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<< Older News  |  April 6, 2020

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Legal Concerns Put Shadow Over Push for Alternative Investments in DC Plans
Pensions & Investments Link to more items from this source
Apr. 6, 2020

"The recent pandemic-induced market volatility could make the concept of adding alternative assets to defined contribution plan lineups more attractive for sponsors, but litigation concerns persist[.]"

Tags: Coronavirus (COVID-19)  •  Fiduciary Duties  •  Retirement Plan Investments: Misc. Issues

Answering Questions About COVID-19 and Your Non-Governmental 457(b) Plans (PDF)
Fulcrum Partners LLC Link to more items from this source
Apr. 6, 2020

"As a participant in a non-governmental 457(b) plan, can I cancel, reduce, or change my deferral election? ... Can I take a distribution from my plan due to COVID-19?  ... As a plan sponsor, can I reduce or remove the match or other employer contributions?  ... How do I handle employees on leave?"

Tags: 457 Plans  •  Coronavirus (COVID-19)

CARES Act Waiver of 2020 Required Minimum Distributions
Bryan Cave Leighton Paisner LLP Link to more items from this source
[Guidance Overview]
Apr. 6, 2020

"The CARES Act waives RMDs for 2020. Note that this waiver of RMDs for 2020 is not limited to those who are affected by COVID-19. This waiver of RMDs applies to [1] any account owner who is 72 or older in 2020, [2] any account owner who turned 70-1/2 in 2019, did not take his or her RMDs in 2019 and planned to take his or her delayed RMDs by April 1, 2020, and [3] all beneficiaries of inherited IRAs for decedents who died prior to 2020."

Tags: CARES Act  •  Required Minimum Distributions (RMDs)

COVID-19 Considerations: Midyear Reductions or Suspensions of Employer and Matching Contributions to 401(k) and Defined Contribution Plans
Mintz Link to more items from this source
Apr. 6, 2020

"An employer's ability to reduce, suspend, or defer these types of contributions is determined by plan type and terms and applicable law and guidance. Generally, it should be possible to make prospective changes to reduce an employer's contribution obligations. Doing so retroactively is more challenging. This post reviews the options for cost cutting available to employers under their defined contribution 401(k) and profit sharing plans."

Tags: 401(k) Plans  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration  •  Retirement Plan Design

Reg BI and Form CRS: Firms Must Comply by June 30 But Examiners Will Apply a 'Good Faith Effort' Standard
Wilmer Hale Link to more items from this source
Apr. 6, 2020

"While the Chairman's statement acknowledged the challenges that firms are facing and the significant resources they are allocating in response to the COVID-19 outbreak, the SEC will not provide an extension.... [R]egulators may show some restraint in their examination of firms, at least in the initial post-June 30th period,,, This restraint, however, will be predicated on firms having made a 'good faith effort' to implement policies and procedures necessary to comply with Reg BI and Form CRS by the compliance date."

Tags: Fiduciary Duties  •  Retirement Plan Investments: Misc. Issues

March 2020 Pension Finance Update
October Three Consulting Link to more items from this source
Apr. 6, 2020

"Tumbling stock markets dealt another blow to pension sponsors in March.... Plan A lost 3% in March, ending the quarter 13% lower than at the end of 2019, while Plan B slipped more than 1% and is now down more than 4% for the year."

Tags: Funding of Defined Benefit Pension Plans  •  Retirement Plan Investments: Misc. Issues

How the Coronavirus Could Permanently Cut Near-Retirees' Social Security
Pension Research Council, The Wharton School of The University of Pennsylvania Link to more items from this source
Apr. 6, 2020

"Assuming a 15 percent decline in the Social Security Administration's measure of economywide average wages in 2020, a middle-income worker born in 1960 could have his annual Social Security benefits in retirement reduced by around 13 percent, with losses over the retirement period in excess of $70,000. Methods of addressing this problem are discussed, including both ad hoc adjustments applying only to affected cohorts, and also permanent changes to the benefit formula to prevent similar benefit 'notches' from occurring in the future."

Tags: Coronavirus (COVID-19)  •  Social Security

Multiemployer Defined Benefit (DB) Pension Plans: A Primer (PDF)
Congressional Research Service [CRS] Link to more items from this source
Apr. 6, 2020

33 pages. "10% to 15% of participants are in plans that are projected to become insolvent in the next 20 years.... In its FY2018 Projections Report, PBGC indicated that the multiemployer insurance program is highly likely to become insolvent by 2025 and will be unable to pay 100% of participants' benefits at the guaranteed level." [R43305, updated Apr. 3, 2020]

Tags: Multiemployer Plans

D.C. Circuit Holds That Participant Who Signed Release Could Not Assert ERISA Fiduciary Breach Claims on Behalf of Her Retirement Plan
Mayer Brown Link to more items from this source
Apr. 6, 2020

"While many employers incorporate 'one-size-fits-all' release language into their agreements, when dealing with prospective ERISA claims, it is important to carefully review any applicable release language to ensure that it is both enforceable and sufficiently broad to cover ERISA fiduciary breach claims and other statutory claims.... [This article provides a list of items] employers should consider when evaluating their release agreements[.]" [Stanley v. George Washington Univ., No. 19-7079 (D.C. Cir. March 24, 2020)]

Tags: Fiduciary Duties

U.S. Chamber of Commerce Letter to Treasury, IRS, DOL, and PBGC on Benefit Plan Reporting Requirements
U.S. Chamber of Commerce Link to more items from this source
[Opinion]
Apr. 6, 2020

"Because of the current financial and staffing constraints, we request, among other items, that [1] the Agencies delay employee benefit plan reporting and disclosure to the full extent allowed by law; [2] provide for good faith compliance; and [3] allow employers additional time to comply with specific notice requirements."

Tags: Misc. Health Plan Administration Issues  •  Reporting by Plans to Government Agencies  •  Retirement Plan Admininstration

CARES Act Suspension of Loan Repayments -- Is It Employer's Choice or the Participant's Choice?
Business of Benefits Link to more items from this source
Apr. 3, 2020

"The statute seems to make the suspension mandatory; yet ... there's a legal problem with this, given loans are existing, valid contracts under state law; ... Did the IRS recognize this issue and try to fix it by claiming that the employer has the choice, because of its ability to change the loan policy under the plan? You know that there will be 'curmudgeonly' employers out there who will NOT approve the suspension. [The author] would think that the IRS could not tax that loan as being defaulted, even though it was reported as such on a 1099."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration

Jarvis Appeals Unsuccessful Challenge to CalSavers Auto-IRA Decision
American Retirement Association [ARA] Link to more items from this source
Apr. 3, 2020

"The Howard Jarvis Taxpayers Association has filed ... [a notice of] appeal of a decision last month which held that that the Golden State's auto-IRA program for private sector workers is neither an employee benefit plan nor does it relate to an ERISA plan, and therefore was not preempted by ERISA.' [Howard Jarvis Taxpayers Ass'n v. The California Secure Choice Retirement Savings Program, No. 18-1584 (E.D. Cal. Mar. 10, 2020)]

Tags: Retirement Plan Policy

Before You Take That Retirement Plan Withdrawal...
Cammack Retirement Group Link to more items from this source
Apr. 3, 2020

"Withdrawals turn 'paper' losses into actual losses.... Withdrawals destroy the magic that is compounding, particularly for younger participants.... Withdrawals are often just a band-aid for an underlying financial problem."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Information for Employees

SEC Says Coronavirus Will Not Delay Reg BI, Form CRS
planadviser Link to more items from this source
Apr. 3, 2020

"[SEC] Chairman Jay Clayton has publicly confirmed that the June 30 deadline for compliance with the SEC’s Regulation Best Interest (Reg BI) rulemaking package remains in effect.... Clayton notes that, over the past 10 months, the SEC has engaged extensively with broker/dealers, investment advisers, retail investors and other market participants, as well as FINRA and other regulatory partners, regarding the implementation of Reg BI and the associated Form CRS."

Tags: Coronavirus (COVID-19)  •  Fiduciary Duties  •  Retirement Plan Investments: Misc. Issues

COVID-19 Takes Bite Out of U.S. Corporate Pension Plans
Willis Towers Watson Link to more items from this source
Apr. 3, 2020

"The funded status of the nation's largest corporate pension plans fell by eight percentage points during the first quarter of 2020, driven primarily by declines in equity markets ... [P]ension plan data for 376 Fortune 1000 companies ... indicate the aggregate pension funded status is estimated to be 79% as of March 31, 2020, compared with 87% at the end of 2019. That's the lowest funded status plans have experienced since 2012, when the year-end funded status stood at 77%."

Tags: Coronavirus (COVID-19)  •  Funding of Defined Benefit Pension Plans

Construction Company Workers Get Support in ESOP Appeal
Bloomberg Law Link to more items from this source
Apr. 3, 2020

"The Pension Rights Center waded into a dispute involving Choate Construction Co.'s employee stock ownership plan, urging the Fourth Circuit to revive the employees' lawsuit and recognize the 'special risks' these plans pose for workers.... The Choate employees allege they were forced to pay $198 million for company stock that may have been worth less than $65 million[.]" [Lee v. Argent Trust Co., No. 19-156 (E.D.N.C. Aug. 7, 2019; amicus brief to 4th Cir. filed Mar. 30, 2020)]

Tags: Employee Stock Ownership Plans (ESOPs)

Should You Withdraw From Your 401(k)?
InvestmentU Link to more items from this source
Apr. 3, 2020

"The best-case scenario that would make tapping into your 401(k) this year a financially responsible decision is if you expect that you will be able to repay those funds within three years. If you can do that, you will not have to pay tax on the withdrawal, and you will have essentially received a three-year interest-free loan. No harm, no foul. The reality, though, is that the next several months are going to be incredibly difficult for millions of Americans."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Information for Employees

Will Workforce Cuts Cause Partial Terminations in DC Plans?
Callan Link to more items from this source
Apr. 3, 2020

"Generally, if the employer's turnover rate is at least 20% during the applicable time period, there is a presumption that a partial termination of the plan has occurred. The time period in question depends on the facts and circumstances of a situation ... Identifying a partial plan termination is important since the failure to recognize and act on it can cause disqualification of the entire plan."

Tags: Coronavirus (COVID-19)  •  Retirement Plan Admininstration

TDFs (and Plan Fiduciaries) in the Crosshairs: Investment Lessons from the Coronavirus (PDF)
Target Date Solutions Link to more items from this source
[Opinion]
Apr. 3, 2020

"It's hard to imagine that anything good could come out of a pandemic, but this one has exposed a scandal in retirement savings plans ... There are two fiduciary breaches that are scandalous: [1] Fiduciaries, namely investment advisors, are breaching their duty of loyalty by not vetting their TDF selection. Self interests are taking precedence over beneficiary interests, violating the SEC's Best Interest (BI) standard. And [2] Fiduciaries are breaching their duty of care by turning a blind eye to the risk near the retirement date in the TDFs they choose, exposing beneficiaries to excessive risk. Fiduciaries are responsible for harm that should have been avoided."

Tags: Coronavirus (COVID-19)  •  Fiduciary Duties  •  Retirement Plan Investments: Misc. Issues

Retirement and Pension Provisions in the CARES Act
Congressional Research Service [CRS] Link to more items from this source
[Guidance Overview]
Apr. 2, 2020

"Among other provisions, the CARES Act includes an exemption to the 10% tax penalty for early withdrawals from retirement accounts for individuals affected by COVID-19, one-year relief from Required Minimum Distributions (RMDs) for all retirement plan account holders, and a delayed due date for employer contributions to private-sector defined benefit (DB) pension plans." [IF11482, Apr. 1, 2020]

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Required Minimum Distributions (RMDs)  •  Retirement Plan Admininstration  •  Retirement Plan Design

Editor's Pick Financial Wellness During COVID-19: Moving from Panic Towards Peace (PDF)
ABD Insurance & Financial Services Link to more items from this source
Apr. 2, 2020

65 presentation slides addressed to plan participants. Topics: [1] Recent market volatility and perspective; [2] Financial relief programs; [3] CARES Act, federal and private-sector relief; [4] Opportunities; [5] 401(k)/retirement accounts; [6] Refinancing debt in low interest rate environment; [7] Adjusting your spending and scenario planning; [8] Tools & resources.

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Fiduciary Duties  •  Retirement Plan Admininstration  •  Retirement Plan Investments: Misc. Issues

Editor's Pick CARES Act Brings Compensation, Benefits, and Payroll Tax Changes
Morgan Lewis Link to more items from this source
[Guidance Overview]
Apr. 2, 2020

"[This article provides] a summary of the retirement plan, health and welfare, payroll tax and fringe benefit, and executive compensation provisions of the CARES Act, along with ... comments and considerations for businesses evaluating the changes brought about by the new law."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Misc. Health Plan Administration Issues  •  Retirement Plan Admininstration

How the CARES Act Affects Retirement Plans
Jackson Lewis P.C. Link to more items from this source
[Guidance Overview]
Apr. 2, 2020

"[The CARES Act] significantly loosens the restrictions on loans and distributions from retirement plans ... Employers are not required to implement these new features. However, some aspects of the rules already may be captured in employer plans through the plans' rollover contribution rules. Further, plan recordkeepers have started proactively implementing these changes programmatically, providing employers only with brief 'opt out' periods."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Retirement Plan Admininstration  •  Retirement Plan Design

COVID-19 Impact on Governmental Pension Plans
Bolton Link to more items from this source
Apr. 2, 2020

"[I]nvestment losses will have the biggest impact on pension cost but there are other factors. There may be mortality gains (more deaths than normal) and public safety unions may push for line-of-duty benefits (either death or disability) for COVID-19 related outcomes. Groups like retirees also will likely have higher medical claim costs that will impact OPEB liabilities."

Tags: Coronavirus (COVID-19)  •  Funding of Defined Benefit Pension Plans  •  State and Local Government Plans

Retirement Plan Benefits: The CARES Act and Other Considerations
von Briesen & Roper, s.c. Link to more items from this source
[Guidance Overview]
Apr. 2, 2020

"RMDs for 2020 are calculated based on account balances as of December 31, 2019, when the market was at or near record highs. The Act will allow individuals to avoid the financial hardship of recent market losses combined with RMD withdrawals calculated as of the recent market highs... Some individuals may, however, find now a good time to take RMDs despite this waiver ... The Act gives individuals flexibility to do this planning.... The conditions that make a conversion [to a Roth IRA] a good strategy include a lower income year or a down market. For many people, 2020 may be an ideal time to consider this income tax planning strategy."

Tags: CARES Act  •  Coronavirus (COVID-19)  •  Individual Retirement Accounts (IRAs)  •  Required Minimum Distributions (RMDs)


<< Older News  |  April 6, 2020

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