The ERISA Industry Committee (ERIC), an employer advocacy group, has requested guidance from the Internal Revenue Service (IRS) and the U.S. Department of Treasury for implementing SECURE 2.0. In a recent letter, ERIC explained that the group was asking for guidance and regulations designed to increase efficiency, decrease burdensome plan administration, and ultimately, create better benefits for plan participants.
More specifically, ERIC asked that IRS/Treasury address the following issues in its 2023/2024 priority guidance plan:
Retirement Recommendations
Matching Contributions for Student Loan Payments
ERIC requested clarification on the “reasonable procedures” plan that sponsors may establish to claim matching contributions for student loan payments, as well as how to certify student loan payments.
Catch-up Contributions
ERIC highlighted the operational challenges posed by the allowance of catch-up contributions in updating their systems and urged the IRS to prioritize this issue.
Emergency Savings for Workers
Allowing workers to establish emergency savings accounts will allow them to participate in sponsored retirement plans without losing needed access to their savings.
Automatic Enrollment Mandate Exception for Existing Plans
ERIC advised that the IRS should clarify that plans tracing their lineage to a grandfathered plan fall within the automatic enrollment mandate exception. IRS also should emphasize that changes in plan design or service providers will maintain the status of a grandfathered plan in this respect.
Overpayments and Self-correction
ERIC requested that the U.S. Department of Labor (DOL), which has jurisdiction over these issues, closely coordinate efforts with the IRS and Treasury.
Optional Roth IRA Match
Employers are requesting as much flexibility as possible so that they can seriously consider a Roth IRA match as a feasible option.
Notices and Disclosures
ERIC recommends simplifying and eliminating required notices and disclosures concerning plan costs and financial literacy to the greatest degree possible.
Missing Plan Participants
Employers should receive guidance from the IRS in coordination with the Pension Benefit Guaranty Corporation and the DOL in procedures to locate missing plan participants while recognizing each employer’s unique capabilities.
Remote Witnessing
The IRS provided relief from the requirement that participants make certain plan elections in the physical presence of notaries public or plan representatives during and after COVID-19. ERIC urges the IRS to issue final regulations to continue allowing remote witnessing of these elections for the ease of plan participants.
In-service Distributions
ERIC pointed out that although the IRS asked for input from stakeholders on this issue, it failed to provide any guidance.
Paid Leave
ERIC requested guidance from the IRS on the federal tax treatment of contributions to and benefits from paid family and medical leave programs.
Health Plan Recommendations
High-deductible Health Plans
ERIC recommended that the Treasury should improve high-deductible health plans (HDHPs) by addressing the following issues:
- Eliminate the spousal flexible spending account glitch;
- Allow employers to offer first-dollar coverage of high-value services; and
- Allow HSA-eligible HDHPs to coordinate with supplemental benefits, such as direct primary care, TRICARE, Medicare, and other programs.
Employer Reporting Requirements Under the ACA
Currently, the Commonsense Reporting Act is pending before Congress. This Act would allow employers to report their sponsored health plan information to the IRS before open enrollment in state and federal exchanges. ERIC requests that the IRS issue best practices for improving and simplifying employer reporting requirements under the Affordable Care Act (ACA).
Regulations Updating Electronic Delivery Rules
In 2020, the DOL updated its regulation to permit plan sponsors to send retirement plan notices via electronic delivery as the default option. ERIC recommends that the IRS and Treasury issue similar regulations concerning the electronic delivery of required notices.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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