Year-End Planning for Your Retirement Plan
The past year’s barrage of non-stop legislation and regulatory news related to retirement plans is creating confusion and an unclear ‘To Do’ list for those administering a plan. Some of the legislation is focused on providing COVID-19 pandemic relief to companies and their employees. While other legislation, including the surprise passing of the SECURE Act in late December of 2019, brought several significant changes to contend with.
ZUNA recently partnered with Faegre Drinker for a year-end retirement plan event to help companies navigate both the optional and the required changes. The discussion between Bonnie Treichel of ZUNA and Summer Conley of Faegre Drinker centered on how the changes impact 401(k) plans and covered the major pieces of legislation including the SECURE Act of 2019, the CARES Act, and additional guidance from the DOL and IRS.
A detailed “Year-End Checklist for Your Retirement Plan” was provided to attendees that you can find HERE.
Although many of the changes were optional, there are a few items that may apply to your plan even if you chose not to implement the optional features:
Part-time workers: Employees who work 500 hours per year for three consecutive years may have to be allowed in your retirement plan (for deferrals only). While this does not begin until 2024, you must start tracking hours effective January 1, 2021.
RMD changes: The age to start taking RMDs was increased to age 72 along with changes to how balances are handled after a participant’s death (or stretch RMDs).
Safe Harbor changes: You may not be required to send that pesky Safe Harbor notice if your plan meets certain requirements. Inquire with your plan consultant or ask ZUNA for help in how to determine if you can implement this change.
Electronic notices: If you are still sending paper notices, you may want to take advantage of the new electronic disclosure safe harbor. Also, now is a good time to review all year-end notices and participant communication materials and determine if they need to be updated for this year’s changes.
Plan amendments: In general, SECURE and CARES Act changes are not due until 12/31/22, however discretionary changes generally need to be adopted by the end of the plan year. So if you increased the number of loans you allow to accommodate CARES provisions, or made other changes, be sure to check in with your plan document provider.
Again, read the full checklist from the audio cast HERE and please reach out to your ZUNA consultant if we can assist you in evaluating how these changes impact your plan.