliance with the ADP and ACP tests. The excess dollars that an HCE would have normally deferred to the 401(k) plan will now be deferred by your HCEs to the NQDC plan."

Tags: 401(k) Plans  •  Nonqualified Plans

The Impact of Missing the July 31, 2022, Deadline for Restating Pre-Approved 401(k) Plans
Jackson Lewis P.C. Link to more items from this source
[Guidance Overview]
Aug. 5, 2022

"Depending on the circumstances, some failures may require obtaining formal approval from the IRS through its Voluntary Correction Program, while others may be eligible for self‑correction.... If failing to timely restate a pre-approved plan results in any interim or discretionary amendments being defective, the plan may be corrected through the IRS Employee Plans Compliance Resolution System (EPCRS). "

Tags: 401(k) Plans  •  Retirement Plan Amendments

When is Self-Correction of a Qualification Failure Not Enough? (PDF)
KLB Benefits Law Group Link to more items from this source
Aug. 4, 2022

"If a failure, or a series of failures, is not insignificant, SCP is only available if the correction is made within a limited time period.... [A] plan sponsor is basically limited to the failures addressed in the Revenue Procedure ... [A] plan sponsor will never know for certain whether the IRS will accept the correction in an audit situation.... If the plan sponsor is a publicly-traded company where the company is answerable to its shareholders and public disclosures must be made, a VCP may be the only option."

Tags: 401(k) Plans  •  Retirement Plan Administration

Boeing Machinists Approve Contract That Keeps 401(k) Match Same, Includes Lump-Sum Payment
Pensions & Investments Link to more items from this source
Aug. 4, 2022

"The workers had previously voted to strike after rejecting an offer from Boeing that included an increase in the matching contribution of its 401(k) plan to 100% of the first 10% in eligible participant contributions from 75% of the first 8% contributed ... Boeing's new offer ... eliminated all changes to the 401(k) plan automatic and matching contribution formulas and instead offered workers a one-time lump sum of $8,000, 100% of which they could defer to the 401(k) plan."

Tags: 401(k) Plans  •  Retirement Plan Design

Text of IRS Notice 2022-33: Extension of Retirement Plan Amendment Deadlines (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Aug. 3, 2022

"Notice 2022-33 extends the deadlines for amending a retirement plan or individual retirement arrangement to reflect certain provisions of Division O of the [SECURE Act], and ... the Bipartisan American Miners Act of 2019 (Miners Act), by modifying Notice 2020-68 ... and Notice 2020-86... In addition, this notice extends the deadline for amending a retirement plan to reflect the provisions of section 2203 of the [CARES Act].

"[T]he extended amendment deadline for [1] a qualified retirement plan or section 403(b) plan (including an applicable collectively bargained plan) that is not a governmental plan or [2] an IRA is December 31, 2025. Later deadlines apply with respect to governmental retirement plans (including governmental plans under section 457(b) of the Internal Revenue Code)."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  457 Plans  •  CARES Act  •  Retirement Plan Amendments  •  SECURE Act

401(k) Plans and Crypto (PDF)
Fisher Phillips, via Employee Benefit Plan Review Link to more items from this source
July 29, 2022

"Plan fiduciaries are in a precarious position -- stuck between the demand of participants and the ESBA guidance.... Employers that include crypto in their 401(k) menu should ensure they have a robust monitoring process in place because they may end up being audited by EBSA."

Tags: 401(k) Plans  •  Retirement Plan Investments

401(k)ology: Participant Loans, Part 1
Newfront Link to more items from this source
July 25, 2022

"[S]econd-order questions [surround] what parameters should be in the loan program (e.g., only one loan outstanding, interest rate is prime plus 1% and minimum loan of $1,000). These are significant compliance and fiduciary related matters that employers should consider when deciding whether to include a participant loan program in the company 401(k) plan."

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

Administrative Policies Every 401(k) Plan Needs
Foley & Lardner LLP Link to more items from this source
July 20, 2022

"[1] Loan policy ... [2] QDRO procedures ... [3] Cybersecurity policy and procedures ... [4] Missing participant and uncashed check procedures ... [5] Investment policy."

Tags: 401(k) Plans  •  Retirement Plan Administration

Preparing for Your 401(k) to Lose Solo Status
Employee Fiduciary Link to more items from this source
July 20, 2022

"[It's] common for business owners to wait too long to notify their 401(k) provider that a common law employee has met their solo plan's age and service eligibility requirements.... This delay can lead to steep consequences[.]"

Tags: 401(k) Plans  •  Retirement Plan Design

2022 Financial Life Benefits® Impact Report (PDF)
Bank of America Merrill Lynch Link to more items from this source
July 18, 2022

11 pages. "Majority of employees participate in 401(k), but still room to improve ... 401(k) balances are growing but significant gender disparities exist ... Employees still need education on the benefits of maximizing their retirement savings contributions ... Employees have significantly increased the portion of their assets in [ESG] focused investments ... Employees are embracing Target Date Funds -- often investing their full account balance ... Health Savings Account (HSA) utilization continues to accelerate with more education needed."

Tags: 401(k) Plans

Combining Automatic Enrollment Features Can Improve Retirement Savings Adequacy (PDF)
T. Rowe Price Link to more items from this source
July 11, 2022

"[A]nalysis of participants who were automatically enrolled in their employers' plans in 2021 reveals that less than 6% opted out.... [T]he percentage who opted out was similar if the default was 3% or the default was ≥6% of wages.... [A]lmost 90% of participants automatically enrolled in 2021 kept their investments in the [QDIA] chosen by their employer. Collectively, these findings point to the power of nudges to influence behavior but raise the question of whether they go far enough or could serve a greater social purpose."

Tags: 401(k) Plans  •  Retirement Plan Design

What to Know If Your Company Changes 401(k) Providers
CNBC Link to more items from this source
July 8, 2022

"24% of employers, sponsoring a 401(k) or similar workplace plan report they are somewhat or very likely to conduct a search for a new plan administrator in 2022 ... [W]orkers should take a few steps to ensure the transfer was smooth and all their funds are accounted for[.]"

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

Retroactive Adoption for New Qualified Plans Under the SECURE Act
TRI-AD Link to more items from this source
[Guidance Overview]
July 7, 2022

"[T]his new deadline is only for qualified plans that are employer-funded ... This does not include 401(k) deferral elections, since elective deferrals may not be implemented retroactively.... In August of 2021, the IRS ... [stated] that retirement plans that are retroactively adopted can skip the first year's Form 5500 filing requirement."

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

How Blockchain Could Change 401(k)s
Investopedia Link to more items from this source
July 5, 2022

"Having everything stored in one easy-to-access place would give people a clearer picture of their retirement assets and perhaps incentivize them to invest more.... Blockchain doesn't require a third-party intermediary to validate transactions, resulting in speedier turnaround times and potentially lower costs. The technology, thanks to its decentralized structure, is more difficult to hack."

Tags: 401(k) Plans  •  Retirement Plan Administration

CRS In Focus: Cryptocurrency in 401(k) Retirement Plans
Congressional Research Service [CRS] Link to more items from this source
July 5, 2022

"While some contend that cryptocurrency in retirement accounts could benefit participants, others have expressed concern about its appropriateness as an investment option."

Tags: 401(k) Plans  •  Retirement Plan Investments

401(k) Plans: Active Participation Results in Sizable Account Balances
Employee Benefit Research Institute [EBRI] Link to more items from this source
July 1, 2022

"The average 401(k) plan account balance for consistent participants rose each year from 2010 through year-end 2019, with the exception of a slight decline in 2018. Overall, the average account balance increased at a compound annual average growth rate of 15.6 percent from 2010 to 2019 ... The growth in 401(k) plan account balances for consistent participants generally exceeded the growth rate for all participants in the EBRI/ICI 401(k) database."

Tags: 401(k) Plans

Automatic Enrollment's Long-Term Effect on Retirement Saving (PDF)
T. Rowe Price Link to more items from this source
June 30, 2022

"Automatic enrollment almost doubles plan participation and successfully gets participants who might not have otherwise saved saving. However, it can also result in participants saving less than those who voluntarily opt in and set their own deferral rate. Automatic enrollment combined with automatic escalation creates better participation and savings outcomes."

Tags: 401(k) Plans  •  Retirement Plan Design

What Is a 'Missed Deferral Opportunity'?
KLB Benefits Law Group Link to more items from this source
[Guidance Overview]
June 29, 2022

"The current correction method for these types of deferral failures requires that the employer make a corrective contribution equal to 50% of the missed deferrals. Note however, that any missed employer contributions have to be made as though 100% of the elected amounts were deferred."

Tags: 401(k) Plans  •  Retirement Plan Administration

Editor's Pick The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2021 (PDF)
Investment Company Institute [ICI] Link to more items from this source
June 28, 2022

28 pages. "401(k) plan participants investing in mutual funds tend to hold lower-cost funds.... The expense ratios that 401(k) plan participants incur for investing in mutual funds have declined substantially since 2000.... The downward trend in the expense ratios that 401(k) plan participants incur for investing in mutual funds continued in 2021.... Employers and employees generally share the costs of operating 401(k) plans."

Tags: 401(k) Plans  •  Retirement Plan Administration

Editor's Pick Emerging from the COVID-19 Pandemic: The Retirement Outlook of the Workforce (PDF)
Transamerica Center for Retirement Studies Link to more items from this source
June 28, 2022

111 pages. "Almost two in three employed workers (63 percent) indicate their financial situation has stayed the same amid the pandemic while 22 percent say it worsened.... 39 percent of employed workers have dipped into their retirement accounts, including 29 percent who have taken a loan and 27 percent who have taken an early and/or hardship withdrawal. Just three in 10 'strongly agree' they are building a large enough retirement nest egg (30 percent)."

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

Senate Finance Committee Unanimously Advances EARN Act
The Wall Street Journal; subscription may be required Link to more items from this source
June 23, 2022

"The Senate bill raises the [RMD] age from 72 today to 75 in 2032, while the House bill [HR 2954] would increase it to 73 next year, 74 in 2030 and 75 in 2033.... The Senate bill also includes provisions for some penalty-free withdrawals for the terminally ill, victims of domestic abuse, those affected by federally declared disasters, and the payment of long-term-care insurance premiums -- all measures that aren't in the House version."

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

It's Unanimous! EARN Act Passed by Senate Committee 28-0
American Retirement Association [ARA] Link to more items from this source
June 23, 2022

"The EARN Act is now cleared for consideration by the full Senate, where it will be merged with the RISE & SHINE Act [S 4353], which was approved June 14 by the Senate Health, Education, Labor and Pensions (HELP) Committee."

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

Changes to Your Next 401(k) Statement Could Be Alarming, But Don't Panic Just Yet
WDJT - Milwaukee Link to more items from this source
June 21, 2022

"Starting this quarter, plan holders will see two new estimates on their 401(k) statements. Each assumes that they will use their current account balance to purchase an annuity, a retirement vehicle that allows investors to invest a lump sum that will be converted into fixed, lifetime monthly payments.... The illustrations don't account for Social Security or any outside savings, nor do they include any future investment growth or compounding in the market."

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

Senate Finance Committee Rolls Out Massive SECURE 2.0 Counterpart
American Retirement Association [ARA] Link to more items from this source
June 20, 2022

"The Senate Finance Committee on June 17 released the Enhancing American Retirement Now (EARN) Act, its counterpart to the House-passed SECURE 2.0 -- a massive piece of legislation that includes a number of key provisions[.]"

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

RISE & SHINE Act: The Senate's Initial Response to House-Passed SECURE 2.0
Jackson Lewis P.C. Link to more items from this source
June 17, 2022

"Provisions in the RISE and SHINE Act not in SECURE 2.0 include: [1] Allowing the use of plan assets to pay some incidental plan design expenses; [2] Raising the limit on mandatory cash-out distributions from $5,000 to $7,000; and ... [3] 401(k) plans could include emergency savings accounts."

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

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