New Roth Conversion Provisions in 401(k) Retirement Plans
The legislation to avoid the “Fiscal Cliff” did not spawn widespread retirement plan changes as many had feared. However, there is a minor change related to Roth conversions in eligible retirement plans. 401(k) plans that allowed for Roth 401(k) contributions also allowed for the conversion of participant accounts to Roth accounts, but only if the participant had a distributable event. Such events are typically termination of employment, reaching normal retirement age, reaching early retirement age, permanent disability, death, or attainment of age 59 ½. Under the new legislation, participants can Continue reading »
Affordable Care Act (ACA) Guidance Has Finally Begun
On November 20, 2012, Affordable Care Act guidance was issued in the form of over 300 pages of proposed regulations. The guidance is broken into three parts: 1) requirements for essential health benefits, actuarial value, and other exchange related requirements; 2) various market reform initiatives; and 3) regulations related to employee wellness programs.
At this time, the proposed regulations related to the exchange requirements, as well as the market reform initiatives, will be more meaningful to industry practitioners. The proposed regulations related to wellness programs will be of greatest interest to employers.
In general, as of January 1, 2014, health plans will not be able to underwrite based on health status. Wellness programs have been granted a limited exemption. The maximum allowable reward under a wellness program as part of a group health plan has increased from twenty to Continue reading »
Form 5500 Filing Relief for Plan Sponsors Impacted by Hurricane Sandy
The IRS announced it is granting relief to benefit plan sponsors affected by Hurricane Sandy. This relief also includes plan providers whose services impact the filing of Form 5500. In general, plans in the affected areas will have until November 7, 2012 to file returns that otherwise would have been due October 31, 2012.
Relief is automatic, with no action required by plan sponsors. In the event a notice for delinquent filing is received, then the impact of Hurricane Sandy should be referenced in the plan sponsor’s reasonable cause statement. As additional details emerge regarding the storm’s impact, additional filing relief Continue reading »
Employers’ 2012 Affordable Care Act To Do List
As a result of the Supreme Court upholding the Affordable Care Act (ACA), employers must continue to satisfy its requirements. In general, employer-sponsored group health plans that provide applicable employer-sponsored coverage are subject to ACA. There are a few limited exceptions, but most fully insured and self-insured group health plans are covered. If an employer determines their health benefits are covered, then they have several action items to address Continue reading »
Even Simplified Employee Pensions Aren’t Always So Simple
Retirement plan sponsors and vendors alike will all tell you that nothing in the world of retirement plans is truly simple. This was supported by the findings of the Employee Plans Compliance Unit’s recent SEP Plan Compliance Check project. The project revealed an abundance of errors by both SEP plan sponsors and financial institutions.
A SEP is designed to allow small employers to provide retirement benefits to its employees without getting bogged down in all of the rules associated with the more complex qualified plans like 401(k) plans and the like. SEPs are not subject to the Employee Retirement Income Securities Act of 1974 (ERISA), do not have a 5500 filing requirement with the DOL and their assets are invested in individual retirement accounts (IRAs). While these differences make them far less complex and expensive to administer, contributions to the participants’ account still receive Continue reading »
IRS Audits of 403(b) Plans
What triggers an audit? Plans are typically selected from filed returns such as Form 5500s, but for plans that don’t have to file returns, the IRS downloads data from W-2 employer’s report and look for things such as exceeding contribution limits. However, the agency often randomly selects plans among different types of sponsors and different industries. Daniel S. Gardner, Senior Employee Plan Specialist for Tax Exempt and Government Entities, Internal Revenue Service, described what the IRS is looking for – and has found – when auditing 403(b) plans. Continue reading »
