Compliance and Regulatory

2023 IRS Retirement Plan Limits Forecast

Inflation in the 12 months ending April 30, 2022, was 8.3%. With only five months remaining for FFY 2022, the 2023 IRS retirement plan limits could show the highest one-year increase, both in dollars and percentage, even if inflation transitions to a more reasonable 3.0% annually for the final five months.

Source: Milliman.com

Common 401k Plan Mistakes: Running the Plan Based on Your Employee Handbook

Employee handbooks are great for communicating an employer's basic policies and procedures. However, a retirement plan sponsor will always want to check the actual plan document to confirm proper plan operations. When it comes to retirement plans or benefits in general, an employee handbook will not get into some of the details, and this can cause issues, both minor hiccups, and major problems. Here are several situations encountered in working with retirement plans.

Source: Conradsiegel.com

Keeping 401k Participants Out of the Lost and Found Box

This article focuses on the issue of how to handle a situation where the 401k plan is unable to reach a plan participant, i.e., "missing participants."

Source: Foley.com

Time is Running Out to Meet the July 31, 2022 'Cycle 3' Deadline

Employers sponsoring 401k or other types of defined contribution plans "pre-approved" by the IRS should be aware that the restatement deadline is quickly approaching. The IRS requires pre-approved plans to be amended and restated every six years to incorporate recent law changes. The deadline for the current restatement cycle, "Cycle 3," is July 31, 2022. You should have received one or more notices from your current document provider. Failing to timely adopt a Cycle 3 restatement may jeopardize a plan's favorable tax status.

Source: Benefitsnotes.com

Revisions to Form 5500 Series for 2022 Reporting Released

The DOL, Treasury, and Pension Benefit Guaranty Corporation on May 20th released the final revisions to the forms and instructions for the Form 5500 series to be used for reporting concerning plan years beginning on or after Jan. 1, 2022. They also indicated, however, that the review of additional considerations and revisions will continue.

Source: Asppa.org

IRS Again Extends Relief From Physical Presence Requirement for Witnessing Electronic Signatures

The IRS has extended, through the end of 2022, its temporary relief from the requirement that certain signatures be witnessed in the physical presence of a plan representative or notary public. According to the IRS, a further extension of the relief beyond the end of 2022 is not expected to be necessary.

Source: Thomsonreuters.com

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Fiduciary and Plan Governance

How Do Employee Benefit Plan Fiduciaries Get That Job?

If you aspire for an appointment to serve on your employer's committee that oversees its retirement, pension, and health plans, you are in a select company. Surveys reveal that few managers and executives who serve on these committees sought their appointment. But let's say that you are appropriately ambitious and would enjoy cracking the circle of an elite group of managers by gaining assignment to your enterprise's fiduciary committee. What do you need to know?

Source: Rolandcriss.com

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Insight: Studies, Research, and White Papers

Alight Data Finds 401k Plan Balances Hit Record Highs

A new report by Alight Solutions found that after a few years of turbulence, retirement savings are on the rise for US employees. Alight's 2022 Universe Benchmarks report revealed that the average defined contribution plan balance hit an all-time high of $144,280 at the end of 2021, up 10% from 2020. Median plan balances also increased, from $28,426 to $29,607, another record high.

Source: Alight.com

Why Small Business Owners Often Resist 401ks

At a time when many companies are boosting 401k benefits to attract and retain employees in a tight labor market, 74% of small businesses still do not offer a retirement plan for their employees, according to survey data published by ShareBuilder 401k. According to the survey, many small business owners mistakenly believe their business is simply too small and that 401ks are too costly.

Source: Planadviser.com

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Employee Education and Communications

Delivering Robust Retirement Communication and Education on a Budget

Plan sponsors can get creative to deliver effective, low-cost retirement communication and education to plan participants. Minding the budget, and aided by trusted plan sponsor partners, employers can take advantage of interesting ideas to communicate with and educate participants for maximum impact.

Source: Plansponsor.com

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Court and Legal

Participant Standing Challenged in Excessive Fee Suit

According to the defendants here (Nohara v. Prevea Clinic Inc.), Nohara didn't have that legal right to bring suit because "she could not have sustained an injury-in-fact that is anything but de minimis." Prevea explained that she only participated in the plan for two weeks at the time she brought suit and "…this action results in alleged damages of, at most, $0.22 and that federal jurisdiction is not available for such de minimis claims."

Source: Napa-net.org

Schlichter Expands flexPath Targets

The law firm of Schlichter Bogard & Denton has a new target in an excessive fee suit, the plan's investment advisor. More specifically, plaintiffs -- who just two months ago filed suit against the plan fiduciaries of the Molina Salary Savings Plan -- have now filed suit on behalf of the Plan against Defendant NFP Retirement, Inc. for breach of fiduciary duties under ERISA.

Source: Napa-net.org

District Court Rules in Favor of 401k Plan Recordkeeper in Lawsuit Over Foreign Tax Credits

In a case involving novel issues around foreign tax credits in the ERISA setting, a federal district court held that a 401k plan's recordkeeper did not have an obligation under the ERISA to provide plans with rebates for the foreign tax credits that the recordkeeper received.

Source: Westlaw.com

Federal District Courts Disagree on Compelling Individual Arbitration of ERISA Class Action

In recent years, it has become more common for ERISA governed benefit plans to include arbitration and class action waiver provisions in their plan documents. These provisions have engendered litigation, with plan participants and beneficiaries challenging plan fiduciaries' ability to enforce these terms, which require the participants and beneficiaries to arbitrate their claims individually. Federal courts have not responded uniformly to these challenges.

Source: Americanbar.org

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Legislative and Washington DC

Congress Considers Banning Discretionary Clauses in ERISA Plans

On May 12, 2022, the "Employee and Retiree Access to Justice Act" was introduced in the House of Representatives by Mark DeSaulnier. Senator Tina Smith introduced a companion bill in the Senate. The bill seeks to ban arbitration and discretionary clauses in employer-sponsored benefit plans governed by the ERISA. The bill seek to prohibit benefit plans from requiring arbitration of claims challenging the administration and fiduciary management of the plan, thereby forcing plan disputes into the judicial system.

Source: Littler.com

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State-Based Private-Sector Retirement Programs

Hawaii Approves State-Run IRA, but Minus Auto-Enrollmen

Hawaii is the latest state to approve the creation of a state-run IRA program to encourage residents to save for retirement, but unlike programs in most other states that have them, the Aloha state's program will not mandate auto-enrollment for those eligible to participate. This one decision is raising some eyebrows.

Source: 401kspecialistmag.com

Bill Would Further Expand CalSavers

A bill is before the California Senate that would expand CalSavers, the state-run retirement plan that provides coverage to those whose employers for not, to cover almost all employers in the Golden State. SB 1126, introduced by Sen. Dave Cortese, would expand the definition of "eligible employer" for purposes of the CalSavers Retirement Savings Trust Act from a person or entity that has at least five eligible employees to a person or entity that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.

Source: Ntsa-net.org

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.