401k and Retirement Plan Limits for the Tax Year 2023
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In This Issue
Compliance and Regulatory 401k and Retirement Plan Limits for the Tax Year 2023 On October 21, 2022, the Internal Revenue Service announced that employees in 401k plans will be able to contribute up to $22,500 next year. The IRS announced this and other changes in Notice 2022-55. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2023. Chart and details here. Source: 401khelpcenter.com Best Practices for 401k Plan SPDs To help employers properly administer their 401k plans, Foley & Lardner LLP has been authoring a series of monthly "401k Compliance Check" newsletters. This latest article includes some tips for drafting a best-in-class 401k plan summary plan description. Source: Foley.com IRS Guidance Signals RMD Rules are Here to Stay Looking for a 401k for your startup? This article will help you understand everything you need to know about selecting a 401k provider designed to meet a startup's needs. Source: Graydon.law Maintaining Plan Documents and Procedures for Retirement Plan Required Minimum Distributions Various types of tax-qualified retirement plans and individual retirement accounts must pay required minimum distributions to participants at their required beginning date. Retirement plan participants that do not timely obtain the required minimum distributions of their benefits can face excise tax penalties for these failures, and plan sponsors can face plan disqualification. Plan sponsors and fiduciaries should clearly communicate plan rules and update their documents and procedures to ensure that required minimum distributions are timely taken, especially since the rules have changed in recent years. Source: Mintz.com The Importance of Maintaining Retirement Beneficiary Forms A new employee has a variety of forms to complete when hired. One of the most important forms new employees must complete is a beneficiary form for the company's retirement benefit plans. The plan sponsor must provide a beneficiary form to keep on file upon enrolling a new employee in a retirement plan. Plan sponsors should also update or confirm beneficiary information annually. Source: Watkinsross.com »» Click here for more Compliance and Regulatory Material Fiduciary and Plan Governance ERISA Section 404(c) Protection: A Refresher for Fiduciaries Section 404(c) of ERISA relieves fiduciaries from liability for participants' and beneficiaries' investment decisions in participant-directed individual account plans (like 401ks) if four requirements are met. They are reviewed in this article. Source: Verrill-law.com A Look at Proposed Regulatory Changes to Crypto and Retirement Plans A bill from earlier this year that seeks to provide comprehensive regulation to digital assets and aims to clarify the way cryptocurrencies are regulated was discussed at a conference hosted by Georgetown's Psaros Center for Financial Markets and Policy. The environment for crypto could change as it becomes more accepted in retirement products. Source: Plansponsor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers ESG Adoption Slow Among DC Plans The growth in the number of ESG funds and their assets supports the case for strong investor interest. Nonetheless, participants' interest and the segment's growth aren't reflected in many retirement plans, and the availability of ESG options varies widely among plan types. One factor hindering ESG's adoption is the lack of ESG-focused target-date funds, though several firms are starting to introduce them. Source: Planadviser.com Invesco DC Study Reveals Majority of Employees Feel Alone in Identifying Best Retirement Strategy Invesco released findings from a new study exploring employee and employer preferences for generating long-term retirement income. The survey of more than 1,000 retirement plan participants and 100 large plan sponsors uncover concerns about generating long-term retirement income and considerations for bridging the income gap. Source: Prnewswire.com Annuities as Part of Target-Date Funds Grow in Popularity For plan sponsors considering an in-plan retirement income option, defined contribution plan consultants are most likely (68%) to recommend target-date funds with a guaranteed income component, followed by a TDF with an income vintage (50%), a new report shows. The report from Cerulli Associates finds the target-date options were followed by a managed account (36%), as the next most likely recommendation from defined contribution consultants for in-plan retirement income offerings. Source: Planadviser.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers How Well Are 401k Advisors Adhering to PTE 2020-02? Several industry insiders worried that advisors were unprepared for the July 1, 2022, Prohibited Transaction Exemption 2020-02 enforcement deadline. Yet initial results seem to confirm the regulation is working as the DOL intended. Source: 401kspecialistmag.com Court and Legal Empower Managed Account Participants File Suit A new lawsuit claims that one of the nation's largest recordkeepers designed a program that -- with the help of advisors -- encouraged retirement plan participants to move those savings into a managed account offering "to benefit themselves at participants' expense...." Source: Napa-net.org Failure to Identify Sound Comparisons Sinks ERISA Fee, Investment Claims in Eighth Circuit Plaintiffs must plead a "sound basis for comparison -- a meaningful benchmark" to sustain their claims of imprudent investment and excessive fee against a 401k plan, the federal appeals court in St. Louis has held, dismissing a class action lawsuit for breach of fiduciary duties under ERISA. The U.S. Courts of Appeals for the Sixth and Seventh Circuits reached similar conclusions in dismissing cases before them. Source: Jacksonlewis.com Latest Excessive Fee Target is a MEP Most of the claims we are familiar with (as was the plaintiffs' attorney), but there were some interesting nuances in the arguments in the latest excessive fee case, which happens to involve a multiple employer plan, or MEP. Source: Napa-net.org Growing Number of Courts Rejecting Common ERISA Fee and Investment Claims In Matousek v. MidAmerican Energy Co., the Eighth Circuit joined the Sixth and Seventh Circuits in affirming the dismissal of ERISA breach of fiduciary duty claims alleging that the plan fiduciaries allowed the plan to pay excessive recordkeeping and administrative fees and offered imprudent investment options. Source: Erisapracticecenter.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Cybersecurity: Insights and Action Steps Cybercriminals are creative and resourceful and they're not just after bank accounts. Industry experts in a recent webinar cautioned that retirement plans are in their sights as well. This article outlines some concrete steps that can be taken to address and protect retirement plans against cybercrime. Source: Ntsa-net.org »» Click here for more on Cybersecurity Issues Marketplace News IRS Announces 401k and Retirement Plan Limits for the Tax Year 2023 Announcing the 2022 NAPA Top Women Advisors Captrust Adds $900 Million in Pension Assets With Acquisition of Patriot Pension Advisors The Standard to Acquire Securian's Retirement Plan Recordkeeping Business
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