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Retirement Plans Newsletter

October 18, 2024

 

[Official Guidance]

Text of IRS Final Regs: Withholding on Certain Distributions under Section 3405(a) and (b)

"This document contains a final regulation regarding income tax withholding on certain periodic payments and nonperiodic distributions from employer deferred compensation plans, individual retirement plans, and commercial annuities that are not eligible rollover distributions. The regulation addresses a payor's obligation to withhold income taxes in the circumstances in which those payments or distributions are made to payees outside of the United States and ... applies with respect to payments and distributions made on or after January 1, 2026. However, taxpayers may apply it to earlier payments and distributions."  MORE >>

Internal Revenue Service [IRS]

[Official Guidance]

Draft of 2024 IRS Form 8955-SSA: Annual Registration Statement Identifying Separated Participants with Deferred Vested Benefits (PDF)

Fillable PDF; Oct. 17, 2024  MORE >>

Internal Revenue Service [IRS]

[Guidance Overview]

IRS Issues Guidance on Overpayments from Retirement Plans

"[If] an inadvertent benefit overpayment results in another type of failure (for example, the overpayment results in an underpayment to another plan participant), a corrective payment may be required.... Recoupment remains an optional correction method under EPCRS.... if a plan seeks recoupment for an overpayment that is rolled over to another plan, the amount being recouped and transferred back to the original plan is treated as an eligible rollover, and both plans are treated as allowing the transfer, regardless of plan terms."  MORE >>

Thomson Reuters Practical Law

[Guidance Overview]

DOL Cuts Back on Reporting to Retirement Savings Lost and Found

"In the updated materials on the L&F database, the DOL is asking plan administrators for information only on participants who have terminated employment with a vested benefit and are age 65 or older.... [T]he DOL is not asking for information about amounts transferred to automatic rollover IRAs or distributed annuities (e.g., pension risk transfer transactions)."  MORE >>

Willis Towers Watson

[Guidance Overview]

IRS Issues Guidance on LTPT Worker Rules for 403(b) Plans

"Notice 2024-73 addresses how the LTPT rule relates to the exceptions for employees who normally work fewer than 20 hours per week and for student employees.... The notice focuses primarily on how the new LTPT eligibility rules relate to the universal availability requirement for 403(b) plans."  MORE >>

Mercer

Retirement Withdrawals: Those Who Take Money Out Early Rarely Pay It Back

"2 out of every 5 people with retirement accounts have taken money out of them early, including more than 10% that have done so multiple times. Only 43% report paying back the amount withdrawn.... More than 80% of people are unaware of an IRS change allowing a $1,000 emergency withdrawal. Personal debt is the #1 reason for making an early withdrawal, cited by nearly one-fourth (24%) of people who have taken an early withdrawal."  MORE >>

FinanceBuzz

Gen Z Foresees an 'Untraditional' Retirement

"Gen Zers planning their future are not anticipating a 'traditional' post-work life. Instead, more believe they'll continue to work late into their 60s and 70s, with some even believing they won't ever retire ... With this belief, a growing number of Gen Zers are instead adopting a 'spend now, save later' mindset, with just 20% of younger workers currently saving for retirement."  MORE >>

401(k) Specialist

DOD Launches Pilot Program for Sole Source Follow-on Awards to ESOPs

"The Pilot Program is the latest effort by DOD to expand the defense industrial base and promote the utilization of small businesses (many of which are owned in whole or in part by ESOPs).... ' It is unclear how many contractors may be considered qualified businesses for purposes of the final rule (only eight businesses have participated in the pilot program's initial phase). Only COs, not contractors themselves, may submit applications for participation in the Pilot Program[.]"  MORE >>

Wiley Rein LLP

Fidelity Identifies Unauthorized Activity Affecting University of California Retirement Accounts

"The Retirement Program Services division of the UC Office of the President announced that 120 accounts administered by Fidelity Investments at UC Davis were affected by the data breach.... Fidelity's cybersecurity team has identified the issue, closed the vulnerability and taken steps to protect all potentially affected accounts, according to the university."  MORE >>

PLANSPONSOR; free registration may be required

PBGC OIG Report: Top Management and Performance Challenges Facing the PBGC in Fiscal Year 2025 (PDF)

22 pages. "[The Inspector General has] identified four management and performance challenges: [1] strengthening PBGC's information technology; [2] Contracting Officers' Representatives' oversight of contracts; [3] human capital: mission critical skills; and [4] acquisition challenges. These challenges were identified based on oversight work performed for the Office of Inspector General, input from PBGC management, and knowledge of the PBGC's programs and operations."  MORE >>

Office of Inspector General [OIG], Pension Benefit Guaranty Corporation [PBGC]

[Opinion]

Public School District 403(b) Participation Rates with Multiple Vendors

"The argument usually proffered as the reason to reduce the number of providers in a 403(b) plan is to decrease the fees that a participant pays for the 403(b) provider that they choose. The thought is that buying power on a larger scale will decrease the fees for participants. ... [S]chool districts should not cut off their noses to spite their faces. When they chase solely after lowering fees, they need to ensure that they are not cutting out service."  MORE >>

NTSA [National Tax-Deferred Savings Association]

[Opinion]

ERIC Letter to IRS Requesting Additional Guidance Under Section 110 of the SECURE 2.0 Act with Respect to Matching Contributions Made on Account of Qualified Student Loan Payments (PDF)

"ERIC requests proposed regulations include model amendments ... ERIC requests additional guidance regarding certification requirements and IRS coordination with the Department of Education ... ERIC requests additional examples of reasonable procedures ... ERIC requests confirmation that certain year-end contributions are permissible."  MORE >>

The ERISA Industry Committee [ERIC]

Benefits in General

A Guide to Buying and Maintaining Cyberinsurance

"DOL guidance assumes that insurance is available for cybersecurity breaches or incidents but does not specify cyberinsurance as the only insurance type. Cyberinsurance covers loss and costs associated with a data breach but does not typically offer coverage related to the theft of money.... Cyberinsurance is not standardized, so sponsors need basic knowledge to evaluate insurance options and policy details properly"  MORE >>

PLANSPONSOR; free registration may be required

Webcasts and Conferences
(Retirement Plans / Executive Compensation)

Harnessing Digital Marketing for Retirement Plan Advisors

October 18, 2024 WEBINAR

RPAG

Last Issue's Most Popular Items

DOL List of Entities Relying on the QPAM Exemption

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

IRS Issues Student Loan Match Guidance: Save for Retirement While Repaying Student Loans (PDF)

Groom Law Group, via TAXES the Tax Magazine

CRS Report: Social Security and Older Workers

Congressional Research Service [CRS]

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

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