From MHA

On September 5, 2009, President Obama and Treasury Secretary Timothy Geithner announced a set of new initiatives designed to encourage retirement savings. The new guidance expands opportunities for automatic enrollment in 401(k) and other retirement plans and enables employees to contribute amounts representing unused vacation or similar leave time to retirement plans (including 401(k) plans). The guidance also updates the IRS’s model rollover notice. The IRS also issued Special Edition Newsletters of both Employee Plans News and Retirement News for Employers with information about the changes.

Automatic Enrollment

• Revenue Ruling 2009-30. This ruling addresses automatic enrollment in 401(k) plans that contain a feature under which employee deferrals to the plan automatically increases each year without an affirmative election by the employee. The ruling describes two situations-one involving a basic automatic contribution arrangement and the other involving an arrangement intended to satisfy the requirements for a qualified automatic contribution arrangement (QACA) and an eligible automatic contribution arrangement (EACA).

Click here to view Revenue Ruling 2009-30

• Notice 2009-65. This notice contains two sample plan amendments to facilitate the use of automatic enrollment. The pre-approved automatic enrollment language will allow employers to amend their plans to adopt automatic enrollment more quickly-and without the need for case-by-case approval from the IRS. The notice states that plans are not required to adopt either amendment verbatim.

Click here to view Notice 2009-65

• Notice 2009-66 and Notice 2009-67. These companion notices provide guidance and a sample amendment, respectively, for including an automatic contribution arrangement in SIMPLE IRA plans.

Click here to view Notice 2009-66 or Click here to view Notice 2009-67

Unused Vacation or Other Similar Leave

• Revenue Ruling 2009-31. This guidance illustrates two situations in which the dollar equivalent of unused paid time off (PTO) can be contributed to an employer’s profit-sharing plan without adversely affecting the plan’s qualified status.

Revenue Ruling 2009-32. This guidance addresses similar contributions at termination of employment.

Click here to view Revenue Ruling 2009-32

Updated Model Rollover Notice under Code Section 402(f)

• Notice 2009-68. This notice simplifies the presentation of an employee’s options when receiving an eligible rollover distribution. It provides a rollover roadmap that satisfies the required notice that must be provided to employees taking their retirement assets. The notice also reflects law changes (such as information on a distribution from a designated Roth account under an employer plan) and explains rules that apply in special situations (such as when a distribution is made to a surviving spouse or other beneficiary).

Click here to view Notice 2009-68