Check Out the Streamlined Compliance Testing Landing Page

All your compliance testing is now on one page. Simply go to your plan website and click Plan > Compliance to access the compliance package, census alert report, and interim testing package.

The compliance package section enables you to review an active test package or view authorized packages. If you're looking ahead to your plan year end, you can run a census alert report to help identify errors in your census data or generate an interim testing package. Run an on-demand interim package to estimate test results from the beginning of the plan year through the business day before the package was generated. Newly available for safe harbor plans, the interim package has also been updated with an easier-to-read format, plus supportive text and a glossary to help you understand your estimated results and recommended next steps. 

Vanguard’s Approach to Target-Date Fund Rebalancing

The TDF rebalancing policies Vanguard has put in place help us increase investors’ chances of achieving retirement success. You’ll see how through this overview of our methodology and rationale for our rebalancing strategy. You’ll also learn about our approach to benchmark selection, construction, and implementation.

Forfeiture Guidance for 2024 and Beyond

In 2023, the Internal Revenue Service (IRS) released proposed regulations for how and when qualified defined contribution plans must use forfeitures. These proposed regulations apply for plan years beginning on or after January 1, 2024. Here’s what you should do.

1. Take advantage of the transition relief period. Use forfeitures generated and accumulated before 2024 as if they originated during the 2024 plan year—no matter how they accumulated over previous plan years.
2. Use forfeitures by the deadlines. Forfeitures must be used within 12 months of the close of the plan year in which they were created. For example, if your plan year end is December 31, forfeitures from the 2024 plan year must be used by December 31, 2025.
3. Use forfeitures to:

• pay plan administrative expenses,
• reduce employer contributions (including restoring conditionally forfeited participant accounts), or
• increase benefits in other participant accounts as described in the plan document.

We’ll share additional guidance as it becomes available. If you have any questions, contact your client service team.

SECURE 2.0: Adding Auto-Enrollment Features to Your Plan

Beginning January 1, 2025, most employers with 401(k) and 403(b) plans established on or after December 29, 2022, must include an eligible automatic contribution arrangement (EACA) feature.* A plan is considered established when it initially adopts an elective deferrals plan provision, even if the effective date is after December 29, 2022, and must comply with all the new auto-enrollment requirements below:

• Offer an EACA that allows permissible withdrawals
• Begin with an auto-enrollment rate between 3-10% and increase by 1% each plan year until reaching at least 10%, but not more than 15% (10% for non-safe harbor plans until the 2025 plan year)
• Direct a participant’s contributions into a qualified default investment alternative (QDIA) that protects the principal if they don’t make investment elections
• Participants can choose to defer more or less than the auto-enrollment rate—or elect not to defer at all

Stay tuned. If your plan rules need updating, we’ll contact you in the second quarter of 2024.

*Exceptions apply. If you have any of the following, you are excluded from adding the SECURE 2.0 auto-enrollment features:

• A small business with 10 or fewer employees
• A business that has existed fewer than 3 years
• A church or governmental plan

DOL Clarifies Employee and Independent Contractor Status

The Department of Labor (DOL) has issued a final rule, effective March 11, 2024, to help employers determine if a worker is considered an employee or independent contractor under the Fair Labor Standards Act (FLSA). The rule only affects a worker’s status under FLSA and doesn’t directly apply to ERISA. The worker’s status under the FLSA standard may impact who can join an employer-sponsored retirement plan. Employers must still consider the existing IRS standard to determine a worker’s status for tax purposes. Read more.