2024 Regional Summits | ERISA

Jeff Cheshier, Vice President, Institutional Relationship Management, leads a discussion with Jenny Kiffmeyer, from the RLC, regarding ERISA updates. Jeff and Jenny shed light on the latest fiduciary regulations as well as other updates in retirement plan legislation.

The discussion kicks off with updates regarding the Secure Act, with over 90 provisions affecting retirement plans, there are only a handful of them that are mandatory with the rest being optional for plan sponsors to consider adding to their plan. Recent developments and regulations have been proposed on the long-term part-time employees rule which is a mandatory provision in which sponsors have to start covering long-term part-time employees. Although some would have potentially been eligible already this year, Secure Act 2.0 recently added another level that might be eligible to start in 2025.

Jenny continues on by sharing some guidance on the pension-linked emergency savings accounts. These accounts, capped at $2,500, provide participants with emergency funds within their retirement plans; this ensures participants have ready access to these funds when needed.

The discussion then begins to shift focus onto Notice 2024-02, which covered 12 different provisions in the Secure Act, including mandatory automatic enrollment and small financial incentives for plan participants, of up to $250.  The plan amendment deadlines have been extended to December 31, 2026, for most plans, with later deadlines for collectively bargained and governmental plans.

Another significant update involves allowing participants to designate employer contributions as Roth contributions. This change will be reported on Form 1099-R, making it easier for record-keepers to manage without complicating payroll processes.

Recently, a wave of lawsuits has emerged, focusing on how plan sponsors use forfeiture accounts. These lawsuits argue that using forfeitures to reduce employer contributions constitutes a breach of fiduciary duty. However, established guidelines allow forfeitures to be used to pay for administrative fees, reduce employer contributions, or participant benefits. Plan sponsors must ensure their plan documents clearly state these permissible uses to avoid legal issues and if wanting to increase flexibility, should cover all three of the previously stated possibilities.

Jeff then directs the conversation towards new legislation and Jenny discusses updates with state legislatures. Many states have introduced mandated retirement plans for private-sector employers without existing plans. While these state plans provide a start, employers should consider designing their plans to better suit their workforce's needs. At the federal level, there are discussions about mandatory retirement plans and other legislative efforts like the American IRA Act and the Help Young Americans Save for Retirement Act. These proposals aim to increase retirement savings opportunities for more workers, particularly young and part-time employees.

Tune into the full video for a more in-depth view of the various updates regarding Secure 2.0 and all related ERISA updates.


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