Compliance August 5, 2022

Plan Sponsors Have More Time for Certain Plan Amendments

The IRS is extending deadlines for amending plans for certain provisions of the SECURE Act and other legislation.

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The IRS has issued Notice 2022-33, extending the deadlines for amending a retirement plan or individual retirement account to reflect certain provisions of the Setting Every Community Up for Retirement Enhancement Act, the Miners Act and the Coronavirus Aid, Relief, and Economic Security Act.

For a qualified non-governmental plan, including an applicable collectively bargained plan, the deadline to amend a plan for provisions of the SECURE Act and the regulations thereunder is December 31, 2025. This previous deadline was the last day of the first plan year ending on or after January 1, 2022. The deadline extension also applies to section 104 of the Miners Act, which lowered the minimum age for allowable in-service distributions from a qualified pension plan from age 62 to age 59.5.

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The plan amendment deadline for SECURE Act and Miners Act provisions for a qualified governmental plan is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023.

In general, the deadline for a section 403(b) plan that is not maintained by a public school to amend a plan for provisions of the SECURE Act and the regulations thereunder is December 31, 2025. For a section 403(b) plan that is maintained by a public school, the deadline is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023.

According to the IRS notice, the deadline for amending a plan to reflect the CARES Act provision that waived required minimum distributions for defined contribution plans and IRAs for 2020 has also been extended. The deadline for amending a retirement plan that is not a governmental plan is December 31, 2025, and the deadline for amending a retirement plan that is a governmental plan is 90 days after the close of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023. With respect to a governmental plan under section 457(b) of the Code, the deadline is the later of the third regular legislative session of the legislative body with the authority to amend the plan that begins after December 31, 2023, or the first day of the first plan year beginning more than 180 days after the date of notification by the Secretary of Labor that the plan was administered in a manner that is inconsistent with the requirements of section 457(b).
Products August 4, 2022

DCIIA Publishes Resource for Introducing a Retirement Tier in DC Plans

A new series of papers aims to provide plan sponsors a framework for supporting near retirees and retirees in preparing for retirement.

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The Defined Contribution Institutional Investment Association has published a white paper series, “Design Matters: The Retirement Tier,” to help plan sponsors better understand how to incorporate a retirement tier into their defined contribution plan and how such a tier would benefit participants.

The series addresses the reality that the demographic shift driven by Baby Boomer retirements will significantly change the focus of DC plans. By 2030, an estimated 73 million Baby Boomers will be age 65 or older. That means that DC plans could see their participant population have more retirees and non-working participants than active employees, DCIIA wrote in a July report about their white paper series.

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DCIIA’s research stresses the importance of engaging participants in a plan’s retirement tier. “Participants need to understand how they can potentially benefit from retirement tier offerings to consider using them,” DCIIA says in a paper summarizing the white paper series.

 

The association goes on to offer advice about how best to communicate with participants about the retirement tier. “Whatever form the retirement tier takes within a plan, sponsors must clearly inform participants about offered products, solutions, tools, and services,” DCIIA says.

In addition, DCIIA stresses the importance of reviewing and possibly updating the plan’s Investment Policy Statement. “The goal of the plan may need to be revisited and refocused on sustainable, predictable retirement income rather than a wealth or accumulation goal,” says DCIIA. “Defining the plan as either a saving or retirement offering matters and has very important investment, service and communication implications.”

 

DCIIA’s paper offers the following suggestions for requests for proposals and vendor evaluations to help gauge potential service providers’ support for a retirement tier:

  • Request existing materials, case studies, and sample work that demonstrates how they typically support plan sponsors.
  • Ask if (and how) they customize communications. If unique and targeted correspondence with participants is considered important, find out how much customization is available and what resources the plan might need to contribute to help create it.
  • Ask service providers if they can fully support the plan’s needs or would require help, such as support from within the plan sponsor’s organization (e.g., using resources from internal communications). Will external communications specialists need to be hired?
  • Ask how they ensure successful rollouts and what kind of ongoing support they provide.

DCIIA also advises that plan sponsors contemplate how a retirement tier would fit the organization’s strategic plans for workforce planning, HR, and benefits.

Overall, DCIIA’s paper advises plan sponsors to work with their service providers to identify and target various participant demographics with messaging about a retirement tier to better design its offerings and the plan’s communications to different age groups. “Consider working with service providers to create personas to help better understand the plan’s participant population, their needs, key messaging, and the various ways to reach different audiences,” the paper says.

 

The key contributor to the paper is Megan Yost, of Segal Benz. The other contributors are Glenn Dial, of American Century Investments; Heather Ross, of Caldwell Ross Communications, Inc.; Toni Brown, of Capital Group; Shawn O’Brien, of Cerulli Associates; Peggy Flynn, of Con Edison; Steve Dufault, from Fiducient Advisors; Drew Carrington, of Franklin Templeton’ and Pam Krueger, with WealthRamp.

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