"[The IRS] announced that it intends to issue opinion letters on February 28, 2023, for pre-approved defined benefit plans that were filed with the IRS for the third six-year remedial amendment cycle. [ Announcement 2023-6 ] also discusses an extension of the deadline to adopt certain pre-approved defined benefit plans. The IRS announced the opening of the determination letter program for adopting employers of certain pre-approved defined benefit plans."   MORE >>

"The key change made by SECURE 2.0 relates to the level of surplus pension assets that a plan must hold to make a de minimis transfer, which is up to 1.75% of plan assets. Under this provision, the funded-status threshold for determining a plan's surplus is reduced to 110%. This lower threshold may create opportunities for more employers looking for alternative sources to fund retiree health and/or group term life insurance benefits."   MORE >>

"[T]he new rules allow for self-certifications as to both [1] the fact that they have a hardship; and [2] that the amount of the distribution is not in excess of the employee's financial need.... Effective for disasters after December 27, 2020, SECURE 2.0 finally makes the exception to the 10% early withdrawal tax for federally declared disasters permanent.... Additionally, employers may permit larger loans (up to a maximum of $100,000 or 100% of the vested account balance) as part of the qualified disaster distribution."   MORE >>

"[SECURE 2.0] will significantly increase the flexibility of 401(k) plans to encourage more workers to participate in workplace savings programs. In each case, workers can make better use of their plans to save for near-term and other non-retirement needs.... Although some provisions aren't effective until 2024, it may take some time to for employers and platform providers to ramp-up technology and establish employee education programs so participants can hit the ground running."   MORE >>

"SECURE 2.0 broadens the scope of self-correction by permitting any eligible inadvertent failures to be self-corrected within a reasonable period after the failure is identified. The self-correction period is now defined as indefinite, with no last day, as long as the IRS does not identify the failure before the plan sponsor takes action demonstrating a specific commitment to self-correct the failure."   MORE >>

"A plan that wishes to request an exception from the withdrawal liability requirements must demonstrate that the exception would reduce the risk of loss to plan participants and beneficiaries, and would not increase expected employer withdrawals. The plan must also demonstrate that the exception would not increase the amount of the plan's SFA or unreasonably increase the PBGC's risk of loss."   MORE >>

"If you are age 73 or older, you are required to take at least a minimum withdrawal from your tax-deferred retirement accounts every year, whether you need the money or not.... In prior years, the penalty for failure to take an RMD from a tax-deferred account by the required deadline resulted in a hefty 50 percent excise tax. But, with the recently enacted law, that excise tax drops to 25 percent, and if corrected in a timely manner, to 10 percent."   MORE >>

"Given that the plaintiffs have filed their lawsuit in a forum that has displayed an antipathy toward many federal agency actions in recent years and the impending legislation to overrule the 2022 Rule, asset managers, plan sponsors and other fiduciaries may wish to monitor this litigation, while they at the same time remain mindful of the now-effective 2022 Rule. If Congress successfully deploys the Congressional Review Act, the DOL would be prohibited from engaging in further rulemaking substantially similar to the nullified rule[.]" [Utah v. Walsh, No. 223-00016, (N.D. Tex. complaint filed Jan. 26, 2023)] MORE >>

"Defined benefit pension plans have many risks and, unfortunately, these risks are not always addressed and managed appropriately. In some cases, plan sponsors move to defined contribution plans as they feel these are risk-free but there is no such thing as a risk-free plan. It comes down to who is responsible for managing the risk and what other risks are created by the different plan types."   MORE >>

"[T]he model ... sets a lower limit on the discount rate ... [ensuring] that the discount rate won't dip below a metric called the value at risk return, which quantifies the extent of potential portfolio losses. The researchers propose that investors use this metric along with modeling the least risky portfolio allocation that a pension would use to still generate a reasonable return."   MORE >>

"Although covered companies do not need to adopt a clawback policy that is fully compliant with Rule 10D-1 until after their applicable stock exchange listing standard becomes effective, there are important steps companies can take now to prepare for compliance."   MORE >>