Compliance August 15, 2017

IRS Developing Presentation About Pre-Approved Plan Program Changes

The agency is seeking input about what to include in its presentation.
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The Internal Revenue Service (IRS) is developing a presentation about the pre-approved plans opinion letter program and would like input about what to include.

Last month, the IRS issued Revenue Procedure 2017-41, which sets forth the procedures for issuing opinion letters regarding the qualification in form of pre-approved plans under Sections 401, 403(a), and 4975(e)(7) of the Internal Revenue Code.

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The presentation will cover:

  • The merger of the “master and prototype” and “volume submitter” programs;
  • Differences between standardized and non-standardized plans;
  • The opinion letter application period for defined contribution (DC) plans; and
  • Other changes made by Revenue Procedure 2017-41.

The IRS invites emails to tege.outreach@irs.gov by 5 p.m. ET on September 1, with any suggestions for this presentation. It notes it is unable to respond to each individual email.

The agency plans to post the presentation to the IRS Video Portal in November.

Products August 15, 2017

Tool From Principal Offers Suggestions for Retirement Plan Design

The modeling tool assesses plan health and makes suggestions for improving it.
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In an effort to provide real-life retirement planning scenarios, Principal Financial Group announced the launch of its retirement modeling planner, designed to assess and improve retirement plan health and overall retirement readiness for participants.

While the tool aims to power effectiveness by providing steps to improve plan health, deliver estimated costs on matching contributions, and stress the impacts of retirement readiness, it’s the all-in-one, single platform that highlights its efficiency, according to Principal.

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“The advanced modeling planner provides a single platform to model best practice plan design features,” says Jerry Patterson, senior vice president for retirement and income solutions at Principal. “Plan sponsors and their advisers can conduct automatic enrollment, auto-escalation, and stretch-match formulas–in real time with real client data–to identify the most beneficial retirement solutions for their business and employees.”

The 2017 Principal Retirement Readiness Survey found most employees didn’t mind if their employers added automatic enrollment or discussed savings advice, a stark contrast to previous employer fears about employee backlash when setting steep default savings rates. Eighty-four percent of employees surveyed said they approved of auto-enrollment with a 6% starting deferral percentage.

“We believe in partnering with plan sponsors to promote best practice plan design features, which often result in life changing impacts for their participants. For many plan sponsors, the story sounds great, but it’s not enough to drive them to action. They need to understand the specific financial impacts to their organization and employees,” says Patterson. “This planner helps plan sponsors and the advisers that serve them, turn that ‘story’ into an actionable strategy for their specific workforce.”

According to Principal, the platform is “being rolled out in a phased approach,” with plan sponsors with eligible plan employees in a single location, including employees in 401(k), 403(b) and 457 plans, will have access to the tool first—provided all participants are subject to the same automated plan provisions. The modeling tool will be available to plans with participants in multiple locations by the end of the year.

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