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Retirement Plans Newsletter

October 8, 2024

3 New Job Opportunities 3 New Job Opportunities

 

[Guidance Overview]

Welcome to the Party, 403(b) Plans: IRS Issues LTPT Guidance

"[Notice 2024-73] provided some key guidance regarding a 403(b) plan’s ability to have, or retain, traditional excluded classifications, such as part-time employees that normally work fewer than 20 hours, and student employees. ... [T]he permission to retain the part-time employee exclusion in an ERISA 403(b) plan is conditioned on the requirement that, should such a part-time employee attain age 21 and complete the two consecutive years with 500 hours of service, the employee must be treated as an LTPT employee and permitted to make elective deferrals."  MORE >>

Ferenczy Benefits Law Center

[Guidance Overview]

How 'Pick-Up' Contributions Work

"Internal Revenue Code Section 414(h)(2) provides that, in any governmental plan where the contributions of the employer are designated as employee contributions but the employer 'picks up' those contributions, the contributions are treated as employer contributions and thus not currently taxable to the employee. Instead the taxation is deferred until the benefit is distributed to the employee. This is where the benefits of a 'pick-up plan' come into play for employees, and particularly those employees a public employer wishes to reward and retain."  MORE >>

Bricker Graydon

[Guidance Overview]

The New Fiduciary Rule, Part 50: What Is a Best Interest Process?

"This post discusses the basic requirements for a best interest process for making recommendations to ERISA-governed retirement plans, participants in those plans, and IRA owners. Note that Reg BI and the NAIC model rule do not apply to recommendations to retirement plans, but do apply to participants and IRA owners, including rollover recommendations and recommendations to transfer IRAs."  MORE >>

FredReish.com

Cornell 403(b) Transaction Complaint to Get SCOTUS Review

"[The Second Circuit had] affirmed the lower court's dismissal and found that the plaintiffs did not 'plausibly allege that the services were unnecessary or involved unreasonable compensation … thus supporting an inference of disloyalty.' That decision aligns in part with decisions in the 3rd, 7th and 10th Circuits, while conflicting with decisions made in the 8th and 9th Circuits." [Cunningham v. Cornell Univ., No. 21-0088 (2d Cir. Nov. 14, 2023; cert. pet. granted Oct. 3, 2024)]  MORE >>

PLANSPONSOR; free registration may be required

DOL Slashes Info Request for SECURE 2.0 Lost-and-Found Database

"In a proposed ICR issued earlier this year, DOL anticipated asking administrators to furnish extensive historical information, but the agency submitted a narrower revised ICR after receiving significant criticism from commenters. Although complying with the revised ICR will remain voluntary, without the data collection, DOL anticipates finding itself unable to meet the Dec. 29 statutory deadline for establishing the database.... [OMB] will accept public comments through Oct. 15 before deciding whether to approve it."  MORE >>

Mercer

The Trouble with True-Ups: Make Sure You Budget for the Maximum Match

"Plan sponsors who don't realize the implications of an annual computation period can have a very rude awakening when they find out that the payroll system only matches each payroll, but the true-up calculation requires an additional contribution to be made at year end. For employers that give substantial bonuses, the true-up contribution can be significant and truly problematic if it is not expected."  MORE >>

Belfint Lyons Shuman

Job Transitions Slow Retirement Savings (PDF)

"The typical U.S. worker has nine employers over the course of their career. The median job switcher sees a 10% increase in pay but a 0.7 percentage point decline in their retirement saving rate when they switch employers.  The current design of many 401(k) plans does not account for repeated job switches."  MORE >>

Vanguard

Investors and Planners Disconnected on Retirement Income

"[W]hile 62% of advisors say they've initiated conversations about annuity products, just 27% of investors agree. Similarly, when discussing retirement income planning, 98% of planners say they have talked about Social Security, pensions, and annuities, but only 69% of clients agree.... [E]ven though 96% of advisors say they have discussed when clients should withdraw from certain accounts, only 66% of clients believe they have; and while 95% of planners have recalled conversations with clients about minimizing taxes, only 64% of clients concur."  MORE >>

401(k) Specialist

Pension Funding Index, October 2024

"The funded status of the 100 largest corporate defined benefit pension plans fell by $3 billion during September ... A decrease in the benchmark corporate bond interest rates used to value pension liabilities led to an increase in plan liabilities, which outweighed plan asset gains during September. As of September 30, the funded ratio inched downward to 102.4%, from 102.6% at the end of August, and the funded status surplus decreased to $32 billion."  MORE >>

Milliman

Will Auto-IRAs Help Households Cope with Emergency Expenses?

"[A] survey of low- to moderate-income workers shows that only 10 percent would tap such an account for an emergency. Most workers prefer to keep the savings intact for retirement and have misperceptions about taxes and penalties. Whether the withdrawal process is described as 'hard' or 'easy' had little effect on withdrawals. But the 'easy access' framing did make workers more enthused about auto-IRAs, which could help participation."  MORE >>

Center for Retirement Research [CRR] at Boston College

[Opinion]

Amicus Brief in Appeal of Case Challenging Multiemployer Plan Calculation of Withdrawal Liability (PDF)

336 pages. "[T]he Pension Fund argues it may include increases in employer contribution rates required by the Fund's rehabilitation plan in the Fund's calculation of the employers' withdrawal liability because those contribution increases have been used to provide increased benefit accruals for Fund participants and beneficiaries. But this argument skips over a key fact: the Pension Fund, a massively underfunded multiemployer pension plan until its receipt of $35.8 billion in Special Financial Assistance in January 2023, was never permitted to increase benefits at all."  [Central States, Southeast and Southwest Areas Pension Fund v. Event Media, Inc., No. 22-6133 (N.D. Ill. Mar. 29, 2024; on appeal to 7th Cir.)]  MORE >>

Miller Johnson

[Opinion]

SPARK Institute Comment Letter to IRS on Notice 2024-55, Certain Exceptions to the 10% Additional Tax Under Code Section 72(t) (PDF)

"Domestic Abuse Victim Distributions: Clarify the treatment of defined contribution plans offering life annuities ... Confirm anti-cutback relief for in-service withdrawal provisions ... Do not create regulatory exceptions to self-certification ... Eliminate exclusion of governmental 457(b) plans for terminally ill individual distributions."  MORE >>

The SPARK Institute

Benefits in General

[Guidance Overview]

DOL Updates and Cybersecurity Guidance and Confirms That It Applies to All ERISA Plans

"[In] following the DOL's guidance with respect to such service providers, plan sponsors and fiduciaries should: [1] request and review the service provider's information and documentation regarding cybersecurity policies, procedures, guidelines, and standards ... [2] include cybersecurity and data privacy provisions in service provider agreements ... and [3] inquire whether third-party service providers have applicable insurance policies."  MORE >>

Patterson Belknap Webb & Tyler LLP

Executive Compensation and Nonqualified Plans

2024 Aggregate Share-Based Compensation (PDF)

29 pages. "This report covers the three-year period from 2021 to 2023, and includes ... [1] Company-wide annual grant rates, measured based on annual share usage and fair value transfer.... [2] Overhang, measured based on potential share dilution as well as the fair value of outstanding grants. [3] Frequency and prevalence of long-term incentive plan share requests. [4] Allocation of long-term incentive pools to the CEO and other proxy officers."  MORE >>

FW Cook

Employee Benefits Jobs

View job as Benefits Manager for West Side Federation for Senior & Supportive Housing

Benefits Manager

West Side Federation for Senior & Supportive Housing

New York NY

View job as Benefits Manager for West Side Federation for Senior & Supportive Housing
View job as Part-Time Distribution Reviewer for Nova 401(k) Associates

Part-Time Distribution Reviewer

Nova 401(k) Associates

Remote

View job as Part-Time Distribution Reviewer for Nova 401(k) Associates
View job as Employee Benefits Associate for Shipman & Goodwin LLP

Employee Benefits Associate

Shipman & Goodwin LLP

Remote / CT

View job as Employee Benefits Associate for Shipman & Goodwin LLP

Selected New Discussions

Can Plan Provision Allowing SECURE 2.0 Disaster Relief Distributions Later Be Eliminated?

"If we amend a plan to allow for Federal disaster relief distributions, is that semi-permanent? Can they remove that provision without a cutback of benefits? Like age 59 1/2 withdrawals?"

BenefitsLink Message Boards

5500SF: Is This Term Participant Counted in 12/31/2023 Headcount?

"Safe Harbor 401k Plan with Cross Tested Profit Sharing. There are 2 Participants at 1/1/2023: 1 HCE and 1 NHCE. The NHCE terminates in 2023 with 1000+ hours credited (i.e. no 'Break-in-service'), is 40% Vested, however, has $0.00 account balances (and therefore $0.00 vested account balances) in all sources (never contributed 401k therefore never received SHMatch, and no PS allocated in years participated). Q: Is the NHCE counted on Form 5500SF as of 12/31/2023? It is a Relius document and Forfeitures definition includes the 'deemed' to have been paid.... However, if a Profit Sharing or Forfeitures had been allocated in 2023, the NHCE would have shared in them. Forfeiture definition goes on to say irrespective of the above, Forfeiture will not occur until the end of the first Plan Year for which the Participant is not eligible to share in the allocation of Forfeitures. Q: Does this force counting the NHCE as of 12/31/2023? Q: Is the NHCE counted simply because no Break-in-service as of 12/31/2023?"

BenefitsLink Message Boards

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Retirement Income Solutions: Delivering Lifetime Benefits

October 23, 2024 WEBINAR

Pensions & Investments

Double-Trigger RSUs and Stock Options in Private Companies: Key Tax and Other Considerations when Designing and Implementing Award Programs, Strategies to Consider for Expiring Awards, and More

December 12, 2024 WEBINAR

Strafford

Last Issue's Most Popular Items

A Guide to Required Minimum Distributions: The ABCs of RMDs

Cohen & Buckmann, P.C.

Citgo Settles Lawsuit Challenging Plan Mortality Tables

Cohen Milstein

Retirement Plans Can Provide Critical Emergency Disaster Relief

Enterprise Iron

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

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