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Retirement Plans Newsletter

March 17, 2023

3 New Job Opportunities 3 New Job Opportunities


[Guidance Overview]

Hardships Becoming Even Less Hard to Take

"[P]lan administrators may rely on certification by a participant that they have met the requirements for a 401(k) or 403(b) plan hardship distribution without this extra documentation.... However, the withdrawal should be denied if the plan administrator has actual knowledge the information on the employee's certification is not accurate. These changes are optional and are effective for calendar year plans now."  MORE >>


[Guidance Overview]

SECURE 2.0: Treating Student Loans as Elective Deferrals

"Effective for plan years beginning after 2023, certain types of plans containing elective deferral features may choose to treat student loan payments as elective deferrals and make matching contributions on those amounts. These optional provisions are available to 401(k) plans, 403(b) plans, SIMPLE IRAs, and governmental 457(b) plans."  MORE >>

Boutwell Fay LLP

Second Circuit Affirms Judgment in Favor of Colgate Retirees in Dispute Over Calculation of Cash Balance Pension Benefits

"[Plaintiffs alleged] that the plan sponsor wrongly calculated, and underpaid, accrued retirement benefits in the form of residual annuities for participants who took their benefits as a lump sum rather than as an annuity.... The Second Circuit Court of Appeals concluded that the Plaintiffs-Appellees interpretation of the Plan is the unambiguously correct reading of the Plan's text." [McCutcheon v. Colgate-Palmolive Co., No. 20-3225 (2d Cir. Mar. 13, 2023)]  MORE >>

Roberts Disability Law

With SECURE 2.0, the Cash Balance DB Plan May Be Back

"Thanks to the return of regulation that allows for plan payouts to align with employee tenure, companies may be interested in starting DB cash balance plans again[.]"  MORE >>


Plan Sponsors Spending Half Their 401(k) Time on Admin Work That Could Be Outsourced

"Nearly 89% of advisors in a new survey said that plan sponsor clients are spending up to 50% of their time on retirement plan administrative work that could be outsourced.... Advisors agree that clients are becoming more interested in fiduciary outsourcing services, with up to 50% of clients planning to add these services in 2023."  MORE >>

401(k) Specialist

Annuity Purchase Update. March 2023

"Average annuity purchase rates increased as of March 1st -- with the average duration 7 annuity purchase rate at 4.84% and average duration 15 annuity purchase rate at 4.77%. The Pension Risk Transfer Market started the year strong as plan sponsors continue to take steps toward plan termination. Annuity Purchase Interest Rates are over 200 basis points higher than 12 months ago."  MORE >>

October Three Consulting

Pension Funds Report Millions in Losses Amid Silicon Valley Bank Collapse

"An Ohio public pension fund for teachers revealed it lost millions by holding more than $27 million in Silicon Valley Bank shares before the bank's collapse. The State Teachers Retirement System (STRS) of Ohio stated that the shares represented a minuscule portion of its overall holdings -- .03% of the total fund -- which held over $88.8 billion in assets as of June 2022."  MORE >>

ABC News

Benefits in General

Plan Sponsors Need Help Communicating Benefits to Employees

"one way plan sponsors can improve employees' awareness of their benefits package is by providing information on a regular basis throughout the year -- not just when open enrollment comes around.... [U]sing a 'multi-channel approach' is an effective way for plan sponsors to communicate with participants.... [P]lan sponsors should look at web traffic and email click-through rates to see how much their participants are engaging with communications they send out."  MORE >>


Executive Compensation and Nonqualified Plans

[Guidance Overview]

Pricing Private Company Stock Options to Avoid the Pitfalls of IRC 409A (PDF)

"This article summarizes the valuation requirements under the 409A Treasury regulations as they relate to pricing private company employee stock options. The general valuation parameters provided in the 409A Regulations are summarized ... as well as three specific valuation methods that, if utilized, create a presumption of reasonableness. General guidance is also provided for companies at various stages concerning the appropriate course of action when establishing the fair market value of their common stock for purposes of pricing stock options."  MORE >>

Manatt, Phelps & Phillips, LLP

Dodd-Frank Clawbacks: A Game Plan for Harmonizing Your Holdback and Clawback Policies

"This post focuses on how companies should conduct a detailed inventory of what their plans and policies state will happen with compensation promised or paid after something bad happens.... Although some companies may determine that all they need to do is plug in their Dodd-Frank clawback policy and call it a day, there are several reasons to consider more comprehensive actions."  MORE >>

Willis Towers Watson

Employee Benefits Jobs

View job as Human Resources Director (Benefits Manager)
            for Sidwell Friends School

Human Resources Director (Benefits Manager)

Sidwell Friends School

Washington DC / Hybrid

View job as ESOP Administrator
            for Blue Ridge ESOP Associates

ESOP Administrator

Blue Ridge ESOP Associates


View job as ESOP Administrator for Blue Ridge ESOP Associates

View job as Implementations Manager
            for Vestwell

Implementations Manager


Remote / NY

View job as Implementations Manager for Vestwell

Selected New Discussions

Safe Harbor Correction: Plan in Effect for Only One Payroll Period

"A brand new plan for the 2022 plan year has a safe harbor match provision. The plan document states that safe harbor contributions are determined at the end of the plan year. However, there was only 1 payroll in 2022 that was in effect. Plan sponsor provided safe harbor match for that one payroll. Is the plan sponsor required to true-up the safe harbor match for the entire year and if their original intention was to fund it on a per payroll basis, can this be corrected under SCP?"

BenefitsLink Message Boards

Coverage Test/Waiver of Participation

"Plan had 3 employees (2 owners and a non-HCE). The only contributions allow to the plan are a Profit Sharing allocation in which all receive an equal proportion to compensation. This contributions is on a 6 year graded vesting schedule. They have a 1 year of service required of 1,000 hours to which a new employee met. They became eligible based on reaching 1,000 using their anniversary date as their determination period. The employee did not reach 1,000 in a calendar year and will not meet this requirement at any point. The concern is putting profit sharing money annually when this employee will never meet any level of vesting service would cause frustration with the employee as they will receive a profit share and statement annually while continually having 0% vesting. The client and participant are curious if she is able to put something in writing to opt out or waive the rights to a profit share to avoid this. Our concern is that since this employee reached eligibility, the plan would fail coverage testing and require a corrective contribution. If the employee has opted out of the plan entirely, would they be owed a QNEC for a failed coverage test or would the opt out from the plan apply?"

BenefitsLink Message Boards

Press Releases

Worldwide Employee Benefits Network, a Preeminent Member Network of Employee Benefits and Retirement Professionals, Celebrates Its 40th Anniversary

Worldwide Employee Benefits Network [WEB]

Last Issue's Most Popular Items

SECURE 2.0: IRS Provides IRA Reporting Relief for 2023 RMDs

Groom Law Group

DOL Issues Changes to Benefit Plan Audit Requirements and Form 5500

Meaden & Moore

Two District Courts Reach Opposite Conclusions on 401(k) Excessive Fee Claims


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

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