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[Official Guidance]

Text of PBGC Technical Update 19-1: 4010 Financial Information Reporting Waiver

"PBGC is waiving the requirement in Section 4010.9(b)(2) to provide member-specific financial information for filers whose ultimate parent is not a foreign entity. For filers whose ultimate parent is a foreign entity, the requirement to report Section 4010.9(b)(2) information is waived if filers provide consolidated financial statements for U.S. controlled group members as an attachment to their filing ... in addition to any other financial information required to be included with the filing."
Pension Benefit Guaranty Corporation [PBGC]


Free Webinar -- Employee Benefit Plan Technical Hot Topics for 2020

Sponsored by Hall Benefits Law

Do you know the risks and opportunities for employee benefit plans in 2020? The HBL team abated more than $55 million in DOL and IRS penalties this year and will give examples of costly ERISA legal compliance issues and how to avoid them! Join us Nov. 6. Learn more

[Official Guidance]

Text of IRS Notice 2019-56: Weighted Average Interest Rates, Yield Curves, and Segment Rates for October 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]

Federal District Court Dismisses Pension Actuarial Equivalence Lawsuit

"[The court] based its decision on a narrow statutory interpretation of ERISA that may not extend to other cases.... [T]he plaintiffs did not allege that they retired at or after normal retirement age. Because the plaintiffs' complaint did not focus on the amount they might receive at normal retirement age, [the] court concluded that the plaintiffs failed to allege a violation of ERISA's anti-forfeiture rule and dismissed the complaint." [DuBuske v. PepsiCo, No. 18-11618 (S.D.N.Y. Sep. 24, 2019)]
McDermott, Will and Emery, via Lexology; free registration required

Ninth Circuit Enforces ERISA Plan Arbitration and Class Action Waiver Provision

"Although the Ninth Circuit had recently held, in [Munro] ... that Section 502(a)(2) claims belong to the plan, rather than the individual ... the critical difference in Dorman was that the plan had been amended to include an arbitration provision binding the plan.... The Ninth Circuit also held, citing [LaRue] ... that although a Section 502(a)(2) claim may belong to the plan, losses are inherently individualized in the context of a defined contribution plan such as the one at issue. " [Dorman v. The Charles Schwab Corp., No. 18-15281 (9th Cir. Aug. 20, 2019; also unpub. memo. opinion)]
Seyfarth Shaw LLP

Warning Signs Your 401(k) Provider Is Ripping You Off

"[1] In truth, a 'free' 401(k) provider is paid 'indirect' fees by plan investments.... [2] It's common practice for 401(k) providers to limit your investment options to a shortlist of 'preferred' funds.... However, the funds on these lists are rarely the best - they're simply the funds that pay a sufficient amount of revenue sharing to the 401(k) provider.... [3] If asset-based 401(k) administration fees outstretch their provider's level of service, excessive fees are the result."
Employee Fiduciary


Form 5500 Reporting Update

Sponsored by Lorman and BenefitsLink

Nov. 4 webinar. Navigating the maze of changes with Form 5500 can leave you lost and helpless without all the important must know information. Also covers Form 8955SSA. BenefitsLink discountLearn more

True-Up Contribution Provisions

"[A] plan that doesn't match the catch-up AND doesn't have a true-up provision faces an unintended consequence: Catch-up-eligible participants that can never get the maximum match to which younger participants are entitled.... [Rev. Proc. 2019-19] allows plan sponsors to self-correct through plan amendment when: [1] The amendment conforms the plan document to actual operations; [2] A benefit, right, or feature of the plan would increase as a result of the amendment; [3] The increase applies to all eligible employees; and [4] Providing the increase is consistent with the procedure's correction principles."
Belfint Lyons Shuman

Proposed Legislation Would Provide New PBGC Funding Source: QPAM Fees

"Legislation aimed at giving the PBGC more money for distressed multiemployer pension funds by imposing fees on asset managers that want to keep managing retirement plan assets following criminal convictions was introduced Monday ... [The] proposed Pension Stability Act [S 2598] calls for the [DOL] to create a fee structure for QPAM exemption applications, with a minimum $1 million fee per application that would be multiplied by the number of previous applications."
Pensions & Investments

Interest Rates 2019: DB Funding Strategy

"[This article begins] with a review of the interest rates used for plan funding -- 25-year average Highway and Transportation Funding Act (HATFA), 24-month average, and one-month spot rates -- reflecting the significant declines this year. [The authors] then consider the short- and medium-term effect of those declines on sponsor funding requirements [and] conclude with a brief review of the effect of those declines on the calculation of PBGC premiums, financial disclosure, and 'real life.' "
October Three Consulting

NCEO Analyzes DOL ESOP Investigations

"Out of the 1,237 cases in which EBSA identified an ERISA violation, approximately two-thirds resulted in monetary recoveries -- a payment to the plan and/or participants as a result of the investigation. Approximately 10% of cases resulted in monetary recoveries of over $1 million, and about one-fifth of cases resulted in recoveries that were nonzero but less than $100,000.... The most common reason ('lead issue') EBSA cited for opening an investigation were potential ERISA violations in the loan terms and/or the ESOP valuation."
National Center for Employee Ownership [NCEO]

Consumers Who Envision Their Retirement Save More

"Retirement plan participants who have envisioned their ideal retirement set their sights higher when saving for retirement. The median amount they think they need to save for retirement is 20% of their income (this is 7% higher than those who have not given any thought to their ideal retirement). As a result, those who have a picture of what retirement holds for them are more than twice as likely to contribute 15% or more in their workplace retirement plan compared to those who have not given it any thought."
Lincoln Financial Group

Benefits in General

Corpus Linguistics and ERISA Litigation

"While the meaning of the statute was plain to the entire panel, Judges Stranch and Thapar quarreled over the evidence that a court might rightly consider when interpreting a statute -- in this case, ERISA. Judge Thapar argues that '[c]ourts should consider adding [corpus linguistics] to their tool belts.'... . [T]his is one more of the many reasons to make serious efforts to compose plan documents and communications clearly and with as little jargon or odd usage as possible. When jargon can't be avoided, the potential judicial use of corpus linguistics in interpreting a document provides even more reason to define clearly such terms or phrases." [Wilson v. Safelite Group, Inc., No. 19-3408 (6th Cir. Jul. 10, 2019)]
Covington & Burling LLP

Cybersecurity and Employee Benefit Plan Professionals

"Some companies have created a standard data privacy and security template agreement for all compensation and employee benefit plan agreements. Such a template agreement could include, among other items, requirements related to access and security controls, encryption, storage of PII on removable devices, audit rights and notification and indemnification provisions in the event of a data breach, and would be tailored to the specific risks and requirements of the company’s plans (employee retirement, 401(k) and group health benefit plans are similarly at risk)."
Winston & Strawn LLP

Selected Discussions
on the BenefitsLink Message Boards

Allow In-Service Distribution of Employer Stock Fund Only?

Can a 401k plan limit pre-59-1/2 in-service distributions to employer matching contributions that are invested in the employer stock fund only? The plan currently does not allow pre-59-1/2 in-service contributions at all so there would no anti-cutback rule issues. The sponsor is considering eliminating the employer stock fund from the plan, but would like to give participants an option to keep the stock if they wish.
BenefitsLink Message Boards

Applying the ASPPA Code of Conduct to Work Papers: Customer Hasn't Paid for 2018 Valuation

The ASPPA code of conduct reads in part as below. Let's say someone hasn't paid for the 2018 valuation, am I obligated to provide it? If not, am I obligated to provide, say, the 2017 val (which was sent to the client already)... the plan document (also sent to the client already)? I asked the question about "work product" once and was told that it is notes and calcs and stuff that are just in our files: "B. When a Principal has given consent for a new or additional professional to consult with a Member with respect to a matter for which the Member is providing or has provided Professional Services, the Member shall cooperate in assembling and transmitting pertinent data and documents, subject to receiving reasonable compensation for the work required to do so.... The Member need not provide any items of a proprietary nature or work product for which the Member has not been compensated."
BenefitsLink Message Boards

Does a Plan Sponsor Have an Affirmative Legal Obligation to Correct a Mistake on a Previously Filed Form 5500?

I anticipate the answer is yes but I am wondering if anyone can cite me to authority that requires this. I know the Form 5500 instructions require the plan sponsor to provide accurate information, but I can't find anything that states it has an affirmative obligation to correct a previously filed 5500 that is inaccurate.
BenefitsLink Message Boards

Tax-Exempt Employer Wants Out of Split Dollar Arrangement Based on Modified Endowment Contract

We have a grandfathered split dollar arrangement based on a modified endowment contract (MEC). The employer is entitled to the premiums paid (without interest) upon surrender of the contract or upon death. At this point, the employer (which is a tax-exempt organization) would like to get out of the contract, by either taking its share as a loan or by taking a cash withdrawal of its share. At that point, the employee would own the contract. The issue is what the tax consequences of this would be.
BenefitsLink Message Boards

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2019, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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