Tag Archives: benefit plans

Dollar Limits on Compensation and Benefits Announced

The Internal Revenue Service has announced the 2017 cost-of-living adjustments for various limits affecting employee benefit plans with very little change. The more common limits are detailed below for both 2016 and 2017.



401(k) & 403(b) Elective Deferrals



Catch-Up Contribution for Participants Age 50 and above



Defined Contribution Plans-IRC 415 (Including SEP and Keogh Plans)



Maximum Benefit for Defined Benefit Plans *This is not the maximum contribution, it is the maximum benefit that can be funded.



SIMPLE Retirement Plans Elective Deferrals



Catch-Up Contribution for Participants Age 50 and above



Maximum Annual Compensation for Determining Contributions and Benefits



Compensation Limit for Key Employee Determination



Compensation Limit for Highly Compensated Determination



IRA Contributions



IRA Catch-Up Contribution




A detailed listing of all the adjusted limitations can be found here.

For questions about how these limits apply to you, please contact Aronson’s Compensation and Benefits Practice Director, Mark Flanagan at 301.231.6257.


Significant Changes to Form 5500 Proposed


The Internal Revenue Service “IRS”, the Department of Labor “DOL” and the Pension Benefit Guaranty Corporation “PBGC” (the agencies) recently proposed significant changes to the Form 5500 requirements for employer sponsored benefit plans. If approved, the changes would be the most significant since implementing the EFAST2 electronic filing system in 2009. As such, the filing system has allowed for easier data collection leaving the agencies anxious to obtain more robust data from plan sponsors about their plans. While the new reporting requirements are scheduled to take effect for plan years beginning on or after January 1, 2019, employers, investment companies, custodians, record-keepers, third-party administrators, and trustees, etc. would be impacted by the new requirements, which could cause rollout delays.

The changes are quite ambitious and clearly reflect the agencies’ desire for additional and more valuable data in the areas of concern. The proposed changes focus on the following areas:

Plan investments

There is continued sentiment that many plans include high-risk, hard to value assets. Proposed modifications to the Schedule H Financial Information, would disclose the assets that create the greatest concern. New information would be gathered on derivatives, limited partnerships, private equity and hedge funds.

Service provider fees and expenses

Fees paid by plan participants continue to be a huge focus, along with continued frustration from the agencies as to how these amounts are being reported via the current Form structure. Additional reporting would be required on the Schedule H, while the  Schedule C Service Provider Information, would be modified to more closely align with the 408(b)(2) indirect compensation reporting for covered service providers. Schedule C reporting would also be required for small retirement and welfare benefit plans along with additional new inquires on the Form.

Information on plan operation and compliance

The 2015 Forms included several new questions focused on plan provisions and testing. Shortly after being released, the agencies relented and eliminated the requirement that these questions be answered. It is not clear at this point when answers to these questions will be required, but they remain a reminder of just how much new information the agencies can obtain. The additional proposed compliance questions revolve around other plan administration areas, including service provider compensation, uncashed checks, default investment alternatives and participant disclosures.

New and enhanced reporting requirements for employer sponsored healthcare arrangements

Employers who sponsor welfare benefit plans, including health plans that generally have greater than 100 participants, are required to file Form 5500. This filing typically consists of the Form itself along with Schedule A Insurance Information, and sometimes Schedule C. Small welfare benefit plans have been exempt from this requirement. However, under the proposed rules, the exemption would be modified. ERISA covered group health plans, regardless of size, would be required to file Form 5500. Additionally, applicable employers would be subject to filing the new Schedule J Group Health Plan Information, which includes a myriad of questions required under the Public Health Service Act.

Other areas impacted by the proposed changes include: additional ESOP questions on Schedule E ESOP Annual Administration, enhanced reporting on Form 5500-SF, new reporting requirements for small plans not eligible for Form 5500-SF, revised Schedule G Financial Transaction Schedules, merger and termination reporting on Schedule H, and changes to Direct Filing Entity “DFE” reporting.

Employers sponsoring ERISA covered plans have been quite fortunate that Form 5500 reporting requirements have generally been reduce over the last 10 to 15 years. This is the first time in quite a while that enhanced Form 5500 reporting requirements are likely. Given the expansive nature of the proposal, some increases are almost certain to be enacted. As previously stated, the proposed reporting changes are a huge undertaking that would greatly impact employers that sponsor retirement plans and/or group health plans. The new reporting for group health plans in particular could present challenges as generating the additional proposed information by health insurance vendors would not be an easy task. Enhanced retirement plan investment fee reporting would also pose difficulties. These challenges will likely result in significant push back from the impacted plan service providers, which has historically resulted in modifications prior to release of the final version.

Employers and service providers have been afforded ample time to prepare for the changes and how the agencies respond to the public’s comments is worth watching. There is no doubt that it is much easier for the agencies to gather and analyze information on employer sponsored plans and they are very interested in the benefits and associated costs of that which is being provided. As an employer, be preparing for change.

Please contact Mark Flanagan of Aronson’s Compensation and Benefits Practice at 301-231-6257 to further discuss the impact of the proposed Form 5500 changes.


401(k) Plans: Don’t Overlook Your Company’s Multi-Million Dollar Investment

Even though it is often overlooked by plan sponsors, a 401(k) plan is one of the most important assets to your company because it pertains to the retirement welfare of your employees. 401(k) plan assets are not considered an asset to the company itself. They are never recorded as an asset on your company financial statements and, in fact, the only impact that they have on corporate financials relates to recording employer contributions through the income statement. That said, the responsibility and oversight of a 401(k) plan should never be disregarded, especially when it comes to the maintenance of plan investments.

As indicated by the Department of Labor, the responsibility of a plan fiduciary is to act solely in the interest of plan participants by carrying out the duties of the plan with skill, prudence and diligence. Carrying out such duties can be extremely difficult for plan sponsors in reviewing plan investment offerings for performance and fees as this is not typically the expertise of plan sponsors. This does not mean that a plan sponsor has to be a certified financial advisor in order to sponsor a 401(k) plan; however, you may need to consult a third party investment advisor. If you do not currently meet with a third party to review your plan investments, are you able to answer the following questions:

  • What type of investments are offered under you plan?
  • What is the nature and risk of each investment?
  • Do you consider your investment offerings diverse?
  • How are fees assessed within each investment?
  • What investments are currently on your “watch list”?

If you are unable to answer the questions above, odds are that you are not acting with the skill, prudence and diligence required of plan sponsors by the Department of Labor — a deficiency that should be remedied quickly.  Please contact Kayla Kania of Aronson’s Employee Benefit Plan Services Group at 301.231.6240 with any questions or to discuss the next steps in resolving this issue.

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