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On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law.
The SECURE Act represents some of the most significant changes to retirement plan law since the passage of the Pension Protection Act of 2006, over thirteen years ago.
On Sept. 23rd, the IRS published a final rule that relaxes several existing restrictions on participant hardship distributions from defined contribution plans.
Some of these changes are mandatory, requiring employers to make the changes by Jan. 1st, 2020, while others are optional.
When the third-party administration firm relays that aspects of the annual compliance testing have failed causing many of the company’s executives to receive taxable distributions from the plan, it isn’t a great day for the HR manager. The administrator explains that the regulations require testing to prevent highly paid employees from receiving disproportionately greater benefits than other employees.
Contribution and benefit increases are based on a calculated change in the Consumer Price Index and are intended to allow participant contributions and benefits to keep up with the “cost of living” from year to year. Here are some highlights from the 2020 changes:
For many new Plan Sponsors, and even those savvy at running company retirement plans, understanding plan design can be daunting. Industry terminology, IRS code sections, and complicated illustrations can make understanding difficult.
The economy continues at its strong pace, keeping unemployment at its lowest rate in nearly 50 years. While this is usually good news, employee financial vulnerability is clouding this sunny forecast. The repercussions are impacting their ability to save for retirement.
All 401(k) plan contributions have deposit deadlines, and it’s up to 401(k) fiduciaries to meet them. Yet, many are unclear about the deadlines applicable to their 401(k) plan. That confusion can easily lead to late contributions.
Though some employers may not think so, the truth is that in today's world 401(k) plans are subject to fraudulent activity and that the often-overlooked retirement plan can be the perfect place for it to occur. For example, in late 2017, several news outlets reported a scheme targeting individual 401(k) accounts.
With the future of Social Security in question, it is becoming ever increasingly important for workers to self- prepare for post-retirement living. Studies show that approximately one out of every three eligible workers choose NOT to participate in their employer-sponsored 401(k) plan.
In 2018, the 401(k) plan celebrated its 40th birthday! Though extremely popular today, 401(k) plans came about almost by accident. IRC Section 401(k) was passed into law as part of the Revenue Act of 1978 and was included to limit executive compensation.