What: The MERS Retirement Board approved plan amendments
Action Required: None
Key Dates: Effective January 1, 2023
Impacted Audiences: Employers offering Defined Benefit, Defined Contribution and/or Hybrid Plans, with immediate impacts to those employers who have adopted alternative transfer rules.
For More Information: Contact your Benefit Plan Coordinator
Key Information:
On December 1, 2022, The MERS Retirement Board approved changes to Sections 6(5), 6(6) and 50(2)[a] of the Plan Document to include amendments relating to employee transfers/rehires for “cash or deferred arrangement” (CODA) prohibition compliance.
Per a recent IRS ruling, any benefit option that presents an employee with a choice between cash or deferred compensation after the first date of coverage under any plan of the employer is prohibited as a CODA. Employers who have previously adopted an alternative transfer provision will no longer be allowed to provide employees with a choice of plans, and the alternative transfer provision will automatically be replaced with the plan continuation rules.
Under the plan continuation rules, participants who are rehired and/or transfer to a new division will be enrolled in the same plan type as the division they are being transferred from or previously enrolled in, whether open or closed, if such a plan exists. When both open and closed plans of that type exist, the employee will be enrolled in the open plan. If the same plan type does not exist, the employee is enrolled in the open plan for that division, regardless of plan type.