Abusive QDRO Scheme Messes With Texans' Retirement Savings
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In This Issue
General Items Abusive QDRO Scheme Messes With Texans' Retirement Savings The American Retirement Association was recently informed of a legal scheme in Texas -- a community property state -- that allows younger workers to raid up to 100% of their defined contribution plan account balance without incurring the tax penalty for an early, in-service retirement plan distribution. The only catch is that the DC plan participant must be married. Source: Napa-net.org Boosting Retirement Confidence: The Role of Building Resilience in Defined Contribution Plans People are worried about retirement. We're facing a period of uncertainty marked by higher volatility, inflation, recessionary fears, and an aging population increasingly concerned with outliving their savings. So how do we increase retirement confidence? Building resilience into defined contribution plans is an important place to start. The new market regime presents a unique opportunity to take a fresh look at plan design, embracing greater nimbleness, and evolving investment strategies to meet the changing needs of DC participants. Source: Georgetown.edu Insight: Studies, Research, and White Papers Four Key Findings From Fidelity's Plan Sponsor Attitudes Survey There is no shortage of interesting and relevant findings from Fidelity Investments' 14th annual Plan Sponsor Attitudes study, released today, which surveys employers that offer retirement plans using a wide variety of recordkeepers. What percentage of plan sponsors are looking to change advisors, CIT use increasing, plan design tweaks; what sponsors value most from advisors, and more from the comprehensive annual study? Source: 401kspecialistmag.com Fidelity Finds 22% of Plan Sponsors Actively Searching for New Adviser One in five plan sponsors (22%) reported they were actively looking to switch advisers, with motivations including more service offerings and better participant communication and education, according to the 14th Fidelity Plan Sponsor Attitudes Study. Among plan sponsors looking to switch advisers, 38% said they were searching for an adviser who provided more extensive services, followed closely by 36% interested in an adviser who was better at tacking servicing issues, and 34% seeking someone with more effective employee communication and education options. Source: Planadviser.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Retirement Plan Confusion Creating Advisor Opportunities Retirement plans are getting more confusing, but that could be a good thing for financial advisors, according to a Fidelity Investments study released Monday. Fidelity characterized 2023 as a "year of opportunity" for the retirement plan industry in its 14th annual Plan Sponsor Attitudes Study. In other words, the asset manager is putting a positive spin on rising plan complexities that are creating ways to increase advisor impact. Source: Investmentnews.com Court and Legal DOL Beats ForUsAll Crypto Suit DC District Court Judge Christopher Cooper ruled that retirement plan provider ForUsAll had no basis for a legal complaint that the DOL caused it to lose clients by issuing a bulletin in March of 2022 warning about the risk of allowing participants to invest in cryptocurrency. Source: Planadviser.com Another Excessive Fee Suit Settlement Struck The allegations are familiar, as are the attorneys representing the plaintiffs, but this settlement proposal involves more than just money. The proposed settlement comes in an action brought by plaintiffs on behalf of participants in the Biogen, Inc. 401k Savings Plan against defendants Biogen Inc., the Board of Directors of Biogen Inc., and the Biogen Inc. 401k Retirement Committee. The suit itself was a consolidated action resulting from the combination of two separate 2020 ERISA class action suits. Source: Napa-net.org Former American Airlines Pilot Fires Back in Retirement Plan ESG Suit A former American Airlines pilot is continuing a push to collect damages from the airline and its benefits committee for allegedly defaulting him and thousands of other participants into underperforming funds that have a focus on environmental, social, and governance investing. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory Welcome Delay of SECURE 2.0 Roth Catch-Up Contribution Requirement On Friday, August 25, 2023, the IRS announced a transition period for the implementation of the new Roth "catch-up" contribution requirement of the SECURE 2.0 Act. The delay extends compliance with the requirement for two years. The delay, announced in Notice 2023-62, is welcomed by plan sponsors and retirement plan administrators, both of whom had expressed serious concerns to the IRS about implementing the requirement by January 1, 2024, the effective date set out in the SECURE 2.0 Act. Source: Icemiller.com IRS Announces Transition Period for Roth Catch-Up Contributions The IRS has announced a two-year administrative transition period that delays until 2026 the new rule that catch-up contributions made by certain higher-income participants in 401k, 403b, and governmental 457b plans must be designated as after-tax Roth contributions. The extension is a welcome relief for recordkeepers and employers. Source: Bradley.com Plan Sponsors Receive Eagerly Awaited Reprieve From Roth Catch-Up Implementation With a multitude of questions surrounding implementation and administration, late on a summer Friday afternoon, the IRS issued Notice 2023-62, providing Plan Sponsors with a transition period until 2026 to implement Roth catch-up contributions. Source: Benefitslawadvisor.com New Form 5500 Audit Requirements When the government does something to reduce costs by simplifying paperwork and lowering audit requirements for retirement plans, it should be a good thing for everyone. This was the case on February 23, 2023, when the DOL finalized changes to the Form 5500 financial statement audit requirement for retirement plans for plan years beginning on or after January 1, 2023. Source: Consultrms.com The IRS released Notice 2023-62 providing welcome relief to plan sponsors concerning the new SECURE 2.0 requirement that all catch-up contributions made by high-income employees be treated as Roth. This provision was set to become effective for taxable years beginning after December 31, 2023, however, the newly released guidance announced a two-year transition period for this requirement. Source: Sgrlaw.com Regarding SECURE Act 2.0 Catch-Up Contribution Provisions Addressing one of the myriad of impending administrative headaches for employers stemming from SECURE Act 2.0, the IRS released Notice 2023-62 regarding catch-up contributions. Source: Mcdonaldhopkins.com IRS Announces Two Year Delay of Roth Catch-Up Requirement The IRS has announced a two-year "administrative transition period" for plan sponsors to implement the SECURE 2.0 provision requiring higher-income employees to make retirement plan catch-up contributions as Roth contributions. The IRS also clarified that catch-up contributions will be allowed in 2024 and later years, notwithstanding language in SECURE 2.0 that could be read as eliminating all catch-up contributions. Source: Eversheds-Sutherland.com What Plan Sponsors Need to Know About the New Long-Term Part-Time Employee Rules The SECURE 2.0 Act continues to remove barriers that may have prevented Americans from saving for retirement through their workplace retirement plan. A recent survey showed that three out of four employees rely solely on their employer's retirement plan as their primary saving vehicle. One of the Act's mandatory provisions focuses on expanding eligibility to long-term part-time employees. Here is what you need to know. Source: Tri-ad.com »» Click here for more Compliance and Regulatory Material Marketplace News TPA Strongpoint Partners Adds Pension Financial Services to Network Smart Expands Fiduciary Services to Advisors, Recordkeepers, TPAs RiXtrema Unveils Pair of AI Tools for 401k Plan Advisors World Insurance Taps Another RIA Firm to Join Pensionmark
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