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Retirement Plans Newsletter

January 24, 2024


[Official Guidance]

PBGC Reporting and Disclosure Requirements

On January 23, 2024, EBSA, the IRS, and PBGC jointly published a request for information (RFI) soliciting public input on the effectiveness of existing reporting and disclosure requirements for retirement plans, as required by Section 319 of SECURE 2.0.  As noted in the RFI, a summary of PBGC’s reporting and disclosure requirements is posted at the linked page.  MORE >>

Pension Benefit Guaranty Corporation [PBGC]

[Official Guidance]

Draft Instructions for IRS Form 5330: Return of Excise Taxes Related to Employee Benefit Plans (PDF)

Jan. 23, 2024; 16 pages. "What's New: ... [1] Mandatory electronic filing.... [2] Effective in 2024, Form 8868, Application for Extension of Time To File an Exempt Organization Return or Excise Taxes Related to Employee Benefit Plans, is used to request an extension of time to file Form 5330."  MORE >>

Internal Revenue Service [IRS]

[Official Guidance]

Draft Instructions for 2023 IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)

Jan. 23, 2024; 11 pages. "Reminders: [1] Certain corrective distributions not subject to 10% early distribution tax.... [2] The 10% additional tax on early distributions doesn't apply to qualified disaster distributions nor does it apply to qualified disaster recovery distributions.... [3] The age restriction for contributions to a traditional IRA has been eliminated." [Also available: 2023 IRS Form 5329]  MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

Exceptional Usefulness and Quality icon SECURE 2.0 and the Past and Future of the U.S. Retirement System (PDF)

31 pages. "[SECURE 2.0] is the most extensive set of changes to retirement law in the last 15 years. In this paper, [the authors] place SECURE 2.0 in the context of the ongoing retirement evolution, summarize certain key provisions, and discuss the need for additional reforms. Because 2024 marks the 50th anniversary of the passage of ERISA, assessing the broad arc of retirement policy and behavior is particularly timely."  MORE >>

J. Mark Iwry, David C. John, and William G. Gale, via The Brookings Institution

[Guidance Overview]

IRS Extends Deadline for SECURE 2.0 Amendments and Provides Other Guidance

"One of the most significant provisions in [Notice 2024-02] is an extension of the deadline for plan sponsors to adopt amendments required under SECURE 2.0.... The Notice also clarifies the Act's provision allowing employers to provide de minimis financial incentives to employees to encourage participation in a 401(k) or 403(b) plan."  MORE >>

Trucker Huss


CCA Enrolled Actuaries Conference | Washington, D.C. | March 10-13, 2024

Choose from 48 sessions covering topics in single-employer, multiemployer, public plans, small plans and other topics relevant to pension professionals. Earn up to 18.5 EA credits, including 2.0 EA Ethics credits & 1.5 credits toward bias topics.

Sponsored by Conference of Consulting Actuaries [CCA]

[Guidance Overview]

Long Term, Part-Time Employees: Identifying Those Who Qualify

"The recently proposed regulations issued by the [IRS] answer the question of who is a long-term, part-time employee in some detail.... [An] employee who might otherwise qualify as a long-term, part-time employee by meeting the minimum service requirements will not be considered one if the employee enters the plan after first satisfying other minimum eligibility criteria."  MORE >>

McDermott Will & Emery

[Guidance Overview]

Long Term, Part-Time Employees: Eligibility Service and Plan Design

"[G]iven the added complexity around hours counting and tracking, some employers may want to explore design changes that would help reduce the administrative burden associated with complying with the new rules. This might include eliminating eligibility waiting periods for making elective deferrals or eliminating waiting periods altogether, even those that can still be applied to receipt of employer contributions."  MORE >>

McDermott Will & Emery

[Guidance Overview]

Long Term, Part-Time Employees: Coverage and Nondiscrimination Testing

"The recently proposed regulations issued by the [IRS] confirm that employees who enter a plan as long-term, part-time employees may be excluded from coverage testing, ... However, ... employers cannot choose to exclude long-term, part-time employees from some types of testing but not others (or to exclude some long-time, part-time employees from testing but not the rest). It's all or nothing."  MORE >>

McDermott Will & Emery

[Guidance Overview]

Long Term, Part-Time Employees: Methods for Counting Hours of Service

"[T]he new rule has generated questions about whether all employers will now be required to track the actual hours all employees work to ensure compliance with this rule. The recently proposed regulations released by the [IRS] confirm, in what should be a relief to many employers, that the answer is no."  MORE >>

McDermott Will & Emery

[Guidance Overview]

Long Term, Part-Time Employees: Eligibility Computation Periods

"[T]he new rule raises numerous questions about how the new service requirement should be tracked.... [R]ecently proposed regulations ... [clarify] that employers can use one of two eligibility computation periods."  MORE >>

McDermott Will & Emery

[Guidance Overview]

Long Term, Part-Time Employees: Vesting

"[Proposed regulations] provide that employees who enter the plan as long-term, part-time employees must continue to be credited with vesting service for completing 500 hours of service in the designated 12-month measurement period, even if they later stop being considered long-term, part-time employees."  MORE >>

McDermott Will & Emery

[Guidance Overview]

Church-Sponsored Retirement Plans: Overview and Considerations (PDF)

11 pages. "This issue brief discusses the broad range of church plans and practices. It discusses: [1] The impact on a participant of being in a church plan when the ERISA protections and provisions for U.S. tax-qualified single or multiemployer pension plans generally do not apply; [2] Governance and fiduciary responsibilities, including plan audit considerations; [3] Differing funding sources and varying approaches to funding benefits; and [4] How the bankruptcy or termination of an underfunded church plan exposes plan participants to potentially more harm than if the plan were covered by PBGC."  MORE >>

American Academy of Actuaries

Public Pension Oversimplification Complicates Reform

"Within a particular state, there are often large pension plans funded much better than the overall ratio of all plans. [This article includes] a non-exhaustive list of some of key features that vary from plan to plan. These items affect aspects of plans like benefit levels, governance, funding, future plan health and plan costs."  MORE >>

Segal, via PERSist


Will Actuaries Come Clean on Public Pensions?

"The total underfunding nationally is usually reported to be in the range of $1-$1.5 trillion. But even that large sum understates the shortfall by trillions of dollars.... While there may be some questionable figures on the asset side of the ledger resulting from lagged appraised values for private assets, for example, the bulk of the mismeasurement is from understated 'actuarial liability' -- the present value of future pension benefit payments earned to date by plan members. In essence, actuaries have for years been helping the public officials who hire them hide trillions of dollars of public debt."  MORE >>

Larry Pollack, via Cato Institute

Benefits in General

[Guidance Overview]

DOL Increases Civil Monetary Penalties for Certain ERISA Violations

"The DOL recently issued a final rule that adjusts for inflation the amounts of civil monetary penalties assessed for certain ERISA violations. The adjusted penalty amounts apply to penalties assessed after January 15, 2024, and for which the associated violations occurred after November 2, 2015."  MORE >>

Haynes and Boone, LLP

Advances in AI and Other Technologies to Enhance Employee Benefits

"Advances in financial technology will soon lead to better improvements in employee benefits in addition to artificial intelligence (AI) ... For example, anti-fraud, health data and language models, which analyze bodies of text data to provide a basis for their word predictions, can help boost offerings to employees[.]"  MORE >>


ERISA Litigation Faces New Frontiers in 2024 (PDF)

"In 2023, just over 100 new class actions were filed under [ERISA] -- the lowest number filed since 2018 ... Plaintiffs firms continue to explore new theories. In 2023, they filed new lawsuits challenging the use of plan forfeitures, sought named plaintiffs for new lawsuits challenging health plan fees, and filed a record number of actuarial equivalence lawsuits."  MORE >>

Groom Law Group, via Law360

Selected New Discussions

NQDC Church Plan: Eligibility and Vesting

"Can/must a church having a 501(c)(3) determination and offering a nonqualified deferred compensation plan limit eligibility to a 'top-hat' group? Also, as I understand 457(f) doesn't apply in the case of a church employer, can plan accounts avoid current taxation upon vesting, as usually occurs with other tax-exempt organization nonqualified plans?"

BenefitsLink Message Boards

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

2024 Employment & Employee Benefits Seminar

February 7, 2024 WEBINAR

Poyner Spruill

Benefit Trends in Mergers and Acquisitions

February 8, 2024 in OH

Worldwide Employee Benefits Network [WEB] - Northeast Ohio Chapter

Last Issue's Most Popular Items

Teresa Ghilarducci: 401(k) Experiment Has Failed, Fueled U.S. Retirement Crisis

Pensions & Investments

Pension-Linked Emergency Savings Accounts: Qualified Plans Can Provide More Than Just Retirement Benefits (PDF)

Groom Law Group, via Journal of Pension Benefits

How the Supreme Court's Chevron Decision Might Impact the Retirement Plan Industry

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

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