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Projected 2020 Retirement Plan Limits
"These estimates are determined using the Code's cost-of-living adjustment and rounding methods, the Consumer Price Index for All Urban Consumers (CPI-U) through May, and estimated CPI-U values for June-September.... [F]igures can't be finalized until ... October." (Mercer)
Find, Fix and Avoid Plan Loan Mistakes: Some Basics
"Plan sponsors who choose to include a loan feature in their retirement plan must take care to ensure their loan program is operated in compliance with the tax rules and the plan's loan policies to avoid unintended consequences for loan recipients and the plan.... [H]ere's an overview of the basic rules for plan loans and some best practices for finding, fixing and avoiding plan loan mistakes." (Newport Group)
[Guidance Overview] Military Retired Pay and Benefits Considerations in Divorce Proceedings
"[While a state] court may divide a service member's pension during a divorce action within the property division, whether by stipulation or contested trial, it must have jurisdiction over the service member and it must make specific findings and awards. This may become a significant problem when practitioners do not fully understand applicable federal law and those fact patterns governed by the FSPA." (James Carson Whedbee Bock, via Lexology)
SECURE Act Changes That Affect Your 401(k)
"Part-time employees must be eligible to contribute.... Distribution rules modified and new withdrawal event created.... New flexibility for non-elective safe harbor plans.... Increased maximum contribution for auto escalation safe harbor plans.... New disclosure of projected retirement income.... Annuity safe harbor for fiduciaries.... Open Multiple Employer Plan (MEP) option." (401kTV)
DOL Rule to Expand Multiple-Employer DC Plans Advances Amid Legal Issues
"[DOL] regulations making it easier to form defined contribution multiple-employer plans (MEPs) are under review by Office of Management and Budget's Office of Information and Regulatory Affairs.... [T]he 2018 proposed MEP rules largely track provisions in the final DOL rules for association health plans (AHPs). A federal district court struck down key portions of the AHP rules earlier this year[.]" (Mercer)
[Guidance Overview] Plan Sponsors of Cash Balance, PEP Plans and Certain Merged Retirement Plans Can Apply for an IRS Determination Letter, Starting September 1, 2019
"If the application is filed and the IRS identifies a document failure in a hybrid plan not related to the hybrid plan regulations, or if it identifies plan document failures in merged plans not related to the plan merger, the IRS will then impose a special sanction equal to the applicable [VCP] user fee that would have applied had the plan sponsor identified the failure and submitted the plan for consideration under the VCP, if either of [two] conditions apply[.]" (DLA Piper)
FASB Changes for Employee Benefit Plans with Master Trust Investments
"FASB issued Accounting Standards Update 2017-06 to provide additional guidance on disclosure of an employee benefit plan's interest in a master trust. The changes are aimed particularly at defined contribution plans, which generally have divided interests (rather than percentage interests) in master trusts. The guidance is effective for fiscal years beginning after December 15, 2018, and applies retrospectively to each period for which financial statements are presented." (McDermott Will & Emery)
Panel Discussion: Current Issues in Employee Benefits & Executive Compensation
"What EBEC issue has had the greatest impact on your clients in the past 12 months? ... What is the most interesting EBEC matter on your desk right now and what are the issues involved? ... Are there any EBEC issues that are on the horizon that could significantly impact your clients and/or your practice? Can you describe the potential impact?" (Thomson Reuters Practical Law)
IRS 2018-2019 Priority Guidance Plan, Third Quarter Update (PDF)
37 pages. Updated March 31, 2019; released June 17, 2019. Employee benefits items begin on page 14. (Internal Revenue Service [IRS])
Checklist: Preparing Your Employee Benefit Plan for a DOL Audit
"Whether you have a small plan that does not need an audit or a large plan and you are preparing for your first audit, the following control processes may help avoid common compliance errors and make the audit process easier to manage[.]" (Windes)
Actuarial Equivalence and DB Plans
"Philosophically, reflecting current mortality and interest in AE is a reasonable thing to do.... Litigating the issue from one side leaves sponsors trapped unfairly between a desire to bring their assumptions up to date, and anticutback regulations restricting their ability to do so.... Safe harbor regulations allowing for periodic AE updates without anticutback concerns would illuminate this admittedly obscure topic to the benefit of sponsors and participants alike." (The Principal Blog)
[Guidance Overview] Plan Problems: What's New With Self Correction and VCP?
"There are a few expanded opportunities provided under SCP and some clarification that certain activity will require correction through a VCP process.... The IRS has also issued clarification on some other items which, when corrected, should go through a VCP. The IRS has made accessing guidance on common failures, along with how to correct those failures very simple to find on their website. [This article] details some of the highlights on SCP, VCP, and where to locate the support you need." (WithumSmith+Brown, PC)
District Court Finds Plan Trustees May Be 'Surcharged' to Remedy Breach That Caused Loss of Benefits Under Unrelated Plan
"The court considered and rejected the Welfare Fund's arguments that [the plaintiff] is not entitled to equitable relief. First, it found that surcharge does not require traceability. The court explained that the Welfare Fund confused restitution with surcharge which does not require unjust enrichment nor the loss of particular plan funds. Amara extended the surcharge remedy to a breach of trust committed by a fiduciary encompassing any violation of a fiduciary duty." [DeRogatis v. Bd. of Trustees of the Welfare Fund of the Int'l Union of Operating Engineers Local 15, 15A, 15C & 15D, AFL-CIO, No. 14-8863 (S.D.N.Y. June 13, 2019)] (Kantor & Kantor)
Understanding Settlor Functions, Plan Expenses, and Who Can Pay What
"While much of the guidance is informal, the DOL has provided plenty of instruction to plan fiduciaries to help them determine what fees may be paid by the plan and what fees must be paid by the plan sponsor." (Ferenczy Benefits Law Center)
Supreme Court Fills Docket with ERISA Cases
"After more than two years since ... its last decision in a case involving [ERISA], the court's next term looks to be flush with ERISA issues.... The Supreme Court has granted certiorari in two ERISA cases in as many weeks, and it seems likely the court may grant review in at least one other case." (Greensfelder)
Financial Reporting for Tribal 401(k) Plans
"GASB No. 84 doesn't apply to a tribe's separately issued enterprise-fund financial statements if the enterprise funds aren't legally separate. However, a 401k plan may still be included in a tribal government's statements ... To determine if a legally separate casino sponsors its own 401k plan, consider if the casino can amend the vesting schedules in the plan document, appoint trustees, select the custodian, choose the third-party administrator (TPA), and appoint other service providers of the 401k plan. If so, the 401k plan will likely be included as a fiduciary activity." (Moss Adams LLP)
Industry Definitions: Security Breach and Cyber Fraud (PDF)
"These definitions are not intended to supersede state and/ or federal laws, legislation, or regulation, but are meant to establish a base of communication between record keepers and plan sponsors regarding Security Breaches and Cyber Fraud events. Using these terms, clients can more accurately assess a recordkeeper's cybersecurity incident practices and controls, and use these definitions to obtain mutually agreed upon contractual protections with a recordkeeper should such an event occur." (SPARK Institute)
What Employers Should Know When Their 401(k) or 403(b) Provider Broadens Services and Revenue Streams (PDF)
"Facing fierce competition and pressure on fees ... providers have largely focused on plan sponsors' interest in financial wellbeing ... offering the solutions or products to meet those demands.... Many, but not all, of these programs create additional revenue for providers either directly or indirectly.... [P]lan sponsors should ... engage in a prudent process that is documented to understand the fee structure, participant approach and determine if the ir provider's solution is in the best of interest of their workforce." (Gallagher)
Ninth Circuit Rules ERISA Pension Plan Must Pay Survivor Benefits to Registered Domestic Partner
"[The] plan document specifically incorporated California law, which has long required that registered domestic partners be given the same rights, protections, and benefits under law as are granted to spouses. The terms 'spouse' and 'married' were not defined in the plan document.... The Court of Appeals held that the plan's incorporation of California law meant the term 'spouse' must include a domestic partner, and that neither ERISA nor the Code provided binding guidance that was inconsistent with that interpretation." [Reed v. KRON/IBEW Local 45 Pension Plan, No. 17-17176 (9th Cir. May 16, 2019; unpub.)] (Hanson Bridgett LLP)
Appellate Court Affirms Award of 401(k) Plan Benefits Under QDRO Issued After Participant's Death
"A federal appellate court has upheld a trial court's determination that a deceased plan participant's former spouse is entitled to part of the participant's 401(k) plan benefit, even though the participant had remarried and the [QDRO] assigning benefits to the former spouse was issued after the participant's death." [Miletello v. RMR Mechanical, Inc., No. 18-30942 (5th Cir. Apr. 16, 2019)] (Thomson Reuters / EBIA)
[Official Guidance] Text of IRS Notice 2019-40: Weighted Average Interest Rates, Yield Curves, and Segment Rates for June 2019 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)." (Internal Revenue Service [IRS])
[Official Guidance] Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, July and Third Quarter 2019
"The July 2019 lump sum interest assumptions will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for June 2019, these assumptions represent a decrease of 0.25 percent in the immediate rate and are otherwise unchanged...The third quarter 2019 interest assumptions will be 2.92 percent for the first 25 years following the valuation date and 3.07 percent thereafter. In comparison with the interest assumptions in effect for the second quarter of 2019, these interest assumptions represent an increase of five years in the select period, a decrease of 0.15 percent in the select rate, and an increase of 0.02 percent in the ultimate rate." (Pension Benefit Guaranty Corporation [PBGC])
Proposed Regs Address Foreign Pension Exception to FIRPTA
"The proposed regulations address section 897(l), which provides that a qualified pension fund (or a qualified controlled entity) is not treated as a nonresident alien individual or foreign corporation for purposes of FIRPTA. Under the proposed regulations, a qualified pension fund that has a gain or loss from the disposition of [U.S. real property interests] would be exempt from taxation." (RSM US)
401(k) Participants' Investing Behavior May Leave Them Short
"[A]lthough 401(k) participants believe they need $1.7 million, on average, to retire, many are not investing enough to reach that goal. The nationwide survey of 1,000 401(k) plan participants also reveals the outsized role of the 401(k) in Americans' financial lives, with most (58%) saying it is their only or largest source of retirement savings. Moreover, two-thirds (65%) of those surveyed say participating in a 401(k) plan was their first experience with investing -- yet when it comes to using a 401(k), 64 percent view themselves as savers rather than investors." (Charles Schwab)
District Court Finds No Abuse of Discretion in Plan's Refusal to Change Retiree's Lump-Sum Election
"A pension plan administrator did not abuse its discretion when it denied a retiree's request to change her mind for the second time as to whether she would prefer to continue to receive a monthly, single-life annuity payment or make a one-time election to receive a lump-sum payment ... The window for revoking the retiree's decision regarding the lump-sum election, set forth in the terms of the plan and communicated in writing to the retiree, had closed." [Mitchell v. Lucent Technologies Pension Plan, No. 17-8097 (N.D. Ill. March 7, 2019). (Wolters Kluwer; free registration required)
Ninth Circuit Rules That Domestic Partner Under California State Law Had Spousal Rights Under an ERISA Plan
"In a very short written opinion, the Ninth Circuit found that neither ERISA nor the Internal Revenue Code contained a binding interpretation of 'spouse' after the Supreme Court found the Defense of Marriage Act (DOMA) to be unconstitutional.... [T]he Court found that because California law gave registered domestic partners the same rights as spouses and that was not inconsistent with ERISA or the Internal Revenue Code (again ignoring DOMA), the plan administrator should have interpreted the term 'spouse' to include registered domestic partners." [Reed v. KRON/IBEW Local 45 Pension Plan, No. 17-17176 (9th Cir. May 16, 2019; unpub.)] (Seyfarth Shaw LLP)
More Pension Lump Sum Cashout De-risking Activity Expected in 2019
"Pension plan sponsors looking for significant cash savings and de-risking opportunities have another favorable environment to pull the participants' lump sum cashout lever this year.... Employers that have previously offered a lump sum cashout to participants should be aware that this doesn't exclude them from pursuing a de-risking program again.... [P]lan sponsors will also want to consider ... [1] Potential increases to contribution requirements; [2] One-time accounting charges that could be triggered; [3] Potential increase to annuity purchase pricing upon plan termination." (Findley)
EBSA Provides Revised Model Summary Annual Report Forms
"These revised versions made minor changes to prior model SAR language; for example, the address where plan participants can request a full copy of a Form 5500 has changed." (CBIZ)
Congress Looks to Overhaul Retirement System for First Time in More Than a Decade
"Through some version or another, this legislation has been proposed for nearly five years. This is the farthest it has gone ... The real centerpiece is the multiple-employer defined-contribution plans expansion. Time will tell whether this will drastically increase the number of small employers offering 401(k) plans or whether the ones that do today obtain real savings through economies of scale." (Lockton)
Employers Now Face Penalties for Failure to Comply with OregonSaves
"The new law gives Oregon's Bureau of Labor and Industries authority to investigate and penalize noncompliant employers.... Employees can report noncompliant employers to the bureau -- although complaints can't be made earlier than two years after the employer's applicable registration deadline.... Employers found to be noncompliant face civil penalties of up to $100 per affected employee, capped at $5,000 total per calendar year." (Mercer)
IRS Proposed Regs Clarify Tax Withholding for Pensions
"The proposed rules [issued on May 31, 2019 would clarify various aspects of IRS Notice 87-7]: [1] Withholding is required when the recipient's residence address is outside the US even if the payment is sent to a financial institution or other individual located in the US. [2] Withholding is required when the recipient's residence address is in the US if the distribution is sent to a financial institution or other individual outside the US. [3] Military and diplomatic addresses are treated as within the US, so recipients at these addresses may elect no withholding." (Mercer)
[Official Guidance] Text of IRS Proposed Regs: Application of Amended Section 897 to Foreign Pension Funds Holding U.S. Real Property
25 pages. "This document contains proposed regulations regarding the exception from taxation with respect to gain or loss of a qualified foreign pension fund attributable to certain interests in United States real property. The proposed regulations also include rules for certifying that a qualified foreign pension fund is not subject to withholding on certain dispositions of, and distributions with respect to, certain interests in United States real property. The proposed regulations affect certain holders of certain interests in United States real property and withholding agents that are required to withhold tax on certain dispositions of, and distributions with respect to, such property." (Internal Revenue Service [IRS])
IRS Updates Error Correction Guidelines for EPCRS
"[C]orrective methods are detailed in the tables [in this article].... [In Rev. Proc. 2019-19 on April 19, 2019, the IRS] issued additional correction methods which may reduce the cost of correction for elective deferral errors that are discovered and corrected quickly. The automatic enrollment correction is a subset of the traditional deferral election failure and if all standards ... are not met, the correction defaults to the traditional deferral election method." (Clark Schaefer Hackett)
[Official Guidance] DOL Updates Model SAR for Pension Plans, Model Notice of Waiver of Financial Statement Audit
These model notices were updated on May 30, 2019: (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
PBGC to Require More Detail in Reportable Events Filings, Introduce New Coverage Determination Form
"[PBGC] will be changing its reportable events filings to include controlled-group information, company financial statements, and defined benefit (DB) plans' actuarial valuation reports, adding more detail to five plan or employer events already reportable to the agency that rescues failed pensions." (HR Daily Advisor)
District Court Looks to Where Benefit Plan Was Signed and Negotiated in Deciding to Transfer ERISA Class Action from Washington State to Georgia
"The court found that the plaintiff's choice of forum was of minimal importance because it was a putative class action. Interestingly, the court seemed to give considerable weight to the fact that the plan was negotiated and executed in Georgia, finding this was a 'considerable technical connection' to that forum. The court also found that litigation and travel costs would be reduced by having the case in Georgia rather than Washington." [Mayfield v. ACE American Ins. Co., 18-1695 (W.D. Wash. May 13, 2019)] (Baker & Hostetler, via Lexology; free registration required)
EBSA Missing Participant Investigations Triggered by Social Security Notice of Possible Plan Benefits
"[T]he increased interest in retirees over the age of 70-1/2 began in the Philadelphia regional office because Social Security advised new recipients of entitlement to possible benefits from long-forgotten retirement plans.... More than half a billion dollars of unpaid retirement benefits were discovered in only six defined benefit plans.... Recent efforts by the EBSA have resulted in the opening of investigations against trustees, plan administrators and Third Party Administrators.... The initiative which began on the east coast with the Philadelphia office has now migrated to west coast offices." (Jackson Lewis P.C.)
[Guidance Overview] IRS Expands Determination Letter Program for Certain Hybrid and Merged Plans
"[S]tatutory hybrid plans -- defined benefits plans (such as cash balance or pension equity plans) that typically express a participant's accumulated benefit as the current balance of a hypothetical account maintained for the participant or the current value of an accumulated percentage of the participant's final average compensation -- are permitted to submit an application for a determination letter during the 12-month period beginning September 1, 2019 and ending August 31, 2020.... IRS also will begin accepting determination letter applications from merged plans beginning September 1, 2019. Submissions from merged plans will be accepted on an ongoing basis during an eligibility window based on the date of the merger." (Slevin & Hart, P.C.)
Deal-Breaking M&A Issues Related to Employee Benefit Plans and Executive Compensation
"The list [in this article] is intended to facilitate the detection, negotiation, and resolution of possible employee benefit plan and executive compensation-related problems.... [S]ellers may defuse risks and streamline negotiations through proactive pre-sale planning.... [B]uyers may maximize their deal-related protections (and their post-closing alternatives) by assuring early stage attention to [these items]." (The Wagner Law Group)
SECURE Act: Key Changes for Plan Sponsors and Employers
"[1] Expansion of part-time employee eligibility ... [2] Changes to section 401(k) safe harbor plans ... [3] Addition of 'qualified birth or adoption distributions' ... [4] Prohibition on using credit card arrangements for plan loans ... [5] New lifetime income disclosure requirement ... [6] New portability for lifetime income investment options ... [7] Nondiscrimination testing relief for closed defined benefit plans ... [8] Changes to minimum required distributions ... [9] New statutory safe harbor for annuity provider selection." (Proskauer Rose LLP)
A Mistake With Lingering Regret: Cashing Out Your 401(k)
"Each year, 5.9 million American women enrolled in 401(k) plans will change jobs. 2.4 million, or 41%, will cash out completely.... [W]omen ages 25-34 will change jobs every 2.7 years, and for women with 401(k) balances less than $5,000, cash out rates soar to 71%.... [A] typical 25-year old woman could change jobs three times prior to age 34 and cash out two of her first three 401(k) balances. At 34, she would preserve only $5,100 in retirement savings, which will yield just $13,900 in savings by age 67.... [H]ad she avoided cashing out, she would have $83,700 at retirement." (Women's Institute for a Secure Retirement [WISER])
[Opinion] Letter from Employer Organizations to EBSA Re Electronic Delivery of Retirement Plan Information (PDF)
"Electronic delivery empowers retirement plan participants by providing them constant and real-time access to information about their retirement benefits and other online tools that can assist with retirement planning. Retirement savers could more easily retain copies of benefit statements, search for relevant information, and link to relevant information and options, such as increasing their retirement contributions." (American Bankers Association, American Council of Life Insurers [ACLI], American Retirement Association [ARA], ERISA Industry Committee [ERIC], Investment Company Institute [ICI], Securities Industry and Financial Markets Association [SIFMA], SPARK Institute, and U.S. Chamber of Commerce)
Inspector General of the PBGC: Semiannual Report to Congress (PDF)
Covers Oct. 1, 2018–Mar. 31, 2019; 49 pages. "The Corporation continues to demonstrate overall improvements in internal control, as evidenced by the results of the FY 2018 Financial Statement Audit and the relatively low number of open, or unimplemented, OIG recommendations. There were 75 open audit recommendations at the end of this reporting period. This number previously had been as high as 209 and averaged over 170 for the period FY 2011 to FY 2015." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
Inspector General of the DOL: Semiannual Report to the Congress (PDF)
Covers Oct. 1, 2018–Mar. 31, 2019; 102 pages. "EBSA did not conduct effective oversight of the TSP for three reasons ... [1] EBSA lacked an ongoing process for assessing changes in risks to the TSP over time ... [A] robust method for prioritizing audits would ensure limited resources are used most effectively.... [2] EBSA 's oversight was not transparent.... EBSA did not post its audit reports and recommendations to a public forum, such as its website ... [3] EBSA lacked sufficient legal authority to require the Federal Retirement Thrift Investment Board to act on its recommendations." (Office of Inspector General, U.S. Department of Labor [DOL])
[Official Guidance] Text of IRS Proposed Regs: Withholding on Certain Distributions under Section 3405(a) and (b)
15 pages. "[S]takeholders have requested clarification regarding the application of Notice 87-7 and section 3405(e)(13)(A) in the following situations: [1] The payee provides the payor with an Army Post Office (APO), Fleet Post Office (FPO), or Diplomatic Post Office (DPO) address. [2] The payee provides the payor with a residence address located within the United States but provides payment instructions that request delivery of the designated distribution to a financial institution or other person located outside of the United States. The proposed regulation includes rules that would address these situations[.]" (Internal Revenue Service [IRS])
[Guidance Overview] IRS Regs Address Withholding on Retirement Payments Made Outside the U.S.
"[T]hese regulations address required withholding for payments made to destinations outside the United States, or made to a U.S. financial institution by a person with no U.S. address.... The proposed regulations are not intended to replace rules that apply to an eligible rollover distribution (ERD) from an employer-sponsored retirement plan... Also, these regulations do not alter the general rule that withholding may be waived for employer plan payments that are not ERDs[.]" (Ascensus)
Can Employees Release ERISA Fiduciary Breach Claims?
"[A] federal district court ... determined that a general release that stated 'by signing this document you are releasing all known claims' without mentioning ERISA prevented a participant from suing an ESOP trustee for fiduciary breach. The decision contains a good discussion of the factors to be reviewed in determining whether such a release is valid and enforceable." [Innis v. Bankers Trust Co. of South Dakota, No. 16-650, (S.D. Ia. Apr. 30, 2019)] (Cohen & Buckmann, P.C.)
RESA and SECURE Act's 'Non-MEP' Fintech Alternative May Have Greater Impact Than MEP Provisions
"These rules are based upon old DOL regulations called 'Group Insurance Arrangements' (or GIAs) for welfare plans ... which permit unrelated employers on the same insurance platform to file a single Form 5500. Under the proposed statutory language, retirement plans participating in a group arrangement could rely upon a single annual report filed by the common Plan Administrator, subject to requirements similar to that required of the GIA ... [T]his arrangement will be more welcome in the TPA community than a MEP." (Business of Benefits)
Highlights from the Lex Machina 2016-2018 ERISA Litigation Report
"From 2010 to 2018, ERISA case filings declined from nearly 9,000 cases to about 6,600 cases. Delinquent Contribution case filings have seen a significant decline from nearly 4,400 cases in 2010 to over 1,900 cases in 2018.... The Northern District of Illinois has the most case filings by nearly 650 cases ... Judges in the District of South Carolina are the top four most active ERISA judges from 2016 through 2018.... In ERISA cases overall, 74% resolved with a likely settlement.... Over the three-year period from 2016 to 2018, courts awarded over $1 billion in Approved Class Action Settlement damages." (Lex Machina; free registration required to view full report)
Feeling Defeated in the Battle of Participant Loans? Here's a Fix for That
"[T]he goal for plan corrections is to put the plan and its participants back in the position they would have been in had the error not occurred.... [M]ost plan sponsors prefer to preserve the loan for the benefit of the participant.... That means we've got a two-fold correction to work through. First, bringing the plan document back into compliance and second, getting the participant loan in good-standing. Luckily, the IRS provides specific guidance on stepping through these corrections." (DWC)
[Guidance Overview] Updated EPCRS Expands Self-Correction Opportunities for Retirement Plan Sponsors
"Under the expanded program, self-correction can be used to correct operational failures by adopting retroactive plan amendments to conform the plan terms to the plan operations if: [1] the amendment would result in an increase of a benefit, right, or feature; [2] the increase is provided to all eligible employees under the plan; and [3] the increase is permitted under the code and satisfies the general correction principles of EPCRS." (Wilson Sonsini Goodrich & Rosati)
[Opinion] The SECURE Act and RESA: The Good, the Bad and the Ugly
"[Certain provisions of the Setting Every Community Up for Retirement Enhancement (SECURE) Act and the Retirement Enhancement and Savings Act (RESA)] reduce barriers to complicated and opaque 401(k) products and investments favored by many large insurance and mutual fund companies.... [T]hese products and investments are likely to benefit providers more than 401(k) participants.... The fiduciary safe harbor appears to only protect employers from a provider that can't afford to pay promised benefits. The employer would still be responsible for determining whether the lifetime income option is 'prudent' ... A tough job given the complexity of these insurance products." (Employee Fiduciary)
Smallest Businesses Lead the Way with Personalized Benefits Education
"47% of employees who work for companies with fewer than 100 employees report understanding their benefits 'very well.' ... Only 33% of employees who have more than 100 coworkers report understanding their benefits that well.... Nearly 25% of employees at the smallest businesses say individual meetings with benefits experts are available to them, compared to just 14% at employers with more than 100 workers. And 37% of the smallest employers have group meetings with HR professionals to discuss benefits, compared to just 29% of larger employers." (Colonial Life)
PBGC Proposes New Plant-Shutdown Reporting Forms
"Employers must notify the PBGC when the 4062(e) event occurs. Sponsors electing the seven-year contribution alternative face additional reporting requirements until contributions are no longer due. The PBGC currently has no specific format for making these reports. The proposed new series of four forms and instructions will give employers a standardized way to satisfy their reporting requirements[.]" (Mercer)
House Passes SECURE Act; Retirement Legislation Moves Closer to Enactment
"[T]he SECURE Act: [1] Provides coverage, non-discrimination, and minimum participation testing relief for defined benefit plans that have been closed to new participants; [2] Provides new options for safe harbor 401(k) plans; [3] Requires 401(k) plans to expand eligibility to long-time part-time employees ... [4] Requires disclosure of lifetime income projections on annual account statements for defined contribution plans and provides a new fiduciary safe harbor for annuity selection; [5] Increases the required beginning date for minimum distributions ... [6] Imposes a new 10-year distribution maximum for death benefits from IRAs and defined contribution plans for designated beneficiaries ... [7] Facilitates open multiple employer defined contribution plans; [8] Increases penalties for failure to file form 5500, 8955-SSA, 5310-A, or distribute a tax withholding election." (Buck)
PBGC Issues Final Rule on Plan Sponsor's Duties for Terminated and Insolvent Multiemployer Plans
"Sponsors of plans that are subject to the actuarial valuation requirement will be required to annually file withdrawal liability information with the PBGC. Information must be filed electronically within 180 days after the earlier of the end of the plan year in which the plan terminates or becomes insolvent and each plan year thereafter. The required information will be both on an aggregate and individual employer basis." (Milliman)
Supreme Court Could Soon Consider Several ERISA Cases
"The cases include examples of 'stock drop' litigation; litigation about the burden of proof to establish loss; a case that tests the 'actual knowledge' standard for statute of limitations purposes; and a case that examines pleading standards under ERISA." (planadviser)
House Passes the SECURE Act
"What are the absolute gems in this version of the SECURE Act? [1] Creates the Pooled Employer Plan (the new name for what has been referred to as an open MEPs). [2] Increases the Required Minimum Distribution start date from 70-1/2 to 72 (no one likes calculating a half year). [3] Allows penalty-free distributions of up to $5,000 within a year for new parents (birth or adoption). [4] Extends the period of time for companies to adopt new plans beyond the end of the year to the due date for filing the company tax return. [5] Permits employers to add a safe-harbor feature to their existing 401(k) plans once the year has already started if they agree to make at least a 4% of pay contribution to employees (instead of the regular 3%). What is potentially much ado about nothing? The annuities!" (DWC)
District Court Rejects Attempt to Certify Class Against Third-Party Plan Administrator
"In affirming its denial of class certification, the court recognized that ERISA Section 502(a)(3) does not address which parties may be sued under the statute and 'admits of no limits . . . on the universe of possible defendants.' However, the court recognized that there are limits on a plaintiff's ability to bring a Section 502(a)(3) claim against a nonfiduciary.... The court ultimately found that the appropriate equitable relief requirement doomed the plaintiff's class claims against the third-party administrator." [Duggan v. Towne Properties Group Health Plan, No. 15-623 (S.D. Ohio, Mar. 31, 2019)] (Baker Hostetler, via Lexology; free registration required)
 
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