The new RMD regulations are not without at least one limitation for spouse beneficiaries, in the form of the “hypothetical RMD.” This could affect a spouse beneficiary who inherits an IRA or qualified retirement plan account before the deceased’s RMDs are required to begin—generally age 73—and who elects the new 10-year beneficiary payout rule in order to delay the onset of required distributions.
Read MoreAutomatic enrollment features are attractive to employers that wish to increase the plan participation rate and encourage employees to begin saving for their own retirement. Automatic enrollment is designed to improve retirement preparedness and improve overall financial wellness.
Read MoreUnlike breaks-in-eligibility service that can delay an employee’s ability to participate in an employer’s retirement plan, breaks-in-vesting service can delay or even prevent a participant’s ability to fully vest and become entitled to employer contributions if she is subject to a vesting schedule.
Read MoreJust as important for an employer choosing plan service requirements is considering when an employee will experience a break in eligibility service. Breaks in service—leaving that employer, in other words—can potentially delay when an employee becomes a participant, or resumes participation if he or she was an eligible participant before incurring breaks in service.
Read MoreThe Department of Labor has launched an online filing system for termination administrators to be able to submit required information for abandoned plans to the DOL, in addition to existing email and paper-based methods.
Read MoreIf elected in the plan document, a plan sponsor can cash out a terminated participant’s account if the balance in the account does not exceed the threshold identified in the plan document, following appropriate notification to the terminated participant.
Read MorePlan sponsors may generally correct eligible inadvertent failures under the EPCR’s Self-Correction Program. Exceptions to this rule include failures in which the plan or plan sponsor is under examination by the IRS or for failures that have been identified by the plan or plan sponsor but have not been corrected within a reasonable period of time after identification.
Read MoreIn January 2024, the Internal Revenue Service (IRS) released Notice 2024-22, providing guidance with respect to anti-abuse rules for Pension-Linked Emergency Savings Accounts (PLESAs), a new provision created by the SECURE 2.0 Act of 2022 (SECURE 2.0).
Read MoreEmployers with qualified retirement plans cannot disproportionately favor highly compensated employees (HCEs). This basic principle may lead to a misconception that no issues would result from implementing changes that negatively affect only HCEs.
Read MoreOn April 16, 2024, the IRS issued Notice 2024-35 to provide additional transition relief for certain specified RMDs for 2024.
Read MoreAs you’re preparing to send your Form 5498 files to your vendor for printing, you’ve probably caught some reporting errors as you audit the files. But mistakes happen. And those errors that inevitably slip through are likely those that keep you up at night. It’s not fun getting a phone call or visits from upset clients after they received an incorrect Form 5498.
Read MoreThe Department of Labor (DOL) has released proposed regulations related to the implementation of section 120 of the SECURE 2.0 Act (SECURE 2.0).
Read MoreOver the past five years Congress has passed extensive legislation to encourage more people to save for their retirement. One obstacle many people face in this endeavor is not meeting eligibility requirements to participate in an employer-sponsored 401(k) plan. This hurdle is now easier to overcome for people who have worked on a part-time basis for their long-term employer.
Read MoreThe Department of Labor (DOL) issued a final rule to assist employers when determining whether a worker is considered an employee or an independent contractor under the Fair Labor Standards Act (FLSA).
Read MoreOne new penalty tax exception is for the terminal illness of a retirement plan participant or IRA owner. The provision applies to terminally ill distributions made after December 29, 2022. The rationale for this new exception is the potential need of an individual to use retirement funds for expenses related to a terminal illness.
The Internal Revenue Service (IRS) has released final regulations that provide de minimis error safe harbor exceptions to penalties for failure to file correct information returns or furnish correct payee statements.
Read MoreGiven the many changes to the retirement landscape brought about by the SECURE 2.0 Act legislation, it would be difficult to identify any one provision that has the greatest potential to impact retirement savers. But, certainly, one strong candidate would be the new ability to make Roth contributions to simplified employee pension (SEP) and savings incentive match plans of small employers (SIMPLE) IRA retirement plans.
Read MoreThe Internal Revenue Service (IRS) has released Notice 2024-02, which provides guidance in a question and answer format regarding several provisions of the SECURE 2.0 Act of 2022 (SECURE 2.0). This article summarizes the guidance contained in Notice 2024-02.
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