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Retirement Plans Newsletter

June 17, 2022


[Guidance Overview]

New IRS Pre-Audit Compliance Program for Retirement Plans

"It's not clear what factors the IRS will consider when determining whether to conduct a limited or full scope audit following a plan sponsor's response. However, it stands to reason that a plan sponsor's efforts at good faith compliance with the correction requirements may serve to limit the scope because typically the IRS wishes to promote self-correction efforts."  MORE >>

McDermott Will & Emery

RISE & SHINE Act: The Senate's Initial Response to House-Passed SECURE 2.0

"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."  MORE >>

Jackson Lewis P.C.

Senate Proposal Calls for Automatic 401(k) Transfers

"[T]he Advancing Auto-Portability Act of 2022 [S 4406] was introduced by Senators Tim Scott, R-South Carolina, and Sherrod Brown, D-Ohio.... [T]he legislation would allow workers' 401(k) savings accounts to be automatically rolled over from a previous employer to a new employer."  MORE >>

PLANSPONSOR; free registration may be required

Pooled Employer Plan Fee Arrangements

"As PEPs mature, ... fee structures will evolve as well. In general, PEPs fees are based on some combination of ... [1] Fixed annual fee; [2] Per participant charge; [3] Asset-based fee; [4] 3(16) plan administration fiduciary fees; [5] 3(38) investment management fiduciary fees; [6] Ad hoc and/or one-time administrative fees.... PEP fees differ substantially by provider for the same plan sponsor."  MORE >>

River and Mercantile

Access to Retirement Plans Is Problematic for Small Companies

"[O]ne barrier to small companies providing retirement plans ... [is] the difficulty for small businesses in accessing quality third party administrators and other resources. Every vendor wants to land a big employer as a client, but not all are prepared to or interested in servicing small shops with correspondingly small plans. This often leaves smaller companies to use weaker vendors, leading to increased mistakes and other problems with administration[.]"  MORE >>

Stephen Rosenberg, The Wagner Law Group

Annuity Purchase Update, June 2022

"The average Annuity Purchase Interest rates continue to climb, with the average duration 7 rate at 3.82% and average duration 15 rate at 3.87%. Annuity Purchase costs relative to pension accounting value (GAAP PBO) are well below [the] historical averages, suggesting a suitable time for plan sponsors to implement a Pension Risk Transfer strategy for even a subset of the population."  MORE >>

October Three Consulting

Retiree Reflections Survey

"Current retirees wish they'd saved more and planned earlier for retirement.... Retirees seem to fare better when they have an advisor.... Few retirees (24 percent) reported that their former employer offered financial planning assistance ... Many retirees don't have a formal financial plan for retirement."  MORE >>

Employee Benefit Research Institute [EBRI]

An Actuarial Perspective on the 2022 Social Security Trustees Report (PDF)

15 pages. "The pandemic is projected to have continuing significant effects on the OASI and DI programs in the near term ... If changes to the program are not implemented before 2035, only 80% of scheduled benefits would be payable after depletion in 2035, declining to 74% by 2096. The actuarial deficit decreased from 3.54% of taxable payroll to 3.42% of taxable payroll[.]"  MORE >>

American Academy of Actuaries

When Should You Move Forward with a Reverse Rollover?

"401(k) plans are permitted to allow incoming rollovers of pre-tax assets only. Roth IRA or after-tax (nondeductible) funds cannot be rolled over into a 401(k) or any other employer-sponsored retirement plan."  MORE >>

Lord Abbott

Benefits in General

[Guidance Overview]

Exceptional Usefulness and Quality icon Higher IRS Mileage Rates for 2022 May Present Opportunity for Employers

"[E]mployers could consider reimbursing employees for their automobile mileage, as many tax professionals believe that such reimbursements qualify as a working condition fringe benefit, which generally means that if the employee paid for such expense, it would be deductible to the employee as a business expense."  MORE >>


Alert (High Risk Issue) icon Lawsuits Put Spotlight on Paying Remote Workers' Expenses

"Some prominent U.S. companies are being sued by remote workers alleging that their employers had a legal obligation under state law to reimburse them for work-related expenses.... If employers decide to adopt reimbursement policies, ... these policies should: [1] Clearly define and provide reimbursement for legitimate expenses associated with telecommuting. [2] Include proportional reimbursement for expenses that have dual business and personal uses."  MORE >>

Society for Human Resource Management [SHRM]; membership may be required to view article

Selected New Discussions

Amending Normal Retirement Age in DC Plan -- Impact on Vesting?

"If a DC Plan wants to amend the Normal Retirement Age (i.e., from 55 to 65), is that an amendment that can be done mid-year or should it wait for the first of the year? The question is due to vesting, because the plan states that they become 100% vested at Normal Retirement (which the previous TPA set at 55)."

BenefitsLink Message Boards

Loss of Anti-Alientation Protections If Plan Shrinks to Cover Owner Only?

"Doctor 1 sells his practice to Doctor 2 and lawsuits ensue. Doctor 2 wins a judgment against Doctor 1. The attorney for Doctor 2 thinks he can get a court to force some action that would allow the participants to be paid out of the TBP while leaving Doctor 1's account (investments) in the plan. Then, the attorney says, the plan would be a one-participant plan and hence Doctor 1 would lose anti-alienation protection provided by ERISA, such that Doctor 1's account could be attached, meaning his client would get paid some amount of liquidated damages that Doctor 1 apparently owes to his client. An attorney for the trust company holding the assets agrees with the attorney. I don't agree. Am I missing something?"

BenefitsLink Message Boards

Last Issue's Most Popular Items

An Updated Forecast of 2023 IRS Limits


Proposed Regs for Inherited IRAs Bring Unwelcome Surprises

Clark Schaefer Hackett

What's Been Learned from ERISA Excessive Fee Lawsuits?


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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587.

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