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Retirement Plans Newsletter

February 9, 2024

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[Official Guidance]

Draft Instructions for IRS Form 8881: Credit for Small Employer Pension Plan Startup Costs, Auto-Enrollment, and Military Spouse Participation (PDF)

Rev. Jan. 2024; draft Feb. 8, 2024. "What's New: [1] Increased small employer pension startup costs credit.... [2] Employer contribution credit.... [3] Military spouse participation credit. "  MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

IRS Announces Extension of Pre-Examination Compliance Pilot Program

"If a plan sponsor receives a letter notifying them of an upcoming examination, it is important to act quickly and loop in benefits counsel as soon as possible. Plan administrators have a relatively short time to review operations and plan documents and determine any appropriate corrective measures in order to take advantage of this limited and valuable window for correction with reduced or no penalties."  MORE >>


[Guidance Overview]

Agencies Request Input on Retirement Plan Disclosure and Reporting

"The [Request for Information] consists of 24 questions, some specific, some more general. They are divided into three categories: disclosures to plan participants and beneficiaries, reporting to the agencies and additional questions. The questions are from all three agencies (and the IRS) with no distinction made among the different agencies."  MORE >>


How Should Plan Sponsors Stand Up a New Retirement Plan Committee?

"Plan sponsors can find education and training for their retirement plan committees from several sources, but how best to build one and why are separate questions."  MORE >>

PLANSPONSOR; free registration may be required

When and Why a Second Retirement Plan Committee Makes Sense

"[A survey of] 99 large defined contribution plan sponsors ... found that a slight majority (54%) of respondents have a single committee to monitor and manage their DC programs, with the other 46% splitting the responsibilities between separate investment and administrative committees. The survey also found that plans with greater asset levels were more likely to have separate committees, with only 25% of sponsors that manage assets less than $1 billion utilizing separate committees."  MORE >>

PLANSPONSOR; free registration may be required

Student Loans and Retirement Preparedness

"Of the participants who were making student loan debt payments at the beginning of the study period and had stopped by the end of the study, 31.6 percent increased their contribution rate by at least 1 percentage point after the payments had stopped.... Making student loan debt payments was found to have a statistically significant negative impact on both the average employee contribution rate and account balance at the end of the study."  MORE >>

Employee Benefit Research Institute [EBRI]

Could Private Equity Work in Employer Workplace Plans?

"High variability is a known feature of private markets, but the fact that large pensions were largely unable to concentrate their investments in high performers was notable. The addition of high variation in how much pensions were allocating to private equity was unforeseen. While there are potential return and diversification benefits to including private equity in a retirement portfolio, these pension plans do not provide a consensus approach that can be broadly applied to defined-contribution plans."  MORE >>


Shuttered Longtime Philadelphia Law Firm Sued Over Pension Plan

"A Philadelphia-based law firm that shuttered last year after nearly 90 years in business has been hit with a class action claiming it unlawfully used pension contributions to help run the firm and pay its shareholding partners, harming other partners and employees." [Bennett v. Schnader Harrison Segal & Lewis LLP, No. 24-0592 (E.D. Penn. complaint filed Feb. 7, 2024)]  MORE >>

Reuters; free registration may be required

Past Proposals to Tax Qualified Retirement Plans Have Never Gotten Far

"A study published by Andrew Biggs and Alicia Munnell for the Center of Retirement Research at Boston College advocated taxing tax-advantaged plans in order to help pay for Social Security.... In recent years, efforts to tax qualified plans or erode the contribution levels through inflation have all been defeated before any formal legislative proposal could even be made."  MORE >>



What the Proposal to End 401(k) Tax Breaks to Fund Social Security Gets Wrong

"[T]he heart of the counterargument [Peter Brady of ICI] and others are making against the new proposal is the fact that American retirees rely on the combination of Social Security benefits, retirement plan income and any additional sources of savings or wealth they may have, such as a pension, an annuity, an inheritance or even the sale of a home. It's the proverbial three-legged stool, [Brady] noted, and it's always going to be misleading to consider only one essential part of the retirement furniture at a time."  MORE >>



Major Costs and Risks Associated with Restoring the Florida Retirement System's Cost-of-Living Adjustment

"Facing overwhelming growth in annual pension costs in 2011, the Florida state legislature elected to suspend the Florida Retirement System's cost-of-living adjustment (COLA) for state workers who retire after that date.... [A] new proposal ... seeks to reinstate the costly COLA feature, which could again expose the state and taxpayers to unpredictable costs. It is crucial that policymakers explore this proposal's potential costs and risks before setting the state's pension funding progress back."  MORE >>

Reason Foundation

Employee Benefits Jobs

View job as Junior Retirement Plan Administrator for WIA Consultants, Inc.

Junior Retirement Plan Administrator

WIA Consultants, Inc.

East Meadow NY / Hybrid

View job as Junior Retirement Plan Administrator for WIA Consultants, Inc.

Selected New Discussions

Short Duration 401(k) Plan: Audit Risk Exposure

"Having informed a small business owner who plans to retire in 2024 that they cannot start a pension plan for 2023, contribute for 2023 and 2024, then retire and terminate the plan, since there is no long term intent for the plan and it would create a significant audit risk of disqualification, she is asking if she can instead create a 401k/PS plan for 2023-2024. I feel like the answer is the same, but I'm really not sure if the risk exposure is as great as if it were a pension plan."

BenefitsLink Message Boards

Realistically, What Is Our Exposure for Several Missed 5500s?

"Client missed filing Form 5500 SF in 2019, 2020, 2021, and 2022. According to the DOL's current penalty of $2,670 per day, the total penalty could come out to over $7m -- the IRS penalties would be almost $500k. We can't use the VFCP (at least not without permission) because we've already been told by the DOL that we are delinquent. This is not a big plan. A $7m penalty would be WAY more than the plan is even worth. What should our expectation be?"

BenefitsLink Message Boards

QDRO: How to Apply Plan Limitations

"DBP with limit on lump sums (PVAB < $50k) In a separate interest QDRO, would this apply individually to the participant's and AP's respective portions or to the pre-split benefit in total? Checking if the plan's QDRO provisions have any exceptions to that LS limit, but looking for opinions in case there are no exceptions. I can see both sides -- AP is treated as a separate participant with separate benefit, so apply separately, but the flip side is if total PVAB is >$50k, say $80k for example and participant can take a $45k LS and AP a $35k LS, then the plan will have been forced to pay a LS total on the one (albeit split) benefit in excess of the plan's $50k limit."

BenefitsLink Message Boards

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

The DOL Fiduciary Proposal’s Impact on Banks and Trust Departments


Faegre Drinker

Q1 2024: Fiduciary Roles & Responsibilities

February 28, 2024 WEBINAR

CAPTRUST Financial Advisors

Last Issue's Most Popular Items

SECURE 2.0 Guidance Gives More Flexibility to Cash Balance Plans


SECURE 2.0 Grab Bag Guidance: De Minimis Financial Incentives

Ferenczy Benefits Law Center

Cybersecurity Firms in Demand for Identifying, Addressing Risks Faced by Retirement Plans

Pensions & Investments

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

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