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Non-Governmental 457(b) Plans Provide Increased Deferral Opportunities for Key Employees of Nonprofit Organizations

"Nongovernmental Code section 457(b) plans are a simple way for nonprofits to offer key employees a way to defer compensation in excess of the limits under their organizations' section 403(b) or 401(k) plan. For larger nonprofits, a section 457(b) plan is frequently offered in conjunction with an individually tailored, separate Code section 457(f) plan to attract and retain key employees."

New Executive Order Expands 401(k) Investment Opportunities

"Many private equity funds operate as partnerships or LLCs, which can result in retirement investors like 401(k) plans being treated as partners for tax purposes when they invest in these funds.... Many retirement plans lack the infrastructure to monitor UBTI exposure, handle tax filings, or manage the related administrative tasks. If these obligations are overlooked, the plan may face penalties and interest from both federal and state tax authorities."

Solo 401(k) 2026 Mandatory Roth Requirements for FICA Wages

"Solo 401(k)s offer substantial retirement savings potential due to their high contribution limits for business owners without common-law employees. New rules starting in 2026 will require 'high earners' to make catch-up contributions as Roth, impacting solo 401(k) participants receiving W-2 wages. Properly identifying what qualifies as a 'catch-up contribution' can be complex and may not always align with separate elections."

COBRA Takes Another Bite: District Court Finds Employer's 'Good Faith Effort' Is Not Enough

"The court ruled that a mere 'good faith effort' to comply with COBRA notice requirements is an insufficient reason to dismiss a lawsuit from a former employee, claiming that a defective COBRA notice ... influenced her decision to reject continuation coverage.... The employer did not use DOL's Model COBRA notice and instead provided a notice that, among other things, provided incorrect or inconsistent information about the time frame for her to make an election and the required time for making COBRA payments." [Marrow v. E.R. Carpenter Company, Inc., No. 23-2959 (M.D. Fla. Feb. 4, 2025)]

Final Regs on Required Minimum Distributions

"[T]rusts that include minor children or disabled beneficiaries can significantly benefit from the life expectancy payout option. By structuring these trusts correctly, planners can ensure that distributions are calculated based on the life expectancy of the oldest trust beneficiary, thereby potentially extending the tax-deferral period for younger beneficiaries.... [P]lanners should consider strategies that utilize the benefits of Roth conversions, which can offer tax-free growth and no required minimum distributions during the account holder's lifetime. "

Switching Your 401(k) Plan's Service Providers: A Guide for a Smooth Transition

"[M]ake sure that the terms outlined in the prospective provider's contract align with your expectations and include clear termination clauses for your current provider.... When changing the service provider that sponsors your plan document, pay close attention to the plan provisions in the new document.... It is essential to thoroughly analyze the fees related to services offered by previous and current service providers ... Plan sponsors must prioritize the comprehensive and precise transfer of participant data[.]"

Tax Considerations in Implementing Donated Leave Policies

"The [IRS] has issued little guidance concerning the implementation and operation of donated leave programs. Employers interested in establishing such a program should be aware that unless [the] program meets certain requirements, the tax implications ... could be confusing and unexpected for employees."

Can Your Cafeteria Plan Pass the Test?

"Over the past year, ... [because of] the increased cost of living due to inflation ... the benefits elected by highly compensated participants (HCPs) have remained steady or increased, while those chosen by non-highly compensated participants (NHCPs) have decreased.... [N]ow is the time to test your cafeteria plan and make the necessary adjustments through payroll by year-end if the plan fails this nondiscrimination test. After year-end, it is too late to make any plan corrections[.]"

SECURE Act Changes: Navigating RMD Rules for Inherited IRAs

"In general, the final regulations provide that the beneficiary, including eligible designated beneficiaries, must continue to take annual RMDs after the death of the taxpayer. The IRA must be fully distributed by the tenth anniversary of the taxpayer's death. The final regulations apply to calendar years beginning on or after January 1, 2025."

Controlled and Affiliated Service Group Rules for Retirement and Cafeteria Plans: An Overview

"[A] foreign-based corporation (or group of individuals) may have wholly owned subsidiaries in other countries that in turn have wholly owned subsidiaries in the U.S., which are in fact part of a controlled group. Most often, these U.S. controlled groups do not have centralized operations and are not even aware that there are other related entities in the U.S. ... Less familiar to many service-type companies are the rules treating affiliated service organizations as a single employer for retirement and cafeteria plan purposes. The ownership thresholds triggering application of these rules are much lower for this type of group than for controlled groups."