Metro Newsletter #113

Metro News # 113

December 11, 2023

 Season’s Greetings from Metro Benefits, Inc! We hope that your Holidays are Happy and Healthy. This issue will start with some year-end updates, and then we will (again) explore some upcoming issues regarding SECURE 2.0. We’ll do a quick update on Metro staffing, and then discuss some other interesting and fun topics. We hope that you enjoy …


Year-End 2023 Updates:

  1. The maximum benefit limits have gone up with inflation:

 As usual, the IRS announced new limits for 2024. (For the geeks, the way this works is that they first apply the CPI factor, and then round down to the next big round number. The rounding system, which is different for each factor, is set forth in the law.) Here we go:

  1. The maximum salary deferral is increasing from $ 22,500 (2023) to $ 23,000. (2024)
    1. Note that this does not include the catch up (below) for those people age 50 or older in 2023.
  2. The catch-up limit remains at $ 7,500.
    1. Therefore, the deferral limit for those age 50 or older is now $ 30,500.
  3. The overall 401k limit, including both employee and employer contributions, has increased from $ 66,000 to $ 69,000.
    1. When you add in the catch up, we are now up to $ 76,500.
  4. The highest compensation that we can recognize has increased from $ 330 K to $ 345 K.
  5. The comp limit for determining if you are considered “Highly Compensated” for 2024 is      $ 150,000. (Ex: if you made this much in 2023 you will be an HCE for 2024). The 2024 income limit, to determine if you are an HCE for 2025, will be $ 155,000.
  6. Finally, the highest annual benefit for a DB Plan is now $ 275,000.
    1. This can create a lump sum of over $ 3 MM at age 62, but you need to have the Plan 10 years to get this much.
    2. You can layer a DB on top of a 401k.
    3. Let us know if you want us to look at some examples for you.

        2. There are some Year-End Tasks to do = 1099’s and RMD’s:

You may soon be receiving information from us regarding two very important year-end issues: (a) Required Minimum Distributions (“RMD’s”), and (b) Form 1099-R’s, reporting 2023 distributions. Please watch for communication from us and, if requested, reply by the stated deadline.

RMDs are required for any participant who has reached the IRS-specified age (*) and who is either a 5% (or more) owner or is no longer employed.  These individuals must receive their RMD’s by December 31. Note that an extension until 4/1/24 is available if 2023 is the first year the participant is required to take this distribution, but it will then require two such distributions in 2024.

Form 1099-Rs must be sent by 1/31/2024 to all Plan members who received a distribution in 2023. This Form is due even if the employee elected a rollover with no taxes due. If your Plan is on a “platform” with a financial institution, then they normally prepare the 1099-R forms. Plans whose investments are in other accounts, such as brokerage accounts, need to be aware of the possible need for 1099-Rs.

(*) age 70 ½ reached in 2019 or prior, or age 72 reached in 2020 or later, or age 73 reached in 2023

(Thanks to Linda Fulton for preparing this item.)


Quick Quiz:

What does the prefix “para” stand for? For example, paralegal, paramedic, para-Olympian, etc. See below for answer.


SECURE 2.0 Change Coming Soon!

Every issue of the 2023 Metro News has focused on this recent legislation, because it is so important. For this issue, we will focus on “LTPT” ees, which stands for “Long-Term Part-Time Employees.” (I can only type this out once.) Since we have already discussed it extensively, we’ll be quick here.

This applies only to Plans that require 1 “Year of Service” for an employee to enter the Plan. Note that 1 “Year of Service” means that you also worked 1,000 hours during the 12-month waiting period. Congress wanted to delete the 1,000-hour requirement, as fewer people work full-time. By deleting the 1,000-hour rule, people could enter the Plan more quickly; that was a central theme of SECURE 2.0. (“Expand Coverage”!).

If an employee works 500 hours for 3 consecutive years, they will enter the Plan. This is effective 1/1/24. As of 1/1/25, the 3-year rule decreases to two. Note that these employees only need to be allowed to defer their own funds into the Plan. No Employer contributions need to be made for them.

Another SECURE 2.0 change that is supposed to happen but has not yet happened is the ability for employees to elect “Roth Treatment” for after-tax contributions. The IRS hasn’t yet issued regs, so, while interest appears to be high, activity is low.

Finally, the force-out limit will increase to $ 7,000 next month, so terminated employees can be more easily paid out. This keeps your Plan clean.


Are Retirement Plans “Good”?

It feels that nothing is black and white anymore. What is good in the eyes of some would be argued as bad by others. I’d suggest that retirement plans are “good”. They assist employees to manage (and survive) their retirements, after working hard for so long. While one can argue about the design, and who gets how much (and when), the whole concept is that they help people. Imagine where we would be without them!

So let me take a moment and toss out a “Well Done!” to our whole industry, including the professionals who make it work, and the Employers who make the contributions and hire us to help run the show.

(Quick counterpoint – some would argue that the large tax deductions mostly benefit those who are wealthy, but we can debate that next time.)

So Yay and Happy Holidays 😊


Quiz Answer:

“Para” stands for “parallel”, at least according to the trivia game we played on our cruise this summer. Let me know if you’d like to suggest other answers; it’s not 100% clear.


Metro Staffing Updates:

Please join us in welcoming Jay Moore, a recent graduate of (and football player at) Fordham University with a major in Economics. Jay lives in Pittsburgh, and will be working remotely.

Also, we’re pleased to announce that Jake Pelloni, Jordan Simko, and Kimberly Snyder have passed professional exams for our Association, called ASPPA. Please join me in congratulating them!


Upcoming Deadlines over the next few Months:

  • January 31, 2024

IRS Form 1099-R

Deadline to distribute the Form 1099-R to participants who received a withdrawal from the Plan in 2023.

  • February 28, 2024

IRS Form 1099-R Copy A

Deadline to submit the 2023 Form 1099-R Copy A to the IRS. This deadline is applicable only for paper filings. If you are submitting the filings electronically, the due date is April 1, 2024.

  • March 15, 2024

Correcting ADP/ACP Discrimination Testing Failures

Deadline for distributing contributions and earnings to participants to correct failures of the ADP/ACP Discrimination Testing for calendar year plans and avoiding possible 10% excise taxes. Note, that this deadline is extended to June 30, 2024, for plans with a particular type of (“EACA”) automatic enrollment provision.

Employer Contributions

Deadline for contributing employer contributions for amounts to be deducted on 2023                 S-Corporation and partnership tax returns with a fiscal year ending December 31, 2023 (without extension).

  • April 1, 2024

Required Minimum Distributions

Latest deadline for distributing a Required Minimum Distribution (RMD) for affected participants who turned 73 in 2023. This 4/1 deadline is available for the first year of RMD’s only.

(Thanks to Rodger Crawford for preparing this item.)


That’s all for now. Thanks for reading this far. Let me know what you think about these or any other retirement Plan issues.


David M. Lipkin, MSPA

[email protected]