Legislative Updates

Get the latest updates on legislation that could impact you or your employees.


Increase in the dollar limit for the involuntary cash-out of participant accounts (Section 304)

Current law allows workplace retirement plans to provide that if the vested account balance of a terminated employee does not exceed $5,000, it may be distributed without consent either in cash (if it is less than $1,000), or as an IRA rollover. Section 304 of the Act increases the maximum dollar limit for such involuntary distributions to $7,000, effective for distributions made on or after January 1, 2024, but leaves unchanged the $1,000 threshold for the automatic rollover requirement.

Mandatory "cash-out" provisions, which are optional and can be changed at any time by a plan amendment, are frequently utilized to provide qualified plan sponsors with a means of removing the small vested account balances of former employees from their plans (with notice) without necessarily creating a taxable event for them. Such provisions can help simplify plan operations reducing both the ongoing administrative expenses of the plan, and the potential for problems arising for a later disposition of unclaimed accounts. To learn more about how Corebridge Financial might assist you with the design and implementation of a mandatory cash­-out feature for your plan under this new rule, please contact your relationship manager or financial professional.


Penalty-free Emergency Withdrawals (Section 115)

SECURE 2.0 contains several provisions designed to enable greater access to retirement benefits in an emergency without incurring the mandatory 10% additional tax penalty on too­ soon withdrawals (generally, withdrawals before age 59 ½). One such provision is Section 115, which creates a new exception to this penalty for an "emergency personal expense distribution" made under a profit sharing, 401(k), 403(b) and governmental 457(b) plan. This provision allows an eligible plan to be amended to permit employees to withdraw up to $1,000 to meet an unforeseeable or immediate financial need relating to necessary personal or family emergency expenses. The distribution may then be repaid to the plan at any time within three years. Three limitations apply. First, only one such distribution is permitted per calendar year. Second, the distribution must not leave the participant with a remaining vested balance of less than $1,000. And third, no additional emergency distributions can be made for the next three calendar years unless the original withdrawal has either been repaid or the employee has subsequently made elective deferral or employee contributions at least equal to the amount withdrawn.

Plan sponsors may rely on the employee's written certification that a requested distribution qualifies as an emergency personal expense distribution. This provision is optional and can be added to an eligible plan effective for distributions made on or after January 1, 2024. To learn more about how Corebridge Financial might assist you with the design and implementation of emergency withdrawals for your plan, please contact your relationship manager or financial professional.


Emergency Savings Accounts (Section 127)

Recent studies have found that nearly half of Americans do not have enough short-term savings and would struggle to cover an unexpected $400 expense. Section 127 of the Act attempts to address this issue by allowing profit sharing, 401(k), 403(b), and governmental 457(b) plans to offer emergency savings accounts (ESAs) to non-highly compensated employees, effective January 1, 2024. ESAs are funded through post-tax ROTH employee contributions up to the account limit that is set by the plan sponsor, which cannot be greater than $2,500 (indexed for inflation). Employees may contribute at their election or may be automatically enrolled with a default contribution rate of up to 3%. All ESA contributions are considered elective deferrals for purposes of any employer matching contributions that are otherwise required under the plan, up to the $2,500 annual limit, which contributions must be made to the employee's matching contribution account (not the ESA). ESAs are invested in cash-equivalent investments, and there is no minimum balance. Withdrawals can be made as often as monthly, with the first four withdrawals during a plan year being free of any service charge or fee (reasonable fees and charges may thereafter apply). Plans may be amended at any time to offer or cease to offer ESAs. If a plan ceases to offer ESAs, or an employee terminates or becomes a highly compensated employee, the employee's ESA may be taken in cash or rolled to another designated ROTH account or IRA. All ESA distributions are exempt from any early withdrawal penalty that might otherwise apply. To learn more about how Corebridge Financial might assist you with the design and implementation of ESAs for your plan, please contact your relationship manager or financial professional.


Self-certification for Hardship Distributions (Section 312)

Previously, under Treasury Regulations, to qualify for a safe-harbor hardship or unforeseeable emergency distribution, plan participants were required to document in writing the existence of a qualifying financial need that could not be met with cash or other liquid assets. Effective for plan years beginning in 2023, Section 312 of the Act provides the plan administrators of 401(k), 403(b) and governmental 457(b) plans the option of granting a hardship distribution based only on a participant's certification that an unforeseeable emergency as described in Treasury Regulations exists, that the participant has no alternative means reasonably available to meet that emergency financial need, and that the amount requested is not in excess of the amount needed for that purpose. For more information about implementing self-certification for the administration of hardship withdrawal requests for your plan, please contact your Corebridge Financial relationship manager or financial professional.


Employees Earning over $145,000 May Only Make Catch-up Contributions on a Roth basis. (Section 603)

Effective for plan years beginning on or after January 1, 2024, Section 603 of the Act amends current law to provide that employees who, in the prior calendar year, had wages of more than $145,000 (indexed, beginning in 2025) may only make age 50 catch-up contributions to their 401(k), 403(b) or governmental 457(b) plan on an after-tax "Roth" basis. While it appears to have been Congress's intent that all other employees will continue to have the option of making catch-up contributions on a pre-tax basis if otherwise permitted by the plan, because a conforming amendment to the Code could be read to disallow all catch-up contributions on either basis, a technical correction to the Act is anticipated.

This mandatory provision is expected to increase the administrative burden for most plans, especially those that currently do not offer catch-up contributions or offer a Roth option for the contribution of elective deferrals. To learn more about how Corebridge Financial can assist you with navigating the administrative complexity of this provision for your plan, please contact your relationship manager or financial professional.


Financial Incentives for Participation (Section 113)

Prior to the enactment of SECURE 2.0, the only financial incentive permitted to encourage employee participation in an employer sponsored retirement plan was to offer employer matching contributions. Providing immediate financial incentives, even in small amounts, was prohibited.  Effective for plan years beginning in 2023, Section 113, enables employers to offer de minimis financial incentives to help increase plan participation. The de minimis financial incentives cannot be paid for with plan assets and must be of minimal value. While no specific examples of de minimis incentives were included in the final legislation, examples may include small dollar gift cards, t-shirts, and water bottles. For more information about how this provision may help increase participation in your plan, please contact your Corebridge Financial relationship manager or financial professional.

For more information, please visit our SECURE 2.0 education hub

The above section includes articles focused on SECURE Act 2.0 including Increase in the dollar limit for the involuntary cash-out of participant accounts (Section 304), Penalty-free Emergency Withdrawals (Section 115), Emergency Savings Accounts (Section 127) , Self-certification for Hardship Distributions (Section 312), Employees Earning over $145,000 May Only Make Catch-up Contributions on a Roth basis (Section 603), and Financial Incentives for Participation (Section 113). 

2023 Retirement Plan Contributions limits and Testing Thresholds

The Internal Revenue Service (IRS) has released the cost-of-living adjustments related to retirement plan limits which take effect on January 1, 2023.  The individual limit on elective deferrals is increased for most 401(k), 403(b) and 457 (b) plans from $20,500(2022) to $22,500 (2023) and the catch-up contribution limit is increased from $6,500 (2022) to $7,500 (2023) for individuals aged 50 and over.     These limits may be required to be aggregated for an individual who participates in more than one retirement plan during the calendar year depending on plan type.  The combined annual limit on aggregate contributions to a defined contribution plan is increased from $61,000 (2022) to $66,000 (2023) (not including catch-up contributions).  The employee compensation limit for calculating plan contributions and plan testing is increased from $305,000 (2022) to $330,000 (2023).  The compensation threshold used in the definition of a “highly compensated employee” for nondiscrimination testing is increased from $135,000 (2022) to $150,000 (2023), and the compensation threshold used in the definition of “key employee” for top-heavy testing is increased from $200,000 (2022) to $215,000 (2023).  For more information on 2023 plan limits, see IRS Notice 2022-55

SourceInternal Revenue Service



On December 29, 2022, President Biden signed into law a spending package that includes the SECURE 2.0 Act of 2022 (SECURE 2.0).  The legislation would expand the SECURE Act passed in 2019. The primary goal of SECURE 2.0 is to continue to expand coverage and increase in retirement savings, preserve income and simplify and clarify retirement plan rules.

A few of the key provisions of SECURE 2.0 are listed below.  We will provide you with more details on this extensive law throughout 2023.

  • Self-Correcting Plan Failures. Effective December 29, 2022, plans may self-correct all inadvertent plan violations under the IRS Employee Plans Compliance Resolution System (EPCRS), subject to certain conditions.
  • Increased RMD age.  Raise the required minimum distribution (RMD) age from today’s 72 to 73 starting on January 1, 2023, and to 75 starting on January 1, 2033.
  • Eliminate 457(b) “first day of the month” requirement.  Permits participants of governmental 457(b) plans to change their deferral rate at any time before compensation is made, eliminating the first day of the month requirement (effective January 1, 2023).
  • Roth Matching and Nonelective Contributions. Starting in tax years beginning after 2022, 401(a), 403(b), and governmental 457(b) plans may permit participants to designate matching and nonelective contributions as Roth contributions.
  • Emergency Savings Accounts.  Offers employers the ability to automatically enroll their employees into emergency savings accounts in their defined contribution plans beginning in 2024.
  • Student Loan Matching. Starting in 2024, sponsors of 401(a), 403(b) and SIMPLE IRAs may make matching contributions with respect to qualified student loan payments for purposes of the nondiscrimination and safe harbor rules.
  • Mandatory Roth Catch Up.  Requires that, starting in 2024, catch up contributions to 401(a), 403(b) and governmental 457(b) plans be made on a Roth basis for employees whose wages exceed $145,000 in the prior year (indexed for inflation).
  • Repeal RMD for Roth.  Starting in 2024, RMDs will no longer be required from Roth accounts in retirement plans. 
  • Cash-out limit.  Starting in 2024, the involuntary cash-out limit increases to $7,000 from $5,000 (requires implementation by the end of 2023).
  • Higher Catch-up Contribution Limit for ages 60-63. The annual catch-up contribution limit for participants aged 60-63 in 401(k), 403(b) and governmental 457(b) plans will increase in 2025.   The current limit of $7,500 would increase to the higher of (1) $10,000 (indexed) and (2) 150% of the regular catch-up.  The current $3,500 annual limit for SIMPLE 401(k) plans would increase to the higher of (1) $5,000 and (2) 150% of the regular SIMPLE catch-up.  The change would not increase the catch-up contribution limit for participants aged 50-59.

SourceSECURE 2.0 Act of 2022


DOL Final ESG Rule

On November 22, 2022, the U.S. Department of Labor (DOL) issued a final rule, Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholders Rights, also known as the ESG rule.  The rule clarifies how ERISA retirement plan fiduciaries may consider climate change and other environmental, social and governance (ESG) factors when selecting investments options.  It also adopts a framework on ERISA fiduciaries’ exercise of shareholder rights, such as proxy voting for plan-held securities.

With respect to ESG investments, the DOL largely follows the proposed regulation issued on October 24, 2021, and takes a somewhat more pro-ESG approach than the regulations issued in 2020 by the Trump administration.  The principle remains that a fiduciary, in exercising the duty of prudence and loyalty, must select investments based on factors that the fiduciary reasonably determines are relevant to a risk and return analysis. The rule provides that risk and return factors “may include” the economic effects of climate change and other ESG factors.  The weight given to any factor should reflect an assessment of the risk and return impact.  The rule no longer says that ESG factors “may often” be relevant economic factors.  In addition, the rule allows a fiduciary to consider collateral benefits, such as ESG factors, where not relevant to the risk-return analysis.  Other examples of “collateral benefits” are stimulating union jobs and investing in the geographic region where participants live and work.  Finally, considering participant preferences is not per se violation of duty of loyalty, so long as the investment is prudent.

Regarding proxy voting, the DOL removed statements to the effect that it may be prudent not to vote proxies and reverted to the general prudence standard.  A fiduciary may determine not to vote a proxy if it is not in the plan’s best interest.  

The rule is generally effective January 30, 2023, 60-days after its publication in the Federal Register.  There is a one-year delay after publication for certain proxy-voting provisions to allow plan fiduciaries and investment managers time to prepare and implement the rule.

Source: U.S. Department of Labor ; Fact Sheet


Cryptocurrency Investments in 401(k) Retirement Plans

 On March 10, 2022, the DOL published Compliance Assistance Release 2022-01 titled “401(k) Plan Investments in Cryptocurrencies” generally  expressing concerns about the prudence of offering cryptocurrency investment options in 401(k) retirement plans. Cryptocurrency is a digital representation of value and are issued and transferred using a distributed ledger or blockchain technology. Various trade organizations have requested the DOL to withdraw the release and that guidance be developed under a formal rulemaking process in conformance with the Administrative Procedure Act.

While there are no official DOL best practices for offering cryptocurrency investment options in 401(k) retirement plans, some important factors plan sponsors may want to consider before offering this form of investment are as follows:

  • The DOL’s informal opposition to such investments, as reflected in Compliance Assistance Release 2022-01
  • Understanding the fiduciary duties of prudence and loyalty when selecting investment alternatives that are included in the plan
  • Ensuring cybersecurity programs are designed to address risks associated with offering cryptocurrency
  • Fully understanding rules regarding prohibited transactions
  • Understanding the impact that future regulations from the DOL or SEC may have on offering cryptocurrency
  • Evaluating custodian and exchange fees paid to plan service providers offering cryptocurrency investments
  • Determining the platform where the investment will be offered such as a designated investment alternative (DIA) or a self-directed brokerage window (SDBW)

Click here to read more about Cryptocurrency in 401(k) Retirement Plans.


Retirement plans can be prime targets for cybersecurity attacks because of the amount of their assets and access to participant and beneficiary personal information. As part of their duty of prudence, plan sponsors, service providers and fiduciaries, should implement policies and procedures to reduce the risk of cybersecurity attacks. 

The DOL has published Cybersecurity Best Practices. Other general tips that plan sponsors should consider to mitigate cybersecurity risks include:

  • Implementing strategies to identify and assess cybersecurity risks.
  • Ensuring all service providers and vendors with access to participant data have current up to date cybersecurity procedures.
  • Educating and providing strategies to plan participants to help protect their personal data. 
  • Reviewing insurance policies to ensure they cover the plan and plan fiduciaries are covered for cyber security breaches.


In addition, in its meetings held on December 8 and 9, the DOL ERISA Advisory Council recommended, among other things, that the DOL study the issue of cybersecurity insurance for employee benefit plans and that the DOL clarify that its Cybersecurity Best Practices apply to health plan fiduciaries. 


For general information regarding Corebridge Financial Retirement Services cybersecurity procedures please visit: https://www.lifeandretirement.aig.com/employers/lp/cyber-security


IRS Extends Plan Amendment Deadlines

On August 3, 2022, the IRS released Notice 2022-33, extending the deadlines for amending certain plans to comply with certain provisions of the SECURE Act, The Miners Act, and the CARES Act.    The deadline to amend qualified retirement plans and 403(b) plans that are not governmental plans and IRAs is December 31, 2025.  The deadline to amend qualified retirement plans 403(b) plans that are governmental plans is generally 90 days after the close of the third regular legislative session for the year beginning after December 31, 2023. The deadline to amend governmental 457(b) plans was extended to the later of 90 days after the close of the third regular legislative session for the plan year beginning after December 31, 2023, or the first day of the first plan year beginning more than 180 days after the date of notification by the Secretary that the plan was administered in a manner that is inconsistent with the requirements of section 457(b) of the Code, if applicable.  Notably, apparently the original December 31, 2022, deadline for tax-exempt (nongovernmental) 457(b) plans has not been extended. 

The deadline to amend plans that permitted coronavirus related distributions and loans under the CARES Act was not extended and remains December 31, 2022.

Corebridge Financial Retirement Services is prepared to assist with amending plans on or before the applicable deadlines.

The above section includes articles covering 2023 Retirement Plan Contribution Limits and Testing Thresholds, SECURE 2.0, DOL Final ESG Rule, Cryptocurrency Investments in 401(k) Retirement Plans, Cybersecurity Best Practices and IRS Extends Plan Amendment Deadlines. 

Federal student loan payment suspension

The U.S. Department of Education extended the student loan payment suspension for eligible federal student loans through August 31, 2022.

The payment suspension includes the following relief for eligible student loan borrowers:

  • A suspension of loan payments
  • A 0% interest rate
  • Stopped collections on defaulted loans


Reminder: As part of the pandemic relief efforts, the Consolidated Appropriations Act signed into law in 2020, allows employers through December 31, 2025, to offer up to $5,250 in student loan repayment as a tax-free benefit.

Link to the information: https://myfedloan.org/borrowers/covid/

Proposed RMD regulations

On February 24, 2022, the Treasury Department and Internal Revenue Service released proposed regulations clarifying amendments that the SECURE Act made to required minimum distributions (RMDs) after death from qualified plans and IRAs. The proposed regulations indicate that they apply to RMDs on or after January 1, 2022, even though they remain in proposed form and could change before they are published in final form. For 2021, RMDs are determined under current regulations but should be administered using a good faith interpretation of the SECURE Act amendments. The good faith interpretation of the SECURE Act amendments was not extended to RMDs that are due in 2022.

The proposed regulations guidance for RMDs includes, but is not limited to, the following:

  • New interpretation of the 10-year rule
  • Rules for determining who is an eligible designated beneficiary including

― If a beneficiary is disabled, including a special rule for minor beneficiaries (under 18)

  • Clarification of the age of majority for RMDs (age 21)
  • Application of RMD rules for multiple beneficiaries and trust beneficiaries

The regulations did not extend the deadline to amend plan documents to reflect these changes. The current deadline to amend plan documents reflecting the SECURE Act amendments is December 31, 2022. Comments on the proposed regulations must be submitted by May 25, 2022. Corebridge Financial Retirement Services is working with trade groups to submit comments on the proposed regulations and is working diligently to comply with these regulations on or before the applicable deadlines.

Link to the information: https://www.federalregister.gov/documents/2022/02/24/2022-02522/required-minimumdistributions

In-plan income (Lifetime income)

One of the important aspects coming out of the SECURE Act, in addition to changes to the RMD rules referenced above, is the introduction of three lifetime income-related provisions that help (1) reduce some of the barriers that have discouraged the use of lifetime income solutions by defined contribution plans, and (2) encourage participants to think about their defined contribution savings in terms of a lifetime income stream.

  • Disclosures Regarding Lifetime Income. The SECURE Act amended ERISA to require 401(k) and other defined contribution plans subject to Title I of ERISA to include a lifetime income illustration at least annually as part of participant benefit statements. The provision is intended to help participants understand how much income their account can generate in retirement. Participants will see such lifetime income illustrations on annual statements no later than October 2022.
  • Fiduciary Safe Harbor for the Selection of Lifetime Income Provider. The Act introduces an optional safe harbor for the prudent selection of an annuity provider. So long as a fiduciary meets minimum fiduciary requirements in the selection, it will be relieved of liability for losses that may result from an annuity provider’s inability to satisfy its financial obligations under the annuity contract.
  • Portability of Lifetime Income Options. This allows 401(k), governmental 457(b) and 403(b) plans to make (1) direct trustee-to-trustee transfers to another employer-sponsored retirement plan or IRA of lifetime income investments or (2) distributions of a lifetime income investment in the form of a qualified plan distribution annuity or IRA if a lifetime income investment is no longer authorized to be held as an investment option under the plan. The change will help participants preserve their lifetime income investments (prevent the loss of the benefit) and avoid surrender charges and fees.

If you have more questions about the impact of lifetime income provisions under the SECURE Act, please contact your Corebridge Financial Retirement Services representative.

The above section includes articles covering Federal Student Loan Payment Suspension, Proposed RMD Regulations, and In-Plan Income (lifetime income).

DOL announced a temporary enforcement policy on prohibited transaction rules applicable to investment advice fiduciaries

On Monday, October 25, 2021, the DOL issued guidance extending its current non-enforcement position of certain prohibited transactions, which was set to expire December 20.  As you’ll recall, fiduciary advisors generally may not have conflicts of interest that might influence their recommendations.  However, the DOL provides certain prohibited transaction exemptions (PTEs), which seek to balance important participant protections with certain common market practices.  PTE 2020-02 is one such exemption.

The DOL’s non-enforcement position has provided parties making fiduciary advice recommendations to ERISA plans or IRAs additional time to implement procedures to comply with PTE 2020-02 or another available exemption.  The recent guidance included two separate extensions:

  • A general extension of its non-enforcement position until January 31, 2022; and
  • A more limited extension until June 30, 2022, for compliance with specific rollover disclosure requirements in PTE 2020-02, relating to (a) the reasons for a rollover recommendation; and, (b) how the recommendation is in the client’s best interest.

Parties seeking reliance on PTE 2020-02 will need to comply with all other requirements of that new exemption beginning February 1, 2022.

Link to the information: https://www.dol.gov/newsroom/releases/ebsa/ebsa20211025

DOL releases informational copies of 2021 Form 5500

On December 29, 2021, The Department of Labor’s Employee Benefits Security Administration (EBSA) released information on the 2021 Form 5500 and related instructions—including Form 5500-SF, relating to annual reporting changes for multiple-employer plans (MEPs) and pooled employer plans (PEPs).  The IRS also released the 2021 Form 5500-EZ and instructions, which are posted on the EBSA website. The changes are effective for plan years beginning on or after January 1, 2021.  EBSA intends to address the other changes to these forms included in its September 2021 release in subsequent notices.

The following are some of the most important modifications made to Forms 5500 and 5500-SF and their instructions.

  • As required by the Secure Act, the forms require defined contribution MEPs to report aggregate account balances for each participating employer on a revised attachment to Forms 5500/5500 S-F.
  • PEPs must file a new attachment to Form 5500 indicating whether the pooled plan provider has complied with the Form PR filing requirements and, if so, provide its AckID number.
  • The forms clarify that PEPs are multiple-employer plan that file a single Form 5500 and may not file Form 5500-SF.
  • A new checkbox was added for plans that were retroactively adopted.
  • The civil penalty amount for failure or refusal to file an annual report has been updated.


Link to the information: https://www.dol.gov/newsroom/releases/ebsa/ebsa20211229


IRS provides guidance for employers seeking to rehire retirees or retain employees after retirement age

To help address employment needs during the COVID-19 pandemic, on November 3, 2021, the IRS released new frequently asked questions (FAQs) to assist employers looking for ways to encourage retirees to return to work and retain experienced employees.


The FAQs provide general guidance to public and private employers who sponsor qualified retirement plans for their employees by highlighting existing ways employers can meet their employment objectives and remain in compliance with the plan qualification rules.


Generally, an employer can choose to address unforeseen hiring needs by rehiring former employees, even if those employees have already retired and begun receiving plan benefits. If authorized under the plan, those employees may continue receiving the benefits even after they are rehired. Additionally, in most cases, an employer can choose to make retirement distributions available to existing employees who have reached age 59½ or the plan’s normal retirement age. This may assist in the retention of employees eligible for retirement.


Link to more information: https://www.irs.gov/newsroom/irs-help-for-employers-wanting-to-rehire-retirees-or-keep-them-after-retirement-age


IRS revises procedures for interim amendments and pre-approved 403(b) plans

On September 1, the IRS issued new revenue procedures affecting interim amendments for pre-approved 401(a) plans (Revenue Procedure 2021-38) and pre-approved 403(b) plans (Revenue Procedure 2021-37).  The IRS indicated that the changes generally are designed to better align the procedures for pre-approved 403(b) plans and pre-approved qualified plans, including with respect to the timing of interim amendment deadlines.  The 403(b) guidance also replaces existing guidance for prototype and volume submitter preapproved plans with a single opinion letter program for standardized and nonstandardized plans. 

Links for the revenue procedures: https://www.irs.gov/pub/irs-drop/rp-21-37.pdf and https://www.irs.gov/pub/irs-drop/rp-21-38.pdf.



Proposed rule: “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights”

On October 13, 2021, the U.S. Department of Labor announced a proposed rule to clarify the application of ERISA’s fiduciary duties of prudence and loyalty to selecting investments and investment courses of action.  The proposal would remove barriers, largely imposed by the prior administration’s rules, to plan fiduciaries’ ability to consider climate change and other environmental, social and governance factors when they select investments and exercise shareholder rights.


The proposed rule titled “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights,” follows Executive Order 14030, signed by President Biden on May 20, 2021. The Acting Assistant Secretary for the Employee Benefits Security Administration Ali Khawar stated: “A principal idea underlying the proposal is that climate change and other ESG factors can be financially material and when they are, considering them will inevitably lead to better long-term risk-adjusted returns, protecting the retirement savings of America’s workers.”


The comment period after publication in the Federal Register ended on December 13.

Links for more information:  https://www.dol.gov/newsroom/releases/ebsa/ebsa20211013; https://www.federalregister.gov/documents/2021/10/14/2021-22263/prudence-and-loyalty-in-selecting-plan-investments-and-exercising-shareholder-rights

The above section includes articles covering DOL announced a temporary enforcement policy on prohibited transaction rules applicable to investment advice fiduciaries, DOL releases informational copies of 2021 Form 5500, IRS provides guidance for employers seeking to rehire retirees or retain employees after retirement age, IRS revises procedures for interim amendments and pre-approved 403(b) plans, and Proposals to Watch/Stay Tuned including the proposed rule: "Prudence and Loyalty in Selecting Plan Investments and Excercising Shareholder Rights".

Missing participants

On January 12th, the DOL and the Employee Benefits Security Administration (EBSA) issued guidance to help plan fiduciaries meet their obligations under ERISA to locate and distribute retirement benefits to missing and nonresponsive participants and their beneficiaries. The guidance came in three forms:

  • Compliance Assistance Release 2021-01
  • Field Assistance Bulletin 2021-01
  • Best Practices for Pension Plans

The compliance assistance release 2021-01 provides guidance to ensure consistent investigative processes and case-closing practices among EBSA’s Regional Offices conducting Terminated Vested Participants Project audits and to facilitate voluntary compliance efforts by defined benefit plan fiduciaries.


Field assistance bulletin 2021-01 provides the DOL’s temporary enforcement policy that permits terminating defined contribution plans’ use of the Pension Benefit Guaranty Corporation’s (PBGC) expanded Missing Participants Program instead of transferring funds to individual retirement accounts.


The best practices for pension plans guide outlines a range of best practices that plan fiduciaries of defined benefit plans and defined contribution plans can follow to ensure that plan participants and beneficiaries receive promised benefits when they reach retirement age. The DOL clarifies that not all listed best practices will be applicable to all plans or participants, and that plan fiduciaries should consider the size of a participant’s accrued benefit/account balance and the cost of search efforts in deciding which steps to take. The guidance focuses on maintaining accurate census information for plan participants and beneficiaries; implementing effective communication strategies; conducting missing participant searches and documenting procedures and actions taken. The guidance points out that ERISA fiduciary obligations apply to missing participants including those participants whose accounts have been “conditionally forfeited.”


Find the guide: https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/retirement/missing-participants-guidance


Rollover rules for qualified plan loan offset amounts

On January 6, 2021, the IRS issued new regulations for qualified plan loan offset (“QPLO”) amounts treated as distributions. A QPLO results when a loan is terminated prematurely due to the severance from employment of the participant or the termination of the plan holding the participant loan. Generally, a participant has a 60-day rollover window to roll funds into a retirement plan or IRA up to the equivalent amount of a loan offset distribution. The final regulations define the parameters that extend the right to rollover QPLO amounts to the individual’s tax filing due date (including extensions) for the year in which the offset occurs.


More details can be found at: https://www.federalregister.gov/documents/2021/01/06/2020-27151/rollover-rules-for-qualified-plan-loan-offset-amounts


Lifetime income illustrations

September 18, 2020, the DOL published interim final regulations regarding the information that must be provided on pension benefit statements concerning lifetime income at least once every twelve months. The information is intended to provide participants with a better understanding of how their plan benefits convert to monthly payments once they retire. The interim final regulations provide the assumptions that must be used to calculate illustrations for both qualified joint and survivor annuity payments and for single life annuity payments. The effective date for the interim final rule is September 18, 2021 and the lifetime income projections will apply to pension benefit statements furnished after that date.


On July 26th, the DOL published FAQs concerning the earliest date on which lifetime income illustrations are required on statements. For example, calendar year plans that issue quarterly statements must incorporate their first lifetime illustration on any quarterly statement no later than the second calendar quarter of 2022 (ending June 30, 2022).


More information can be found at: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/



April 14, 2021 the DOL announced new cybersecurity guidance for plan sponsors, plan fiduciaries, recordkeepers and plan participants. The best practices document focuses on establishment of sound processes and documentation of the execution of such processes. It also focuses on assessment of vendors, processes, controls and responsiveness to any security incident that occurs. It is well worth your review.


Review this information at: https://www.dol.gov/sites/dolgov/files/ebsa/key-topics/retirement- benefits/cybersecurity/best-practices.pdf


ESG investments and proxy voting by employee benefit plans

The DOL published a final rule on “Financial Factors in Selecting Plan Investments, November 13, 2020, (the ‘ESG Rule’).” Generally, the amended regulations require plan fiduciaries to select investments and courses of action for investments based solely on consideration of pecuniary factors. On December 16, 2020, the DOL published a final rule on “Fiduciary Duties Regarding in Proxy Voting and Shareholder Rights,” (the “Proxy Voting Rule”) which adopted additional regulations concerning fiduciary duties under ERISA when voting proxies and other shareholder rights in regard to plan investments in shares of stock. In a Biden Administration Presidential Executive Order agencies were directed to review regulations including those issued or adopted during the Trump administration for any that might be inconsistent with, or present obstacles to, the policies set for in directions issued by the Biden Administration. Subsequent to such direction, both the ESG Rule and the Proxy Voting Rule will not be enforced by the DOL while these matters are being revisited.


Guidance on prohibited transaction exemption PTE 2020-02 and temporary nonenforcement policy

April 13, 2021, the United States Department of Labor (“DOL”) issued a set of Frequently Asked Questions concerning:

  • A new prohibited transaction exemption (“PTE”), PTE 2020-02, and
  • The DOL’s recent reinterpretation of the five-part test under 1975 regulations defining who is an investment advice fiduciary. The new interpretation expanded the scope of recommendations that could be considered fiduciary investment advice, including many recommendations to rollover retirement plan accounts or IRA accounts.

Fiduciary advisors generally may not have conflicts of interest that might influence their recommendations. However, the DOL issues PTEs which seek to balance important participant protections with certain common market practices.  PTE 2020-02 is one such exemption.


PTE 2020-02 became effective February 16, 2021. Among the requirements to qualify for its use, a fiduciary advisor must: (1) make prudent recommendations that are in the best interests of the client, (2) make certain important disclosures, (3) have policies and procedures in place concerning such advice and to identify and address conflicts of interest, and (4) perform a retrospective review of the advice and the policies and procedures.


Although the exemption is already in effect, the DOL recognized that it takes time to get procedures in place. As a result, the DOL also extended its existing nonenforcement policy until December 20, 2021. To rely on the DOL’s nonenforcement policy, and thus be able to provide covered recommendations including rollover recommendations, the investment advice fiduciaries must (1) act in the best interest of the client, (2) receive only reasonable compensation and (3) make no material misleading statements.


The FAQs make it clear that the DOL intends to make further changes to the existing regulatory guidance for providing fiduciary advice in the future. In June 2021, the DOL followed up on this message in its spring agenda, which includes an expectation of issuing a regulatory proposal by the end of 2021.


Link to the information: https://www.dol.gov/newsroom/releases/ebsa/ebsa20210413

The above section includes articles covering Missing Participants, Rollover rules for qualified plan loan offset amounts, Lifetime income illustrations, Cybersecurity, ESG investments and proxy voting by employee benefit plans, and Guidance on prohibited transaction exemption PTE 2020-02 and temporary non-enforcement policy. 

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RO 2990420 - (07/2023)