News Archive

"The deadline by which a plan sponsor must amend its retirement plans depends on the plan type. Here’s a list of the current amendment deadlines by plan type."  MORE >>

"[S]ponsors of tax-exempt 457(b) plans now face a short timeframe to implement amendments, such as the increase in the required minimum distribution age, which was first raised to 72 under the SECURE Act, then to 73 under SECURE 2.0 ... It is unlikely that the IRS will grant tax-exempt 457(b) plans a last-minute extension, especially given the government shutdown[.]"  MORE >>

"SECURE limited the ability of some inherited IRA beneficiaries to stretch their distributions from the IRA. Non-eligible designated beneficiaries and non-designated beneficiaries are restricted in their ability to stretch distributions beyond 10 years. Eligible designated beneficiaries, such as spouses, are still able to do the inherited stretch."  MORE >>

"[A] 401(k) or 403(b) plan will satisfy the mandatory automatic enrollment requirement only if the plan provides an EACA that covers all employees in the plan who are eligible to elect to have contributions made on their behalf. This includes long-term, part-time employees.... The regulatory amendments are designed to align with the mandatory automatic enrollment requirements described in Section 101 of SECURE 2.0. They also support SECURE 2.0 provisions that allow employers to forego sending annual EACA notices to unenrolled participants and to combine two or more mandatory notices."  MORE >>

"As 2024 comes to a close, it is a good time to review how some of the recent changes under the SECURE 2.0 Act of 2022 and the original SECURE Act impact qualified retirement plans.... [S]ome of the noteworthy changes that recently took effect or will soon become effective: [1] Participation of long-term part-time employees in 401 (k) plans ... [2] Required minimum distributions for Roth 401 (k) contributions ... [3] Surviving spouse can be treated as employee for RMD purposes ... [4] Increased cashout limit ... [5] Higher catch-up contribution limit ... [6] Catch-up contributions required to be Roth contributions ... [7] Notices to unenrolled participants."  MORE >>

"In general, the final regulations provide that the beneficiary, including eligible designated beneficiaries, must continue to take annual RMDs after the death of the taxpayer. The IRA must be fully distributed by the tenth anniversary of the taxpayer's death. The final regulations apply to calendar years beginning on or after January 1, 2025."  MORE >>

"The Final RMD Regulations are effective for distribution calendar years beginning on or after January 1, 2025. For distribution calendar years before January 1, 2025, a good faith, reasonable interpretation of statutory provisions standard applies. The key provisions from the Final RMD Regulations that clarify or expand on the 2022 Proposed Regulations and the Proposed RMD Regulations are discussed [in this article]."  MORE >>

"The IRS stated that it anticipates issuing proposed regulations with respect to Section 403(b) plans that are expected to be similar to the final regulations regarding 401(k) plan LTPTEs. The Notice also confirms that the forthcoming final regulations regarding LTPTEs participating in Section 401(k) plans will apply only to plan years beginning on or after January 1, 2026."  MORE >>

"The five most important rules affecting RMDs: [1] Changes in the age requirement.... [2] Excluding Roth accounts ... [3] Reducing penalties for failing to take an RMD.... [4] RMDs for sole beneficiary surviving spouses.... [5] RMDs for eligible designated beneficiaries."  MORE >>

• Q-1: Do the eligibility rules for ERISA LTPT employees under section 202(c) of ERISA apply to a section 403(b) plan that is not subject to title I of ERISA? A-1: No....
• Q-2: Is a section 403(b) plan that is subject to ERISA required to provide the right to make elective deferrals to a part-time employee who qualifies as an ERISA LTPT employee? A-2: Yes....
• Q-3: May a section 403(b) plan that is subject to ERISA continue to retain a part-time employee exclusion for part-time employees who do not qualify as ERISA LTPT employees? A-3: Yes....
• Q-4: Is a section 403(b) plan that is subject to ERISA required to provide the right to make elective deferrals to a student employee who qualifies as an ERISA LTPT employee? A-4: No....
• Q-5: May an employer with a section 403(b) plan that is subject to ERISA exclude ERISA LTPT employees for purposes of determining whether matching contributions satisfy the nondiscrimination requirements applicable to a section 403(b) plan under section 401(m)(2)? A-5: Yes....
• Q-6: Can an employer use section 403(b)(12)(D) to continue to exclude an ERISA LTPT employee who later becomes eligible to participate in the plan for reasons other than the eligibility rules for ERISA LTPT employees under section 202(c)(1)(B) of ERISA from receiving nonelective or matching contributions or from the application of the nondiscrimination requirements in sections 401(a)(4), 401(m)(2), and 410(b) of the Code? A-6: No....

This notice applies for plan years beginning after December 31, 2024.... The final regulation related to section 401(k) LTPT employees will apply no earlier than to plan years that begin on or after January 1, 2026." [11 pages]  MORE >>

"[W]hile the SECURE Act established the LTPT rules that became required for most plan sponsors on January 1, 2024 ... 'SECURE 2.0' modified and expanded the LTPT rules. This article discusses those changes to the LTPT rules as imposed by SECURE 2.0. Such changes generally are effective for most plan sponsors on January 1, 2025 so now is the time to take action in order to be prepared for the change."  MORE >>

"The final regulations' changes apply to RMDs for 2025 and later calendar years.... The 2024 proposed regulations would have the same applicability dates. The preamble to the final regulations explains that for years before the regulations apply, taxpayers must follow the earlier regulations, taking into account a reasonable, good-faith interpretation of SECURE 1.0's RMD changes. Compliance with the 2022 proposed regulations satisfies this requirement."  MORE >>

"Some provisions have already taken effect, while others are scheduled for implementation in 2025 and beyond. Plan sponsors should be aware of these upcoming provisions, as many will require them to decide whether to opt in or out. Here's a summary of the key changes that plan sponsors need to know."  MORE >>

"The final regulations apply to qualified 401(a) plans and IRAs ... The final regulations that affect eligible rollovers apply for distributions on or after January 1, 2025, and final regulations related to the penalty tax on RMD failures apply for taxable years beginning on or after January 1, 2025. For earlier years, individuals must apply the 2002 and 2004 regulations, taking into account a reasonable, good faith interpretation of the amendments made by the SECURE Act and SECURE 2.0."  MORE >>

"This bulletin summarizes the key RMD provisions of the final regulations for employer-sponsored retirement plans, including qualified defined benefit (DB) plans and defined contribution (DC) plans, 403(b) plans, and 457(b) plans.... These regulations finalize the proposed RMD regulations published on February 24, 2022 (as corrected on March 21, 2022, and May 20, 2022), and generally follow those earlier proposed regulations without substantial change."  MORE >>

"Most older items didn't change significantly, but the agency moved several projects from the active agenda to its long-term agenda and vice versa. The [DOL] and Pension Benefit Guaranty Corp. (PBGC) also updated their agendas, but neither agency made significant changes to their current lists of retirement projects. While the active agenda often specifies anticipated completion dates within the next year, those dates are generally aspirational and routinely change as an agency's priorities shift."

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"[T]he SECURE 2.0 rule adjustment does not alter a plan sponsor's obligation to comply with the SECURE Act LTPTE rules for 2024. Consequently, the SECURE Act 'three year' rule will apply for 2024. However, effective for 2025 and into the future, the SECURE 2.0 'two year' rule will apply."

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"There are still unanswered questions surrounding this guidance, including ... [1] Will designated beneficiaries and successor beneficiaries who do not take their 2021, 2022, or 2023 life expectancy payments be required to take those payments in the future? ... [2] Are amounts that would have been distributed to satisfy a 2021, 2022, 2023, or 2024 life expectancy payment still considered an RMD for other purposes (e.g., rollovers)?"

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9 pages. "This notice provides guidance relating to certain specified required minimum distributions (RMDs) for 2024. In addition, this notice announces that the final regulations that the Department of the Treasury and the [IRS]  intend to issue related to RMDs will apply for purposes of determining RMDs for calendar years beginning on or after January 1, 2025....

"A defined contribution plan that failed to make a specified RMD will not be treated as having failed to satisfy Section 401(a)(9) merely because it did not make that distribution. ...

"To the extent a taxpayer did not take a specified RMD, the IRS will not assert that an excise tax is due under Section 4974....

"For purposes of this notice, a specified RMD is any distribution that, under the interpretation included in the proposed regulations, would be required to be made pursuant to Section 401(a)(9) in 2024 under a defined contribution plan or IRA that is subject to the rules of Section 401(a)(9)(H) for the year in which the employee (or designated beneficiary) died if that payment would be required to be made to:

• a designated beneficiary of an employee under the plan (or IRA owner) if: (1) the employee (or IRA owner) died in 2020, 2021, 2022, or 2023, and on or after the employee's (or IRA owner's) required beginning date, and (2) the designated beneficiary is not using the lifetime or life expectancy payments exception under Section 401(a)(9)(B)(iii); or
• a beneficiary of an eligible designated beneficiary (including a designated beneficiary who is treated as an eligible designated beneficiary pursuant to Section 401(b)(5) of the SECURE Act) if: [1] the eligible designated beneficiary died in 2020, 2021, 2022, or 2023, and [2] that eligible designated beneficiary was using the lifetime or life expectancy payments exception under Section 401(a)(9)(B)(iii) of the Code."

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"The [SECURE Act] enacted at the end of 2019 established new retirement plan types, including Pooled Employer Plans (PEPs) and Defined Contribution Group of Plans (GoPs). It also ratified the existence of 'open' Multiple Employer Plans (MEPs), which had been used by many service providers without formalized reporting requirements.... [T]he Form 5500 series was updated to accommodate reporting requirements for plans maintained by more than one employer."  MORE >>

"Even though written plan amendments do not have to be made until the end of the 2026 plan year, plan sponsors are required to operate their plans in compliance with these LTPT employee requirements starting with the 2024 plan year. Section 403(b) plans must implement these provisions for plan years beginning in 2025."  MORE >>

[P]eriods beginning before January 1, 2021, are not taken into account; the preamble to the regulations explains that this a mandatory requirement, and plan sponsors may not voluntarily credit additional service to employees for purposes of an LTPT employee determination.... ... If a plan sponsor mistakenly did not provide LTPT employees eligible as of Jan. 1, 2024, the opportunity to defer on that date, the plan sponsor may need to take corrective action under [EPCRS]."  MORE >>

"While safe harbor 401(k) plans are explicitly called out as requiring amendments to reflect the exclusion of LTPEs from eligibility for those contributions, as well as their exclusion from testing, non-safe harbor plans also appear to be subject to this requirement. The preamble to the proposed regulations requires a plan to contain 'enabling' language to permit the exclusion.... [A] non-safe harbor plan, out of an abundance of caution, should be amended in the same manner as a safe harbor plan regarding LTPE eligibility for employer contributions and exclusion from testing."

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"What is the deadline for adopting a new safe harbor 401(k) plan? ... What is the deadline for adopting a new traditional 401(k) plan? ... What is the deadline for converting a traditional 401(k) into a safe harbor plan? ... How soon can I replace a SIMPLE IRA with a 401(k) plan? ... What are the major 401(k) adoption deadlines for 2024 and 2025 [listed in a chart]?"

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Jan. 26, 2024. "The SECURE Act made changes to when an employee is eligible to make deferrals to a 401(k) plan.... This new requirement generally applies to all 401(k) plans and all employees, other than certain employees covered by a collective bargaining agreement. For a 401(k) plan that uses the calendar year as its plan year, this change could require enrollment of long-term part-time employees as of January 1, 2024."

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