account for these rules. If a participant separates from service or a PLESA feature is terminated, distributions will be considered eligible rollover distributions but are not subject to mandatory 20% withholding. In addition, no direct rollover option needs to be given and the participant is not required to receive a 402(f) statement. An employer may terminate the PLESA feature and, upon termination, allow participants to transfer amounts in the PLESA to their designated Roth account within the plan or receive the amounts personally. If the latter, payment must be made to participants within a reasonable period of time. If a participant has excess deferrals that are distributed from the plan, the employer must distribute PLESA deferrals first and apply those to the correction of the excess. Disclosures Similar to other retirement plan features, employers that allow PLESAs will be required to provide a notice to participants describing the PLESA rules 30–90 days before the first contribution or the date of any change in contribution rates and at least annually in future years. The notice must include the participant’s balance and the amount or percentage contributed to the account. The PLESA notice may generally be combined with other notices (e.g., safe harbor notices). IRS Guidance As part of the SECURE 2.0 legislation, the IRS is required to issue regulations by the end of 2023 to address remedies employers have to prevent abuse by participants. For example, a participant may make PLESA contributions only to receive a matching contribution before withdrawing the account balance and repeating the cycle to receive a free matching contribution. This issue and others will be monitored by the government before issuing a summary report after seven years. Lisa Haberman is an analyst with the ERISA Department at Ascensus. She brings 30 years of experience within the insurance and financial industries to her role at Ascensus. Her previous experience includes a variety of roles with a national insurance provider, regional financial advisory firm, and community banking institutions. Ascensus helps people save for what matters — retirement, education, and healthcare. With more than 40 years of experience, it offers tailored solutions that meet the needs of financial institutions, state governments, financial advisors, employers, and individuals. Ascensus supports more than 157,000 retirement plans, more than 6.5 million 529 education savings accounts, and a growing number of ABLE savings accounts. As of Dec. 31, 2022, Ascensus had more than $700 billion in total assets under administration. For more information about Ascensus, visit www.ascensus.com. 19 In Touch
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