2021: Quarter 4 Newsletter
403(b) Plan Amendment
On November 8, 2021, AFPlanServ sent each of our 403(b) plans the following:
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An amendment incorporating required and optional changes for the hardship distribution requirements of the Bipartisan Budget Act of 2018.
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The waiver of minimum required distributions in The Coronavirus Aid, Relief, And Economic Security (CARES) Act of 2020.
AFPlanServ has begun administering your Plan per these amendments, based on each provision’s applicable effective date. In the event signed documents are not returned, we will continue to administer the Plan in accordance with the amendment, and your Plan will be deemed amended as of December 31, 2021.
A follow-up email was sent the week of December 6, 2021, to all Plan Sponsors that had not returned the Amendment. If you did not receive the Plan Amendment, please contact us as soon as possible.
Did you know?
New Link Alert!
A new Employer Contact Form has been added to this newsletter to ensure that we have your most up-to-date information for your Plan. The contact form is also located in the "Plan Reminders" section.
2022 Annual Limits
Effective January 1, 2022, the Internal Revenue Services (IRS) announced the following contribution, deferral, and catch-up limits for retirement savings for the 2022 tax year:
- The dollar limit for Elective Deferrals is $20,500
- The dollar limit for “Age 50” catch-up contributions is $6,500
- The combination of these two for participants who will turn 50 during the calendar year 2022 is the maximum contribution of $27,000
- The dollar limit for 403(b) overall contributions increases to $61,000
- The dollar limit for 457(b) overall contributions is $20,500 unless over the age of 50, the amount is $27,000
Please be aware of these limits when working with your employees on their 2022 deferral changes. If you have any questions, please contact us.
Excess 403/457(b) Contributions
AFPlanServ monitors all contribution limits to help ensure contribution amounts, including catch-up contributions, do not exceed allowable annual limits for plan participants across all your Plan's approved investment providers. This helps lower the risk of excess contributions and allows for corrective action to be taken prior to the end of each tax year and thereafter, as necessary.
We will notify you of any excess contributions that are identified. If they are identified within the same calendar year, we will notify the provider and request a refund of the excess amount back to the Plan. You will need to stop any remaining payroll deductions immediately, and the participant will need to complete a new salary reduction agreement to reduce the amount for the upcoming/current calendar year. If an excess contribution is identified after the end of the calendar year, AFPlanServ will notify you and the provider, and a corrective distribution will be processed to the participant.
Frequently Asked Questions
Q: When is the latest date a correction can be made for excess contributions?
A: We recommend corrections are made prior to the issue of your Form W-2s, however, April is the latest corrections can be made.
Q: Can the plan reject the Plan Amendment?
A: The Bipartisan Budget Act of 2018 Amendment and the CARES Act of 2020 Amendment are laws that were enacted and requires incorporation to your 403(b) Plan Document.
Plan Reminders
Each year, AFPlanServ provides a Sample Eligibility Notice to help satisfy the Universal Availability requirements.
You may use it as a template for your custom notification or distribute the sample in its entirety.
Please check the Operational Guidelines to ensure you are adhering to the items listed. If you have any questions, please contact us.
To update the contact information for your Plan, please complete the Employer Contact Form.
If you need more information about your role as the plan sponsor, we're happy to help!