Retirement plan administration mistakes require difficult conversations with participants, especially when the mistake involves an overpayment. Changes in the law, specifically, SECURE 2.0 and IRS Notice 2024-77, give plan fiduciaries additional flexibility when addressing overpayments. Overpayment of Matching Contributions Consider the case of a 401(k) plan with an employer matching contribution on the first 6% …
Remote Employees Participating in Employee Benefit Plans – What’s Local Law Got to Do with It?
Recently, a client called about a remote employee who was moving from the company’s primary location to a different state, and would continue working for the company. The company had no other employees in the new state and the client wanted to know if the employee’s new state residence might affect the company’s 401(k) retirement …
Avoid the Year-End Rush – 5 Proactive 401(k) Plan Administrative Steps to Take Now
Anyone responsible for the administration of a 401(k) retirement plan probably has a “to-do” list that never ends. For example, as soon as a plan administrator files the Annual Report Form 5500 for the prior year, it is time to start planning to distribute the Summary Annual Reports and annual fee and QDIA notices to …
A Cautionary Tale for Administrators Who Neglect Employee Benefit Plan Terms
Individuals responsible for 401(k) retirement or welfare plan decisions know that the plan document is the first place to look for guidance when deciding a difficult administration question, such as whether a participant is entitled to a benefit. A recent 6th Circuit Court of Appeals case, Laake v. Benefits Committee, Western & Southern Financial Group …
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What Happens to the 401(k) Plan When a Company Is Sold?
Administering a 401(k) plan is a team effort, requiring the expertise of HR staff, the plan’s recordkeeper, and an ERISA attorney. When a company that sponsors a 401(k) or other retirement plan sells the business, a call early in the process to the company’s ERISA attorney can help identify options and create a plan to …
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Has Your Company Decided to Self-Fund its Medical Plan? Don’t Forget Privacy, Security, and Reporting Requirements.
An employer that changes its medical plan from fully insured – where the insurance company sets the terms of the policy and retains the risk that claims will exceed the premiums paid – to self-funded – where the employer is responsible for the claims – must re-examine all aspects of the operation of its medical …
Using the New Group Health Plan Fee Disclosure Rules To Reduce Plan Costs
Like a 401(k) plan, a group health plan must comply with ERISA’s rule that prohibits a plan fiduciary from paying more than a reasonable amount for services provided to the plan. When a group health plan offers insured benefits, service providers may receive a commission from the insurance company instead of direct payment from the …
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What do a newly married employee, a long-term employee, and a change of 401(k) recordkeepers have in common? Beneficiary Designation Forms.
A participant in a 401(k), 403(b), or other account-style retirement plan may name a beneficiary to receive his or her account balance after the participant’s death. A recent case, Moore v. NCR Corp. Plan Admin. Comm. (USDC N.D. Ga., Aug. 30, 2021) is a reminder that retirement plan beneficiary forms need to be reviewed and …
Three Tax Principles that HR Professionals Should Know
Although it might not be obvious, tax law permeates most HR responsibilities – from paying an employee, to arranging for benefit coverages, to settling employment lawsuits, and paying pensions. Knowing a few key tax principles may help employers understand why things are done in a certain way, what questions to ask when discussing possible solutions …
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The Hidden Cost of Terminating 20% or More of Your Employees – Partial Termination of the Retirement Plan
With the delay in re-opening businesses, some companies are finding that they need to terminate employees who had been placed initially on furlough or a reduced-hours assignment. When analyzing the costs that will be incurred due to these terminations, companies that sponsor 401(k) plans or other qualified retirement plans should determine if the partial termination …