CPC Employee Benefits Law & Regulatory Updates 2 — Questions and Answers
Question 1: Under the SECURE 2.0 Act, what is the required beginning date for RMDs for individuals who turn age 73 after December 31, 2022?
- April 1 of the year following the year the participant turns 73 (Correct answer)
- December 31 of the year the participant turns 73
- April 1 of the year the participant turns 73
- December 31 of the year following the year the participant turns 73
Correct answer: April 1 of the year following the year the participant turns 73
SECURE 2.0 raised the RMD age to 73 for those born between 1951 and 1959, with the first RMD due by April 1 of the year after turning 73.
Question 2: Which ERISA section governs the fiduciary duty of prudence for plan administrators?
- ERISA Section 404(a)(1)(B) (Correct answer)
- ERISA Section 408(b)(2)
- ERISA Section 502(a)
- ERISA Section 401(a)
Correct answer: ERISA Section 404(a)(1)(B)
ERISA Section 404(a)(1)(B) establishes the prudent man standard, requiring fiduciaries to act with the care, skill, prudence, and diligence of a prudent expert.
Question 3: A plan sponsor adopts a long-term part-time employee policy under SECURE 2.0. After how many consecutive years of service with at least 500 hours each year must such employees be eligible to make elective deferrals?
- 2 years (Correct answer)
- 3 years
- 5 years
- 1 year
Correct answer: 2 years
SECURE 2.0 reduced the long-term part-time employee rule from three consecutive years to two years of service with at least 500 hours each year for plan years beginning after 2024.
Question 4: Which IRS correction program allows plan sponsors to self-correct significant operational failures without IRS approval, effective after SECURE 2.0?
- Self-Correction Program (SCP) (Correct answer)
- Voluntary Correction Program (VCP)
- Audit Closing Agreement Program (Audit CAP)
- Employee Plans Compliance Resolution System (EPCRS) standard submission
Correct answer: Self-Correction Program (SCP)
SECURE 2.0 expanded SCP to allow self-correction of significant failures, including certain plan document failures, without requiring IRS approval under VCP.
Question 5: Under the Consolidated Appropriations Act of 2023, pension-linked emergency savings accounts (PLESAs) allow non-highly compensated employees to contribute up to what amount on an after-tax basis?
- $2,500 (Correct answer)
- $1,000
- $5,000
- $3,000
Correct answer: $2,500
PLESAs under SECURE 2.0 permit participants to contribute up to $2,500 (indexed for inflation) in after-tax emergency savings linked to their defined contribution plan.
Question 6: Under ERISA, which party bears the burden of proof in an ERISA Section 502(a)(1)(B) benefits claim once a plan administrator has denied a claim under a discretionary authority clause?
- The participant must prove the administrator's decision was an abuse of discretion (Correct answer)
- The plan administrator must prove the denial was reasonable
- The participant must prove the administrator acted in bad faith
- The court applies de novo review automatically
Correct answer: The participant must prove the administrator's decision was an abuse of discretion
Under the abuse of discretion standard (Firestone Tire), when a plan grants discretionary authority, the claimant must show the administrator's decision was arbitrary and capricious.
Question 7: The DOL's 2024 fiduciary rule expansion primarily targeted which type of financial advice interaction?
- One-time rollover recommendations to IRA accounts (Correct answer)
- Ongoing investment management of plan assets
- Annual actuarial valuations of defined benefit plans
- Group health plan enrollment counseling
Correct answer: One-time rollover recommendations to IRA accounts
The DOL's 2024 fiduciary rule update expanded the definition of investment advice fiduciary to cover one-time rollover recommendations, which were previously excluded under the five-part test.
CPC Employee Benefits Law & Regulatory Updates 2
Under the SECURE 2.0 Act, what is the required beginning date for RMDs for individuals who turn age 73 after December 31, 2022?