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Retirement Plans Newsletter

February 21, 2023


Tenth Circuit Rejects ESOP Plan Arbitration Provision

"[T]he Tenth Circuit rejected enforcement of an [ESOP] arbitration provision in a lawsuit brought by a plan participant alleging that the ESOP's fiduciaries overpaid for the employer's stock, breached numerous ERISA fiduciary duties, and engaged in prohibited transactions.... [The] ruling focused on the ESOP's specific arbitration provision, which precluded a claimant from obtaining plan-wide relief, rather than ERISA arbitration provisions generally." [Harrison v. Envision Mgmt. Holding, Inc. Bd. of Directors, No. 22-1098 (10th Cir. Feb. 9, 2023)]  MORE >>

Holland & Hart LLP

Trade Groups Seek Fix of SECURE 2.0 401(k) Catch-Up Glitch

"In separate letters to the Treasury Department on Tuesday, the National Association of Government Defined Contribution Administrators and the American Benefits Council asked the agency to issue guidance stating that it will apply the law as though the anticipated technical correction to the legislation had been made."  MORE >>

Pensions & Investments

IRAs Continue to Play an Important Role for Retirement Savers in 2022

"More than four in 10 US households owned individual retirement accounts (IRAs) in mid-2022 ... With $11.7 trillion in assets in mid-2022, IRAs represented 34 percent of US total retirement market assets, almost double the 18 percent figure recorded three decades ago.... Rollovers from employer-sponsored retirement plans have fueled the growth in IRAs.... Roth IRA owners are almost twice as likely to contribute than traditional IRA owners. T"  MORE >>

Investment Company Institute [ICI]

PBGC Approves $2.2 Million in Supplemented SFA for GWU Local 610 Plan

"[PBGC] has approved the supplemented application submitted ... by the Gastronomical Workers Union Local 610 and Metropolitan Hotel Association Pension Fund. The plan, based in San Juan, Puerto Rico, covers 2,624 participants in the hospitality industry.... [It] will receive approximately $2.2 million in supplemented SFA, which is in addition to $31.1 million in SFA approved for the plan in August 2022[.]"  MORE >>

Pension Benefit Guaranty Corporation [PBGC]

PBGC Approves $9.9 Million in Supplemented SFA for Sheet Metal Workers Plan

"[PBGC] has approved the supplemented application submitted ... by the Sheet Metal Workers Local Pension Plan. The plan, based in Massillon, Ohio, covers 1,649 participants in the construction industry.... [It] will receive approximately $9.9 million in supplemented SFA, which is in addition to $28.8 million in SFA approved for the plan in October 2022[.]"  MORE >>

Pension Benefit Guaranty Corporation [PBGC]


The 403(b) CIT and the 12 Month Put

"One of the inevitable results of Congress's failure to cobble together some sort of compromise on what the most suitable 'Securities Fix' would be for the 403(b) CIT is a flurry of activity to find some way to craft a solution which would permit 403(b) plans' investments in 81-100 trusts without a statutory fix. From a purely technical point of view, any of the three or four different possible legislative approaches being considered are not, in themselves, a heavy lift.... What we've not seen much discussion of is of the risks involved in adopting any of these seemingly esoteric approaches."  MORE >>

Business of Benefits


NTSA and 'The Big Lie'

"Let's dig into the NTSAs 2023 effort ... [starting] with the title: Apples and Oranges: Why K-12 403(b) Plans Work. Clearly the paper is trying to draw a comparison with the 401(k). So let's do that. Does this look like a plan that works?"  MORE >>


Benefits in General

[Official Guidance]

Text of IRS Final Regs: Electronic-Filing Requirements for Specified Returns and Other Documents

"This document contains final regulations amending the rules for filing electronically and affects persons required to file partnership returns, corporate income tax returns, unrelated business income tax returns, withholding tax returns, certain information returns, registration statements, disclosure statements, notifications, actuarial reports, and certain excise tax returns. The final regulations reflect changes made by the Taxpayer First Act (TFA) and are consistent with the TFA's emphasis on increasing electronic filing."  MORE >>

Internal Revenue Service [IRS]

Selected New Discussions

Spin Off and Plan Termination

"There are three entities and out of which two of them wishes to continue with the retirement program and hence they decided to spin off their portion into a new plan however the client never got it to our attention or spoke about spinoff. We went ahead with the termination of the 401k plan and now we are in a situation the term needs to be on HOLD since participants have not received spin off notification letter, looks like some have even taken a distribution any idea from the regulatory stand point how this can be rectified and handle the spin off first."

BenefitsLink Message Boards

Top Heavy

"Hello, We are trying to figure a possible way out of a top heavy issue and would appreciate any thoughts. Facts:

  • Calendar year 401(k) Plan. Does not allow profit sharing contributions.
  • Plan has been safe harbor (safe harbor match) for several years and the employer elected to stop the safe harbor match effective 1/1/2023.
  • Safe Harbor Match is an annual match and is calculated and funded after the end of the year. They are getting ready to submit their 2022 required safe harbor match now.
  • The Top Heavy ratio as of 12/31/2022 is 61% calculated on a straight cash basis, i.e. no receivable accrued. This would mean the plan is top heavy for 2023.

We came up with a couple of ideas that we hope might allow the plan to not be considered top heavy for 2023.

  1. If we accrue the 2022 safe harbor contribution in our 12/31/2022 balances the top heavy ratio drops to 59%. I looked into this and came across the IRS Q&A from 2002 concerning contribution receivables. Do you think it would be permissible to include the required 2022 safe harbor match in the 12/31/2022 balances for top heavy testing?
  2. Establish a new profit sharing plan retroactive for 2022 and make a $15,000 contribution to non-key employees. If we could include that $15,000 in our 12/31/2022 balances for top heavy testing then the plan would not be top heavy for 2023.

Do you think either of these to options would work? I appreciate any thoughts or comments. Thank you!"

BenefitsLink Message Boards

RMD Error

"An owner took an RMD from the 401k plan, and then another one for the same amount was processed a couple of months later in error. One August 2022 and one October 2022. A substantial amount. Not the owner's fault. Can one of them be returned to the plan from his account?"

BenefitsLink Message Boards

Press Releases

DOL Recovers $20k for Employee Illegally Terminated by Bank of Dudley's Violations of Medical Leave Protections

U.S. Department of Labor [DOL]

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Long-Term Part-Time Employees: Are You Prepared?

March 21, 2023 WEBINAR

Nova 401(k) Associates

IRA University

April 26, 2023 WEBINAR


Last Issue's Most Popular Items

SECURE 2.0: Matching Contributions on Student Loan Payments

McDonald Hopkins

End of COVID-19 National Emergency Declarations

Slevin & Hart, P.C.

'Great Resignation' Hits DC Plan Committees

Pensions & Investments

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

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