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All News > Retirement Plan Design

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SECURE 2.0 Brings Significant Changes for 403(b) Plans
Proskauer Link to more items from this source
[Guidance Overview]
Jan. 30, 2023

"SECURE 2.0 provisions that specifically impact 403(b) plans include changes to: [1] amounts available for hardship distributions, [2] eligibility to participate in pooled and multiple employer plans, [3] treatment of long-term, part-time employees, and [4] potentially, investments in collective investment trusts."

Tags: 403(b) Plans and Annuities  •  MEP/PEP  •  Misc. Distribution Issues  •  Retirement Plan Design  •  SECURE 2.0

SECURE 2.0: Expanded Pension Plan Startup Cost Credit
Holland & Hart LLP Link to more items from this source
[Guidance Overview]
Jan. 30, 2023

"Starting in 2023, for employers with 50 or fewer employees this credit is now equal to 100% of such plan start-up costs, subject to [certain] dollar limits ... For many small employers, the credit will likely cover most, if not all, of the costs of setting up and administering a plan for the first three years."

Tags: Retirement Plan Design  •  SECURE 2.0

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

SECURE 2.0 Timeline
Poyner Spruill LLP Link to more items from this source
Jan. 30, 2023

List of SECURE 2.0's major retirement plan provisions, organized by effective date.

Tags: Retirement Plan Administration  •  Retirement Plan Amendments  •  Retirement Plan Design  •  SECURE 2.0

Editor's Pick Pension Defrost: Is It Time to Reopen DB Pension Plans -- or at Least Stop Closing and Freezing Them? (PDF)
J.P. Morgan Asset Management Link to more items from this source
Jan. 30, 2023

18 pages. "Many DB plans are fully funded, in aggregate, and sponsors have developed the expertise to manage pension assets to out-earn liabilities while imposing minimal financial risk.... Commonly used measures of pension risk are flawed, leading sponsors to overstate the benefits of getting rid of their pension plans through pension risk transfer (PRT) transactions, and to understate the potential benefits of maintaining prudently invested plans.... Closing, freezing and terminating plans may offer far less value than the conventional wisdom would suggest."

Tags: Funding of DB Plans  •  Retirement Plan Design

Retirement Plans Take Center Stage in the War for Hiring Talent
InsuranceNewsNet.com Link to more items from this source
Jan. 30, 2023

"Given the current difficult hiring environment, plan sponsors are tinkering mightily with the plans -- increasing contribution matches, customizing plan investments, and employing interactive financial wellness programs -- in order to motivate employees, hiring, and boost company loyalty.... [E]mployers and financial service firms have identified retirement plans as areas of opportunity for further growth and value-added services beyond their historical roles of simply managing retirement assets, partly due to improvements in technology over the last several decades."

Tags: Retirement Plan Design

SECURE 2.0: Credit for Small Employer Pension Plan Startup Costs When Employer Joins an Existing MEP/PEP
Schneider Downs Link to more items from this source
[Guidance Overview]
Jan. 27, 2023

"Prior to SECURE 2.0, the startup tax credit only applied for the first 3 years that a MEP was in existence ... Section 111 of SECURE 2.0 aims to fix this issue ... Section 111 is effective retroactively for taxable years beginning after December 31, 2019. This enables taxpayers who formed or joined new MEPs/PEPs in 2019, 2020, and 2021 to file amended returns and retroactively claim a credit for those earlier years applying the rules of Section 45E."

Tags: MEP/PEP  •  Retirement Plan Design  •  SECURE 2.0

SECURE 2.0: Modification of Credit for Small Employer Pension Start-Up Costs
Schneider Downs Link to more items from this source
[Guidance Overview]
Jan. 27, 2023

"SECURE 2.0 makes several changes to these credits. First, the employer plan start-up credit is increased from 50 percent to 100 percent for employers with up to 50 employees.... [An] additional credit is also provided based upon employer contributions made."

Tags: Retirement Plan Design  •  SECURE 2.0

Which Benefits Are Valued Most Depends on Age of Workers (PDF)
Employee Benefit Research Institute [EBRI] Link to more items from this source
Jan. 27, 2023

"[M]iddle-aged employees reported being more likely than younger or older workers to be concerned about various aspects of their well-being. Older workers were, unsurprisingly, focused on retirement benefits. And younger workers highly valued help with day-to-day bills, student loan debt assistance, and career advancement opportunities."

Tags: Health Plan Design  •  Retirement Plan Design

SECURE 2.0 Drafting Error Threatens Catch-Up Contributions, But Meaning Is Clear
planadviser Link to more items from this source
[Guidance Overview]
Jan. 26, 2023

"A mistake in SECURE 2.0 legislation would eliminate both future and existing retirement plan catch-up contributions, though IRS interpretation to keep the rule as intended seems possible."

Tags: Retirement Plan Design  •  SECURE 2.0

SECURE 2.0 Provisions Encouraging Employers to Adopt a Plan
Murphy Austin Link to more items from this source
[Guidance Overview]
Jan. 26, 2023

"SECURE 2.0 changes the credit for employers with up to 50 employees for taxable years beginning after 2022. It increases the percentage to 100% of the startup costs. In addition, SECURE 2.0 creates an additional credit based on the amount of employer contributions to plans other than defined benefit plans."

Tags: 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 Increases Age for Required Minimum Distributions
Haynes and Boone, LLP Link to more items from this source
[Guidance Overview]
Jan. 25, 2023

"Although the SECURE 2.0 Act raises the statutory minimum distribution age, retirement plans may incorporate a minimum distribution age that is earlier than the statutory requirement.... [T]he tax treatment of a distribution made at the earlier plan deadline may be different than if the distribution is made at the later statutory deadline, including eligibility of the distribution for rollover."

Tags: Required Minimum Distributions (RMDs)  •  Retirement Plan Design  •  SECURE 2.0

SECURE 2.0 Creates New Opportunities for IRAs, SEPs and SIMPLE IRAS
Cohen & Buckmann, P.C. Link to more items from this source
[Guidance Overview]
Jan. 25, 2023

"Many of the general changes ... apply to individual retirement accounts (IRAs) as well as to other types of retirement plans. Other new options apply to SEP-IRAs and SIMPLE IRAs ... [including] the ability to match participant loan repayments under SIMPLE IRAs and the ability to establish a SEP for domestic employees. Additional changes that enhance the benefits of participation and permit increased contributions are specific to IRAs, SEP-IRAs and SIMPLE IRAs."

Tags: Retirement Plan Design  •  SECURE 2.0  •  SIMPLE 401(k), SIMPLE IRA Plans  •  Simplified Employee Pensions (SEPs)

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

SECURE 2.0 Technical Drafting Error Puts Catch-Ups in Jeopardy
American Retirement Association [ARA] Link to more items from this source
[Guidance Overview]
Jan. 24, 2023

"[A]ccording to wording in the current legislation, beginning in 2024, no participants will be able to make catch-up contributions (pre-tax or Roth).... ARA has already alerted the Treasury Department and the Joint Committee on Taxation to the issue, and the latter acknowledged that it does, in fact, appear to be a technical error. But getting it fixed on a timely basis is not certain at this point."

Tags: Retirement Plan Design  •  SECURE 2.0

SECURE 2.0 Adds New Distribution Options for Defined Contribution Plans
Faegre Drinker Link to more items from this source
[Guidance Overview]
Jan. 24, 2023

"SECURE 2.0 introduced several new distribution options and tax reporting rules for defined contribution plan sponsors. [This article provides] an overview of the new provisions and their potential implementation dates."

Tags: Misc. Distribution Issues  •  Retirement Plan Design  •  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

Delta Introduces New Emergency Savings Program
planadviser Link to more items from this source
Jan. 24, 2023

"[E]ligible employees can opt to take an online financial education course and a series of one-on-one financial coaching sessions to earn a $750 kickstart for an emergency savings account. Employees must also commit to contributing to the account from their paycheck, with Delta matching up to $250 for the initial contribution.... Delta will pay the taxes on the $1,000 it contributes to the account[.]"

Tags: Retirement Plan Design  •  SECURE 2.0

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

Check These Five Boxes to See If You Are Financially Ready to Retire
Ken Steiner, FSA Retired Link to more items from this source
Jan. 23, 2023

"[1] Current Funded Status is greater than or equal to desired retirement threshold percentage (recommend 110%); [2] Current present value of non-risky assets/investments is greater than or equal to present value of future essential expenses; [3] Current investment in risky assets is greater than or equal to present value of desired future discretionary expenses; [4] Funded Status threshold for reducing future spending (or increasing assets) has been established (recommend 95%); and [5] Possible future cash flow issues have been identified and planned for."

Tags: Retirement Plan Design  •  Retirement Plan Information for Employees

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 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

SECURE 2.0: New Contribution Options
Sherman Howard Link to more items from this source
[Guidance Overview]
Jan. 20, 2023

"Available now: Option to designate certain employer contributions as Roth contributions ... If a plan allows this option, the employer Roth contributions must be fully vested.... Starting in 2024: [1] Student loan payments as eligible for employer matching contributions ... [2] Emergency savings accounts."

Tags: Retirement Plan Administration  •  Retirement Plan Design  •  SECURE 2.0

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