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<< Older News  |  December 5, 2020


All News > Retirement Plan Administration

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IRS Releases New Escheatment Guidance
Ascensus Link to more items from this source
[Guidance Overview]
Dec. 4, 2020

"The DOL considers escheatment a less desirable option and believes that ERISA preempts state escheatment laws for active retirement plans.... The IRS's guidance addresses how to withhold and report on escheated assets, but it doesn't address whether or when escheatment should be used. Questions also remain on how to treat escheated assets once they're rolled over to an eligible plan."

Tags: Retirement Plan Administration

Final Transparency Rules Mean More Disclosures by Plan Sponsors
Graydon Link to more items from this source
[Guidance Overview]
Dec. 3, 2020

"For plan years beginning January 1, 2022, health plans and insurers must disclose three separate files on their websites that include detailed pricing information for all covered items and services under the applicable plan. The first file must show negotiated rates for all in-network covered items and services. The second file must show information regarding charges from, and payments to, out-of-network providers. The third file must provide historical information regarding in-network prescription drug pricing by pharmacy location."

Tags: Retirement Plan Administration

IRS Issues Final Life Expectancy Regs
Ascensus Link to more items from this source
[Guidance Overview]
Dec. 3, 2020

"These new tables reflect an increase in life expectancies since the last tables were issued nearly 20 years ago. Although the updated tables do not apply until distribution years beginning in 2022, financial professionals should learn how the new life expectancy figures may affect their clients and should assess how their administrative systems will accommodate the changes."

Tags: Retirement Plan Administration

Agencies Releases Advance Copies of Form 5500 Series Annual Return/Report for 2020 (PDF)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Internal Revenue Service [IRS]; and Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Dec. 2, 2020

"The Form 5500 and Form 5500-SF instructions have been revised to reflect that the Form 5500-SF can no longer be used by a one-participant plan or a foreign plan in place of filing of the Form 5500-EZ with the IRS. Effective for plan years beginning after 2019, one-participant plans and foreign plans can file the Form 5500-EZ electronically using the EFAST2 filing system....

"Administrative Penalties: The instructions have been updated to reflect an increase to $2,233 per day in the maximum civil penalty amount assessable under [ERISA] section 502(c)(2) ...

"Schedule H Part III - Accountant's Opinion: To conform to the new Statement on Auditing Standards 136, 'Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA,' the instructions for the questions on line 3a regarding the accountant's opinion have been revised. Line 3b and its instructions have been updated to permit filers to indicate more accurately whether there have been any permissible limitations on the scope of the audit pursuant to the Department's regulations.

"Schedules H and I, Line 4l and Form 5500-SF, Line 10f: The instructions ... have been revised to increase the required minimum distribution age from 70½ to 72 ...

"Schedules H and I, Line 5c ... has been revised to make clear that if the plan was covered by PBGC at any time during the plan year, filers should check the 'Yes' box....

"Schedule R: Line 14 has been revised to provide multiemployer plans with a choice of three counting methods to count inactive participants and to require that an attachment be provided depending on the counting method chosen....

"Information copies of the forms, schedules and instructions are available on the EBSA website."

Tags: Health Plan Administration  •  Reporting to Government Agencies  •  Retirement Plan Administration

Sixth Circuit Opinion Outlines Ways to Defend Disgorgement and Breach of Fiduciary Duty Claims Under Section 1132(a)(3)
Lane Powell PC Link to more items from this source
Dec. 2, 2020

"[T]ypically claimants seeking ERISA-governed benefits make claims for recovery under Section 1132(a)(1)(B). Now you are likely seeing more simultaneous assertions of equitable claims for breach of fiduciary duty and disgorgement under Section 1132(a)(3). A successful claimant asserting this theory may recover additional forms of monetary relief, and may get broader discovery. But the availability of relief under Section 1132(a)(3) claims is narrow ... So, how do you defend Section 1132 (a)(3) equitable claims?" [Davis v. Hartford Life & Accident Ins. Co., No. 19-6091 (6th Cir. Nov. 19, 2020)]

Tags: Fiduciary Duties  •  Health Plan Administration  •  Retirement Plan Administration

IRS Extends Contribution Deadline for Single-Employer Defined Benefit Plans
Hodgson Russ LLP Link to more items from this source
[Guidance Overview]
Dec. 2, 2020

"[IRS Notice 2020-82] extends to January 4, 2021 the deadline for a plan sponsor's election to add to a prefunding balance or to use a prefunding account balance to offset the minimum required contribution for the 2020 plan year. The guidance further provides that if a contribution is made by January 4, 2021, the amount of the minimum required contribution that is satisfied by the contribution (and the amount that can be added to the plan's prefunding balance related to any excess contribution) is determined by computing the applicable interest adjustment using the actual contribution date."

Tags: Retirement Plan Administration

December 31 Sunset of Safe Harbor Correction Method for Certain Elective Deferral Failures
Verrill Dana LLP Link to more items from this source
[Guidance Overview]
Dec. 2, 2020

"A special IRS-approved correction method available for elective deferral failures in 401(k) and 403(b) plans with automatic contribution features ... will not be available to correct elective deferral failures that begin after [December 31]. It remains available, however, for a limited time to correct elective deferral failures that begin on or before that date. The loss of this favorable correction method going forward serves as a good reminder to plan sponsors to confirm that their plans, in operation, are correctly implementing employee elective deferrals."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  Retirement Plan Administration

Vary Your Tools for Communicating About Employee Benefits
Inside Business Link to more items from this source
Dec. 2, 2020

"Perception of company benefits has a direct impact on employee satisfaction, productivity, retention, and recruitment.... Current trends are showing that each of the four or five generations which may be represented in your organization have different concerns."

Tags: Coronavirus (COVID-19)  •  Health Plan Administration  •  Retirement Plan Administration

Overtime Is Up and Bonuses Are Down: Will This Year's Irregular Compensation Impact Our Retirement Plan?
DWC Link to more items from this source
Dec. 1, 2020

"[An] alternative definition of compensation ... can be a powerful tool to enhance plan design and target your retirement plan dollars according to your overall goals. As with any plan design, it's important that you carefully consider any excluded compensation and review as compensation structures change over time. Likewise, it's worth remembering that there is no bright-line test to determine whether a plan passes compensation ratio testing each year. So, it's important to make sure that the definition of compensation is within reason both numerically and circumstantially."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design

Participant Steps to Cyber Security
National Tax-Deferred Savings Association [NTSA] Link to more items from this source
Dec. 1, 2020

"Here's some things you, your clients, and their participants should check out ... [1] Find your account(s) ... [2] Make sure 'they' can find you, too ... [3] Change the 'locks' ... [4] Check your beneficiaries ... [5] Get a 'ready' read."

Tags: Retirement Plan Administration  •  Retirement Plan Information for Employees

How Small 401(k) Plan Sponsors Can Best Address Their Unique Needs
Fiduciary News; free registration required Link to more items from this source
Dec. 1, 2020

"The biggest issue when it comes to access is cost. It's not just the plan sponsor's sensitivity to higher costs. It's the service provider's ability to keep those costs low.... [T]here's a disincentive for financial firms to invest the time necessary to help smaller plans grow to a critical mass size. This puts small plan sponsors at a further disadvantage.... Complicating matters is the fact that executives at smaller companies tend to have multiple responsibilities. This means they will often opt for the quickest solution."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design

The Basics of Terminating a DC Plan
PLANSPONSOR; free registration may be required Link to more items from this source
Dec. 1, 2020

"From updating the plan with statutory amendments to filing the final Form 5500, there are many details to attend to when terminating a defined contribution plan."

Tags: Retirement Plan Administration

Growing Number of Americans Are Facing Early Retirement
U.S. News & World Report Link to more items from this source
Dec. 1, 2020

"A report ... found that 2.9 million workers ages 55 to 70 have left the labor force since March.... Researchers note that if these exits continued at the same pace over the ensuing three months, an additional 1.1 million workers in this age group may leave the workforce. That would be a total of 4 million people potentially pushed into retirement due to the pandemic's related economic downturn."

Tags: Retirement Plan Administration  •  Retirement Plan Design

Who Is a 'Long Term, Part Time' Employee? 401(k) Plans Will Soon Need to Know the Answer
Fisher Phillips Link to more items from this source
Nov. 30, 2020

"Key plan design decisions include: [1] Do we want to let ALL part-time employees make their own 401(k) contributions (so we don't have to track hours?) [2] Do we want to be more generous than the law requires and let 'long time, part time' employees into the 401(k) plan prior to 2024? [3] Do we want to impose a 1,000-hour rule to be eligible for matching contributions? [4] Do we want to impose age restrictions of 18 (for vesting) and age 21 (for participation)? [5] Do we want to revise our company contribution vesting schedule?"

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE Act

Editor's Pick 2020 End of Year Plan Sponsor 'To Do' List, Part 4: Qualified Retirement Plans
Snell & Wilmer Link to more items from this source
Nov. 30, 2020

"[This article] covers qualified plan issues ... [and] provides you with a 'To Do' List of items on which you may want to take action before the end of 2020 or in early 2021."

Tags: Retirement Plan Administration

Diving Into the Pooled Plan Provider Deep End? It’s Time to Register!
Mayer Brown Link to more items from this source
[Guidance Overview]
Nov. 25, 2020

"The SECURE Act permits a PPP to begin sponsoring PEPs as soon as January 1, 2021, provided the PPP meets the SECURE Act's requirements, including registration with the DOL and IRS before commencing operations. The DOL issued proposed regulations on August 20, and in its November 16 final regulations, softened some of the requirements it had originally proposed."

Tags: MEP/PEP  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE Act

2021 Annual Plan Compliance Review (PDF)
Employee Fiduciary Link to more items from this source
Nov. 25, 2020

"Annual 401(k) administration tasks generally fall into one of four categories – nondiscrimination testing, Form 5500 reporting, participant disclosure, and plan document maintenance. If you’re an employer, you can use this Annual Plan Compliance Review to help ensure these tasks are completed timely for 2021. It includes 3 sections: [1] Deadline tasks ... [2] Periodic tasks ... [3] Document retention ... Once you’ve completed this checklist, you can file it with other 2021 plan records."

Tags: 401(k) Plans  •  Retirement Plan Administration

Segregation of ESOP Participant Accounts
Blue Ridge ESOP Associates Link to more items from this source
Nov. 25, 2020

"An ESOP must have a written provision in the plan document in order to implement segregation. Based on the terms of the provision and generally on an annual basis, all or a portion of stock held in the accounts of terminated participants will be exchanged for cash from active participant accounts. At the same time, the active participants will receive the stock from terminated accounts in exchange for their cash. As a result, stock is 'reshuffled' between terminated and active accounts in the Trust."

Tags: ESOPs  •  Retirement Plan Administration

DOL Unveils Registration Requirements for Pooled Plan Providers
Stradley Ronon Link to more items from this source
[Guidance Overview]
Nov. 24, 2020

"A [pooled plan provider (PPP)] is at the heart of these new [pooled employer plans (PEPs)].... [T]he plan must designate the PPP and provide that the PPP is a plan administrator and 'named fiduciary' under ERISA.... [A] PPP will be subject to ERISA's fiduciary duties and other requirements. Each participating employer remains responsible for selecting and monitoring the PPP.... [T]here is an initial registration filing of basic identifying information about the PPP."

Tags: MEP/PEP  •  Retirement Plan Administration  •  Retirement Plan Design  •  SECURE Act

Retirement Plan Sponsors: Give Your Retirement Plan an Annual ‘Checkup’
Foley & Lardner LLP Link to more items from this source
Nov. 24, 2020

"By completing a retirement plan administration checklist (whether using the IRS' checklist or its own customized checklist) on an annual basis, a plan sponsor can ensure its retirement plans are being administered in compliance with the Code and ERISA. The sponsor should retain the completed checklist in the plan's records, as evidence it is fulfilling its fiduciary duty to monitor the plan's compliance and administration."

Tags: Retirement Plan Administration

Year-End Compliance Update for Retirement Plans
Society for Human Resource Management [SHRM]; membership may be required to view article Link to more items from this source
Nov. 24, 2020

"[1] Year-end deadlines ... [2] IRS guidance on birth/adoption withdrawals ... [3] Part-time employee eligibility changes for 401(k) plans ... [4] Pooled Employer Plans ... [5] Coronavirus-related withdrawals ... [6] Coronavirus-related loans from qualified plans ... [7] Waiver of required minimum distributions for 2020 ... [8] Partial plan terminations ... [9] Restatement window for pre-approved defined contribution plans ... [10] Electronic disclosures ... [11] Electronic signatures ... [12] Remote witness of spousal consents."

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

Form 5500 Penalties Increased by How Much?
Belfint Lyons Shuman Link to more items from this source
Nov. 23, 2020

"Tenfold. That's how much the SECURE Act increased the penalty for the late filing of a Form 5500 --TENFOLD! Before the Act, the IRS could assess a civil penalty of $25 for each day that the Form 5500 was late up to $15,000, but now, add a zero: the penalty is $250 per day not to exceed $150,000."

Tags: Reporting to Government Agencies  •  Retirement Plan Administration  •  SECURE Act

DCIIA Comments to EBSA on Proposed Regs for Pension Benefit Statements -- Lifetime Income Illustrations (PDF)
Defined Contribution Institutional Investment Association [DCIIA] Link to more items from this source
Nov. 23, 2020

"DCIIA believes it is important for the Department to provide reassurance that, and specific examples as to how, good actors seeking to help plan participants achieve secure retirements can safely, without the threat of costly litigation, provide lifetime income information and education to participants and beneficiaries as 'investment education' and not fiduciary 'investment advice' under [ERISA].... This support would assist plan fiduciaries, administrators and service providers who are committed to strengthening retirement security and wish to go beyond the assumptions and form of the model disclosure covered by the Rule[.]"

Tags: Retirement Plan Administration

Year-End Compliance Update for Retirement Plans
Miller Johnson Link to more items from this source
Nov. 20, 2020

"As 2020 draws to a close, this is a good time for employers sponsoring retirement plans to wrap up year-end compliance issues and prepare for the upcoming year. Here is a quick list of topics that plan sponsors may want to consider as 2021 approaches."

Tags: Retirement Plan Administration

Changes on the Horizon? Introducing the Securing a Strong Retirement Act of 2020
Hall Benefits Law Link to more items from this source
Nov. 20, 2020

"Some provisions would be mandatory, such as the changes to the required beginning date and required minimum distribution rules, modifications to the long-term, part-time employee eligibility measurement period, and the automatic enrollment feature for new plans.... [T]he effective date for most of these changes [would be] the plan year beginning after December 31, 2020."

Tags: Retirement Plan Administration  •  Retirement Plan Design

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