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Retirement Plans Newsletter

March 20, 2023

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[Guidance Overview]

SECURE 2.0 Needs Technical Corrections

"This drafting ... leads to two triggering ages and thus two RBDs for those born in 1959.... In certain states (Kentucky, Maine, Colorado, and Nevada), an IRA is considered 'abandoned' if they remain dormant for three years following age 70½.... [A] participant may find themselves with an abandoned IRA at age 73½, before an otherwise age 75 RBD.... Nearer term, the technical error that has made headlines is for catch-up contributions in defined contribution plans."  MORE >>


[Guidance Overview]

SECURE 2.0 Act: How the New Retirement Bill Affects You

"This table lays out a few of the significant new retirement rules in the SECURE 2.0 Act, comparing to the previous law and when each new provision goes into effect."  MORE >>

American Century Investment Services, Inc.

What's Holding Back Retirement Plan Adoption of Lifetime Income Options?

"While low adoption rates have traditionally been attributed to lack of interest and negative impressions of annuities, nearly half (47%) of consultants say the biggest issue is that these products are complex and difficult for them to explain. This was followed by a lack of competitive pricing/cost (28%); burdensome administration (19%); lack of flexibility (15%) and concern about client reactions should things go badly/want to avoid a lawsuit (15%)."  MORE >>

American Retirement Association [ARA]

Higher Interest Rates Call for a Fixed Income Reassessment

"[D]own markets can create value opportunities for well-diversified portfolios.... This paper discusses how recent developments in the fixed income market may be able to help total return-seeking pension plan portfolios, frozen plans looking to de-risk, and open or recently closed pension plan portfolios."  MORE >>

Cambridge Associates

Major Disruptors That Could Transform the Retirement Industry by 2030

"Gen X (1965-1980), the first full 401(k) generation, is starting to plan their retirement dates only to discover they didn't save nearly enough or have any idea how to turn their savings into income. This, along with the global pandemic and the ensuing worker shortage, has employers looking at enhancing their retirement benefits as an innovative way to recruit and retain employees."  MORE >>

Principal Financial Group

Complying with the SEC Custody Rule and the New Custody Proposal

"The new rule requires that an adviser segregate their assets clearly from client assets so that their client's assets are safe in the event that the adviser declares bankruptcy.... The new rule would also apply to agreements in which an adviser has discretionary trading authority, or the ability to buy and sell client's assets without receiving client permission on a trade-by-trade basis."  MORE >>


SFA Bailout Flood: $98 Billion and Counting

"As of now 69 plans covering 686,540 participants have had $45,844,757,860 approved for them. Another 43 plans covering 923,077 participants are asking for $23,099,259,941.... [PBGC] recognized last week that they were about to get a flood of applications and so they instituted a waiting list. Based on available 2020 Schedule MB information for 101 of those plans ... those plans have $29.4 billion [in unfunded liabilities] ... That would bring the total bailout to over $98 billion and the wave has not yet crested."  MORE >>


Why Small-Business Owners Can't Retire

"Only 1 in 4 business owners have a financial strategy for retirement in the form of a written plan. Post-COVID, 17% of self-employed workers now expect to either retire later than planned or not at all. 37% of small-business owners don't think they make enough profit to save for retirement."  MORE >>

Forbes; subscription may be required

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Notice CA-2023-03, for Victims of Severe Winter Storms, Flooding, Landslides and Mudslides in California

"Victims of severe winter storms, flooding, landslides and mudslides in California beginning March 9, 2023, now have until Oct. 16, 2023, to file various individual and business tax returns and make tax payments ... [I]ndividuals and households ... that reside or have a business in Alpine, Amador, Butte, Calaveras, Del Norte, El Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo, Kern, Kings, Lake, Los Angeles, Madera, Mariposa, Mendocino, Merced, Mono, Monterey, Napa, Nevada, Orange, Placer, Plumas, Sacramento, San Benito, San Bernardino, San Francisco, San Joaquin, San Mateo, San Luis Obispo, Santa Barbara, Santa Clara, Santa Cruz, Sierra, Sonoma, Stanislaus, Trinity, Tulare, Tuolumne and Yuba counties qualify for tax relief."  MORE >>

Internal Revenue Service [IRS]

Executive Compensation and Nonqualified Plans

Bank Failure Demonstrates Importance of Protecting Non-Qualified Savings

"[P]articipants in Non-Qualified Deferred Compensation (NQDC) plans also need to understand that their non-qualified retirement savings, like bank deposits, are unsecured 'promises to pay' and subject to the same pitfalls of uninsured bank deposits."  MORE >>


Employee Benefits Jobs

View job as DC Consultant Administrator
            for Boutique TPA Firm is Southern California

DC Consultant Administrator

Boutique TPA Firm is Southern California

Remote / Burbank CA

Selected New Discussions

Allocation Conditions for Profit Sharing Contribution Include 'Date Contribution Declared'

"I have a client that wants to declare a profit sharing allocation. The Document currently has a last day/1000 hours. However, they want to have the allocation condition be 'you must be an employee on the day it is declared.' The plans sponsor declared the PS contribution effective 2/13/2023 based on 2022 plan year compensation. Would this be permissible? Would the contribution be a 2022 or 2023 plan year contribution?"

BenefitsLink Message Boards

Scrivener Error - Self-Correction vs. VCP

"Any opinions as to whether the SECURE 2.0 Section 305 will prompt the IRS to allow self-correction of scrivener errors? ... For example safe harbor 3% nonelective, with an additional PS discretionary, was amended in 2021, mid year, to exclude a category of compensation for PS allocation purposes. Since 1,000 hour/last day for the PS, no problem. Problem is that on the AA amendment, wrong box was checked -- instead of checking the box to carve this out to exclude for PS purposes only for 2021, it was checked to exclude for all purposes. Clearly unintended, client made the appropriate safe harbor contribution for 2021, etc. Now, technically this amendment appears to violate 1.401(k)-3(g), and would cause the plan to require ADP testing for 2021, etc. -- a pretty harsh outcome. So a VCP filing appears to be required to correct this. Allowing as a Scrivener error would be much nicer."

BenefitsLink Message Boards

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Jerry Schlichter and Tom Clark Fiduciary Litigation Debate

March 20, 2023 PODCAST

American Retirement Association [ARA]

Last Issue's Most Popular Items

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


Hardships Becoming Even Less Hard to Take


SECURE 2.0: Treating Student Loans as Elective Deferrals

Boutwell Fay LLP

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

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