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Retirement Plans Newsletter

September 14, 2023

2 New Job Opportunities 2 New Job Opportunities


[Guidance Overview]

New Guidance for SECURE 2.0 Roth Treatment of Catch-Up Contributions

"For now, sponsors of 401(k), 403(b) or 457 retirement plans: [1] Have additional time to amend the plan to allow for post-tax Roth contributions, if not already offered, and; [2] May classify all Catch-up Contributions (including those making more than $145,000 per year) as pre-tax contributions, during the 2024 and 2025 tax years ... Employers who have already agreed to treat all catch-up contributions after 2023 as Roth contributions may want to contact their record keeper and possibly rescind their earlier action."  MORE >>

Best Best & Krieger

[Guidance Overview]

401(k)ology: Highly Compensated Employees

"The primary area of difficulty in practice is generally not the definition itself, but rather obtaining the correct employee compensation and ownership information required to accurately determine the HCEs. In this post, [the authors] review the basics of the HCE definition, discuss the Top Paid Group Election, and highlight common errors that plague the HCE determination."  MORE >>


[Guidance Overview]

The Evolution of Hardship Distributions

"Effective in 2023, a participant can self-certify that the distribution is not in excess of the amount required to satisfy the financial need, and the participant has no alternative means reasonably available to satisfy the financial need. Similar rules will also apply to distributions from a governmental 457(b) plan due to an 'unforeseeable emergency' of a participant.... For plan years beginning after December 31, 2023, 403(b) plans will now be treated the same as 401(k) plans, meaning that 403(b) plans may also allow hardship withdrawals of employer contributions and historical earnings."  MORE >>


[Guidance Overview]

SECURE 2.0: New Distribution Options

"As there are several changes and many are optional, it is important that plan sponsors take time now to decide which will be added to a retirement plan. Even though plan amendments are not immediately required, coordination with administrators, legal counsel and other service providers will help minimize the compliance risks.... [A] chart provides some of the most important information about each distribution option, including whether adding the distribution option is voluntary and when it goes into effect."  MORE >>


District Court Rules in Favor of ERISA Defendants After Rare Bench Trial

"The 63,000-member class action lawsuit alleged that B. Braun Medical Inc. and its retirement committee violated ERISA's fiduciary duties with respect to the monitoring and selection of the retirement plan's investments and recordkeeping fees. After a three-day bench trial, the Eastern District of Pennsylvania found in favor of B. Braun on all counts.... The Court's ruling ... offers valuable guidance to plan fiduciaries on how to make the case for a prudent process." [Nunez v. B. Braun Medical Inc., No. 20-4195 (E.D. Penn. Aug. 18, 2023)]  MORE >>

Groom Law Group

Key Questions to Ask When Choosing a Plan Provider

"[1] What is your fee structure? ... [2] Do you have experience offering plans for companies similar to mine? ... [3] How can you help with fiduciary responsibilities? ... [4] How can you help with setting up the plan? ... [5] What services will you provide to plan participants? ... [6] Will I have access to a dedicated representative?"  MORE >>


Start Auto-Enrollment With New Clients Now

"SECURE 2.0 ... requires all new 401(k) and 403(b) plans to include an automatic enrollment feature beginning in 2025. But as advisers engage clients on the plethora of SECURE 2.0-mandated changes that will debut in coming years, implementing auto-enrollment with new clients now may save precious time later[.]"  MORE >>


Mobile Apps Become Increasingly Critical Battleground for Retirement Plan Providers

"[J]ust 38% of retirement plan participants give their plans high marks for their digital capabilities. Overall satisfaction lags significantly behind other industries ... such as wealth management (701),1 property and casualty insurance (702)2 and automotive (718).... Nearly half (47%) of participants have downloaded their retirement plan's mobile app, up from 35% in 2021, and 38% have used the mobile app in the past 30 days, up from 27% in 2021. "  MORE >>

J.D. Power

Solving the Puzzle within the Annuity Puzzle: Incorporating Irrevocability Aversion into Annuity Choice

"This study builds upon a classic life cycle finance utility framework by introducing a discount factor penalty when the annuity is irrevocable. The magnitude of the penalty depends on the irrevocability aversion coefficient. [The authors] found that inclusion of this discount factor penalty can explain the distribution of actual annuity sales."  MORE >>

Spencer Look, Tao Guo and Yuanshan Cheng, via SSRN

Annuity Purchase Update, September 2023

"[A]nnuity purchase interest rates hit a record high for the year with the average duration 7 annuity purchase interest rate at 4.94% and the average duration 15 annuity purchase interest rate at 4.90%. In the last month, the average duration 7 annuity rate increased by 16 basis points, while the average duration 15 annuity rate increased by 15 basis points. Appealing annuity interest rates have increased plan sponsors' appetite to de-risk defined benefit plans."  MORE >>

October Three Consulting


Tenth Circuit Rejects Claims of Excess Investment Fees Contradicted by Plan Documents, and Comparison to 401(k) Averages Book as a 'Meaningless' Benchmark

"First, the Court allowed documentary evidence from plan documents that contradicted the false share class investment fee claims ... Some courts do not allow plan sponsors to defend with the actual plan fees, and this is the key difference in the disparate rulings on the ERISA excessive fee pleading standard across the county. ... Second, the Court required a meaningful benchmark to allege that plan investment and recordkeeping fees were too high. ... Until we have a reliable national benchmark of what large plans actually pay in recordkeeping fees, courts must require meaningful comparisons to justify claims of fiduciary imprudence." [Matney v. Barrick Gold of N. Am., No. 22-404 (10th Cir. Sept. 6, 2023)]   MORE >>

Euclid Specialty Managers

Benefits in General

[Official Guidance]

Text of IRS Disaster Relief Notice 2023-GA-02, for Taxpayers Impacted by Hurricane Idalia in Parts of Georgia

"Taxpayers affected by Hurricane Idalia in parts of Georgia that began Aug. 30, 2023, now have until Feb. 15, 2024, to file various individual and business tax returns and make tax payments ... [I]ndividuals and households affected by Hurricane Idalia that reside or have a business in Appling, Atkinson, Bacon, Berrien, Brantley, Brooks, Bulloch, Camden, Candler, Charlton, Clinch, Coffee, Colquitt, Cook, Echols, Emanuel, Glynn, Jeff Davis, Jenkins, Lanier, Lowndes, Pierce, Screven, Tattnall, Thomas, Tift, Ware, and Wayne counties in Georgia qualify for tax relief."  MORE >>

Internal Revenue Service [IRS]

DOL Poised to Issue Two High-Profile Proposed Regulations

"Last week, DOL sent a new proposed 'fiduciary rule' to [OMB] for review.... This highly anticipated rulemaking would be DOL's third attempt to reinterpret the 'investment advice' fiduciary definition in ERISA and replace the five-part regulatory test that has largely been in place since 1975.... Also last week, DOL sent a new association health plan (AHP) proposed regulation to OMB. According to DOL, it will explore in the rulemaking whether to replace its 2018 regulation ... with an alternative set of criteria for determining when an employer association may act indirectly in the interest of an employer under ERISA section 3(5) for purposes of establishing a multiple employer group health plan."  MORE >>

Miller & Chevalier

Employee Benefits Jobs

View job as Retirement Plan Consultant
            for July Business Services

Retirement Plan Consultant

July Business Services


View job as Retirement Plan Consultant for July Business Services

View job as Retirement Implementation Specialist
            for Alerus

Retirement Implementation Specialist



View job as Retirement Implementation Specialist for Alerus

Selected New Discussions

DB Partial Term or Not?

"Company A sold company B. All company B unvested employees who had accrued benefits. Do the employees get 100% vested? 2011 -Form 5500 showed 178 active participants. 2012 showed 0 active participants. Does this consider Partial plan termination? I thought it was, but my other co-worker told me it was not. I'd like to find out if is there any exemption that the plan was not considered partial plan termination. Am I missing something?"

BenefitsLink Message Boards

5500 EZ Filing Required for a 1 Life Plan When the Spouse Owns a Different Business?

"Wife and husband own 100% each of 2 different businesses, unrelated to each other. The one has about 10 employees and has a 401k plan. The other is spouse only and started a solo 401k for herself, well under $250K. Neither performs any work for the other's business. I do not see in the instructions that this would cause the solo plan to file a 5500EZ. Would you agree?"

BenefitsLink Message Boards

Joinder Agreement

"I have a client who owns 2 businesses. Each single member businesses (one is an insurance company, the other investments). He wants to use income from both businesses to enable himself to max out contributions. I prepared a joinder agreement so both businesses can utilize one plan. Correct so far? If he makes a 10% contribution to the plan from Company A does it stand to reason he must make a 10% contribution from Company B? Let's say he does, do these contributions need to be in separate accounts? or at least accounted for separately?"

BenefitsLink Message Boards

Press Releases

Financial Literacy Proponent Launches Educational Initiative to Promote 401(k) Participation: The 2023 401(k) Champion®

Jackson, Grant Investment Advisers, Inc.

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

ERISA Plan Investments in the Financial Markets 2024: The Fundamentals

March 19, 2024 WEBINAR

PLI [Practising Law Institute]

Last Issue's Most Popular Items

Text of IRS Rev. Proc. 2023-31: Exceptions from the Electronic Filing Requirements for Certain Filers of Forms 8955-SSA and 5500-EZ (PDF)

Internal Revenue Service [IRS]

Common Misconceptions About Roth IRA Conversions


2023 Q&As: PBGC Meeting with ABA Joint Committee on Employee Benefits (PDF)

Joint Committee on Employee Benefits [JCEB], American Bar Association

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

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