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Retirement Plans Newsletter

January 16, 2024


[Guidance Overview]

IRS Offers Guidance on Emergency Savings Accounts

"Employees who are eligible to be part of an employer's defined contribution plan and qualify to contribute to a PLESA, if their employer offers one, can contribute to the account even if they don't participate in the employer's defined contribution plan. Generally, the maximum balance in a participant's PLESA (attributable to contributions) is $2,500, but employers can opt to set a lower limit."  MORE >>

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Virtual APC on Jan 31-Feb 2, 2024

Get the practical updates that matter to you from our ERISA panel at the virtual Advanced Pension Conference, Jan 31-Feb 2, 2024. The program features eleven sessions. Earn up to 13 CE credits. See complete agenda and register today!

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[Guidance Overview]

IRS Issues Guidance on Miscellaneous SECURE 2.0 Provisions

"IRS Notice 2024-2 ... [provides] bringing guidance on twelve provisions of SECURE 2.0 that are or will soon be effective. About half of these items are of interest to most retirement plan sponsors, while a few apply primarily to smaller employers.... [T]ables summarize the guidance provided by the IRS."  MORE >>


[Guidance Overview]

Treasury Issues Final Regulation on Constructing Yield Curve

"The final regulations are nearly identical to the proposed regulations (we covered here), with the only difference being a clarification of the methodology. The final regulations also closely follow the existing methodology in Notice 2007-81, though they make two key changes."  MORE >>

Groom Law Group

Retirement Industry Eyes Supreme Court on Chevron Deference

"The Supreme Court holds oral arguments Jan. 17 on a challenge to the legal standing of regulatory agencies that could significantly alter the balance of power between regulators and federal courts.... [P]laintiffs say the justices should overrule or restrict Chevron deference across the board -- a prospect that would affect every acronym from EPA to NLRB, from SEC to IRS, from DOL to PBGC.... Critics say Chevron deference allows legislation via regulation, permitting regulatory overreach beyond the scope of the laws that regulators administer."  MORE >>

Pensions & Investments

A Comprehensive Guide to the 401(k) RFP Process

"You must understand your company's goals and objectives and the demographics of your company. This will help you ask the right questions to potential service providers.... Drafting a thorough and detailed Request for Proposal (RFP) document is a foundational step ... When selecting potential providers, consider factors such as industry reputation, experience, and financial stability."  MORE >>

CUI Wealth Management, LLC

Unpacking the DOL's Enforcement Actions

"While each investigation may be unique and certain techniques will not work in all situations, there are several steps that can be taken to mitigate the burden.... [Establish] a strong rapport with the DOL investigator.... [T]he DOL has shown willingness to work collaboratively to resolve any issues.... The plan sponsor's ability to document efforts will lead to a more expeditious resolution."  MORE >>

Alvarez & Marsal

A Changed Investment Landscape Is Providing Greater Opportunity for U.S. Corporate Pensions

"Over the past decade, executives overseeing corporate defined benefit (DB) pension plans have experienced significant regulatory reform and a full reversal of investment conditions. While rising liabilities once offset asset gains, the opposite is now true. Yet many organizations haven’t recalibrated their approach to plan management in response, leaving them exposed to unnecessary costs and at risk of missed opportunities. Today, plan sponsors should be rethinking their plan’s strategic priorities and re-underwriting their investment approach."  MORE >>

Cambridge Associates


ERIC Comment Letter to Banking Regulators re Proposed Regs for Large Banking Organizations and Banking Organizations with Significant Trading Activity (PDF)

"Under the Proposal, certain banks' investment grade 'corporate exposures' would receive a preferential risk weighting for purposes of calculating capital requirements, provided that the derivative counterparty (or its parent) is publicly traded. Pension funds that do not have publicly listed securities would be ineligible for this preference. That would make pension funds a less desirable counterparty for otherwise beneficial transactions than other potential counterparties."  MORE >>

The ERISA Industry Committee [ERIC]


Bridging the Gap Between the DB and DC

"The industry must shift its mindset. Retirement programs don't need to be purely DB or DC. Plan sponsors can build better programs for themselves and their employees. Start by focusing on your company's goals, then introduce flexibility and control so people can customize based on their needs. Ultimately, a retirement program should provide efficient retirement savings and income while driving engagement,"  MORE >>

October Three Consulting


DB Pensions: Continued 'Life Support' More Likely Than a 'Full Recovery'

"IBM wasn't the first organization to reopen their frozen DB. We may see a few organizations with frozen DB plans with a funding surplus follow IBM's lead. But no one is predicting employers who don't currently offer a DB plan will start one based on IBM's actions, let alone return to 1985."  MORE >>

Jack Towarnicky, via 401(k) Specialist


The Case for Using Subsidies for Retirement Plans to Fix Social Security

"Revenues saved from repealing the retirement saving tax preferences could be reallocated to address the majority of Social Security’s long-term funding gap, strengthening a program that is crucial for the retirement security of older Americans while bypassing a decades-old debate about raising taxes or reducing Social Security benefits. This study reassesses the favorable tax treatment of retirement plans and explores an opportunity to use taxpayer resources more productively."  MORE >>

Center for Retirement Research at Boston College

Benefits in General

[Guidance Overview]

DOL and PBGC Announce Retirement Plan Civil Penalties for 2024

"[A chart] shows DOL's maximum 2024 penalties for single-employer defined benefit (DB) and defined contribution (DC) plans, with 2023 penalties shown for comparison. The increased amounts apply to penalties assessed after Jan. 15, 2024, for violations occurring after Nov. 2, 2015.... PBGC's 2024 maximum penalty under ERISA Section 4071 for single-employer DB plans is $2,670 a day (up from $2,586 in 2023) for each day a filing, notice or other information is overdue. The higher rate applies to penalties assessed after Jan. 12, 2024."  MORE >>


The Excellent Fiduciary: Traits of Effective Committee Members (PDF)

"The architecture of employee benefit plan committees, also known as plan fiduciary or plan oversight committees, is as diverse as the organizations that sponsor them. There is, however, essential consistency in the skills and experiences of the individuals employers appoint to serve as committee members."  MORE >>

Roland Criss, via Journal of Compensation and Benefits

Selected New Discussions

ARPA 2024 Rates - Second Segment

"Confused here, IRS notices 2023-66, -72, -76, and 2024-04 showed 2024 ARPA Segment rates as 4.75%, 4.87%, and 5.59%. Now IR Notice 2024-21 has 2024 ARPA Segment rates as 4.75%, 4.96% (instead of 4.87%), and 5.59%. Note that they show the January 2024 segment rates as 4.37%, 4.96%, and 4.95%. Did just leave a voice message with the IRS to figure out if they have a typo on 2024-21. Holding off on doing 2024 valuations for now."

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Last Issue's Most Popular Items

IRS Posts Initial Employer Guidance on Emergency Savings Accounts

American Retirement Association [ARA]

Implementing the New Forms W-4P and W-4R: One Year Later

Morgan Lewis

Text of IRS Notice 2024-21: Weighted Average Interest Rates, Yield Curves, and Segment Rates for January 2024 (PDF)

Internal Revenue Service [IRS]

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

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