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 …
IRS Expands Self-Correction Procedures for Retirement Plans
Certain qualified retirement plan errors are now easier to fix under the new expanded IRS self-correction procedures. On April 19, 2019, the IRS released the revised Employee Plans Compliance Resolution System (“EPCRS”) under Revenue Procedure 2019-19. EPCRS allows employers of all sizes to identify and correct retirement plan errors under the Self-Correction Program (“SCP”), Voluntary …
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A Written Fee Policy Can Help Employers Answer the Question: Who Pays for Your 401(k) or 403(b) Plan’s Administrative Costs and How Do You Know?
Most employers are familiar by now of the many lawsuits (more than 100) filed against 401(k) and 403(b) plan sponsors and their employee fiduciaries responsible for selecting the plans’ record keepers and investment line-ups, alleging that they breached their fiduciary duty by allowing participants to pay excessive record keeping fees and invest in underperforming and …
The Top 5 Things to Know if You Are New to 401(k) Benefits Administration
As an advisor to many 401(k) plan sponsors, I have been asked occasionally what advice I would give to a person who is relatively new to retirement plan administration. While some aspects of administration may only be learned through experience, here are my top 5 things to understand about plan administration. 1. Identify the service …
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The IRS Announces Updated Limitations Related to Employer Plans; 401(k) Contribution Limit Increases to $19,000 for 2019
The IRS announced cost of living adjustments affecting dollar limitations for employer plans for tax year 2019. The IRS issued technical guidance detailing these items in Notice 2018-83, in addition to previous guidance in Rev. Proc. 2018-30. Many, but not all, of the limitations will change because the increase in the cost-of-living index met the …
Common But Costly Mistakes in 401(k) Plan Loans
Many 401(k) plans allow participants to borrow amounts from their vested 401(k) plan accounts and repay such amounts, typically through payroll deductions, back to their own accounts. Plan loans must comply with IRS rules which govern: the amount of the loan (lesser of $50,000 or 50% of the vested account balance), the loan term (5 …
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Minimizing the Risk of Costly 401(k) and 403(b) Investment Fund and Fee Lawsuits
As employers who sponsor 401(k) and 403(b) retirement plans prepare their 2017 year-end and 2018 “to do” lists, they should be sure to include a review of their processes for selecting and monitoring the investment funds they make available for plan participant investment and the fees their plans pay to record keepers and other service …
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IRS Scrutiny of Plan Loans Increases, but IRS Provides Helpful Guidance
The Internal Revenue Service (“IRS”) has increased its level of scrutiny on the limitations imposed on participant loans from defined contribution retirement plans. Internal Revenue Code (“IRC”) Section 72(p) generally limits a participant’s plan loans to the lesser of: $50,000, or 50% of the participants vested account balance. Additionally, if the participant already took out …
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