What’s Happening in the Retirement Market?

Rob Peter to Pay Paul?

Typically this idiom has had a negative connotation, but the Internal Revenue Service’s (IRS) August 17 Private Letter Ruling approving the amendment of Abbott Lab’s 401(k) to include a student loan repayment benefit implies there might be circumstances when it’s not only ok “to take from one source to give to another,” but financially savvy.

The IRS gave its blessing to Abbott Lab’s making non-elective contributions to the 401(k) plan based on an employee’s total student loan repayments made outside the plan. These employer contributions would be in lieu of the matching contributions that would otherwise be made to the plan had the employee made elective contributions. However, the employer may provide a year end true-up match to ensure that if there are pay periods where the employee fails to make student loan repayments, but opts to make elective contributions during the same period, the employee would be eligible to receive a true-up matching contribution.

Sobering News Around 2018 Mortality Tables

Effective January 1, 2018, the IRS will implement new mortality tables to be used by Defined Benefit plan sponsors. A number of important things could occur when these new tables take effect, none of which are good news. These include:

• an increase in the plan liabilities; 
• an increase in the sponsor's minimum funding levels; and 
• an increase in the PBGC premiums. 

IRS Releases 2018 Retirement Plan Contribution Limits

The Internal Revenue Service (IRS) has recently released the contribution limits on Qualified Retirement Plans for 2018.

Strategic Benefit Services created a chart that details these contribution limits.

If you have any questions, or would like to begin talking to a retirement plan advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

Key Retirement and Employee Benefits Compliance Reminders for February

Due February 28th

• Paper filing of Form 1099-R to IRS for distributions made in 2016.
• Section 6055 Reporting - Forms 1094-B and 1095-B. IRS information returns filed no later than February 28, 2017, or March 31, 2017 if filed electronically.
• Section 6056 Reporting - Forms 1094-C and 1095-C. IRS information returns filed no later than February 28, 2017, or March 31, 2017 if filed electronically.

Download the full 2017 Retirement and Employee Benefits Compliance Calendar.

If you have any questions or would like to begin talking to an advisor, please get in touch by calling (855) 882-9177 or e-mail us at sbs@hanys.org.

IRS Releases Retirement Plan Contribution Limits for 2016

The Internal Revenue Service (IRS) has recently released the contribution limits on Qualified Retirement Plans for 2016.

Strategic Benefit Services created a chart that details the 2016 contribution limits.

Should you have questions, please contact Strategic Benefit Services by calling (855) 882-9177 or email us at sbs@hanys.org.

New IRS Resource helps Employers Understand the Health Care Law

The new ACA Information Center for Applicable Large Employers page on IRS.gov features information and resources for employers of all sizes on how the health care law may affect them if they fit the definition of an applicable large employer.

The web page includes the following sections:

• What’s Trending for ALEs, 
• How to Determine if You are an ALE, 
• Resources for Applicable Large Employers, and 
• Outreach Materials. 

Visitors to the new page will find links to:

IRS Gives Plan Sponsors Welcome Relief for Automatic Enrollment Features

The Internal Revenue Service (IRS) recently announced modified correction methods for errors relating to automatic contribution features, including automatic enrollment, automatic escalation, and employee elective deferrals in both 401(k) and 403(b) plans.

The correction methods in the new Revenue Procedure 2015-28 are in addition to those previously identified in Revenue Procedure 2013-12. These new correction methods will encourage employers to more readily include automatic enrollment features in their defined contribution plans.

IRS Releases Retirement Plan Contribution Limits for 2015

The Internal Revenue Service (IRS) has recently released the contribution limits on Qualified Retirement Plans for 2015. Strategic Benefit Services created the attached chart that details these contribution limit increases.

If you have any questions about the COLA Limits, or would like to speak with an advisor about reviewing or establishing a plan, please contact us at (855) 882-9177 or via e-mail at sbs@hanys.org.

404(c) Compliance Checklist

By complying with ERISA section 404(c), sponsors and other fiduciaries of retirement plans with participant-directed investments may shield themselves from liability for poor investment decisions made by plan participants. If a retirement plan meets the requirements of ERISA section 404(c), no plan fiduciary will be liable for any loss that is the direct and necessary result of a participant’s exercise of control over the investment of his or her plan account.

IRS Issues Guidance on Windsor Decision for Qualified Retirement Plans

On April 4, 2014, the IRS issued Notice 2014-19 which provides additional guidance on how qualified retirement plans should treat the marriages of same-sex couples following the June 26, 2013 Supreme Court’s ruling in United States v. Windsor. The Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act (DOMA) that barred same-sex couples from being treated as married under federal law. Subsequent to the Windsor decision, the IRS issued Revenue Ruling 2013-17 which stated that a couple would be considered married for federal tax purposes if their marriage certificate was issued by a jurisdiction having the legal authority to sanction marriages. Moreover, once married, the IRS would consider the couple to be married, even if domiciled in a state that does not recognize same-sex marriages. Notice 2014-19 provides guidance on how to comply with the provisions of the Revenue Ruling. Specifically, the Notice provides guidance on the following:

IRS Provides Guidance on In-Plan Roth Rollovers

The American Taxpayer Relief Act of 2012 amends the requirement that employees wait until a distributable event (i.e., age 59½, termination, death or disability) for an in-plan Roth conversion. With the release of Notice 2013-74, the Internal Revenue Service (IRS) provides additional guidance on in-plan Roth conversions.

The Small Business Jobs Act of 2010 permitted retirement plans that provided for Roth contributions to allow employees to roll over amounts (other than designated Roth contributions) from their retirement plans to their Roth account in the plan. However, the amounts that could be rolled over were limited to amounts that were otherwise distributable under the plan. Thus, unless an employee had met a distributable event, a rollover was not possible. Section 902 of the American Taxpayer Relief Act of 2012 expanded the type of amounts that are eligible for an in-plan Roth rollover. 

IRS Initiates Compliance Check of 457(b) Top Hat Plans

Earlier this year, the Internal Revenue Service (IRS) announced that its Employee Plans Compliance Unit (EPCU) would begin a compliance check of certain 457(b) plans maintained by non-governmental, tax-exempt entities. These plans, commonly referred to as “Top Hat” plans, are frequently offered by tax-exempt organizations in addition to other qualified retirement plans.

The good news is that the extent of the compliance check is fairly limited. Letters and a questionnaire will be sent to 200 tax-exempt organizations in fiscal year 2013, and another 200 will be sent in fiscal year 2014. Employers will be selected for review based on information contained on 2011 Form W-2 and Form 990.

IRS Establishes Program for Pre-Approved §403(b) Retirement Plan Documents

What Plan Sponsors Need to Know

The Internal Revenue Service (IRS) issued regulations governing §403(b) retirement plans in 2007 that generally became effective January 1, 2009, requiring that all such plans, whether subject to the Employee Retirement Income Security Act (ERISA) or not, be maintained pursuant to a written plan. However, with few exceptions, plan sponsors could not be sure that their plan document met the §403(b) requirements.

Target Date Retirement Funds - TIPS for ERISA Plan Fiduciaries

The Plan Sponsor Council of America (PSCA) recently released the 2013 403(b) Plan Survey. The survey showed that 73.6% of plans offer target date funds (TDF) as an investment option. Similar findings were noted for 401(k) plans. Additionally, many plan sponsors have identified TDFs as their plan’s qualified default investment alternative (QDIA). Target date funds can be an attractive investment option for employees who do not want to actively manage their retirement portfolio. The inflow of monies into TDFs in recent years reflects the growing popularity of these types of investments.

Fee Disclosures

Annual Disclosure to Plan Participants

• This is the plan sponsor’s obligation, not the record keeper’s obligation. 
• Distributed to all eligible employees whether they are participating in a plan or not; covers administrative expenses and fees that apply on an individual basis (loans, qualified domestic relation orders, brokerage windows, etc.). 
• Includes the investment-related disclosures, such as performance data and benchmarks.