Products September 9, 2021

Broadridge Fi360 Offers Enhanced Solution Ahead of DOL IRA Rollover Requirements

The Decision Optimizer tool offers a customizable, turnkey solution to help financial advisers and home-office clients comply with evolving ERISA plan/IRA transfer regulatory requirements.

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To support wealth and retirement professionals as they address new requirements associated with the Department of Labor (DOL)’s Prohibited Transaction Exemption (PTE) 2020-02, Broadridge Fi360 Solutions has announced it is rolling out a Decision Optimizer software for financial advisers.

The capability supports advisers with PTE 2020-02 requirements that take effect December 20, as well as ongoing individual retirement account (IRA) rollover and related compliance needs. The PTE allows advisers to provide guidance and collect compensation in more situations than they otherwise could have without the exemption.

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The Decision Optimizer tool, first launched in July 2020 in response to Regulation Best Interest (Reg BI), offers a customizable, turnkey solution to help financial advisers and home-office clients comply with evolving Employee Retirement Income Security Act (ERISA) plan/IRA transfer regulatory requirements. Advisers can access PTE 2020-02-specific rollover analysis criteria, plan fee benchmarking data, attestations and home office surveillance of rollover comparisons, improving workflows to align with current and future compliance conditions.

Broadridge Fi360 Solutions says it worked to enhance the tool with ongoing support from the Pension Resource Institute (PRI) to develop best practice criteria that is easily adaptable as the regulatory environment evolves.

“The enforcement date of December 20, 2021, and associated requirements are creating meaningful challenges for advisers and home offices. Working alongside PRI and our clients, we’re excited to offer a turnkey solution to help drive compliance,” says John Faustino, head of Broadridge Fi360 Solutions. “We’re thrilled to bring PRI’s expertise to our client base and to continue helping advisers simplify and implement fiduciary processes.”

“We’re excited to work with Broadridge Fi360 Solutions to deliver services that address the technical and evolving regulatory environment,” says Jason C. Roberts, CEO at Pension Resource Institute and Retirement Law Group. “Broadridge Fi360’s deep knowledge of the fiduciary adviser landscape with 20 plus years’ experience and superior technology resources, combined with our intellectual property and focus on ERISA legal and compliance issues, enables us to bring actionable and scalable solutions to serve our respective clients.”

Compliance September 9, 2021

IRS Issues Procedures for 403(b) Plan Remedial Amendment Cycle 2

The agency also issued a Revenue Procedure which extends the deadline for making interim amendments for IRC Section 401(a) plans.

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The IRS has published Revenue Procedure (Rev. Proc.) 2021-37, which sets forth the agency’s procedures for issuing opinion letters regarding satisfaction in the form of 403(b) pre-approved plans with respect to the requirements for the second Remedial Amendment Cycle (Cycle 2).

It also sets forth the rules for determining when Remedial Amendment Periods expire for 403(b) pre-approved plans.

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In Rev. Proc. 2019-39, the IRS established a recurring remedial amendment period for 403(b) plans and extended the initial remedial amendment period beyond March 31, 2020, for certain form defects.

The IRS says Rev. Proc. 2021-37 is modifying the procedures for the 403(b) pre-approved plan program to be more similar to the procedures applicable under the Internal Revenue Code (IRC) Section 401(a) pre-approved plan program in several ways, including by:

  • simplifying the 403(b) pre-approved plan program by eliminating the distinction between prototype and volume submitter plans;
  • providing that the IRS will issue a cumulative list of changes in the 403(b) requirements and identify the 403(b) requirements that the IRS will take into account in reviewing 403(b) pre-approved plans submitted for Cycle 2;
  • making 403(b) pre-approved plan program provisions regarding reliance on an opinion letter more similar to the provisions applicable under the 401(a) pre-approved plan program. It aims to do this, in part by including provisions that permit the submission during the employer adoption window of an application for a determination letter using Form 5307, “Application for Determination for Adopters of Modified Volume Submitter Plans,” by either an adopting employer of a non-standardized plan that makes amendments to the plan that are not extensive or an adopting employer of any 403(b) pre-approved plan (whether a standardized plan or a non-standardized plan) that adds language to satisfy the requirements of IRC Section 415 due to the required aggregation of plans; and
  • providing details regarding the system of cyclical remedial amendment periods that follows the initial remedial amendment period.

Rev. Proc. 2021-37 provides that the on-cycle submission period for Cycle 2 applications will begin on May 2, 2022, and end on May 1, 2023.

The revenue procedure extends the plan amendment deadline for making interim amendments with respect to a change in 403(b) requirements, for most plans, until the end of the second calendar year following the calendar year in which the change in 403(b) requirements is effective. The IRS also issued Rev. Proc. 2021-38, which also extends the deadline for making interim amendments for IRC Section 401(a) plans.

Rev. Proc. 2021-37 sets forth the date on which the limited extension of the initial remedial amendment period expires and extends the deadline for adopting an initial amendment (if applicable) that is required under certain circumstances in order for the limited extension of the initial remedial amendment period to apply.

Finally, the revenue procedure provides rules for permitting the participation of employees of certain church-related organizations, as described in IRC Section 414(e)(3)(B), in a 403(b) pre-approved plan that is intended to be a retirement income account. This includes special rules for amending a Cycle 1 403(b) pre-approved plan that is intended to be a retirement income account to permit the participation of employees of certain church-related organizations, retroactive to the beginning of Cycle 2.

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