October is the usual month that the Internal Revenue Service to come down from the mountain and announce the 2024 retirement plan limits, but we can guess.
The 402(g) salary deferral limit might rise by $500 or 2.2%, according to a forecast from Mercer from $22,500 to $23,000 next year.
Mercer claims there will be no increase in the $7,500 in catch-up contributions allowed for those over 50.
This estimated is based when the official inflation figure is 3.2%.
No one who claimed to make me rich ever did. No person who had thousands of potential clients for a PEP really scored more than 1% of what they thought they could get.
The road to hell is paved with good intentions, as well as any PEP opportunity that plan providers think they have. January 1 will mark two years of Pooled Employer Plans (PEPs). Thanks to poor traction, lack of participants, and high fees, I expect more PEPs to fail. I worked with one client where they couldn’t get a PEP off the ground with even just one adopting employer.
Expect PEPs to fold or merge into a bigger PEP. Two of the PEPs I’m affiliated with will be like the New Colossus poem on the Statute of Liberty, where plan providers could dump their tired, poor, huddled PEPs, yearning to be free.
My latest article on JDSupra.com can be found here.
With January 1st coming down the pike, many in the retirement plan industry have issued a sigh of relief.
The Internal Revenue Service (IRS) has now announced an administrative transition period for the new catch-up contribution requirements under the SECURE 2.0 Act. The new rule requires older, higher paid 401(k) participants to make their catch-up contributions into after-tax Roth accounts, instead of pre-tax traditional accounts. Congress meant for it to take effect in 2024. Now, responding to begging from plan sponsors and payroll providers, the IRS has postponed that until 2026.
Millennium Trust Company, announced its plan to rebrand as Inspira Financial. The transformation unifies Millennium Trust and its portfolio of technology-enabled solutions, including PayFlex, under a single brand. The brand change will officially launch in early 2024.
Created in 2000, Millennium Trust began with a focus on individual retirement account custody and administration, and over the years has broadened its platform offerings to cover a wider range of retirement, wealth, health, and benefits solutions.
State automatic retirement programs have finally accumulated more than $1 billion in assets, according to data collected by the Center for Retirement Initiatives at Georgetown University.
That is a significant step, but not a huge sum when you figure 19 states have these automatic programs for employers that don’t have worksite plans.
As shown by the Pew Charitable Trusts, state-facilitated retirement savings plans for private sector workers that do not have workplace plans may have a positive effect on the creation and retention of private plans.
Not enough plan sponsors and plan providers talk about cyberattacks and they should.
The massive MOVEit cyberattack breached the personal data of millions of participants in public pension and private-sector workplace retirement plans.
The cyber attack by the Russian ransomware gang Clop, exploited vulnerabilities in the MOVEit file transfer application used by Pension Benefit Information LLC and other vendors to securely transfer encrypted files.
The breach has impacted public pensions systems in at least 10 states, including the California Public Employees’ Retirement System, Sacramento, and California State Teachers’ Retirement System, West Sacramento, affecting almost 1.2 million participants and beneficiaries; retirement plans in Tennessee, Rhode Island, Virginia and others. Several record keepers were also affected by the hack, including Fidelity Investments, Teachers Insurance and Annuity Association of America, and Corebridge Financial, formerly AIG Life & Retirement.
To date, at least 3.8 million participants in public pension and private-sector retirement plans are known to have been affected.
Stealing a line from Chris Rock, I once joked while working at a third-party administrator (TPA) that if you wanted to hide something from one of our inexperienced plan administrators, you should hide it in the plan document file.
So many TPA errors can be avoided if the TPA knows what’s in a client’s plan document. I use Relius’ volume submitter documents and one of the great things is a plan index file, which spits out a one-page summary of the plan document terms and which page in the plan document to find it. I’m sure other plan document drafters have the same type of index. Yet errors by plan sponsors and TPAs based on no review of the plan document are still a thing. Read the plan document because as the old Ed Asner RIF commercials, reading is fundamental.
The fact is that sometimes, bad things happen to good people. That can be said about retirement plans and the good plan sponsors and providers who do their job. No matter how great a job they do, the threat of potential liability is always there.
No matter how a plan sponsor takes care of their fiduciary responsibility and no matter how professional a plan provider is won’t preclude someone from suing them.
Just because a plan participant doesn’t really have a case against a plan sponsor or a plan provider that is doing their job., doesn’t mean they can’t sue. Competence doesn’t preclude frivolous lawsuits or litigation that have very little merit. Competence will only mean that there will likely be no liability, just the headache of a lawsuit.
I know a fiduciary who was sued because the previous plan fiduciary stole money the year before (that would be me). These things happen because sometimes when someone hires an overly ambitious litigator, people get sued when they do nothing wrong.
We can talk about how plan sponsors and providers can minimize their potential liability, but they can never eliminate the threat of litigation.
Over the past few years, more and more workers have become gig workers. In reality, they are just sole proprietors, that make a living, project to project.
Their retirement savings usually revolve around SEPs, SIMPLE-IRAs, and Solo 401(k)s. I once worked on a multiple-employer plan, made up of this gig, freelance workers. The only problem is way too expensive and not very good. I think if you have the distribution channel, a solo 401(k) PEP can be successful. It has the opportunity to offer assistance to gig workers when those other small plans give absolutely no investment help when they open an account at one of the brokerage firms.
