Suspending 401k Match Raises Compliance Issues
|
Newsletter Sponsor It's Here! The 401k Averages Book 20th Edition The 20th Edition of the 401k Averages Book has just been released with all new 401k fee benchmarking data. Use the 401k Averages Book to better understand investment, recordkeeping and revenue sharing expenses for 401k plans. Still the most recognized source book for comparative, non-biased 401k average cost information. Click here for more information. Click Here for Our Resource Page on Retirement Plans and the Coronavirus PandemicIn This Issue
General Items Suspending 401k Match Raises Compliance Issues Many employers may be considering a temporary suspension of their 401k matching contributions as a cost-saving measure. This 7-page article identifies several technical compliance issues for employers to consider before reducing or suspending a 401k match. Source: Mercer.com What Is the Best Way for Plan Sponsors to Pay Retirement Plan Fees? Companies are becoming more open and willing to pay retirement plan servicing fees. This article focuses on Non-Settlor fees which typically include the following service providers: Third-Party administration services, investment advisory services, recordkeeping platform services, and employee benefit audit services. There are some compelling benefits for a company to pay these plan fees. Source: Bpp401k.com Insight: Studies, Research, and White Papers Pandemic May Stall Implementation of Certain DC Plan Decisions The effects of the COVID-19 pandemic have plan sponsors contemplating what to do about scheduled re-enrollments, the RFP process, and fund mapping during recordkeeper conversions. Not knowing how long the current market climate will last, many plan sponsors are questioning whether and when they should move forward with such plan decisions. Source: Plansponsor.com Amid COVID-19, More Employers Are Easing Access to 401k Assets Than Cutting Matching Contributions A majority of U.S. companies are making it easier for employees to access their 401k plans' assets even as some companies are cutting matching contributions amid the COVID-19 pandemic. These findings are according to the latest pulse survey by Willis Towers Watson. A total of 816 employers participated in the COVID-19 Benefits Survey, which was conducted during the week of April 20, 2020. Respondents employ 12 million workers. Source: Willistowerswatson.com Average 401k Springs Back in April In March, the average 401k account for younger (25-34), less tenured (1-4 years) workers, plunged 7.3%. Older (age 55-64) workers with more than 20 years of tenure also shed 7.3%, according to estimates from the nonpartisan Employee Benefit Research Institute. However, April was a different matter. In the best month for the Dow Jones Industrial Average and S&P 500 since 1987, the average 401k for the younger less tenured demographic rebounded 9.8%. The average 401k account of older and longer-tenured workers regained 8.1%, according to EBRI estimates. Source: Asppa.org »» Click here for More Studies, Research, and White Papers 403b Plans 403b Plan Catch-Up Contributions - Updated This IRS snapshot discusses catch-up contributions under a 403b plan. A 403b plan may have non-elective contributions (including matching and non-matching contributions) and elective deferrals. A 403b plan may also permit participants to make additional elective deferrals under the age 50 catch-up in IRC Section 414(v) and the special 403b catch-up in IRC 402(g)(3). Source: Irs.gov »» Click here for More 403b Material Court and Legal Lawsuit Argues Fees Are Excessive for University of Miami 403b Another lawsuit has been filed challenging fees for a university's 403b plan, this one against the University of Miami. The plaintiffs say there is additional evidence for their claims, "such as incorrect reporting on mandatory Department of Labor disclosures about the amount of administrative fees paid by [the] participants." Source: Planadviser.com Lawsuit Says Host International Discriminated Against Tipped Employees in 401k A proposed class-action lawsuit has been filed against Host International, a provider of meals to various travel and entertainment venues, alleging it and other plan fiduciaries refused to properly defer compensation of certain employees to the HMSHost 401k Retirement Savings Plan and Trust under the terms of the plan document. The complaint notes that the definition of compensation for deferral purposes in the plan document includes tips received. Source: Planadviser.com Excessive Fees, Conflicts of Interest Alleged in New ERISA Lawsuit The lawsuit, filed as a class action on behalf of participants and beneficiaries of the Magna Group of Companies Retirement Savings Plans, says the defendants did not try to reduce the plan's expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Cybersecurity and Retirement Plans: What Plan Sponsors Should Do Without substantive regulatory guidance and taking into account the increasing threat of cyber criminality to retirement plans, plan sponsors should establish, evaluate, and test their cybersecurity protocols. Plan sponsors might want to take a conservative approach and assume that ERISA's duties of loyalty and prudence do indeed apply to participants' identification data and their plan benefits in case the DOL or the courts conclude such information do constitute plan assets for purposes of ERISA. Source: Wagnerlawgroup.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Limited Extension of Participant Contributions and Loan Repayments Deadlines The DOL and IRS have recently issued coordinated guidance that provides relief for benefit plans by extending certain deadlines. This article examines the limited relief granted to retirement plans by extending the amount of time a plan has to distribute participant contributions and loan repayments into participant accounts to still be considered timely. Source: Graydon.law DOL, IRS Issue Guidance Further Expanding COVID-19 Relief for 401k Plans On April 29, 2020, key governmental agencies issued two separate pieces of official guidance further expanding COVID-19-related relief for 401k retirement plans and other employee benefit plans and arrangements. This guidance supplement and expand upon earlier official pronouncements that extended various deadlines concerning 401k plans in response to the global crisis. Source: Compliancedashboard.net Form 5500 Preparation and Filing As a plan sponsor or financial advisor, it is paramount that you maintain an open line of communication with your TPA or recordkeeper responsible for preparing the 5500 filings to avoid potential penalties and fines from both the Internal Revenue Service and the Department of Labor. To avoid delays in the preparation and filing of the form, here are some things you can do as the plan sponsor to assist your service provider. Source: Legacyrsllc.com Is That COVID-19 Distribution Subject to State Taxes? For many households, COVID-19 distributions from qualified plans and IRAs may be a welcome backstop against the financial challenges of the Coronavirus pandemic. But those receiving those distributions (and those who process them) need to be aware of the potential sting of state tax liability due to differences between federal and state tax rules. Source: Napa-net.org IRS Answers Some FAQs on Coronavirus-Related Distributions and Loans On May 4, 2020, the IRS provided guidance on coronavirus-related distributions and coronavirus-related loans and loan payment delays in the form of FAQs. In those FAQs, the IRS answered a few of the questions that many practitioners, administrators, and employers have been asking. Source: Benefitsnotes.com New IRS Guidance Answers Pressing CARES Act Questions for Retirement Plans On May 4th, the IRS released a set of FAQs focused on the special coronavirus-related distribution and plan loan options under the CARES Act. The FAQs offer helpful guidance for sponsors of retirement plans who are considering adding special distribution and/or loan options for participants affected by COVID-19. Source: Erisapracticecenter.com »» Click here for more Compliance and Regulatory Material
This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted. Articles are copyrighted to their publishers. If you believe that your work has been copied in a way that constitutes copyright infringement, please contact the source site immediately. Hyperlinks in this document are provided as a convenience and we disclaim any responsibility for information, services or products found on websites linked hereto. All links were tested before this eNewsletter was e-mailed to you to ensure that they are still functional, but publishers do move or delete articles. Therefore, we can't guarantee that the links provided will remain operational. 401khelpcenter.com does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com. Opinions expressed are those of the author of the article and do not necessarily reflect the positions of 401khelpcenter.com. THIS NEWSLETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE INVESTMENT, TAX, ACCOUNTING, OR LEGAL ADVICE. Copyright © 2020 by 401khelpcenter.com, LLC. All rights reserved. No reproductions without prior authorization, but you are free to email this copy (in its entirety) along to colleagues or clients. This newsletter may not be posted to any website. 401khelpcenter.com, LLC
|
