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Retirement Plans Newsletter

May 15, 2023

2 New Job Opportunities 2 New Job Opportunities


[Official Guidance]

Text of IRS Notice 2023-40: Weighted Average Interest Rates, Yield Curves, and Segment Rates for May 2023 (PDF)

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates ... and the 24-month average segment rates ... [as well as] the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate[.]"  MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

SECURE 2.0: Multiple Employer 403(b) Plans

"The SECURE Act 1.0 gave us Pooled Employer Plans, PEPs, for qualified plans. SECURE Act 2.0 -- effective for plan years beginning after December 31, 2022 -- extends PEPs and MEPs to 403(b) plans. While the legal effective date is already here, [the author hasn't] yet seen any 403(b) MEPs or PEPs in the marketplace. So, the 'practical effective date' may be the 2024 plan year."  MORE >>

Why QDIA's Are a Key Differentiator Among PEP Plans in Today's Market

"If a PEP uses a passive TDF as its QDIA, the plan's overall investment fees are likely to be lower compared to a plan that uses an active TDF or a managed account as its QDIA.... [It] is crucial to consider various factors such as the demographics of the plan participants, as well as a thorough evaluation of the investment process, returns, and associated fees."  MORE >>


Next for Defined Contribution: Protected Retirement Income

"95% of plan sponsors agree employees need help turning their balances into reliable income, and 94% say they should offer income features.... [T]wo-thirds of plan sponsors say they would rather have a guaranteed income option in an existing investment, such as their TDF ... Three-quarters of participants feel it's at least very important to protect all their savings in the event of a market crash.... Three-quarters of participants want 100% control and flexibility with their accounts after retirement."  MORE >>

American Century Investment Services, Inc.

Smoothing the Transition to a New 401(k) Provider

"Switching plan providers consists of four principal steps: [1] Transferring assets ... [2] Preparing new documents ... [3] Selecting investments ... [4] Enrollment ... [The employer's] main task will typically consist of gathering required information, both for [the] old provider and [the] new provider, in order to facilitate the changeover."  MORE >>


What Happens to the 401(k) Plan When a Company Is Sold?

"Is the transaction structured as a sale of assets or a sale of the owner's stock or membership interests? ... Does the 401(k) plan include matching or profit-sharing accounts that are not fully vested? ... Does the 401(k) plan allow for participant loans? ... Are there any uncashed distribution checks or missing participants? ... Does the 401(k) plan include investments such as a stable value fund or guaranteed investment contract that impose a fee on the plan's complete withdrawal from the fund? ... What steps are involved in winding down the 401(k) plan?"  MORE >>

Dickinson Wright

Americans' Lack of Retirement Savings Could Cost Governments $1.3 Trillion

"As Americans with insufficient retirement savings leave the workforce over the next 20 years, they will severely strain state and federal budgets to the tune of $1.3 trillion, according to a study ... by the Pew Charitable Trusts.... The study projects that the share of financially vulnerable elderly households -- those with less than $75,000 in annual income -- will jump 43% to 32.6 million in 2040 from 22.8 million in 2020."  MORE >>

Pensions & Investments

PBGC Approves $8.6 in Supplemented SFA for Local 966 Plan

"[PBGC] has approved the supplemented application submitted to [SFA] Program by the Local 966 of the International Brotherhood of Teamsters Plan. The plan, based in Cresskill, New Jersey, covers 2,356 participants in the transportation industry.... The Local 966 Plan will receive approximately $8.6 million in supplemented SFA, which is in addition to $54.1 million in SFA approved for the plan in December 2022[.]"  MORE >>

Pension Benefit Guaranty Corporation [PBGC]


National Organizations to Treasury/IRS: SECURE 2.0 Guidance Must Recognize Unique Legal Constructs of Governmental Plans

"The organizations urged Treasury and IRS to recognize the state and local statutory and regulatory governance structures in place for public retirement plans when promulgating regulations surrounding the new law. Notably, governmental plans may need additional time to amend state and local statutes to come into operational compliance with some of the recently-enacted provisions."  MORE >>

National Conference on Public Employee Retirement Systems [NCPERS]

Benefits in General

Dear Plan Sponsor, Where Can I Find You?

"When plan participants and/or governmental agencies, such as the DOL or IRS, cannot easily locate the plan sponsor it can be a recipe for disaster.... Often, third party service providers will prepare the initial drafts of summary plan descriptions and Plan Filings. It is imperative that, in reviewing these drafts, plan sponsors focus on the addresses included -- not only to confirm that they are correct, but to ensure that they are as specific as they should be."  MORE >>

Haynes and Boone, LLP

Employee Benefits Jobs

View job as Regional Sales Consultant
            for Prime Pensions, Inc.

Regional Sales Consultant

Prime Pensions, Inc.

Remote / Florham Park NJ

View job as Regional Sales Consultant for Prime Pensions, Inc.

View job as Senior Defined Contribution Account Manager
            for Nova 401(k) Associates

Senior Defined Contribution Account Manager

Nova 401(k) Associates


View job as Senior Defined Contribution Account Manager for Nova 401(k) Associates

Selected New Discussions

Employer in MEP, Spinning-Off, 5500 Reporting

"Client had been a single employer for 5500 filing and filed under 001. Then employer became a related employer due to an acquisition and joined parent's plan as adopting employer. Initial 001 Form 5500 had a final filing when the assets merged into the parent's plan. A few years later and due to ownership change, they are no longer related so the current plan is a MEP and the Client is spinning out their portion of the MEP into a stand alone plan (June 1, 2023).

"My experience has been that the effective date of the newly established spin-off plan should be June 1, 2023. The Client would use 002 since 001 had been previously used. Since this is a spin-off, there are protected benefits and no distributable events (that is not the issue).

"The service provider is insisting that the effective date be 1/1/2018 (effective date of the prior parent's plan). My concern is that once filed, the EBSA is going to ask about all of the missing prior 5500 filings, which could be avoided with a new effective date and I also believe that the 5500 must be marked as 'First Year Filing'.

"Any experience out there with using a prior effective date and what notices get generated?"

BenefitsLink Message Boards

Frozen 401(k) Plan: Impact on Vesting?

"Hi. We had both a 403b and 401k plans. We decided to freeze our 401k plan (no contributions) a few years ago and use the 403b as our sole DC plan. The question is what does this plan freeze do to our vesting (3 year cliff)? I had thought we could just continue with applying our vesting schedule. But I read that the IRS may view a 401k freeze as a 'complete discontinuation of contributions' and require full vesting of all participants.

"I couldn't find anything official, but did find this on an IRS website. We haven't made many contributions to our profit-sharing plan. How will this impact our plan termination? Although employers are not required to contribute every year to a profit-sharing plan, contributions must be recurring and substantial. If the amount is not significant enough to show an intention to continue the plan, the IRS will treat the contributions as discontinued. A plan is treated as terminated for vesting purposes if the employer completely discontinues contributions. The employees affected by the discontinuance must become 100% vested. Generally, you must vest all affected employees no later than the end of the taxable year following the taxable year in which you made your last substantial contribution (IRC Section 411(d)(3)). The IRS presumes that an employer has completely discontinued contributions when the employer fails to make substantial contributions for at least 3 years in a 5-year period. If this happens, the burden shifts to the employer to show that a complete discontinuance has not occurred (Announcement 94-101).

"I also found this on the IRS website. Does anyone have experience with this? Any thoughts?"

BenefitsLink Message Boards

Press Releases

Local Firm Provides Alternative to Colorado SecureSavings

Castle Rock Investment Company

Milliman Hires Ryan Falls to Expand Statewide Public Pension Work


Webcasts and Conferences
(Retirement Plans / Executive Compensation)

State Auto-IRA Plans

May 15, 2023 PODCAST

National Association of Plan Advisors [NAPA]

Last Issue's Most Popular Items

Final Changes Announced to Forms 5500 and 5500-SF

Faegre Drinker

How SECURE 2.0 Will Impact Your Retirement Plan Starting in 2025 and Beyond

Spectrum Consultants

SECURE 2.0 Encourages Employers to Expand Employee Benefits (PDF)

Groom Law Group, via Benefits PRO

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

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