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Retirement Plans Newsletter

September 28, 2023

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[Guidance Overview]

Have You Been Counting Those Long-Term Part-Time Employee Hours?

"Counting is consecutive, not cumulative. If an employee misses a year, counting starts over. The plan's age and entry date requirements still apply to LTPT employees. LTPT employees may be excluded from coverage and non-discrimination testing.... The plan should count hours for LTPT purposes the same way it counts service hours for other purposes. Employer contributions are not required for these participants, but are permitted."  MORE >>

Bricker Graydon

[Guidance Overview]

What Is UBTI Anyway? Investing 401(k) Assets in a Partnership Operating a Business

"All other things (such as risk and reward profiles for an investment) being equal, it is better to avoid 401(k) plan investments that may result in unrelated business income. Most plan administrators will seek to avoid such investments, but in some cases, the projected returns on investment could make the taxes palatable. The key is to understand in advance whether an investment may result in UBTI and to be prepared to file Form 990-T and timely pay the respective taxes."  MORE >>

Ferenczy Benefits Law Center

[Guidance Overview]

SECURE 2.0: Retirement Plan Changes for 2024

"[1] Mandatory distributions ... [2] Withdrawals for emergency expenses.... [3] Emergency savings accounts.... [4] Withdrawals relating to domestic abuse.... [5] Student loan payments as deferrals for matching contributions.... [6] Hardship distributions in 403(b) plans."  MORE >>


[Guidance Overview]

Avoiding ESOP Compliance Issues Noted in Recent IRS Warning

"IRS officials explained that they have become aware of promoters suggesting that the ESOP-owned S corporation lend the owners of its lower-tier business affiliates ... a significant amount of the S corporation's business income. Apparently, such loans are never intended to be repaid, thus transferring the S corporation's income to a few highly paid individuals. In turn, those uncollectable loans reduce the value of the S corporation stock held by the ESOP, because cash is lent out and potentially worthless loans remain."  MORE >>


District Court Upholds New ERISA Rules on ESG Investing

"The decision ... upholds the [DOL's] interpretations under ERISA that plan fiduciaries may consider ESG factors when evaluating the risk-weighted returns of investment options, but should not give extra weight to ESG factors in choosing investments. The decision thus affirms the [DOL's] long-standing focus on risk-weighted financial returns as the touchstone for compliance with ERISA fiduciary duties." [Utah v. Walsh, No. 23-0016 (N.D. Tex. Sep. 21, 23)]   MORE >>

Hunton Andrews Kurth LLP

Biden Administration's DOL Rule Enabling Investment Advisors to Consider ESG Factors Survives Judicial Challenge

"[T]his decision--while upholding the Biden Administration's DOL rule against a serious legal challenge--did so by emphasizing two things: [1] the relative innocuousness of the rule ... and that [2] the Biden Administration abided by proper procedure when issuing the rule, and so was entitled to administrative deference.... [It] was a narrow decision on technical, legal grounds, which emphasized the limited nature of the DOL rule." [Utah v. Walsh, No. 23-0016 (N.D. Tex. Sep. 21, 23)]  MORE >>

Mintz, via Lexology; free registration required

A Gender Lens on Public-Sector DC Savings Behaviors (PDF)

"[M]en have larger account balances relative to women across all age groups. On average, women in their 30s hold $0.69 for every $1 that similarly aged men have in their accounts. These differences are driven in part by two key forces: [1] Men contribute more than women to their retirement accounts, both in terms of dollar contributions and as a percentage of salary.... [2] Men take on greater equity risk in their retirement portfolios, having a higher allocation to equity funds relative to women across all age groups."  MORE >>

PRRL [Public Retirement Research Lab]

The State of Public Sector DC Plans: 2021 (PDF)

"Half of public plan participants in their 60s have account balances lower than $40,000 ... The mean employee contribution rate ... for participants in their 20s was 2.7 percent. This rate increases with age, reaching 9.5 percent for participants in their 60s.... Participants in their 20s have the largest allocations to target-date funds (approximately 50 percent)."  MORE >>

PRRL [Public Retirement Research Lab]


Making ERISA Meaningful: Common Sense, 'Humble Arithmetic,' SCOTUS, and the Matney Case

"Assuming that Matney applies for certiorari, [the author believes] that SCOTUS will, and should, grant certiorari.... Matney is a perfect example of the issues involved with revenue sharing and ... why SCOTUS needs [to] establish a uniform standard on the issue of which party bears the burden of proof on the issue of causation.... [T]his would not appear to be a difficult decision for SCOTUS if they remain consistent with their previous decision in Tibble." [Matney v. Barrick Gold of N. Am., No. 22-404 (10th Cir. Sept. 6, 2023)]  MORE >>

The Prudent Investment Adviser Rules

Benefits in General

Cybersecurity's Role in Plan Governance

"The responsibility for ensuring the safety of [employee benefit plan] participants’ data and monetary assets has shifted from the computer department to the human resources suite. HR managers face a two-part challenge. The first is the need to have a working knowledge of the risks facing their EBPs from internal sources and service providers. Second is the capability to detect any data security intrusions that strike plan vendors as they occur."  MORE >>

Roland Criss

Employee Benefits Jobs

View job as Business Advisor, Retirement Specialist
            for Alerus

Business Advisor, Retirement Specialist


Fargo ND / Hybrid

View job as Business Advisor, Retirement Specialist for Alerus

Selected New Discussions

Lifetime Income Illustration Required for 1-Person Plan?

"For a 1-person plan (sole prop, corp, whatever) the CPA is saying the lifetime income illustration is required. I say otherwise. SECURE amended ERISA 105(a) to add this requirement. ERISA 105(a)(1)(A) exempts the pension benefit statement requirement for one participant plans described in ERISA 101(i)(8)(B). The lifetime income disclosure under 105(a)(2)(B)(III)(iii) falls under 105(a)(2)(B) in general, which refers to statements required under clause (i) or (ii) of paragraph (1)(A) which as stated above, exempts the one-participant plans. Am, I missing anything?"

BenefitsLink Message Boards

Plan Year for New Safe Harbor Plan with Automatic Increase

"We are installing a new Safe Harbor 401(k) Plan with automatic enrollment and automatic increases. Generally, in the past when we've installed a new plan we've always gone with the first day of the Plan being January 1, even if it was signed during the Plan Year. My question is, under the new Secure 2.0 rules is there a reason not to use a 1/1 start date and instead use 11/1 for a short Plan Year?"

BenefitsLink Message Boards

Press Releases

Virgin Pulse and HealthComp Announce Intent to Merge to Create Comprehensive Employer Health Platform

Virgin Pulse

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Student Loan Repayment Benefits

October 18, 2023 WEBINAR


IRA Required Minimum Distributions

November 9, 2023 WEBINAR


Last Issue's Most Popular Items

Plan Sponsor Year End Compliance: Consider SECURE 2.0 Provisions Effective January 1

Haynes and Boone, LLP

403(b) or 401(k): Which is Best for a Tax-Exempt Organization?

Employee Fiduciary

Proxy Voting Rule Starts December 1: Action Steps for Managers of Private Investment Funds Subject to ERISA

Seward & Kissel LLP

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

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