401k Plan Concerns From the Auditor Perspective
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Compliance and Regulatory 401k Plan Concerns From the Auditor Perspective 401k plans are often missing key items and are therefore exposing both management of the plan sponsor, as well as the fiduciaries of the plan, to potential litigation and corrective actions in the case of a DOL or IRS exam. This article shares several concerns from a plan auditor perspective which are leaving plan sponsors and fiduciaries exposed in the current environment to litigation and regulatory scrutiny. Source: Linkedin.com IRS Issues Guidance on Qualified Birth or Adoption Distributions In recent guidance, the IRS addressed several issues under the SECURE Act, including qualified birth or adoption distributions (QBOADs). While QBOADs have been permissible since January 2020, many employers have been waiting for some IRS guidance on how these distributions would be implemented before deciding as to whether to include a QBOAD as a plan feature. Source: Wagnerlawgroup.com Retirement Plan Update: New DOL Disclosures and Updated IRS Notices The DOL recently issued interim final regulations requiring new information to be included on ERISA-covered defined contribution plan participant account statements under the SECURE Act. The guidance only applies to defined contribution plans, such as 401k and 403b plans. The IRS also recently updated safe-harbor explanations that can be used to satisfy the tax notice requirements in Code Section 402(f). These requirements generally require plan administrators to provide a written explanation of tax consequences when making eligible rollover distributions from a qualified retirement plan. Source: Shermanhoward.com IRS Revenue Procedure 2020-40 Provides Extensions of Retirement Plan Amendment Deadlines Revenue Procedure 2020-40 (Rev. Proc. 2020-40) expands the situations in which the plan amendment deadline may be extended for discretionary amendments made to pre-approved qualified retirement plans and pre-approved Internal Revenue Code Section 403b plans. Source: Westlaw.com Good Ideas for 401k Plans That Don't Get Enough Attention This article highlights some features which can benefit participants in 401k plans which we don't see used enough. Employers and plan sponsors should consider adding these four features to their plans to provide additional benefits to their employees. Source: Linkedin.com IRS Expands List of Qualified Individuals Eligible for Coronavirus-Related Distributions The IRS issued Notice 2020-50 to update and clarify certain provisions of Section 2202 of the CARES Act, which deals with the tax treatment of coronavirus-related distributions from eligible retirement plans for qualified individuals. The Notice expands the definition of a "qualified individual" eligible to take coronavirus-related distributions from their retirement plans. Source: Hallbenefitslaw.com UPDATE: SECURE Provides New Option to Help Pay for Birth or Adoption The IRS has again directed our attention back to the SECURE Act by issuing guidance related to qualified birth or adoption distributions. Withdrawals from a qualified retirement plan before age 59 ½ are generally subject to a 10% tax for early distribution, but the SECURE Act created a new distribution option that permits plan participants to take distributions of up to $5,000 as a penalty-free early withdrawal to help cover expenses related to the adoption or birth of a child. The IRS has now issued further guidance on these qualified birth or adoption distributions in Notice 2020-68. Source: Graydon.law Implementing Long-Term Part-Time Employee 401k Elective Deferrals Notice 2020-68 includes guidance for implementing the mandatory participation of long-term part-time non-union employees in 401k plans for plan years beginning Jan. 1, 2021. The IRS also announces that it is seeking taxpayer questions and comments about the SECURE Act and Miner Act provisions referenced in the Notice. The deadline for submitting comments and questions is Nov. 2, 2020. Source: Bhfs.com »» Click here for more Compliance and Regulatory Material Fiduciary and Plan Governance How to Minimize Judicial Review of ERISA Fiduciary Decisions The courts have stated that their review of fiduciary decisions is both exacting and deferential. A recent decision from the Court of Appeals for the Seventh Circuit offers help to ERISA benefit professionals who prefer to maximize judicial deference in favor of the fiduciaries. Source: Beneficiallyyours.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers People of Color Report Limited Retirement Investments Americans who identify as people of color report that they have limited retirement investments and say they're not making progress toward achieving important retirement goals, according to the 2020 Retirement Risk Readiness Study from Allianz Life Insurance Co. of North America. Source: Planadviser.com Average 401k Continued to Sizzle in August Temperatures and major U.S. stock indexes, notably the S&P 500, continued to rise. The markets had their best August since 1986 and it was a pretty good month for the average 401k balance as well. Source: Asppa.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers MassMutual 401k Deal Wins Empower Valuable Clients Empower Retirement's deal to buy MassMutual's defined-contribution business represents the latest iteration of the company's growth-by-acquisition strategy. But it also hints at a larger goal of winning over the workers who could be tomorrow's wealth management clients. The agreement also gains Empower a valuable potential relationship with Edward Jones. Source: Investmentnews.com (registration may be required) Small Business Retirement Plans and the SECURE Act The SECURE Act passed at the end of 2019 had several features that affected individuals and their retirement accounts. For financial advisers serving small business owner clients, the SECURE Act also offers several opportunities for small business retirement plans. Source: Thestreet.com The main theme of the DOL's new rule proposal is in alignment with other regulators -- the SEC and FINRA in particular -- but the agency is not surrendering its jurisdiction over tax-qualified retirement plans. Source: Planadviser.com Legislative and Washington DC Biden Plan to Improve the 401k Does the Opposite The author writes, "I've written a couple of recent columns on fixes needed to restore the value of 401k and other deferred tax retirement plans for young median-wage workers. The presidential campaign of Joe Biden and Kamala Harris has a proposal aimed at that issue. It's a step almost exactly in the wrong direction." Source: Advisorperspectives.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Cybersecurity Risk Considerations for 401k Plans Cybercriminals have become increasingly sophisticated when targeting organizations holding significant assets and personal data. As a result, complaints have been filed and case law is developing that should motivate plan sponsors to satisfy their fiduciary duty to enact prudent procedures and safeguards to protect plan assets and plan data. Source: Cpajournal.com »» Click here for more on Cybersecurity Issues Marketplace News Captrust Acquires Retirement Business of Plante Moran Advisor Releases New 401k Guidebook for Plan Sponsors Mid Atlantic Trust Announces the Expansion of ModelxChange® Empower to Acquire Retirement Plan Business of MassMutual
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