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Welcome to the Snell & Wilmer Benefits Blog. We will be posting about current employee benefits and executive compensation topics and issues. We invite you to contact the authors with your thoughts or questions.Blog Contributors
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The IRS Significantly Increased the Availability of Mid-Year Changes to Safe Harbor Plans
Mid-year changes to safe harbor 401(k) plans have long been thought to be available in only very limited circumstances. However, the IRS recently released guidance in Notice 2016-16 that significantly increases the scope of permissible mid-year changes to safe harbor 401(k) plans.
Generally, safe harbor 401(k) plan provisions must be adopted (and participants must be notified) before the first day of the plan year and remain in effect for the entire 12-month plan year. Such a plan generally loses its safe harbor status if changes are made during the plan year. However, the safe harbor regulations set out the following limited exceptions to the general rule:
1. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 401(k) plan, IRS, mid-year amendment, mid-year change, safe harbor, safe harbor 401(k) plan
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Supreme Court Confirms that Plan Fiduciaries have a “Continuing Duty of Some Kind” to Monitor Investments
In Tibble v. Edison International, Justice Breyer held, for a unanimous Supreme Court, that “a fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones.” In so ruling, the Court reversed a decision from the Ninth Circuit, which held, in essence, that plan fiduciaries could not be held responsible for imprudent investment decisions made more than six years prior to the filing of the complaint.
In Tibble, the fiduciaries of the Edison 401(k) Savings Plan added three mutual funds to the plan’s investment lineup in 1999. The fiduciaries added an additional three investment funds to the fund lineup in 2002. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 401(k) plan, duty to monitor, fiduciary duty, plan investments, Supreme Court, Tibble v. Edison International
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IRS Provides Relief for Correction of Elective Deferral Mistakes in 401(k) Plans
The IRS recently announced changes that make it significantly easier to correct employee deferral mistakes (also known as elective deferrals) in qualified retirement plans. The changes make modifications to the IRS’ Employee Plans Compliance Resolution System (“EPCRS”), which is the IRS’ comprehensive correction program for qualified retirement plans.
Automatic Enrollment Correction Relief
If a qualified plan has automatic enrollment and it either (1) does not automatically enroll employees in accordance with the terms of the plan’s automatic enrollment feature or (2) does not implement an employee’s affirmative election, the new guidance provides that as long as the employee is enrolled in the plan within 9-1/2 months following the end of the plan year of the failure (or earlier if the employee notifies the employer of the mistake), the employer is not required to make a correction for the missed elective deferrals. Read More ›
Posted in Employee Benefits, Qualified Retirement Plans
| Tagged 401(k), 401(k) plan, automatic contribution, automatic enrollment, correction, elective deferral error, EPCRS, qualified retirement plans
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