Articles — Ascensus

More Changes for RMDs

In 2019, the SECURE Act made several changes to the rules for retirement plans and IRAs, including raising the applicable RMD age from 70½ to 72. In 2022, the IRS released proposed regulations that revised long-standing RMD rules and provided guidance on certain SECURE Act provisions. Congress also passed the SECURE 2.0 Act, which increased the applicable RMD age again from age 72 to age 73 in 2023, and then to age 75 in 2033 (or the year of retirement, if later, for certain plan participants who are not five percent owners).

New RMD Rule Could Affect Spouse Beneficiaries, Hypothetically

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.

Mandatory Automatic Enrollment Under SECURE 2.0

Automatic 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.

expert, Employer PlanAscensusOctober 17, 2024Retirement Plan, Qualified Retirement Plan, Regulations

Navigating a Break-in-vesting Service? What You Need to Know About Your Qualified Retirement Plan

Unlike 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.

Employer PlanAscensusSeptember 19, 2024Qualified Retirement Plan, Regulations, Retirement Plan

New Guidance Released on Matching Contributions for Qualified Student Loan Payments

Recent legislation passed by Congress includes several provisions that enhance the ability of workers to increase their retirement savings. One of these provisions, Section 110 of the SECURE 2.0 Act of 2022 (SECURE 2.0), also enhances the ability of employers that sponsor a 401(k), 403(b), governmental 457(b), or a SIMPLE IRA plan to supplement workers’ retirement savings by providing matching contributions to employees who make qualified student loan payments (QSLPs) in 2024 and later plan years.

401(k) Actual Deferral Percentage Compliance Test Basics

The ADP test measures or determines whether elective deferrals that are made in the plan are disproportionate between two groups of employees: the highly compensated employees (HCEs) and the non-highly compensated employees (NHCEs). This status is determined by such things as compensation and company ownership.

expert, Employer PlanAscensusSeptember 19, 2024Qualified Retirement Plan, Retirement Plan, 401(k) Plan

Employee Breaks-in-Eligibility Service Are Inevitable. Here's How to Handle Them.

Just 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.

Now that Cycle 3 is Over, What's Next?

The IRS requires that all qualified retirement plans be established and supported by a formal written document that complies with the Internal Revenue Code. Employers may choose to use a pre-approved document offered by a document sponsor, like Ascensus.

DOL Launches Online Filing Option for Abandoned Plans

The 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.

Employer Plan, News BriefAscensusAugust 15, 2024Qualified Retirement Plan, Retirement Plan, Regulations, DOL

IRS Releases Guidance on Certain SECURE 2.0 Penalty Tax Exceptions

The IRS has issued Notice 2024-55, providing guidance on emergency personal expense distributions and domestic abuse victim distributions that are effective after December 31, 2023, under SECURE 2.0.

IRA, Employer Plan, News BriefAscensusJuly 18, 2024IRA, SIMPLE IRA Plan, SEP Plan, IRS, Traditional IRA, Roth IRA

Choosing Service Requirements for 401(k) Plan Eligibility Purposes

Employers that establish 401(k) or similar qualified retirement plans often have definite ideas on how, and when, employees become eligible to participate. Choosing eligibility requirements is one of many important decisions that employers must make when they establish such plans.

Handling Cashout Distributions

If 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.

expert, Employer PlanAscensusJuly 18, 2024Qualified Retirement Plan, Q&A, Regulations, Retirement Plan

Student Loan Repayments and Matching Contributions

Employers may now treat an employee’s qualified student loan payments like elective deferrals or after-tax contributions for purposes of providing an employer matching contribution.

Interim Final Rule for Abandoned Plans Released

The Department of Labor (DOL) has issued an interim final rule, expanding the Abandoned Plan Program regulations to also include plans of employers who are in liquidation under Chapter 7 of the U.S. Bankruptcy Code.

DOL Releases Final Investment Advice Fiduciary Rule

The Department of Labor (DOL) recently released a regulatory package that includes a final amendment (the Retirement Security Rule) to the regulations that define what constitutes an investment advice fiduciary under the Employee Retirement Income Security Act of 1974 (ERISA) Title I and Title II (codified in the Internal Revenue Code).

Post-Severance Compensation vs. Severance Pay

A widely discussed but frequently misunderstood topic that is critical to a qualified plan’s operations and compliance is post-severance compensation.

A Brush Up on EPCRS’s Self-Correction Program: Reviewing updates made to EPCRS following the passage of SECURE 2.0

Plan 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.

IRS Reminds Businesses of SECURE 2.0 Impacts on Form W-2

The Internal Revenue Service is reminding businesses who sponsor a retirement plan that certain provisions of SECURE 2.0 that became effective in 2023 may impact their Form W-2 reporting requirements.