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Retirement Plans Newsletter

October 21, 2022

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[Official Guidance]

Text of IRS Notice 2022-55: 2023 Limitations Adjusted as Provided in Section 415(d), etc. (PDF)

"Section 415 of the Internal Revenue Code (“Code”) provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost-of-living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under section 415.

  • Effective January 1, 2023, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $245,000 to $265,000....
  • The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2023 from $61,000 to $66,000....
  • The limitation under section 402(g)(1) on the exclusion for elective deferrals described in section 402(g)(3) is increased from $20,500 to $22,500.
  • The annual compensation limit under sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $305,000 to $330,000.
  • The dollar limitation under section 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $200,000 to $215,000....
  • The limitation used in the definition of “highly compensated employee” under section 414(q)(1)(B) is increased from $135,000 to $150,000.
  • The dollar limitation under section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) for individuals aged 50 or over is increased from $6,500 to $7,500."

   MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

State Regulation of ESG Investment Decision-Making by Public Retirement Plans: An Updated Survey (PDF)

24 pages. "[T]his alert [describes] the state initiatives adopted to date, as well as other initiatives, including those undertaken by the American Legislative Exchange Council, State Financial Officers Foundation and the [DOL]."  MORE >>

Ropes & Gray LLP

Seventh Circuit Still Skeptical of Excessive Fee Claims After High Court Ruling

"The 7th Circuit's decision in this case extends a growing trend of federal appeals courts expressing skepticism toward some of the most common allegations in many ERISA excessive fee lawsuits since the high court's Northwestern ruling." [Albert v. Oshkosh Corp., No. 21-2789 (7th Cir. Aug. 29, 2022)]  MORE >>

Mercer

Union Multiemployer Plan Faces ERISA Lawsuit

"Attorneys for the plaintiffs have alleged that the plan's recordkeeper, Mass Mutual, charged between $95 and $125 per participant -- from 2016 to 2020 -- for recordkeeping and administration services. The complaint argues, as a 'jumbo' plan, fiduciaries for the union plan should have been able to negotiate lower recordkeeping costs, ranging from $14 to $30 per participant." [McLachlan v. International Union of Elevator Constructors, No. 22-4115 (E.D. Penn. complaint filed Oct. 13, 2022)]  MORE >>

PLANSPONSOR; free registration may be required

State's Highest Court Upholds New York's 'Best Interest' Rule for Life and Annuities

"The Court found that the statute makes clear that producers must act in the best interest of the consumer. As to the term 'best interest' itself, the Court explained that the regulation employs standard legal terms to explain exactly what a producer needs to do to discharge this duty and held that 'following these steps does not require producers and insurers to identify the single best policy for a consumer. It simply requires them to reasonably recommend a suitable policy that will benefit the consumer, while refraining from considering their own financial gain.' " [In the Matter of Independent Insurance Agents and Brokers of New York, Inc. v. New York State Department of Financial Services, No. 73 (N.Y. Ct. App. Oct. 20, 2022)]  MORE >>

Debevoise & Plimpton LLP

SECURE 2.0's 403(b) PEP Rules Will Be, Well, Different

"403(b) PEPs are going to be enabled through changes to 403(b), and not by simply including them in the definitional sections of 413(e), and through changes to ERISA's PEP language under Sections 3(43) and 3(44). This is critically important because had Congress chosen to simply amend 413(e), it would have opened a Pandora's box of details which would have demanded clumsy (and perhaps extensive) regulatory fixes."  MORE >>

Business of Benefits

House Lawmakers Seek to Curb ESG Investing in Retirement Plans

"Just as the [DOL] gets set to release a final regulation allowing the use of [ESG] factors by fiduciaries when selecting plan investments, another bill has been introduced in Congress that seeks to dial that back. The Safeguarding Investment Options for Retirement Act (HR 9198) ... would amend ERISA and the Internal Revenue Code to limit fiduciary consideration of so-called 'non-pecuniary factors' in investment decision-making for defined contribution plans."  MORE >>

American Retirement Association [ARA]

Managed Accounts Fraught with Issues for Employers

"Unlike target-date funds, which build investment portfolios based solely on a participant's age, managed accounts factor in things like a participant's outside assets and other personal information, creating what managed account providers contend is a stronger, more detailed investment portfolio. For all the purported benefits, these accounts are fraught with issues for employers. The chief worry is cost."  MORE >>

Pensions & Investments

Gen Zers Are Socking Away 14% of Their Income for Retirement

"Overall confidence in being on track for retirement is lower than a year ago due to inflation and market volatility, but Gen Z has the highest share of share of savers who feel like they're getting it right. Among older generations (millennials, Gen X and baby boomers), the average retirement-savings rate is 12% of income, compared with 14% among Gen Zers."  MORE >>

CNBC

U.S. Pension Risk Transfer: Growing and Evolving

"Amid rising economic uncertainty, higher interest rates and inflation, the U.S. pension risk transfer (PRT) market has returned to pre-pandemic annual growth rates. More insurers have entered the market, and others are willing to take on larger or more complex risks. The added competition is leading insurers to adapt and evolve."  MORE >>

Willis Towers Watson

The Employee Stock Ownership Plan, Part 3: Shareholder Strategies

"How does an ESOP buy stock if it has no revenue? ... How can an existing shareholder sell stock to an ESOP? ... Can a selling shareholder help finance a sale? ... Where is the tax advantage for the selling shareholder? ... What good is section 1042 if the selling shareholder helps finance the deal?"  MORE >>

McDonald Hopkins

The Impact of Inflation on Public Pensions (PDF)

"Except for some COLA designs and potential investment impacts, periods of high inflation generally do not have a direct, immediate impact on public pensions. Typically, the effect is delayed and is based on other factors related to inflation; and may not have as great an impact on plan costs as the prices of goods and services."  MORE >>

Segal, via NCPERS PERSist

Avoiding Costly IRA Mistakes

"[It] is critical to name the right beneficiary -- while you are still alive.... It's also important to name contingent beneficiaries.... [If] you made post or after-tax contributions to a traditional IRA, file Form 8606 to account for that contribution.... There is more than one table to calculate your IRA required minimum distribution."  MORE >>

Kiplinger

Employee Benefits Jobs

View job as Quality Assurance Manager
            for Bates & Company

Quality Assurance Manager

Bates & Company

Remote / Winter Park FL

View job as Quality Assurance Manager for Bates & Company

Selected New Discussions

Deadline for Determination Letter Application for Initial Qualification of Individually Designed Plan?

"Is there a specific deadline for requesting a determination letter for the initial qualification of a new individually designed plan? The instructions to Form 5300 do not appear to contain a deadline, nor does Rev. Proc. 2022-4. By contrast, there are specific deadlines for determination applications for merged plans."

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Press Releases

DWC - The 401(k) Experts Announces Tianna Schulz as Firm Partner

DWC - The 401k Experts

The Standard Partners with Alight Solutions to Expand Employee Benefits Portfolio

The Standard

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Multiemployer Plans

RECORDED

Williams Mullen

Last Issue's Most Popular Items

Maintaining Plan Documents and Procedures for Retirement Plan Required Minimum Distributions (PDF)

Mintz, via Journal of Pension Benefits

ERISA Section 404(c) Protection: A Refresher for Fiduciaries

Verrill Dana LLP

District Court Finds for Defendant Plan Sponsor in BlackRock Target Date Fund Suit

October Three Consulting

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

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