Blue Ridge ESOP Associates Industry News

The Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act”) contained provisions aimed at increasing access to tax-advantaged accounts and changes to required minimum distribution rules.   The budget bill signed by President Biden on December 23, 2022 included the SECURE 2.0 Act of 2022 (“SECURE 2.0”). SECURE 2.0 builds on the SECURE Act with changes aimed to strengthen the retirement system and financial preparedness upon retirement.

You’ve spent countless hours and who knows how much money to provide meaningful benefits through your ESOP and/or 401(k) plan only to find that when you want to distribute the benefits, you can’t find the participant or beneficiary(ies). Distribution forms and statements come back “return to sender – that address unknown.” E-mails are flagged undeliverable or perhaps most frustrating are the situations where the participant is just non-responsive. It’s as if you’re knocking on their door knowing they’re home but they just don’t answer. Hence the dilemma of what we’ll lump together as missing participants.

Provisions in the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) require defined contribution plans to include illustrations of estimated lifetime income stream of payments. The idea is to provide information to participants that if the account balance were converted to annuity payments how much income would be payable to the participant (based on various assumptions) in both the form of payments over the participant’s lifetime and payments over the joint lifetimes of the participant and survivor. The Department of Labor (DOL) published an Interim Final Rule (IFR) on September 18, 2020 that becomes effective September 18, 2021. On July 26, 2021 the DOL issued the Temporary Implementing Frequently Asked Questions (TIFAQ) to clarify some of the provisions in the IFR that, frankly, were a little confusing.