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Retirement Plans Newsletter

January 22, 2024


[Official Guidance]

Text of 2023 IRS Publication 915: Social Security and Equivalent Railroad Retirement Benefits (PDF)

33 pages; For use in preparing 2023 Returns. "This publication explains the federal income tax rules for social security benefits and equivalent tier 1 railroad retirement benefits.... [It] covers ... [1] Whether any of your benefits are taxable. [2] How to report taxable benefits. [3] How much is taxable. [4] How to treat lump-sum benefit payments. [5] Deductions related to your benefits, including a deduction or credit you can claim if your repayments are more than your gross benefits."  MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

IRS Updates Minimum Present Value Requirements for DB Plan Distributions

"The regulations provide guidance on changes the Pension Protection Act of 2006 (PPA) made to the prescribed interest rate and mortality table and other guidance, including rules regarding the treatment of preretirement mortality discounts and Social Security level income options. These regulations update the existing regulations to reflect ... the new interest rates and mortality tables set forth in IRC Section 417(e)(3) and the exception from the valuation rules for certain applicable DB plans set forth in IRC IRC Section 411(a)(13)."  MORE >>

American Retirement Association [ARA]

[Guidance Overview]

DOL Proposes Rules for Automatic Portability Transactions

"SECURE 2.0 allows an automatic portability provider to receive a fee in connection with executing an automatic portability transaction if certain conditions are met ... The proposed regulations detail the conditions that must be satisfied for an automatic portability transaction to be covered by the new statutory exemption."  MORE >>

Thomson Reuters Practical Law

[Guidance Overview]

IRS Issues First Big Grab Bag of Guidance on SECURE 2.0 Act

"[Notice 2024-02] covers a wide array of SECURE 2.0 Act provisions; however, some of the more complex items, such as the 2026 mandatory flip from 401(k) plan deferrals to Roth deferrals for certain highly compensated employees or student loan matching contributions, are not included."  MORE >>

Calfee, Halter & Griswold LLP

[Guidance Overview]

IRS Proposes Long-Term, Part-Time Worker 401(k) Eligibility Rules

"The regulation would apply to plan years starting on or after Jan. 1, 2024, which is when 401(k) plans must start allowing LTPT employees to participate. The proposal doesn't address Section 403(b) plans that are covered by ERISA, which must comply with SECURE 2.0's LTPT eligibility requirements starting in the 2025 plan year. IRS is accepting comments on the proposal through Jan. 26, 2024, and will hold a public hearing on March 15, 2024."  MORE >>


Supreme Court Ruling on Agency Powers May Impact ESG Investing Rule

"26 states, led by Utah and Texas ... said Chevron deference does not apply to the case because federal law clearly requires retirement plans to act 'solely and exclusively' for the financial benefit of participants. But if the 5th Circuit finds otherwise, it should wait for the Supreme Court to rule on the fate of Chevron deference before deciding the case, the states said in their filing." [Utah v. Walsh, No. 23-0016 (N.D. Tex. Sep. 21, 2023; on appeal to 5th Cir. as Utah v. Su, No. 23-11097; opening brief for appellants filed Jan. 18, 2024)]  MORE >>

Reuters; free registration may be required

Second Circuit Decision Offers New Hope for Defending Prohibited Transaction Claims

"This decision was in contradiction to decisions from some other circuits which treat prohibited transaction exemptions as an affirmative fact-intensive defenses whose applicability can’t be determined at the motion to dismiss stage. (including last year’s Ninth Circuit’s decision in the AT&T excessive fee class action)." [Cunningham v. Cornell Univ., No. 21-0088 (2d Cir. Nov. 14, 2023)]   MORE >>

Willis Towers Watson

Economic Analysis of the DOL's Proposed Retirement Security Rule (PDF)

38 pages. "Based on the survey responses, [Oxford estimates] that the upfront cost for the proposed 2023 Fiduciary rule will be approximately $238 million, over six times the DOL's estimate of upfront costs ($37 million). [The] estimate of the ongoing annual cost of the rules, $2.5 billion, is almost 11 times the DOL's estimate ($216 million).... [T]he DOL's evidence of potential benefits ... at best ... are speculative, with magnitudes that are unclear."  MORE >>

Oxford Economics, for The Financial Services Institute

DOL May Have Underestimated Compliance Cost of Fiduciary Proposal

"A [recent survey] ... estimated that the compliance costs associated with the [DOL's] fiduciary proposal could grossly exceed the estimates provided by the DOL.... [A] study from August 2017 published by Deloitte, shortly after the vacated rule went into effect ... found that 11 of 21 firms had to limit or even eliminate advisory services, such as removing advice from brokerage windows, as a consequence of the 2016 rule."  MORE >>


2024 Retirement Outlook

"A higher-for-longer market environment presents challenges and opportunities for sponsors and participants and has sponsors rethinking retirement plan menus. Inflation concerns and competing financial priorities have dented retirement confidence but also provide an opportunity for sponsors to clearly define their plan objectives.... With yield at the highest levels in years, fixed income will be in focus for 2024 ... In a changing market environment, some companies are reevaluating how they provide retirement benefits in ways we have not seen in years."  MORE >>

MFS Institutional Advisors, Inc.


Actuaries Confuse the Primary Causes of the Social Security Funding Shortfall

"[T]he Valuation Creep results from the implicit assumption adopted by the Trustees and system's Chief Actuary that system revenue will equal system income for years after the 75-year projection period. This has been an unreasonable assumption since 1983 and, in [the authors'] opinion, should be fixed and its negative effect on the system's funding should be acknowledged by the Academy."  MORE >>

Ken Steiner, FSA Retired

Benefits in General

Employee Benefits Plan Transition and Integration Decisions Continue After M&A Transactions Close

"[This article provides] a high-level list of post-closing integration considerations with a focus on qualified defined contribution retirement plans and health and welfare plans."  MORE >>

Morgan Lewis

Projected Health Care Costs for Medicare Beneficiaries Rose Again in 2023

"In an extreme case, a couple with high prescription drug expenditures will need to have saved as much as $413,000 to have a 90% chance of having enough money to cover their health costs in retirement ... [A] 65-year-old man enrolled in a Medigap plan with the highest prescription drug expenditures in retirement will need to have saved $215,000 in order to have a 90% chance of having enough money to cover premiums and median prescription drug costs, and a 65-year-old woman will need to have saved $252,000."  MORE >>

PLANSPONSOR; free registration may be required

Selected New Discussions

Distribution of Rollover Contributions

"A potential new client is asking questions. Within the email I received there is a bullet item 'Rollover funds entirely'. I asked for clarity, wanted to know what the intention was. I know they can't just dig into their plan balance and roll out employer contributions whenever they want. That said, if they rolled money into the plan into a designated rollover account from an IRA or a balance they had as a participant in another qualified plan, can they take a distribution from those plan accounts at any time?"

BenefitsLink Message Boards

Change Profit Sharing Formula Mid-Year?

"The current plan profit sharing is 8% to eligible employees. There is no age, no service required, and no last-day service requirements for the profit-sharing contribution, and the contribution is being funded per payroll. There are 1000 hours for vesting. Now, the client would like to change the formula to lower it based on age. If age 45 or less: 4% Age 46-59: 6%, Age 60 and above: 8%. They like to make it effective mid-year. From my understanding is the formula was already set for the plan year 2024, the client cannot change it anymore. I understand they can amend the plan to have it effective 01/01/2025. My question: Is it possible to change the PS formula mid-year 2024 in this case? if yes, what are the consequences that we need to know?"

BenefitsLink Message Boards

Press Releases

SageView Advisory Group Acquires Palmer Retirement Consulting

SageView Advisory Group

Pontera Announces Partnership with Commonwealth Financial Network to Help Its Advisors Better Manage Clients' Wealth


Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Washington Legislative Update

May 6, 2024 in DC

International Foundation of Employee Benefit Plans [IFEBP]

Last Issue's Most Popular Items

In Memoriam: Richard ('Rick') Matta

Groom Law Group

Text of Agencies' RFI Under SECURE 2.0 Section 319: Effectiveness of Reporting and Disclosure Requirements (PDF)

U.S. Treasury Department; U.S. Department of Labor [DOL]; and Pension Benefit Guaranty Corporation [PBGC]

Planning for Inherited Retirement Accounts: Determining the Applicable Distribution Period


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

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