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All News > Retirement Plan Design

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1974-2024: Celebrating 50 Years of Protected Retirement Plans
U.S. Bureau of Labor Statistics [BLS] Link to more items from this source
Mar. 18, 2024

"Although the first private pension plan in the United States was established in 1875, it wasn’t until 1974 that a law was enacted to set minimum standards for pensions ... While federal, state, and local laws do not require establishments to provide retirement benefits, ERISA established standards in case they do. This Spotlight on Statistics highlights recent data on retired persons and retirement benefits for private industry workers."

Tags: Retirement Plan Administration  •  Retirement Plan Design  •  Social Security

Editor's Pick PEP Cost Savings May Take Years, and May Not Materialize
PLANSPONSOR; free registration may be required Link to more items from this source
Mar. 15, 2024

"Retirement plans that include multiple employers have continued to grow in assets, but the growth of assets necessary to reach the critical size where economies of scale can be achieved may take years. The forecasted cost savings to plan sponsors of joining a pooled employer plan over using a single employer plan may not materialize, depending on the sponsor's pooled plan provider.... Boston College researchers provided [a] breakdown of the fees that should be considered[.]"

Tags: MEP/PEP  •  Retirement Plan Administration  •  Retirement Plan Design

What Employers Sponsoring Defined Benefit Pension Plans Should Know About Class Actions Challenging Plan Assumptions
Jackson Lewis P.C. Link to more items from this source
Mar. 15, 2024

"The 'actuarial equivalence' cases allege that plan sponsors or fiduciaries violate ERISA by adopting unreasonable actuarial assumptions.... [P]lan sponsors have responded that ERISA does not prescribe any kind of reasonableness requirement when mandating that actuarial assumptions be used.... Courts are split on the issues."

Tags: Funding of DB Plans  •  Retirement Plan Administration  •  Retirement Plan Design

How Does Tax Timing Affect Spending in Retirement?
Journal of the American Taxation Association Link to more items from this source
Mar. 15, 2024

"This study investigates how the timing of taxes on retirement savings affects spending.... [The authors] find that deferred-tax account holders consume savings faster than currently taxed account holders with equal after-tax spending power. Further, given equivalent nominal balances, deferred-tax and currently taxed account holders spend nominally equivalent amounts on goods, despite deferred-tax account holders needing to pay taxes on withdrawals. This finding suggests deferred-tax account holders under-adjust for taxes and, therefore, consume their wealth faster."

Tags: Misc. Distribution Issues  •  Retirement Plan Design

State Mandates Drive Business Owners to Explore Retirement Plans
Putnam Investments Link to more items from this source
Mar. 14, 2024

"Lawmakers and the retirement industry have tried for years to close the access gap. This year could see growth in workplace plans. The growing number of state initiatives and new tax incentives introduced by recent legislation, including SECURE 2.0, could move the dial on business startup plans."

Tags: Retirement Plan Design

2024 Retirement Happiness Study (PDF)
MassMutual Link to more items from this source
Mar. 14, 2024

"The definition of retirement may be shifting to mean more than simply an end to working. A majority of pre-retirees view retirement as either shifting focus to 'a new type of work or fulfilling purpose' or 'working less.'... On average, 63 is the ideal age for retirement according to both retirees and pre-retirees. While current retirees are hitting close to that mark with an average actual retirement age of 62, there are signs that future retirees could have more difficulty retiring at their ideal age.... Many retirees retired earlier than planned. Few say they retired later than planned."

Tags: Retirement Plan Design

How Starter 401(k) Plans Compare to Safe Harbor and Traditional Plans
Employee Fiduciary Link to more items from this source
[Guidance Overview]
Mar. 13, 2024

"[SECURE 2.0] created a new type of automatic enrollment 401(k) plan called the 'starter 401(k) deferral-only arrangement'  ... meant to be an entry-level option for small businesses who do not already offer a retirement plan. A starter plan is not subject to annual testing like a traditional 401(k) plan or mandatory employer contributions like a safe harbor 401(k) plan. The trade-off is lower contribution limits for plan participants. Small businesses can adopt a starter 401(k) plan starting January 1, 2024."

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

401(k) Inventor Offers New Way for Employers to Reward and Incentivize Employees
Newsmax Link to more items from this source
Mar. 13, 2024

"Ted Benna, the 'Father of the 401(k),' is pushing a new incentive plan employers could offer rank-and-file employees.... [M]oney put into it, exclusively by employers, would grow tax-deferred much like a 401(k).... Employers would reward workers a flat-dollar amount or a percentage of compensation to the account ... [T]he minimum amount that can be withdrawn is $500 and only one withdrawal per year is permitted."

Tags: Retirement Plan Design

How Employers Can Help Employees Guard Retirement Savings Against Market Volatility
USI Consulting Group Link to more items from this source
Mar. 13, 2024

"Promote the usage of target date funds (TDFs)  ... Provide retirement income planning tools and resources ... Establish emergency cash accounts ... [E]ncourage their employees to: Meet with a financial planner and use retirement income planning tools ... Develop a contingency plan ... Revise timing of retirement ... Ensure adequate insurance coverage during retirement for healthcare, long-term care and life insurance."

Tags: Retirement Plan Administration  •  Retirement Plan Design

House Proposal Would Mandate Auto-Enrollment Retirement Plans for Employers
Mercer Link to more items from this source
Mar. 12, 2024

"[T]he Automatic IRA Act of 2024 [HR 7293] would effectively require most private-sector employers that don't already sponsor a retirement plan either to maintain an 'automatic contribution plan' or enroll employees in automatic individual retirement arrangements (IRAs) beginning in 2027. The bill would also direct the Treasury Department to provide guidance enabling automatic IRAs for independent contractors and gig workers."

Tags: Retirement Plan Design  •  Retirement Plan Policy

DOL and IRS Issue Guidance on DC Plan Emergency Savings Accounts
Mercer Link to more items from this source
[Guidance Overview]
Mar. 12, 2024

"DOL's guidance takes the form of 20 wide-ranging FAQs posted on the agency's website covering multiple aspects of PLESA administration. IRS's guidance in Notice 2024-22 focuses on reasonable measures sponsors can take to limit employees' manipulation of the employer match on PLESA contributions. IRS is accepting written comments on its notice through April 5, and both agencies have indicated that more PLESA guidance is coming."

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

IRS Issues Favorable Initial PLESA Guidance on Match Restrictions (PDF)
Groom Law Group, via Taxes the Tax Magazine Link to more items from this source
[Guidance Overview]
Mar. 12, 2024

"[Notice 2024-22] is the first step into making these accounts viable, providing for allowable and prohibited restrictions for anti-abuse measures. But there remain a number of complexities and open issues to be addressed for these accounts that would benefit from simple, flexible rules, with a good faith implementation standard to bring these accounts into existence for 2024."

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

2024 State of Retirement Planning (PDF)
Fidelity Link to more items from this source
Mar. 12, 2024

"3-in-4 feel confident about retiring when and how they want.... [P]ost-pandemic ... Americans are prioritizing financial stability. For those aiming to pursue their passions, traveling (57%) and hobbies (61%) top the list.... Since the pandemic took hold, its impacts remain far-reaching: remote and hybrid work are redefining what retirement means to many."

Tags: Retirement Plan Design

Washington State Poised to Adopt State-Sponsored Retirement Plan
American Retirement Association [ARA] Link to more items from this source
Mar. 11, 2024

"SB 6069 establishes Washington Saves, an automatic enrollment individual retirement savings account program. It requires covered employers to allow employees an opportunity to contribute to an IRA through an automatic payroll deduction. The default contribution rate is to be not less than 3%, nor more than 7%, of wages.... Accounts are portable."

Tags: Local Regulation  •  Retirement Plan Design

Updated Actuarial Financial Planner Models
Ken Steiner, FSA Retired Link to more items from this source
Mar. 11, 2024

"[T]he AFP models [have been updated] to permit inputting of additional non-recurring income and expense items. These new cells will enable you to estimate present values of items such as: [1] Social Security survivor benefits; [2] Survivor benefits under Joint and Survivor annuities; [3] Future home sales; [4] Possible future Social Security cuts, and [5] Many types of expected future non-recurring expenses."

Tags: Misc. Distribution Issues  •  Retirement Plan Design  •  Retirement Plan Information for Employees

Employer Simplifies 'Confusing' 401(k) Match Formula to Boost Employee Savings
PLANSPONSOR; free registration may be required Link to more items from this source
Mar. 8, 2024

"Dawn made the change based on feedback from employee surveys -- in two successive years -- which showed its 401(k) plan participants were confused by the employer's old formula ... Using Dawn's prior formula, the 401(k) matched 100% of a participant's first 3% of retirement contributions and 50% of the next 2% ... Confused participants were less engaged with the retirement plan and 'more hesitant to come participate,' [Dawn Foods' Brian Coleman] says"

Tags: 401(k) Plans  •  Retirement Plan Design

The 'Unretirement' Boom
HR Daily Advisor Link to more items from this source
Mar. 8, 2024

"[O]ne in three current retirees are contemplating a return to work, driven largely by desires for increased social interaction and to alleviate boredom. This trend is reshaping the landscape of employment and prompting a reevaluation of workplace dynamics across generations."

Tags: Retirement Plan Design

2024 Limits on Contributions to 401(k) Plans Qualified in Puerto Rico
Carlos Gonzalez Law Office LLC Link to more items from this source
[Guidance Overview]
Mar. 7, 2024

"In the case of dual qualified 401(k) plans, Hacienda's limits only apply to those participants who.... are residents of Puerto Rico. Basically, this means participants whose wages are reported using a local Form W-2 ... U.S. participants, on the other hand, remain subject to the regular annual limits set forth by the IRS in Notice 2023-75."

Tags: Retirement Plan Administration  •  Retirement Plan Design

Insurers to Assume Pension Obligations for 56,000 Verizon Retirees
PLANSPONSOR; free registration may be required Link to more items from this source
Mar. 7, 2024

"Plan sponsor Verizon Communications Inc. this month completed a $5.9 billion pension risk transfer by purchasing single-premium group annuity contracts with two insurers covering 56,000 retirees ... The group annuities, from Prudential Insurance Co. of America and RGA Reinsurance Co., will provide benefits to retirees that began receiving payments from the Verizon pension plans before January 1, 2023[.]"

Tags: Retirement Plan Design  •  Retirement Plan Investments

Why DB Plans Are the Right Tool for the Job
October Three Consulting Link to more items from this source
[Opinion]
Mar. 7, 2024

"DB programs (such as cash balance plans) are designed to offer efficient and pure risk pooling in retirement. The uncertainty of individual lifespans is handled efficiently by grouping many retirees in a single pension plan backed by a collective pool of assets. All members benefit from a more straightforward and cost-effective conversion of accumulated savings into lifetime income."

Tags: Retirement Plan Design

Notice 2024-02 Provides Guidance on Distributions to the Terminally Ill
Trucker Huss Link to more items from this source
[Guidance Overview]
Mar. 6, 2024

"To be eligible for a Terminally Ill Distribution, an individual must be certified by a physician as having an illness or physical condition that can reasonably be expected to result in death in 84 months or less after the date of certification.... [T]he Terminally Ill Distribution provision of the Act is an exception to the 10 percent additional tax, not the distribution restriction requirements of 401(k) or 403(b) plans. For such a plan to allow Terminally Ill Distributions, it must first permit in-service distributions or hardship distributions."

Tags: Misc. Distribution Issues  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

SECURE 2.0 Defined Contribution Retirement Plan Provisions Snapshot (PDF)
Multnomah Group Link to more items from this source
[Guidance Overview]
Mar. 6, 2024

8-page chart lists and describes SECURE 2.0 provisions and effective dates.

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

Another 401(k) Plan Sponsor Faces Novel Suit Regarding Its Use of Forfeiture Funds
Jones Day Link to more items from this source
Mar. 6, 2024

"This is the seventh lawsuit filed against a plan sponsor, all filed by the same plaintiffs' firm in federal district courts throughout California. In some of the prior lawsuits, plaintiffs have alleged that the governing plan documents explicitly provided that plan sponsors could use forfeitures to lower contributions owed to the plans. The Tetra complaint is devoid of such allegations." [Yagy v. Tetra Tech, Inc., Case No. 24-1394, (C.D. Cal. complaint filed Feb. 21, 2024)]

Tags: Fiduciary Duties  •  Retirement Plan Design

Ecolab Hit with ERISA Lawsuit Over Benefit Calculations
Pensions & Investments Link to more items from this source
Mar. 6, 2024

"The lawsuit ... said the pension plan executives used out-of-date mortality tables to calculate benefits, thus underpaying retirees.... [The plaintiff] said the [plan's joint and survivor annuity] shortchanges married retirees because pension executives use mortality tables that are over 50 years old in preparing the payment formula." [Bennett v. Ecolab, Inc., No. 24-0546 (D. Minn. complaint filed Feb. 21, 2024)]

Tags: Retirement Plan Administration  •  Retirement Plan Design

Senate Debates Whether 401(k)s Should Replace Pensions
Treasury & Risk; free registration required Link to more items from this source
Mar. 6, 2024

"Advocates of defined-benefits plans and proponents of defined-contribution plans once again squared off at a Senate committee hearing [on Feb. 28]. And, as usual, no consensus developed about the best direction to go, as policymakers struggle to find ways to increase Americans' retirement savings."

Tags: Retirement Plan Design  •  Retirement Plan Policy

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