Under current law, RMDs are required to begin prior to the death of the owner of a Roth account in employer sponsored retirement plans (e.g.: 401(k) plans), but RMDs are not required in Roth IRAs. Beginning January 1, 2024, the pre-death distribution requirement for...
Retirement Plan Law
Catch-up contributions for certain participants must be made on a Roth basis
See updates to Roth catch-up contributions here. Under current law, catch-up contributions can be either made on a pre-tax or Roth basis. Going forward, all catch-up contributions must be made on a Roth basis for employees with compensation in excess of $145,000 the...
Expansion of the Employee Compliance Resolution System (EPCRS)
The law expands EPCRS to allow more types of errors to be corrected under the self-correction method. There is no time limit unless the self-correction is not completed within a reasonable time period after the failure is identified or the IRS catches the failure...
Safe Harbor for corrections of employee elective deferral failures
Under current law, plans with automatic enrollment and automatic escalation features could be subject to significant penalties for mistakenly missing a deferral contribution for an employee. New rules eliminate the penalty for this mistake if the following conditions...
Employers allowed to replace SIMPLE retirement accounts with Safe Harbor 401(k) plans during a plan year
This allows an employer to replace a SIMPLE IRA plan with a SIMPLE 401(k) plan or other 401(k) plan that requires mandatory employer contributions during a plan year.
Updating dollar limit for mandatory distributions
Under current law, employers may automatically roll over former employees’ retirement accounts from a workplace retirement plan into an IRA if their balances are between $1,000 and $5,000. The $5,000 limit will now be increased to $7,000.
Emergency savings accounts linked to individual account plans
Provides employers the option to offer their non-highly compensated employees plan-linked emergency savings accounts. Employers may automatically opt employees into these accounts at no more than 3% of their salary, and the portion of an account attributable to the...
Special rules for certain distributions from long-term qualified tuition programs to Roth IRAs
Amends the Internal Revenue Code to allow for tax and penalty free rollovers from 529 accounts to Roth IRAs, under certain conditions. Beneficiaries of 529 college savings accounts would be permitted to rollover up to $35,000 over the course of their lifetime from any...
Starter 401(k) and Safe Harbor 403(b) plans for employers with no retirement plan
This change permits an employer that does not sponsor a retirement plan to offer a starter 401(k) plan or safe harbor 403(b) plan. A starter plan would generally require that all employees be automatically enrolled in the plan at a 3% to 15% of compensation deferral...
Exemption for certain automatic portability transactions
Currently, in most cases, a plan may distribute a terminated participant’s account balance without their consent if the balance is under $5,000 – a “force-out” distribution. Current law also requires an employer to roll over this distribution into a default IRA if the...