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Retirement Plans Newsletter

May 16, 2023

2 New Job Opportunities 2 New Job Opportunities


[Guidance Overview]

IRS Issues Proposed Regs on Allocation of Forfeitures (PDF)

"[Defined contribution plans that] have participant accounts that have not been forfeited, but should have been ... are encouraged to take advantage of the transition relief and forfeit amounts and allocate/use such forfeitures by the end of the 2025 plan year.... [T]here is no express anti-cutback relief for these regulations and therefore plan amendments prior to the effective date may be in order if changes are being contemplated."  MORE >>

Groom Law Group, via Taxes the Tax Magazine

[Guidance Overview]

Safe Harbor 401(k): 2023 Guide for Employers

"Safe Harbor 401(k) plans help small businesses pass nondiscrimination testing, but are costly because employers must make 401(k) contributions. Small businesses can avoid the costs of Safe Harbor by simply getting high participation and high savings rates.... Tax credits provided by Secure Act 2.0 may cover up to 100% of employer costs, and up to $1,000 of the employer contributions for the first few years."  MORE >>


[Guidance Overview]

Indian Tribal Government Retirement Plans

"In order for an Indian tribal plan to be exempt as a governmental plan, substantially all of the participants in the plan must be employees who perform services that are [1] essential government functions and [2] not in the performance of commercial activities. Because the tax and fiduciary/labor law rules are significantly different for retirement plans of ITGs and their commercial activities, it makes sense to segregate, design, and administer a tribe's 'governmental plans' apart from the retirement plans covering employees in its commercial activities."  MORE >>

Best Best & Krieger LLP

DOL Withdraws Appeal of District Court Decision Vacating Fiduciary Rollover Advice Guidance

"The [DOL] has decided against appealing a federal court's decision vacating a piece of guidance that established rollover recommendations as fiduciary investment advice, according to the American Securities Association, the lawsuit's plaintiff." [American Securities Association v. DOL, No. 22-0330 (M.D. Fla. Feb. 13, 2023; notice of appeal filed Apr. 14, 2023; 11th Cir. No. 23-11266)]   MORE >>

Pensions & Investments

DOL Retirement Plan Investigations: Key Areas of Inquiry

"The most common focus of DOL investigations of defined benefit pension plans in the last few years has been reviewing plan fiduciary efforts to identify and locate 'missing participants.' ... A new and growing DOL investigatory topic is cybersecurity.... [A] lack of policies and procedures may be cited as proof of an inadequate fiduciary process ... The DOL will often review a plan's process for handling plan participant claims and appeals."  MORE >>

Morgan Lewis, via The Temple 10-Q


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Annuity Purchase Update, May 2023

"Average annuity purchase interest rates in May stayed on current trend with the average duration 7 rate at 4.50% and average duration 15 annuity purchase rate at 4.55% ... Preliminary data suggests there was a significant interest in annuity purchases in the first quarter, totaling over $6 billion in premium.... [P]lan termination annuity purchases dominated the market during the first quarter of the year."  MORE >>

October Three Consulting

Exceptional Usefulness and Quality icon CRS Report: Social Security: The Trust Funds (PDF)

22 pages. "This report covers how the Social Security program is financed and how the Social Security trust funds work. The report also covers the projected financial operations of the trust funds using data from the 2023 Annual Report of the Board of Trustees. The 2023 annual report reflects the trustees' understanding of the OASDI program at the start of 2023 and presents projected program and financial information for a 75-year period (2023-2097)." [RL33028, updated May 16, 2023]  MORE >>

Congressional Research Service [CRS]

Exceptional Usefulness and Quality icon CRS Report: Social Security Primer (PDF)

18 pages. "This report ... covers the origins and a brief history of the program; Social Security financing and the status of the trust funds; how Social Security benefits are computed; the types of Social Security benefits available to workers and their family members; the basic eligibility requirements for each type of benefit; the scheduled increase in the Social Security retirement age; and the federal income taxation of Social Security benefits." [R42035, updated May 16, 2023]  MORE >>

Congressional Research Service [CRS]

CRS In Focus: Social Security Overview

"How is Social Security financed? ... Who qualifies for benefits? ... How are benefits computed? ... Who is receiving benefits? ... How much do beneficiaries receive? ... What is Social Security's status?" [IF10426, updated May 16, 2023]  MORE >>

Congressional Research Service [CRS]


Debunking the 'Excess' Recordkeeping Fee Claims in the U.S. Bancorp Case

"The initial complaint asserted a false recordkeeping fee that was easily rebutted by plan fee disclosures. The amended complaint then asserted the correct fee, but with lower purported benchmarks to allege fiduciary imprudence.... [The] motion to dismiss is worth studying, as it exposes the con game of the plaintiffs' excess fee bar, particularly when they sue low-fee plans like the U.S. Bancorp plan." [Dionicio v. U.S. Bancorp, No. 23-0026 (D. Minn. motion to dismiss filed May 2, 2023)]  MORE >>

Euclid Specialty Managers


Annuities, Plan Sponsors, and Fiduciary Law

"[A plan sponsor's] reluctance to offer annuities is generally some variation of the following: [1] Distrust of the annuity industry ... [2] The impact of the costs and fees typically associated with annuities, resulting in a potential breach of a plan sponsor's duty of prudence.... [3] The difficulty and/or inability of plan sponsors to perform the legally independent investigation and evaluation of a product required by ERISA.... [4] The frequent inclusion of certain complicated and confusing provisions within annuity contracts that protect the annuity issuer's interests at ... an annuity owner's expense, resulting in a breach of a plan sponsor's duties of loyalty and prudence."  MORE >>

The Prudent Investment Adviser Rules

Benefits in General

[Guidance Overview]

Exceptional Usefulness and Quality icon Controlled and Affiliated Service Group Rules for Retirement and Cafeteria Plans: An Overview

"For plan sponsors with U.S. based operations and exclusively U.S. controlled groups, there is, generally, a healthy awareness of the rules as operations are typically centralized in the U.S. and frequently a single third-party administrator is used for all retirement plans of the controlled group. For foreign based corporations with U.S. subsidiaries ... each company in the U.S. controlled group may have their own retirement plan and cafeteria plan with completely different benefits and separate third-party administrators and none of the parties are aware that a controlled group exists.... The ownership thresholds triggering application of these rules are much lower for [affiliated service groups] than for controlled groups."  MORE >>


Defining Your Employee Benefits Strategy

"Employers should revisit their existing benefits strategy and update it to reflect the current economic environment and meet their employees' needs.... Benefits can supplement salaries ... Set goals for your benefits program ... Benefits should promote overall well-being ... Make packages appealing to all ages ... Benefits go beyond insurance, retirement."  MORE >>

Meaden & Moore

Employee Benefits Jobs

View job as Senior Level DC/DB Administrator
            for SPS

Senior Level DC/DB Administrator


Remote / Lebanon NJ / PA

View job as Senior Level DC/DB Administrator for SPS

View job as Client Relationship Manager - Retirement Services
            for HANYS Benefit Services

Client Relationship Manager - Retirement Services

HANYS Benefit Services

Rensselaer NY / Hybrid

View job as Client Relationship Manager - Retirement Services for HANYS Benefit Services

Selected New Discussions

Enhanced Safe Harbor and Testing Requirements

"Is a enhanced safe harbor match (6%) still exempt from top heavy and ADP and ACP testing?"

BenefitsLink Message Boards

2021 EZ Filed But No SB Done

"Looking at a potential takeover for 2022. Although 5500EZ was filed for 2021, no valuation was done and no SB signed. Forget the AFTAP for a sec. Looks like some contribution was made, not sure if satisfies MRC. As I have never seen this before, what are corrective steps to be taken? If anyone has experience with this and can share it, would appreciate it."

BenefitsLink Message Boards

Profit Sharing Plan Termination with Leftover Funds

"We have a profit sharing plan that was terminated effective 7/1/22. Most participants rolled over by 12/31/22, the remaining participants, exclusive of the owners were paid out between 1/1/23-5/12/23. After the owners rollover, there is an excess of roughly $2,500 sitting in the plan master account at Schwab and the client is asking what to do with it. Usually the excess is paid to the TPA as an administrative expense, but they are complaining because they had paid my fee 12/22; this is the only plan I have that the excess probably will not be paid as an administrative expense. To whom would the excess be reallocated, those that were paid after 12/31/22 or all participants of the plan that were paid out."

BenefitsLink Message Boards

Press Releases

SEC Charges Red Rock Secured, Three Executives in Fraud Scheme Targeting Retirement Accounts

Securities and Exchange Commission [SEC]

PensionOnline Introduces Innovative Tax Credit Calculator for 401(k) Professionals


Webcasts and Conferences
(Retirement Plans / Executive Compensation)

When ERISA Was Young


Seyfarth Shaw LLP

Incentivizing Increased Participant Savings

June 15, 2023 WEBINAR


Last Issue's Most Popular Items

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

Dickinson Wright

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

Internal Revenue Service [IRS]

SECURE 2.0: Multiple Employer 403(b) Plans

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

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