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Retirement Plans Newsletter

October 7, 2024

5 New Job Opportunities 5 New Job Opportunities

 

[Guidance Overview]

Retirement Plans Can Provide Critical Emergency Disaster Relief

"[SECURE 2.0] allows special distribution and loan rules from retirement plans for individuals impacted by qualified federally declared disasters. This provision enables employers to offer financial assistance to plan participants by allowing emergency withdrawals or loans without incurring the 10% early withdrawal penalty. To qualify, a participant's principal residence must be located in the disaster area during the incident period, and they must have experienced an economic loss due to the disaster."  MORE >>

Enterprise Iron

[Guidance Overview]

A Guide to Required Minimum Distributions: The ABCs of RMDs

"The five most important rules affecting RMDs: [1] Changes in the age requirement.... [2] Excluding Roth accounts ... [3] Reducing penalties for failing to take an RMD.... [4] RMDs for sole beneficiary surviving spouses.... [5] RMDs for eligible designated beneficiaries."  MORE >>

Cohen & Buckmann, P.C.

Citgo Settles Lawsuit Challenging Plan Mortality Tables

"Citgo will ... settle a class action alleging it shorted early retirement payouts by basing the allowances on outdated mortality tables that used data from the 1970s ... Citgo has agreed to increase the value of retirees' annuities by $10 million, calculated as additional present value added to their benefits[.]" [Urlaub v. Citgo Petroleum Corp., No. 21-4133 (N.D. Ill. settlement agreement filed Oct. 2, 2024)]  MORE >>

Cohen Milstein

Supreme Court to Hear ERISA Case Challenging Management of Cornell's 403(b) Plans

"In their petition to the Supreme Court, plaintiffs asked for uniform guidance on how appeals courts and district courts interpret prohibited transactions rules and what sponsors must do to secure exemptions." [Cunningham v. Cornell Univ., No. 21-0088 (2d Cir. Nov. 14, 2023; cert. pet. granted Oct. 3, 2024)]  MORE >>

Pensions & Investments

Drawdown with Annuities Can Balance Retirement Income and Liquidity (PDF)

"A drawdown strategy paired with a deferred annuity may be a better match for retirees who need to maximize income and maintain adequate liquidity. Due diligence is key during insurer selection and when evaluating the product to ensure that it is a good fit for the plan."  MORE >>

T. Rowe Price

Survey Shows Income a Major Retirement Concern

"The survey of 1,500 American retirement plan participants ages 25-65 reveals attitudes and apprehensions on retirement income ... Only 1 in 10 correctly estimated the 70% to 80% income replacement rate that experts recommend to maintain their same standard of living.... 87% believe they will need some level of help withdrawing money from their retirement accounts."  MORE >>

American Century Investment Services, Inc.

Lessons from Behavioral Research for Retirement Saving, Investment, and Spending

"Behavioral research on financial decision making has exploded over the last decade, spurred by social scientists working at the interface of economics, finance, psychology, and sociology. This volume collects insights and offers new perspectives on this research, with a particular focus on ways to design and sustain more effective and successful retirement plans."  MORE >>

Olivia S. Mitchell abd Nikolai L. Roussanov, via SSRN

Does 401(k) Loan Repayment Crowd Out Retirement Saving? Implications for Plan Design

"Relative to a control group, loan takers' contribution rates fall by just 0.8 percentage points in the two years following loan issuance, despite simultaneously making large loan repayments. Relatedly, most participants continue making elective contributions after hardship withdrawals."  MORE >>

John Beshears, James J. Choi, Joel Dickson, Aaron Goodman, Fiona Greig, and David Laibson, via SSRN

The Implications of Gender Differences in Retirement Plan Investment Patterns

"Some previous studies have concluded that women's more conservative investing is a major factor leading to observed gender differences in retirement preparation, but current research does not strongly support that viewpoint. Nevertheless, there is substantial evidence of gender differences in social roles, psychology, and labor market experience that make it more difficult for women to save adequately for retirement. This chapter reviews the research on these differences and identifies potential policy solutions."  MORE >>

Vickie L. Bajtelsmit, via SSRN

Plan Design and Participant Behavior in Defined Contribution Retirement Plans: Past, Present, and Future

"This chapter reviews the academic literature on defined contribution retirement plan design and participant behavior. While adoption of automatic enrollment has significantly increased participation rates, recent studies find the long-run effects on savings are smaller than the short-run effects, with some savings financed via debt."  MORE >>

Jonathan Reuter, via SSRN

Deepening Our Understanding of Savings Automation in Retirement and Non-Retirement Contexts

"Twenty years of research focusing on retirement savings demonstrate that automating components of the savings process can increase participation in retirement plans, contribution rates, and balances. [The authors] review the literature on these benefits and the potential negative consequences of automation, such as reduced liquidity. ... Recent policies like the SECURE 2.0 Act of 2022 and a growing number of state auto-IRA programs are encouraging greater automation of both retirement savings and liquid emergency savings, and may provide new avenues for understanding the impacts of savings automation."  MORE >>

Alycia Chin, Brianna Middlewood, Heidi Johnson, via SSRN

Employee Benefits Jobs

View job as Education Consultant for Pentegra

Education Consultant

Pentegra

Remote

View job as Education Consultant for Pentegra
View job as Retirement Plan Administrator for Retirement Solutions Specialists

Retirement Plan Administrator

Retirement Solutions Specialists

Remote / Jacksonville FL / Hybrid

View job as Retirement Plan Administrator for Retirement Solutions Specialists
View job as Customer Service Representative for Distribution & Loan Department for The Benefit Advantage

Customer Service Representative for Distribution & Loan Department

The Benefit Advantage

Remote

View job as Customer Service Representative for Distribution & Loan Department for The Benefit Advantage
View job as Benefits Underwriter for Vensure Employer Solutions

Benefits Underwriter

Vensure Employer Solutions

Chandler AZ

View job as Benefits Underwriter for Vensure Employer Solutions
View job as Underwriter & Transition Specialist for DIETRICH

Underwriter & Transition Specialist

DIETRICH

Plymouth Meeting PA / Hybrid

View job as Underwriter & Transition Specialist for DIETRICH

Selected New Discussions

May a Plan Exclude an Intern (Even If She Met LTPT Conditions)?

"A 2023 BenefitsLink discussion aired some observations about whether an employment classification of intern is or isn't a classification sufficiently distinct from an age or service condition that a plan may exclude an intern who met age and service conditions for treatment as a long-term-part-time employee. Interpreting ERISA Section 202(c) for a situation that might involve some similarities, the IRS states: 'The student employee exclusion in section 403(b)(12)(A) of the [Internal Revenue] Code is a statutory exclusion based on a classification (students performing services described in [I.R.C.] section 3121(b)(10)), rather than on service.' And: 'Although [26 C.F.R.] Section 31.3121(b)(10)-2(d) provides that hours worked is a factor in determining whether an employee is a student, as well as providing an unsafe harbor if an employee normally works at least 40 hours per week (which is equivalent to 2,000 hours a year), the statutory student exclusion is not based principally on service.' Notice 2024-73, at A-5 & footnote 7 (emphasis added). Does this change our thinking about whether a for-profit employer's plan may exclude an intern from elective deferrals?"

BenefitsLink Message Boards

Qualified Disaster Recovery Distributions: Qualified Disaster Area

"I'm having a hard time finding a good source for when a disaster is a Qualified Disaster for purposes of Qualified Disaster Recovery Distributions. I'm 99% sure that for prior disaster recoveries, it was limited to areas FEMA designated as eligible for individual assistance rather than only public assistance. Does anyone have a good source to confirm or refute that only areas designated for individual assistance qualify? I think this will come up rather frequently for those of us with clients in the southeast. Next hurdle is whether the participant is a qualified individual, but we can clear that through self certification."

BenefitsLink Message Boards

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Cash Balance Plans: A Powerful Retirement Savings Strategy

October 29, 2024 WEBINAR

Pentegra

Last Issue's Most Popular Items

IRS Issues Guidance for Long-Term, Part-Time Employees in 403(b) Plans

American Retirement Association [ARA]

Cornell Workers' ERISA Case Will Be Reviewed by Supreme Court

Bloomberg Law

First Multiemployer Pension Plan Risk Transfer

Bolton

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

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