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. 

The Impact of U.S. v. Windsor on Retirement Plans

Supreme Court Ruling on the Defense of Marriage Act 

The U.S. Supreme Court in a landmark case ruled on June 26, 2013, that Section 3 of the federal Defense of Marriage Act (DOMA) is unconstitutional. Section 3 of DOMA defined “spouse” for the purposes of federal law as a person of the opposite sex and that a “marriage” only applied to opposite-sex partners.

In addition to the social and historical implications of this ruling, U.S. v. Windsor has a direct effect on all Qualified Retirement Plans. Under the ruling, to maintain their tax qualified status, plans must recognize same-sex married couples and provide the same benefits as they would to a participant married to a member of the opposite sex. Plan sponsors should specifically review the following areas:

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.

HSA Questions and Answers

This article  sets out Questions and Answers regarding Health Savings Accounts (HSAs), as provided by the Internal Revenue Service (IRS) in Notice 2008-59. The Notice addresses the following topics related to HSAs:

• Important definitions
• Distributions from HSAs
• Eligible individuals
• Prohibited transactions
• High deductible health plans (HDHPs)
• Establishing an HSA
• Contributions to HSAs
• Administrative fees

Please read below for more information.

Note: For 2014, the HSA annual contribution limit is $3,300 (up from $3,250 for 2013) for self-only HDHP coverage or $6,550 (up from $6,450 for 2013) for family HDHP coverage. To qualify as an HDHP for 2014, the annual deductible must be at least $1,250 for self-only coverage or $2,500 for family coverage, the same annual deductible as for 2013. For 2014, the maximum annual out-of-pocket expenses for HDHP coverage may not exceed $6,350 (up from $6,250 for 2013) for self-only coverage or $12,700 (up from $12,500 for 2013) for family coverage.

Metal Levels for Qualified Health Plans

Beginning in 2014, the Affordable Care Act (ACA) requires health plans offered through an Exchange, or qualified health plans (QHPs), to meet certain levels of actuarial value. ACA’s required actuarial value levels are referred to as “metal levels”—bronze, silver, gold and platinum.

New Report Offers Tips for Improving Retirement Plan Participant Outcomes

Defined contribution plans are and will continue to be a mainstay in the market. But, are they working?

Improving Participant Outcomes: An Action Plan for Plan Sponsors looks at some of the factors that plan sponsors should consider when assessing the value of the retirement plan offered to their employees. It also considers steps they can take to provide greater assurance that employees will be able to generate sufficient income on which to retire.