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2020 Retirement Regulation Update

March 5, 2020

2019 was a year of major developments in the US retirement industry. The signing of the SECURE Act at the end of December and state sponsored retirement programs such as CalSavers in California enacted significant changes to qualified retirement plans, as well as how individuals can save for retirement. Below, we will focus on the provisions in those pieces of legislation that most affect you as adopters of The Contractors Plan. Please note, we are awaiting additional guidance on some of the provisions before they can be applied.


The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law on December 20, 2019 as part of the Further Consolidated Appropriations Act. Most of the provisions in the act are effective in 2020 and require amendments to your plan. The act is over 300 pages in length, so we’ll try to narrow it down to the areas that we feel are the most important and impactful.

  • Notices have been eliminated for safe harbor nonelective plans. If you are using a nonelective contribution to satisfy the ADP safe harbor, you are no longer required to send safe harbor notices to your employees. However, if you have a safe harbor match provision, annual notices are still required.
  • Mid-Year adoption of safe harbor status. You may now amend your plan to adopt a safe harbor feature using a 3% nonelective contribution anytime up to 30 days before your plan’s year end. Alternatively, if you do not elect to adopt the safe harbor feature for your plan until 30 days before your plan year end, you may still adopt the safe harbor feature with a 4% nonelective contribution.
  • Adopting a qualified plan after the end of the year. You may now adopt a qualified retirement plan up until your corporate tax return is due, including extensions. However, if you want to have a deferral option in your plan, it must be adopted prior to year-end.
  • Required Minimum Distribution (RMD) age. The age which participants are required to take a required minimum distribution from a qualified retirement plan or IRA has been raised from 70 ½ to 72.This will be effective for distributions required after 2019 for those employees turning 70 ½ after 12/31/2019. If their birthday is after 7/1/1949, they are not required take an RMD until 4/1/2022 – April of the year after you turn 72.
  • Small plan tax credit. If you are eligible to set up a SIMPLE plan, generally <100 employees, you could receive a tax credit when establishing a qualified plan such as a Profit Sharing or 401(k) plan. You could receive a credit for the startup and annual fees that total $500 – $5,000 for the first three years of the plan. See your tax accountant to determine if you are eligible for this credit.
  • Withdrawals after a birth or adoption. This optional amendment allows for up to $5,000 to be withdrawn without the standard 10% penalty up to 1 year following a birth or finalized adoption. There is also a provision to repay the distribution, though additional guidance from the IRS is required relative to the details of this repayment option.
  • Form 5500 late filing penalty increase. The penalty for filing a late Form 5500 has been increased from $25/day with a $15,000 maximum to $250/day, with a $150,000 maximum. Note the DOL penalty for a late Form 5500 filing has remained the same at $1,100/day with no maximum penalty. Message? File your Form 5500 on time!
  • In-service distribution age for Money Purchase Pension Plans. If you have a Money Purchase Pension Plan, you have the option to amend your plan to allow for in-service distributions at age 59 ½ instead of age 62.

State Sponsored Mandatory Retirement Plans

Several states have passed legislation which encourages or mandates small businesses to either have an employer sponsored retirement plan or enroll their employees in a state run program. Many of these programs are still being developed. However, the common theme is that an employer can be exempt from the state sponsored programs if they offer a qualified retirement plan. The Contractors Plan meets these criteria.

CalSavers (CA), Illinois Secure Choice (IL), and OregonSaves (OR) have all enacted mandatory employee savings plans that employers must utilize unless they offer a qualified employer sponsored retirement plan.

Programs in Connecticut, Maryland, and New Jersey are still working on the specifics of their mandates and may be ready later in 2020 or 2021. Massachusetts’ program is for non-profit entities only. Vermont’s Green Mountain Secure Retirement Plan will be a MEP (multiple employer plan) and Washington state offers the Retirement Workplace of which participation is voluntary.

If you have questions about whether your state has passed or is thinking of passing similar legislation, please refer to your state’s treasury website.

Administration Proposes Trillion Dollar Infrastructure Budget

February 14, 2020

Earlier this week, the Fiscal Year 2021 proposed budget submitted to Congress by the White House requests $1 trillion over 10-years in Direct Federal Investments to support the rebuilding and modernizing of the nation’s infrastructure. The proposal includes two major components that combined would focus on roads, bridges, improvements to existing rail and bus systems, and providing high-speed internet to rural areas.

The principal component is a request for $810 billion to support a 10-year reauthorization of surface transportation programs. Within this amount is $602 billion for highway infrastructure, $155 billion for transit infrastructure, $20 billion for traffic and motor carrier safety, $17 billion for rail infrastructure, $16 billion for Transportation Infrastructure Finance and Innovation Act (TIFIA) loans and Better Utilizing Investments to Leverage Development (BUILD) grants, and about $1 billion for pipeline and hazardous materials safety.

The second component requests $190 billion for a wide range of infrastructure sectors that include broadband and water. More specifically it proposes $60 Billion for a new Building Infrastructure Great grants program, $50 billion for a new Moving America’s Freight Safely and Efficiently program, $35 billion for a Bridge Rebuilding program,  $25 billion for a new Revitalizing Rural America program, and $20 billion for a Transit State of Good Repair Sprint program.

The budget request also includes $6.5 billion for a Public Lands Infrastructure Fund to address the deferred maintenance backlog in national parks, forests, wildlife refuges, and other public lands, along with the Bureau of Indian Education schools.

Similar to the recently proposed House Democratic infrastructure plan, the Administration’s request would also require approval by the House, Senate, and White House. However, it serves as another indicator of the importance of addressing infrastructure.

December 2019 and Full-Year Construction Spending

February 5, 2020

The U.S. Census Bureau announced construction spending for December 2019 was at a seasonally adjusted annual rate of $1,328 billion, 0.2 percent below the estimate of $1,330 billion in November. Compared to the same period last year, construction spending in December was up 5.0 percent. The overall value of construction in 2019 was $1,303 billion, not seasonally adjusted which is 0.3 percent below the $1,307 billion in 2018.

While private construction spending in December was $ 991 billion, 0.1 percent below the revised November estimate of $ 992 billion; public construction spending was $ 336 billion, 0.4 percent below last month’s estimate of $ 338 billion. One of the main contributors to public spending was Highway construction which was $99 billion, up 3.1 percent from November’s $97 billion. Also, Highway construction in December 2019 was up 14.1 percent from the same period in 2018.

Compared to the previous year, the value of public construction in 2019 was $329 billion, up 7.1 percent from $307 billion in 2018. Educational construction in 2019 was $79 billion, up 3.4 percent from $76 billion and highway construction was $99 billion, up 8.8 percent from $91 billion in 2018.

More information may be found at:

House Democratic Infrastructure Proposal

February 3, 2020

Late January, House Democrats released their proposal for a $760 billion five-year infrastructure plan to rebuild roads, bridges, transit systems, railways, airports, ports, inland waterways, wastewater and drinking water systems, brownfields, and broadband. The Democratic proposal addresses the nation’s aging infrastructure and commits to long-term sustainable funding, improving the economy, enhancing public safety, and addressing environmental concerns.

Some key features include:

  • Transit and Highway spending of $434 billion
  • Rail transportation spending of $55 billion
  • Airport spending of $30 billion
  • Harbor Maintenance Trust Fund spending of $19.7 billion
  • Water Resource spending of $10 billion
  • Clean Water spending of $50.5 billion
  • Brownfield Restoration and Reinvestment spending of $2.7 billion
  • Clean Drinking Water and Clean Energy spending of $59.7 billion
  • Broadband and Communication spending of $98 billion

The proposal also applies the Davis-Bacon Act and other worker protections. The House Democratic infrastructure proposal would require approval by both the House and Senate and the President’s signature. However, it does serve as a starting point for negotiations which could lead to something eventually getting adopted. This is a link to the proposal;

WHD To Host 2020 Prevailing Wage Seminars

January 22, 2020

The U.S. Department of Labor’s Wage and Hour Division (WHD) released the dates of their upcoming prevailing wage seminars for 2020. These three-day compliance training workshops are designed for regional stakeholders such as private contractors, unions, state agencies, federal agencies, and workers.

WHD 2020 seminars will be held in the following locations:

  • Guam, March, 2020
  • Hawaii, March, 2020
  • Salt Lake City, UT, May, 2020
  • Detroit, MI, June, 2020
  • Charleston, SC, July, 2020
  • Philadelphia, PA, August, 2020

During the seminars conference participants, will cover the following topics: The Davis-Bacon Act and McNamara O’Hara Service Contract Act; Executive Order 13658 “Establishing a Minimum Wage for Contractors”; the process of obtaining wage determinations and adding classifications; the process for appealing wage rates, coverage, and compliance determinations; and compliance assistance and enforcement processes.

For more information go to:

Data Privacy And Security Must Be Key Components In Selecting A Business Partner That Will Handle Your Most Sensitive Information.

December 13, 2019

Why You Need A Partner Who Is Service Organization Control (SOC) 2 Certified.

The Digital and Information Age requires your Benefit Administrator have the proper security resources and technologies to protect your data and keep your personal information secure. The Contractors Plan, provided by Fringe Benefit Group, is one of the few Third Party Administrators in our industry who has made the significant investments necessary to earn the esteemed Service Organization Control (SOC) 2 security certification. 

Plain And Simple, SOC 2 Credentials Matter.

The SOC 2 standard is a measure of trust and accountability in a business’s data handling practices. You, no doubt, have seen news articles about businesses who failed to properly manage and protect their customers’ data.  Data privacy and security must be key components in selecting a business partner that will handle your most sensitive information.

These are the four main areas that the SOC 2 certification covers:

  1. Monitoring – A SOC 2-certified business is be able to fully monitor system access and usage, along with associated network matters such as user access privileges and has the best possible systems in place to monitor and guard against unauthorized access. This includes unauthorized access from human hackers or by software attacks.
  2. Alerting – Businesses are constantly under attack from global threats. The SOC 2 requires robust alert systems to notify organizations when possible threats or attacks might be occurring.  Just a few areas that The Contractors Plan monitors 24 x 7 include unauthorized file transfers, account access, or changes to data.
  3. Auditing – To be SOC 2-certified, organizations must have auditing systems capable of producing detailed logs of system access, changes, and alerts. The Contractors Plan maintains audit trails covering modification of system components, data changes, and the source of incoming connections.
  4. Forensics – Quickly responding to threats, identifying their source, and understanding the scope of the attack are all critical in stopping attacks. Having best of class forensics systems in place enables the Contractors Plan to offer assurance that any attacks will be dealt with via best security practices, with an eye towards minimizing any harm done.

NY City Council Passes Prevailing Wage Bill For Building Service Workers

December 2, 2019

Recently the NY City Council passed a bill to extend the existing building service prevailing wage law to include new affordable housing. The bill requires that future affordable-housing developments and preservation projects with 120 units or more pay building-services workers a living wage. 

Based on the principle that if developers receive financial assistance to build affordable housing units, building service workers should also receive a prevailing wage that includes affordable housing benefits. The law would require future developments that get more than $1 million in aid from the city for construction or preserving rent-stabilized low-income units to pay the prevailing wage to building-service workers.

Building-service workers will now be guaranteed that as the city builds and preserves 300,000 affordable housing units in low-income communities, that the workers in those buildings would be able to afford similar housing. 

Opponents of the bill believe it will add billions to the cost of developing affordable housing, money that the City Council does not include.

NPRM for Fluctuating Workweek Method of Computing Overtime

November 26, 2019

Recently, U.S. the Department of Labor (DOL) announced a Notice of Proposed Rule Making (NPRM), which would allow employers subject to the Fair Labor Standards Act (FLSA) overtime requirement to offer incentive-based pay and other bonuses to employees whose hours vary from week-to-week. The NPRM seeks to provide clarity to ensure the salary and payments are compatible with the use of the fluctuating workweek method under the FLSA.

The FLSA requires time-and-one-half the regular rate of pay for any hours above 40 that an employee works in a week unless the employee is “exempt.” For some employees, however, there is the alternative “fluctuating workweek method” under the FLSA,  in which employers have another method of calculating overtime when employee work hours fluctuate.

The NPRM lays out the plan to revise the existing regulations implementing the FLSA fluctuating workweek regulation (29 CFR 778.114) to explain the circumstances under which employers may use an alternate method. Changes will include explicitly stating requirements, adding examples, improving readability, and changing the title of the regulation to reflect the purpose of the subsection better.

The public has 30 days to review the NPRM (RIN Number: 1235-AA31) and is encouraged to submit comments on the proposed rule.

OFCCP To Begin VEVRAA-Focused Reviews

November 18, 2019

The Office of Federal Contract Compliance Programs (OFCCP) released its initial scheduling list for reviews focused solely on compliance with the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). The VEVRAA-focused reviews are meant to ensure that federal contractors and subcontractors comply with their affirmative action and nondiscrimination obligations, assuring equal employment opportunities for veterans.

Under VEVRAA, employers doing business with the federal government are required to take affirmative action to recruit, hire, and promote categories of veterans covered by the law, including disabled veterans and recently separated veterans. Additionally, it is unlawful for federal contractors and subcontractors to discriminate against protected veterans when making employment decisions about hiring or firing, pay, benefits, job assignments, promotions, layoffs, training, and other employment-related activities.

The OFCCP is expected to conduct 500 reviews that will include a comprehensive review of employment practices and a contractor’s policies as they relate specifically to VEVRAA. Contractors can check-out the Corporate Scheduling Announcement List in the OFCCP’s FOIA Library,, to find out if OFCCP has scheduled them for a VEVRAA-focused review.

Understanding The Service Contract Act of 1965

November 11, 2019

The Service Contract Act of 1965 (SCA) requires that government contractors pay most non-professional service employees designated minimum wage rates and fringe benefits. These regulations are complex and often poorly understood by federal contractors, government contracting officers and auditors, particularly with respect to the SCA’s fringe benefits requirements. This is especially challenging for smaller contractors who may not have the resources to address such complexities. As a result, federal service contractors often face government allegations of SCA non-compliance.

Potential penalties for SCA errors are severe, including default termination and debarment. Extensive fines are on record and the potential loss of contracting access are common. In addition, a contractor’s failure to correctly understand the Service Contract Act when preparing bid pricing may result in a reduction to anticipated profits on the resulting government contract.

The Contractors Plan has created administrative processes and compliance solutions to address these risks for over 30 years. In addition to our expertise, The Contractors Plan has been committed to helping employers identify and implement solutions that are Affordable Care Act compliant, eliminating additional compliance risks as result of federal health regulations.

We encourage you to review our solutions and utilize our Savings Calculator so you can thoroughly understand the options available to you. We are here to be an expert resource and partner with you in minimizing your administration efforts and compliance risks.