Default Provision Added to Forfeiture Rules

The MERS Retirement Board recently approved adding a default provision to the DC forfeiture rules. This means that if action is not taken to utilize forfeiture funds by the required deadline, funds will automatically be distributed as an equal share to any active participant in that DC plan. This ensures that employers remain in compliance… Continue reading

IRS Extends Time In Which Forfeiture Funds Must Be Used

The timeframe you in which you must use forfeiture funds from your defined contribution plan has been extended. As a reminder, in years prior, the MERS Plan Document required employers to utilize DC forfeiture funds in the plan year in which they occurred. Effective January 1, 2024, the IRS will allow forfeitures to be used… Continue reading

Utilizing Employer Retirement Plan or IRA Funds for Disaster-related Expenses with Penalty Waived

Exception to 10% early distribution penalty and expanded access to plan loans for plan participants in disaster areas Allows up to $22,000 to be distributed from employer retirement plans or IRAs for affected individuals. Such distributions, called “Qualified Disaster Recovery Distributions,” are not subject to the 10% early distribution penalty, and the individual may include… Continue reading

Public Safety Officer Health Insurance Tax Exemption Change

Public Safety Officer Health Insurance Previous law provided the opportunity for public safety officers to exclude $3,000 from gross income for a direct payment for health insurance premiums from a governmental retirement plan. With SECURE 2.0, insurance premium payments no longer need to be paid directly from the retirement plan to qualify for the tax… Continue reading

Reduction in Excise Tax on RMDs

Reduction in excise tax on RMDs Reduces the penalty for failure to take an RMD from 50% to 25%. Further, if a failure to take an RMD from an IRA is corrected in a timely manner, as defined under SECURE 2.0, the excise tax on the failure is further reduced from 25% to 10%. This… Continue reading

Required Minimum Distribution (RMD) Ages Updated

Required minimum distribution (RMD) age changes Increases the required minimum distribution (RMD) age from 72 to 73 for individuals who attain age 72 after January 1, 2023, and age 73 before January 1, 2033. Further, there is a subsequent increase to age 75 for any individual who did not attain age 74 prior to January… Continue reading