Industry & Regulatory NewsIRS Signals Compatibility of Pre-Approved Plan Documents and PEPs
The IRS in its January 20, 2021 edition of Employee Plans News has revealed that pre-approved qualified retirement plan documents may be used to establish arrangements known as pooled employer plans, or PEPs. These arrangements are a type of multiple employer plan (MEP) in which several employers may participate in this common plan structure. But PEPs are less likely to have common interest or common ownership among participating employers than is required of conventional MEPs.
Industry & Regulatory NewsRetirement Spotlight: IRS Gives SECURE Act Guidance on Traditional and QACA Safe Harbor Plans
The SECURE Act makes it easier for employers to adopt ADP/ACP safe harbor plan provisions. These plans, which include both “traditional” safe harbor plans and qualified automatic contribution arrangements (QACAs), have proven popular with many employers. This is because such plans are usually deemed to pass several nondiscrimination tests. IRS Notice 2020-86 provides guidance on some of the details of these SECURE Act provisions, including direction on amendments and notices. But while this notice gives important direction, we await more comprehensive regulatory guidance.
Industry & Regulatory NewsIRS Notice Addresses 401(k)/403(b) Safe Harbor SECURE Act Provisions
The IRS has issued Notice 2020-86, providing guidance for implementing provisions of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. Specifically, the SECURE Act provisions addressed deal with features and procedures of 401(k) and 403(b) plans that incorporate safe harbor designs for satisfying nondiscrimination testing requirements, and automatic enrollment and automatically increased deferral rates.