2023 IRS Limits Forecast Update - May
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Compliance and Regulatory 2023 IRS Limits Forecast Update - May This is an update to the Milliman 2023 IRS limits forecast using the U.S. Bureau of Labor Statistics report published June 10, 2022. With only four months remaining for the federal fiscal year 2022, our forecast of the 2023 IRS limits could set a record one-year increase, both in dollars and percentage, even if inflation transitions to 3.0% annually (0.25% per month) for June through September 2022. Source: Milliman.com 401k Compliance Check: Have You Recently Checked Your 401k Plan's Definition of Compensation 401k plan sponsors are required to include a legally compliant definition of compensation within the plan document. Unfortunately, compensation-related failures are common occurrences in connection with 401k plan administration. These failures may result in time-consuming and expensive corrections being required through the IRS's Employee Plans Compliance Resolution System to maintain the 401k plan's tax-qualified status. Source: Foley.com A Kinder, Gentler IRS Employee Plans Office? Introducing the New Pre-Audit Compliance Pilot Program The IRS says its goal is to reduce taxpayer burden and reduce the amount of time spent on retirement plan examinations. The pilot program can make the audit process more efficient, and perhaps less expensive, but it certainly won't a plan sponsor avoid the hard work of audit-proofing its plan. If plan sponsors receive a pilot program letter, they should make sure their plan is in order before responding. Source: Cohenbuckmann.com Retirement Plan Record Retention: Keeping Your Data Clean Maintaining a well-organized archive of your participants' retirement records sounds easy in theory, but can be difficult in the real world. It's easy to grow lax about keeping up with the deluge of data for which you're responsible, but careless record retention will always come back to haunt you. Whether it's the unnecessary and laborious administrative process needed to perform daily functions, a legal action, or a government audit, inaccurate data can cost you plenty. Source: Segalco.com »» Click here for more Compliance and Regulatory Material Fiduciary and Plan Governance Shareholder Climate Activism Comes for 401k Plans: Lessons Learned From Amazon and Comcast The SEC permitted the shareholders of Amazon and Comcast to vote on proposals to evaluate the alignment of the companies' 401k plans with the companies' climate action goals, finding that these proposals transcend ordinary business matters. Although the shareholders of both Amazon and Comcast have voted against the shareholder proposals, there are important lessons to be learned from the SEC's decision allowing the proposals to proceed. Source: Debevoise.com How to Choose Your Retirement Plan Provider Selecting competent plan providers is part of your fiduciary duty as a plan sponsor. So selecting a provider must be through an actual process where you review potential providers in each area (administration, financial advisory, ERISA attorney, and auditors) before selecting one and documenting the entire method of selection. This article is about what you should consider in selecting a retirement plan provider. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers How to Prepare Your Clients for 401k Statement Shock Most investors will be in no rush to tear open the envelopes when their monthly retirement account statements arrive in early July. The S&P 500 has dropped 9% from the May 31 close through the market’s big sell-off on June 13th, while the Nasdaq has sunk just over 10%. With 401k savers likely to be getting some unpleasant news in their next statement, their financial advisers might want to reach out in advance. Source: Investmentnews.com 403b Plans Universal Availability Audit Steps Universal Availability violations often result in material adjustments to the financial statements due to the size of the corrective contributions that must be funded by the employer when eligible employees are improperly excluded from participation. For that reason, auditors do need to see census and payroll data for all employees who have been excluded from plan participation, as well as annual notices of the opportunity to defer for those who are eligible but not contributing. Source: Belfint.com Access to CITs Creates Opportunity for 403b Plans The topic of making CITs permissible investment vehicles in 403b plans has been covered extensively over the past several years. This 5-page paper focuses the dialogue on what will be the most important innovations and their potential outcomes should 403b plans be allowed to use CITs, namely: potentially lower costs and opportunities for greater administrative efficiency, flexibility for more investment innovation, and more choice in short-term investing options. Source: Dciia.org »» Click here for More 403b Material Court and Legal More Pushback Against CAR 2022-01: ForUsAll's Suit Against the DOL ForUsAll continues to maintain that cryptocurrency could be an appropriate plan investment to provide account diversification and considers its business targeted by the DOL guidance. On June 2, ForUsAll filed suit in the District of Columbia to invalidate the CAR because it was issued in violation of the Administrative Procedure Act. This is the same statute that was used by the Fifth Circuit Court of Appeals to invalidate the DOL's Fiduciary Rule. Source: Cohenbuckmann.com Universal Health Loses Appeal to Undo 60,000-Person Class in Excessive Fee Case The Third Circuit Court of Appeals recently held that as the plan fiduciary of Universal's defined contribution plan, Universal Health Services Inc. and its plan investment committee must face a class-action claiming its retirement plan included imprudent investment options charging excessive fees to more than 60,000 participants, even though the three named plaintiffs only invested in seven of the 37 plan investment options challenged by their lawsuit. Source: Erisalitigationadvisor.com Sixth Circuit Rules Derivative ERISA Claims Not Arbitrable Without Plan Consent On April 22, 2022, the U.S. Court of Appeals for the Sixth Circuit issued its decision in Hawkins v. Cintas Corporation holding that ERISA claims for breach of fiduciary duty belong to the plan. As a result, plan members alleging harm to their individual retirement accounts in defined contribution plans, cannot be forced to arbitrate their claims without the plan's consent. Source: Hallbenefitslaw.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC SECURE 2.0 Surprise: The ROTH Catch-Up Contribution and ROTH Employer Match Proposal SECURE 2.0 would reclassify all catch-up contributions as Roth-only in 2024, increase catch-up contributions to $10,000 only for ages 62 to 64, optionally treat employer matching contributions as Roth contributions, and offer a new safe harbor correction for auto-enrollment plans' unintentional administrative flaws. Source: Milliman.com RISE and SHINE: The Senate's Initial Response to House-Passed SECURE 2.0 On March 29, 2022, the House of Representatives passed the Securing a Strong Retirement Act of 2022. SECURE 2.0 is a comprehensive bill designed to increase access to retirement savings and includes a variety of provisions that would affect employer-provided retirement plans. On June 14, 2022, the Senate Health, Education, Labor, and Pensions Committee unanimously approved its version of SECURE 2.0, the Retirement Improvement and Savings Enhancement to Supplement Health Investments for the Nest Egg Act. Source: Benefitslawadvisor.com Starter 401k Bill Introduced in the U.S. House Bipartisan legislation that would make it easier for small businesses to offer retirement plans and that has the backing of the American Retirement Association has been introduced in the House of Representatives. Reps. Linda Sanchez and Darin LaHood -- both of whom are members of the tax-writing House Ways & Means Committee -- introduced the Starter-K Act on June 16. Source: Asppa.org Bipartisan Bill Backs Auto-Portability Bipartisan legislation introduced in the U.S. Senate on June 15 seeks to stem retirement plan leakage, backing auto-portability and a tax credit for adopting employers. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Marketplace News Edelman Financial Engines Launches New 401k Retirement Income Solution
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