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Bob Toth has more than 35 years of experience in employee benefits law. His practice focuses on the design, administration and distribution of financial products and services for retirement plans.

The one topic which seems to be on the forefront of a significant number of professionals, however, is the attempt to make sense of the new MEP and PEP rules. This is especially so because they follow so closely on the Association Retirement Plan regs finalized by the DOL and the “Unified Plan (“bad apple”) rule proposed by the IRS.  These commentators seem to be taking are common misstep, however:  it seems like (with rare exception) that each of these analyses are missing the assessment of the use of the “Group of Plans,”or “GoP”, in relation to MEPs and PEPs.
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Section 109 of the SECURE Act enables something called “Portability of Lifetime Income Options.” It  is one of those fundamental building blocks with which -regrettably or not, depending on your view of things-  all benefit professionals and all plan sponsors will have to eventually deal. Given that it is effective now, there is some urgency in understanding this thing. One of the challenges is that annuities within Defined Contribution plans are not generally well understood.
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Under Section 112 of the SECURE Act, sponsors of “cash or deferred arrangements”  arrangements must allow long-term employees working more than 500 but less than 1,000 hours per year to make elective deferrals to their plans. At first glance, one may be under the mistaken impression that this is a rule which applies to all elective deferral plans, whether they be 401(k) plans, 403(b) plans or 457(b) governmental plans.  But impression is likely wrong: the statute, by its terms,  clearly only applies to elective deferrals under 401(k) plans, not 403(b) or other plans.
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“Aggregating” plans has now taken center stage with the passage of the SECURE Act. We now often find ourselves a bit muddled by the new array of terms with which we now need to deal.  Keep this as a handy glossary to guide when you find yourself caught in the middle of a conversation about “Multiple Employer Plans:”
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The SECURE Act will make substantial and highly technical changes to some very specific elements of retirement plan laws, many of to which we have been putting a ta good deal of attention to (and written about here) throughout the years-like distribution of 403(b) custodial accounts; aggregating 5500s of unrelated plans; MEPs; and the fiduciary safe harbor for annuity purchases. Before we try wrap our heads around the details of all of these changes, I thought it would be helpful to list-in chronological order-the effective dates for these changes to help in prioritizing what to pay attention to first.
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Long-time readers may recognize this as a version of the Mother’s Day blog I would periodically post in honor of Mom. It has been nearly two years since her passing, and I have not posted it since. But it seems that sharing these notions now, during Thanksgiving week, makes some sense. Hopefully, it may help

Lifetime Income from Defined Contribution continues to gain traction, which means that those tasked with administering these programs really need to start paying attention to the details of how its done. This also means understanding how the Joint & Survivor Annuity rules-rules which many have spent a career avoiding in 401(k) plans- operate. This then means understanding how Revenue Ruling 2012-03 actually works.
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One of the most important rules which really hasn’t gotten a lot of press is the very new rule under Rev Proc 2019-39 that any “discretionary” 403(b) amendment must-as of January 1, 2020- be adopted by the end of the plan year in which the change to the plan’s operation was made (a “discretionary” amendment, by the way, is one which not required by law).This is actually a very significant change, and one which should not be overlooked.
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Code Section 402(g)(7) seems to have a gift for certain 403(b) plan sponsors (that is, for “qualified organizations, being educational organizations, hospitals, home health service agencies, health and welfare service agency, church, or convention or association of churches): the annual elective deferral limit for participants in these plans with “15 years of service” with the qualified organization these plans can be as much as $3,000 greater than the existing limit for everyone else, up to a lifetime maximum of $15,000. You should, however, pause at that moment, and consider the details of what it takes to be able to support providing this benefit. It’s not what it seems to be, and it truly has become an “attractive nuisance.”
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Those organizations which do take advantage of the Student FICA Exclusion are often well versed in its use, but that knowledge may or may not spill over into those responsible for making plan document choices under the 403(b) plan. It is too easy sometimes to simply choose that exclusion without recognizing the details of that exclusion-especially when the employer is also choosing to exclude “students” (and not necessarily just those with the FICA exemption) from receiving any employer contributions, and may want to exclude all student employees from making elective deferrals.

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