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How Is Liability-Driven Investing Different?

"An LDI approach forces us to examine our investment and funding assumptions on an ongoing basis -- and to make adjustments. Because an LDI approach starts with an identified liability or funding target, compares it with the current value of available assets and challenges us to figure the best way to achieve that goal, it makes us carefully evaluate the assumptions we have made as part of our plan."

Tax Issues Loom for Employers Fielding Late Enrollment Requests

"Accommodating a late enrollment request could pose a problem if the plan intends to reimburse employees for medical expenses on a nontaxable basis under Section 105 of the federal tax code. It also could raise issues if it allows employees to pay for certain medical, disability, or accidental insurance coverage (among other benefits) on a pre-tax basis under Section 125."

403(b) Plan Employer Eligibility Failures

"It is not uncommon to find governmental agencies that do not operate a public school system, do not have an IRS determination letter and are not within any other classification of an eligible employer, having operated a Section 403(b) Plan for many years. They have been under the misconception that because they are exempt from federal income taxation as a 'local government,' they are an eligible employer. However, the IRS considers a 403(b) plan maintained by an ineligible employer to have experienced a potentially disqualifying event, which it classifies as an 'Employer Eligibility Failure,' starting from the plan's inception."

California Public Agencies Are Required to Report Their 401(a) Plans to The State on an Annual Basis

"[T]he State Controller's Office (SCO) confirmed that the SCO indeed expects all California public employee retirement systems to annually furnish it with a 'Financial Transactions Report' (FTR) and audited financial statements. According to the SCO, the term 'public employee retirement systems' ... includes all independently maintained public agency Internal Revenue Code Section 401(a) plans, whether they are defined benefit or defined contribution."

New Guidance for SECURE 2.0 Roth Treatment of Catch-Up Contributions

"For now, sponsors of 401(k), 403(b) or 457 retirement plans: [1] Have additional time to amend the plan to allow for post-tax Roth contributions, if not already offered, and; [2] May classify all Catch-up Contributions (including those making more than $145,000 per year) as pre-tax contributions, during the 2024 and 2025 tax years ... Employers who have already agreed to treat all catch-up contributions after 2023 as Roth contributions may want to contact their record keeper and possibly rescind their earlier action."

Indian Tribal Government Retirement Plans

"In order for an Indian tribal plan to be exempt as a governmental plan, substantially all of the participants in the plan must be employees who perform services that are [1] essential government functions and [2] not in the performance of commercial activities. Because the tax and fiduciary/labor law rules are significantly different for retirement plans of ITGs and their commercial activities, it makes sense to segregate, design, and administer a tribe's 'governmental plans' apart from the retirement plans covering employees in its commercial activities."

SECURE 2.0 Impacts on Governmental Plans

"[A table] highlights 'what' is changed, 'when' the change takes effect, and 'whether' the change is automatic or optional. Although a number of the changes are 'automatic,' we will not know how to implement them until we receive further guidance from the IRS."

Documentation of Employer 'Pick-Up' Contributions

"An MOU provision that provides for pre-tax employee mandatory contributions to a pension plan (such as CalPERS) will most likely not satisfy the documentation requirements for a pick-up.... A properly adopted pick-up resolution that is adopted now, cannot have retroactive effect -- that is, previous employee contributions that were not properly picked-up should have been treated as after-tax."

IRS Compliance Pilot Gives Retirement Plan Sponsors Grace Period

"Plan sponsors also should consider performing periodic internal compliance reviews to confirm that all applicable requirements are being satisfied. ... Corrective actions will be significantly less expensive for a plan sponsor that self-identifies errors.... [P]lan sponsors may begin to see an increase in IRS auditing, thanks to the Inflation Reduction Act[.]"

California Extends COVID-19 Supplemental Paid Sick Leave

"[T]he law does not provide a new allotment of leave, but extends the time employees have to use any remaining leave (of the available 80 hours) not already used this year.... [It] also amends the current leave provisions and creates a program to reimburse costs for qualifying small businesses and nonprofits providing COVID-19 [supplemental paid sick leave]."