PLANSPONSOR - November/December 2024 - 8

RULES & REGULATIONS
More From Washington
And the Courts
IRS' Tax Inflation
Adjustments for 2025
The IRS announced the annual inflation
adjustments for tax year 2025, affecting
over 60 tax provisions.
The maximum salary contribution
to employer-sponsored health flexible
spending plans-aka cafeteria plans-
which
enable
employees
to
choose
between multiple health benefits, will get
a $100 bump to $3,300 next year, for the
2026 tax-filing season. For cafeteria plans
that permit carryover of unused amounts,
the maximum carryover was raised by
$20 to $660.
Standard tax deductions also will rise.
For single taxpayers and married individuals
filing separately for 2025, the standard
deduction will be $15,000, a $400
increase. For married couples filing jointly,
the deduction rises $800 to $30,000.
These increases are less than the $750 and
$1,500, respectively, for the 2024 tax year.
Inflation has stabilized over the past
year, since the Federal Reserve's interest
rate hikes took hold. The IRS makes annual
inflation adjustments to the tax provisions,
based on Revenue Procedure 2024-40.
The marginal tax rates remain the
same in terms of percent of payment,
though the income threshold for those
rates increased across brackets.
DOL Clarifies Scope of
Cybersecurity Guidance
The Department of Labor issued updated
cybersecurity guidance in September for
employee retirement benefit plans and
health and welfare plans covered by the
Employee Retirement Income Security Act.
The DOL's Employee Benefits
Security Administration issued its new
Compliance Assistance Release, updating
guidance last issued by the DOL in 2021.
The release also corrects misapprehensions
of health and welfare plan ser8
PLANSPONSOR.COM November - December 2024
vice providers that the guidance applied
only to retirement plans. Lisa Gomez,
assistant secretary of labor in charge of
EBSA, stressed the need for " all ERISAcovered
plans to implement appropriate
best practices to help protect participants
and their beneficiaries from cybercrime
and emerging threats. "
The release updated best practice
guidance in the areas of: tips for plan
sponsors and fiduciaries when hiring a
service provider; best practices to help
mitigate cybersecurity risks; and online
security tips for plan participants when
checking their retirement accounts.
Nearly 900 Firms
Register With DOL Under
Amended PTE Rule
The Department of Labor, October 16,
published a list of nearly 900 companies
that have used or had planned to use the
qualified professional asset manager
exemption, as of September 30.
The initial public list comes after the
DOL published, in April, a new amendment
to the 1984 rule governing the QPAM
exemption, which regulates transactions
between an investment manager and a
qualified plan. This prohibited transaction
exemption, PTE 84-14, provides relief for
some employee benefit plan and individual
retirement
account
the
transactions
otherwise
noncompliant with the Employee
Retirement Income Security Act.
Under
amended PTE 84-14,
any firm that relies on the exemption
must notify the DOL. The regulator's list
includes many of the biggest names in
asset management, insurance and recordkeeping.
The DOL reports that the list will
be updated periodically.
The publication and maintenance
of the list is required by the amendment,
which both broadened the types of misconduct
that would require an investment
manager exemption and made it easier for
a retirement plan sponsor to exit a QPAM
relationship. The DOL noted it had not
directly verified whether any of the listed
entities met the exemption's requirements
and that inclusion should " not be taken
as the Department's endorsement of the
use of the entity as a service provider or
fiduciary. " It advised plan fiduciaries to
consult legal counsel regarding working
with a QPAM.
Part-Time Eligibility Rules
For ERISA 403(b)s
The Department of the Treasury and IRS
have issued guidance confirming that
student employees are not considered
long-term, part-time employees of their
colleges and universities for the purposes
of retirement saving in 403(b) plans.
According to a Q&A section of the
guidance, Employee Retirement Income
Security Act 403(b) plans need not give
student employees the right to make elective
deferrals into a plan, even if the student
otherwise qualifies for long-term, parttime
employee classification under ERISA.
The clarification was one that
higher education plan sponsors were
seeking because maintaining the necessary
records for all student employees
was considered cumbersome, says Mike
Webb, a senior manager in the retirement
plan consulting group at CAPTRUST.
The agencies' guidance addressed
long-term, part-time employees in 403(b)
retirement plans under the SECURE
[Setting Every Community Up for
Retirement Enhancement] 2.0 Act, provisions
of which apply to 403(b) plans, beginning
in 2025. The release, Notice 202473,
includes guidance for charities, public
schools, and state or local governments
that operate 403(b) plans subject to ERISA.
The guidance also addresses when
plans may exclude other part-timers from
a 403(b) plan if they fail to meet the longterm
part of the requirements. -PS
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