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Decoding the Alphabet Soup: What’s With All the Acronyms, Part 6

"As if we didn't have enough acronyms already, the SECURE Act and SECURE 2.0 brought us a bunch of new ones…apart from the fact that SECURE is an acronym itself.... SECURE ... PLESA ... QBAD ... QSLP ... QLAC."

In Case of Emergency, (Don't) Break Plan!

"Countless surveys suggest many American families have little to nothing set aside for unexpected emergency-type expenses.... [L]et's look at some of the reasons you could break your plan by using PLESAs to help participants plan for emergencies..... Enter the good old fashioned after-tax contribution ... There are no contribution limits ... and participants can access those accounts at any time. Contributions are included in the ACP test, so it would generally make sense to limit availability to non-HCEs, which is no different than the PLESA."

Form 5500: File It Late or Incomplete?

"The unknown is how quickly the DOL sends a delinquency notice, ending eligibility to use DFVCP and subjecting the plan sponsor to those big daily penalties.... [A]lthough the IRS is often the faster agency (sometimes sending notices within only a couple months), the DOL can take 4 to 6 months or longer.... The assumed 'advantage' of submitting a timely but incomplete form and amending later is that it avoids the daily penalties. ... both the IRS and DOL tend to respond more quickly to deficient Forms 5500 than delinquent ones. And if the deficiency is due to something obvious (like the plan auditor's report) being omitted, the agencies tend to be heavier-handed. "

Catching Up On Catch-Up Contributions

"There are both mandatory and optional parts of these new rules, and we will address those as we go. Sponsors will eventually need to amend their plans to reflect these changes, but the current deadline for that is not until the end of the 2026 plan year. In the meantime, companies need to keep track of how they operate these new rules in their plans so that those details can be captured in the amendments when the time comes." Part 1: Increased Catch-Up Contribution Limit [this article]; also see Part 2: Rothification Strikes Back and Part 3: Return of the Plan Correction."

Self-Correction of Participant Loans: The IRS Gave and DOL Confirms What It Took Away

"The new and 'improved' (there are those quotes again) VFCP leaves little ambiguity with respect to loan errors that are self-corrected via EPCRS. To obtain DOL relief, a plan fiduciary must now use DOL's new online web portal to submit information about the correction. To be clear, the information to be submitted isn't especially onerous; however, compiling the required supporting documentation is pretty much just as time-consuming as preparing a full-blown approval application."

Self-Correction of Late Deposits: Finally, But Not Really

"The new version [of the Voluntary Fiduciary Correction Program (VFCP)] ... makes a number of important changes ... The underlying methodology of calculating the correction itself is the same.... [T]he submission [to DOL] hasn't been eliminated. It's been changed (actually added to since the existing option is still available). This table summarizes the key differences."

Form 1099-R Distribution Codes for Defined Contribution Plans

"Form 1099-R must be sent no later than January 31 following the calendar year of the distribution. [An image] highlights the 1099-R boxes most frequently used -- and their explanations -- for defined contribution plan distributions.... [A] chart provides the distribution codes for Box 7 for defined contribution plan distributions ... If more than two codes apply, two 1099-Rs may be required. "

How Long Must We Store Our 401(k) Records?

"Both the [IRS] and [DOL] have rules that provide some basic guidance on record retention. Both agencies impose these requirements directly on plan sponsors; so even though service providers may store certain records as a convenience, sponsors remain legally obligated to hold on to all relevant records."

New Distribution Options to Encourage Savings

"SECURE 2.0 (S2) includes a number of provisions designed to encourage workers to save more for retirement.... [O]ne way Congress attempted to do this is by ensuring that those who do contribute have access to their accounts when they need it. To that end, S2 creates at least 4 new types of distributions and makes changes to several others."

Long Term, Part Time Employees, Part 1

"We already allow employees who work fewer than 500 hours per year to defer. Does this new rule impact us? That is a definite 'no'  ... Similarly, if you use the elapsed time method of determining eligibility for all of your employees, you also don't have to worry about this rule.... Our plan excludes certain classifications of employees. Do we now have to allow those employees to join the plan if they meet the LTPT requirements? As long as that exclusion is otherwise allowable, you can continue to apply it to those who would otherwise join as LTPT employees."