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Retirement Plans Newsletter

October 25, 2023

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[Guidance Overview]

IRS Determination Letter Program Opens for 403(b) Plans

"Since 2009, most 403(b) plans have required a written plan document, but plan sponsors could not obtain the IRS's opinion that the form of the plan follows the Code's requirements. 403(b) plan sponsors can now obtain an initial determination letter under the IRS program.... Determination letter applications are limited to an initial review of individually designed 403(b) plans (including most long-standing 403(b) plans that could not apply previously) and terminating 403(b) plans."  MORE >>

McDermott Will & Emery

[Guidance Overview]

Is Your Company Part of an Affiliated Service Group?

"When a 401(k) plan excludes the employees of an ASG member, failed coverage testing is often the result. A basic understanding of the ASG rules can help business owners avoid this trouble.The ASG rules are significantly more complicated than the controlled group rule.... Here are the basics."  MORE >>

Employee Fiduciary

Results in New Wave of 401(k) Forfeiture Lawsuits May Hinge on Plan Terms

"Using 401(k) forfeitures to reduce employer contributions is a common practice that's been approved by regulators when done the right way ... Four cases casting doubt on the practice have been filed since September by Hayes Pawlenko LLP, a small employment law firm in California ... Like many ERISA disputes, this legal theory could turn on the language of a given plan document."  MORE >>

Bloomberg Law

Proxy Voting: Plan Sponsor Fiduciary Risk

"[T]he sponsor fiduciary's responsibility with respect to proxy voting is typically indirect -- generally, some other fiduciary will be directly responsible for proxy voting. In that situation, the sponsor fiduciary's responsibility will be to monitor the conduct of the proxy voting-fiduciary ... And, within a range of plausibility, that duty will be more about process (reviewing/documenting review of the proxy voting-fiduciary's policies and activity) and less about substance (less about, e.g., whether a particular proxy initiative is prudent)."  MORE >>

October Three Consulting

Should a Safe Harbor Contribution Plan Be on Your To-Do List?

"A safe harbor design only provides relief from ADP and ACP testing. It does not keep the plan 'safe', or exempt the plan, from other compliance testing requirements such as IRC Sec 410(b) minimum coverage testing, IRC Sec 401(a)(4) general testing or benefits, rights and features testing.... There may be additional costs and administrative complexity with the adoption of safe harbor design, including minimum contributions, minimum vesting, and automatic enrollment requirements. A comprehensive cost-benefit analysis should be performed to evaluate the pros and cons."  MORE >>


Despite Pressures, Pension Plans Expect ESG Exposure to Grow

"A large portion of 152 global corporate and public pension funds recently surveyed by Apex Partners -- 58 percent -- said they expect allocations to private equity that accounts for environmental, social, and governance factors to rise over the next three years. The trend comes amid a complex investing environment for ESG strategies overall."  MORE >>

Institutional Investor

Proposed Legislation Would Increase Plan Startup Credits for Small Businesses

"SECURE 2.0 left in place a tax credit structure which limited the tax credit amount to $250 per employee, with a minimum total of $500 ... The RISE Act would increase the minimum credit to $2,500 for businesses with fewer than 10 employees to better compensate businesses for the costs of starting and operating a plan."  MORE >>

PLANSPONSOR; free registration may be required

A Framework for Valuation and Assessment of Retirement Income Products

"This paper devises a flexible assessment framework of a catalogue of existing retirement income products which include, account-based pensions, group self-annuities and variable annuity contracts.... The key features of the retirement income products which include variable annuities, account-based pension, and group self-annuities, are presented in an easily understandable way for a retiree with common knowledge.... [The authors] also devise a lifetime utility analysis framework for the comparison of lifetime utility from purchasing the products."  MORE >>

Yang Shen, Michael Sherris, Yawei Wang and Jonathan Ziveyi, via SSRN


SPARK Institute Comment Letter to IRS: SECURE 2.0’s Roth Catch-Up Requirement (PDF)

"it is critical that Treasury and IRS issue additional guidance as soon as possible to allow plan sponsors, payroll providers, recordkeepers and other service providers to prepare for January 2026. Without that guidance and sufficient time to implement necessary systems, configuration changes, and participant communications, the transition period cannot be used for its intended purpose.... [This letter provides] responses to the specific requests for comments in Notice 2023-62, as well as [other] requests for guidance on SECURE 2.0's Roth catch-up requirement that were not addressed by Notice 2023-62."  MORE >>

The SPARK Institute

Benefits in General

Clearing the Blind Spot Between Employer Perceptions and Employee Preferences

"Total rewards preferences among the workforce have always differed somewhat from employers' perceptions.... Regular feedback, whether gathered formally or in real time, allows closer alignment of resource investments with employee preferences ... Data access and analysis provide the clearest window into strategic applications for optimizing the employee experience.... Assessing current employee experience data at regular intervals helps ensure that employers stay tuned to quickly evolving preferences."  MORE >>


Executive Compensation and Nonqualified Plans

[Guidance Overview]

IRS Indefinitely Extends Use of Electronic Signatures for Section 83(b) Elections

"On October 17, 2023, the [IRS] updated its Internal Revenue Manual to fully incorporate ... certain e-signature policies and procedures permitting the use of electronic signatures on certain forms, including elections under section 83(b) of the Internal Revenue Code ... This indefinitely extends the prior temporary relief granted by the IRS that was set to expire on October 31, 2023."  MORE >>

Shearman & Sterling LLP

Employee Benefits Jobs

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Selected New Discussions

How to Correct Distribution of Deferrals in Violation of Successor Plan Rule

"So, employer (A) is purchased in a stock sale by Employer (B), let's say on April 1 (yes, humor intended). Employer A has a 401(k) plan, Employer (B) has a 401(k) plan. Both are calendar year corporations. (A)and (B) become a controlled group as of the date of the purchase. Most of the employees of (A) transfer to (B) as of the date of purchase Employer A does a plan termination as of November 30 of that same year, and DISTRIBUTES all assets, except to the now employees of (B) who ELECTED to have their funds transferred to (B)'s plan. Others chose to receive a distribution. ... When there is an impermissible distribution of deferrals under the Successor plan rule, what's the correction? Anyone gone through VCP and gotten an approval for a correction that doesn't require heroic and 'unreasonable' results?"

BenefitsLink Message Boards

Contribution Deadline for Plan Terminating Midyear

"If a plan is terminated mid year, the 430 regs tell us to use the termination date as the val date and treat the plan for 430 purposes as having a short plan year. The minimum is due 8.5 months after the end of the short plan year. Do we count 8.5 months from the end of the month like with the final 5500 filing or is a more precise counting required. For example, if the plan terminated today 10/23/2023 is the contribution due date 7/15/2024 or some other date?"

BenefitsLink Message Boards

Press Releases

July Business Services is First to Earn a CEFEX Certification for Operational Fiduciaries in Pooled Plans

JULY Business Services

Cerulli Associates

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Feeling Insecure About SECURE 2.0? A Discussion for Retirement Plan Sponsors

November 1, 2023 WEBINAR

Foley & Lardner LLP

Medicare: Understanding and Navigating the Planning Process

November 29, 2023 WEBINAR

TRA [The Retirement Advantage]

Last Issue's Most Popular Items

2023 Year End: SECURE 2.0 Operational Compliance, But Plan Amendments Not Yet Required


Updated 417(e) Mortality Table Will Decrease 2024 Lump Sum Values in Most Defined Benefit Plans

Cowden Associates, Inc.

Text of DOL Fact Sheet 66E: The Davis-Bacon and Related Acts – Compliance with Fringe Benefit Requirements

Wage and Hour Division [WHD], U.S. Department of Labor [DOL]

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

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