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States may force millions of small employers to sponsor pensions, buoying VC-backed digital recordkeepers. But RIAs like Fisher Investments are trying to convince small businesses to set up their own 401(k) plans to meet new mandates.
December 17, 2020 9:34 PM by Lisa Shidler
Brooke s Note: The pendulum is swinging again in the pension world. Coverage of private-sector employees with workplace retirement plans all defined benefit was at 85% in 1975 but had fallen to 33% by 2005. The reasons are complex. One factor was the rise of 401(k) plans invented in 1978 but then slowly implemented in the 1980s. These defined contribution plans appealed to employers but bottom line left many employees retiring with small pensions or none at all. With government left to pick up the pieces for low-balance retirees, it s no surprise that they are passing new rules to up coverage. Vestwell and Ascensus are angling in as first movers. B
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On December 9, 2020, the Internal Revenue Service (“IRS”) issued Notice 2020-86 which provides guidance relating to certain changes to the safe harbor rules that apply to 401(k) plans made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”). The IRS Notice interprets the SECURE Act’s provisions to apply to some, but not all, aspects of the rules regarding safe harbor plans, limiting the applicability of the recent liberalizations to the safe harbor rules.
Please see full Alert below for more information.
Employee Benefits and Executive Compensation Alert December 15, 2020SECURE Act Update: IRS Issues Guidance with Respect to Safe Harbor PlansOn December 9, 2020, the Internal Revenue Service (“IRS”) issued Notice 2020-86 which provides guidance relating to certain changes to the safe harbor rules that apply to 401(k) plans made by the S
Retirement Plan Tax Deductions/Credits for Tax-Exempt Sponsors
Experts from Groom Law Group and Cammack Retirement Group answer questions concerning retirement plan administration and regulations.
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Do the deductibility rules for employer contributions to a retirement plan under Internal Revenue Code (IRC) Section 404 apply to 403(b) plans? And does it matter whether the contribution is nonelective or matching?”
Charles Filips, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:
No. The rules under IRC Section 404 provide a tax deduction for retirement plan sponsors for employer contributions made to a retirement plan that otherwise qualify as ordinary and necessary business expenses. For defined contribution (DC) plans, deductions for contributions are generally limited to 25% of the compensation paid to beneficiaries of the plan during the taxabl
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The IRS recently published Notice 2020-86 (the “Notice”), which provides clarification with respect to certain changes made by the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”). In particular, the Notice answers several outstanding questions related to the maximum default deferral rate for qualified automatic contribution arrangements.
As previously reported here, the SECURE Act raised the maximum permissible deferral rate for qualified automatic contribution arrangements to 15% of compensation from 10% of compensation for the second plan year and all subsequent plan years. The maximum deferral rate through the end of the first year remains set at 10% of compensation.
Annexus Retirement Solutions Launches to Address In-Plan Guaranteed Income
The new division of Annexus will focus on “re-engineering” target-date fund (TDF) structures to better enable guaranteed lifetime income as part of defined contribution (DC) plans.
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Annexus has announced the launch of a venture called “Annexus Retirement Solutions,” a new division that will focus on “re-engineering” the target-date fund (TDF) structure to better enable guaranteed lifetime income as part of defined contribution (DC) plans.
In conversation with PLANSPONSOR, Dave Paulsen, former president of individual solutions and chief distribution officer of Transamerica, and Charles Millard, former director of the U.S. Pension Benefit Guaranty Corporation (PBGC), said they are pleased to have been brought onto this project as advisers. Paulsen confirmed that the new venture intends to debut its first retirement solution in early 2021, to be followed up by multiple other solutions l