One of the most common errors in 401(k) plan administration continues to be a mismatch between a plan’s definition of compensation and the actual compensation taken into account for plan purposes despite this problem being common enough for the IRS to include it in its “401(k) Plan Fix-It Guide”. In this All Things HR Blog, …
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 …
Continue reading “Three Tax Principles that HR Professionals Should Know”
The IRS Announces Updated Limitations Related to Employer Plans for 2021
The IRS announced cost of living adjustments affecting dollar limitations for employer plans for tax year 2021. Most IRS limits impacting employer retirement plans have remained the same because the increase in the cost-of-living index did not meet the legal thresholds that trigger their adjustment. See IRS Notice 2020-79 and IRS Revenue Procedure 2020-32 for …
Continue reading “The IRS Announces Updated Limitations Related to Employer Plans for 2021”
401(k) and 403(b) Fund and Fee Litigation: Employers, Can You Answer These Four Questions?
Most employers sponsoring 401(k) and 403(b) plans are well aware of the large number of lawsuits filed over the past decade or so alleging breach of ERISA fiduciary duty related to plan investment funds and service providers. Unfortunately for plan sponsors (and their employees who serve as investment related fiduciaries), the pace of these lawsuits …
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 …
Benefits Briefs in the Time of COVID-19, Part 5: Suspending or Reducing 401(k) Safe Harbor Contributions
As businesses across the country adjust to the financial reality of Coronavirus related shutdowns and restrictions, some employers that sponsor safe harbor formula 401(k) plans are revisiting a money saving strategy last implemented on a wide scale basis over a decade ago during the great recession—the suspension or reduction of safe harbor contributions. Under a …
IRS Publishes 2019 Required Amendment List for Individually-Designed Retirement Plans
The IRS recently issued its “Required Amendment List,” which contains the annual list of amendments that must be adopted by certain individually-designed retirement plans. This year, the List includes the requirements imposed by the final hardship distribution regulations, and certain rules that apply to collectively-bargained cash balance / hybrid defined benefit plans. Sponsors of individually-designed …
The DOL Proposes New “Notice and Access” Electronic Disclosure Rules for Retirement Plans, but Numerous Questions and Issues Remain
The Department of Labor (“DOL”) has proposed a new safe harbor to allow employers to furnish information to participants and beneficiaries subject to ERISA. While it is a welcome update to the DOL’s woefully outdated disclosure rules previously covered on our All Things HR Blog, there are numerous technical details and exceptions, which each employer …
Increasing Access to Retirement Security
On August 31, 2018 President Trump issued Executive Order 13847, titled “Strengthening Retirement Security in America”. This Executive Order directed the Secretary of Labor to: Clarify and expand the circumstances under which small and midsize businesses may sponsor or adopt a multi-employer plan (MEP) as a retirement savings option for employees; and Increase retirement security …