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SECURE 2.0 Provisions Allow Greater Access to Retirement Money

"SECURE 2.0 authorizes many ways a plan can allow participants access to their retirement savings for other reasons. The repayment features are meant to avoid retirement savings leakage that could otherwise occur if the amounts could not be repaid to the plan. It remains to be seen if amounts that can be repaid are repaid in practice. Of course, these provisions are all optional, making the decision whether to include them in the discretion of the sponsoring employer as a matter of plan design."

SECURE 2.0 Provisions Encouraging Employers to Adopt a Plan

"SECURE 2.0 changes the credit for employers with up to 50 employees for taxable years beginning after 2022. It increases the percentage to 100% of the startup costs. In addition, SECURE 2.0 creates an additional credit based on the amount of employer contributions to plans other than defined benefit plans."

SECURE 2.0 Requires Auto-Enrollment, Auto-Escalation For Most New Plans

"[A]ll Plans existing on the date of enactment are grandfathered from the requirement as an exception.... [N]ew employers, in existence for less than 3 years, are excepted from the requirement, until their fourth year. There is also an exception for Plans of employers who normally employ 10 or fewer employees until the year after the employer normally employs more than 10 employees.... [If] an employer with an existing plan on the date of enactment joins a multiple employer plan (MEP), the grandfathering disappears. Each Plan of an employer in the MEP is treated as a separate plan."

SECURE 2.0 Changes Specific to Plans of Tax-Exempt Organizations

"457 RMD amendment deadline extended.... 403(b) changes: [1] MEPs and PEPs ... [2] Collective Investment Trusts.... [3] Hardship withdrawals.... [4] Long term part-time employees."

Recent Complaint Emphasizes Sponsor's Need to Monitor Recordkeeping Fees

"The case demonstrates how plan fiduciaries have a duty to continually monitor the fees that plan participants pay whether directly or indirectly ... The complaint provides a blueprint of actions plan fiduciaries should take to be able to defend their actions relating to plan costs." [Hagins v. Knight-Swift Transportation Holdings, Inc., No. 22-1835 (D. Ariz. complaint filed Oct. 26, 2022)]

Bill Passed by House Would Increase ERISA Litigation by Changing Administrator Discretion and Arbitration Provisions

"[The Employee and Retiree Access to Justice Act (ERAJA)] amends ERISA in two important ways that will lead to much more ERISA retirement plan litigation.... [1] ERAJA would invalidate and render unenforceable any arbitration provisions, class action waivers, and representation waivers for the purposes of claims brought under ERISA Section 502 as well as common law claims.  ... [2] ERAJA would also legislatively remove the ability of plans to give the plan administrator discretion in deciding claims and having the administrator's decision be given deference by a reviewing court[.]"

Inflation Reduction Act Means Employers Should Review Benefits Plans Now for Compliance

"[B]usinesses and employers should be aware of the upcoming increase in enforcement and ... should perform self-audits to see if there are document or operational failures that might be self-corrected or corrected under EPCRS or the Voluntary Closing Agreement program.... [T]here is significant reason to believe that there may be an enforcement initiative for nonqualified deferred compensation plans."

CalSavers: Threshold Number of Employees Required for Coverage Will Drop to One

"Under the new law, the threshold drops from five or more employees to one or more employees [on December 31, 2025].... All California employers ... should consider whether a private plan can be designed to better meet their goals than the state run CalSavers. Those with under 5 employees, in particular, have time ... to discuss private plan designs that may be a better option before being subject to CalSavers."

Notice 2022-23 Does Not Extend Deadline for Adopting Amendments to Plans for All CARES Act Provisions

"Notice 2022-33 does not extend the deadline under the CARES Act for adopting plan amendments reflecting special COVID-related relief for qualified individuals involving loans and in-service withdrawals.... The CARES Act provision permitting the waiver of RMDs for defined contribution plans for 2020 is eligible for the extended adoption date."

As Latest CalSavers Deadline Approaches, Some Thoughts on Its Possible Effect

"Imagine ... the IRS audits the plan and determines that the corporation's total disregard for the law means it will disqualify the plan ... [S]ince the employer didn't maintain a qualified plan, it was required to register for CalSavers and failed to do so, now it is subject to penalties.... Another nightmare scenario involves misclassified workers.... These situations demonstrate how noncompliance with one law can trigger a prior obligation to comply with CalSavers."