Retirement Plans Newsletter

October 23, 2019 logo logo
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[Guidance Overview]

DOL Proposes New Electronic Disclosure Rule

"According to the proposed rule, the DOL believes its policy objectives may be best advanced through adoption of a 'notice and access' structure, similar to that previously adopted by the Department in FAB 2006-03. In short, this means that plan participants would be notified that information is available online, including instructions for how to access the disclosures and their right to receive paper copies of disclosures."
Jackson Lewis P.C.

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[Guidance Overview]

DOL Proposing to Allow Default Electronic Distribution of ERISA Retirement Plan Disclosures

"[R]etirement plans and their plan administrators still would have to provide ERISA retirement plan disclosures, but their options for distributing these disclosures would expand.... [T]he proposed regulation would provide an option to use website posting as the default means of distribution provided the participant does not elect to continue to receive paper notification. To take advantage of the option to use website posting, however, plan administrators would have to comply with the safe harbor requirements in the proposed regulation[.]"
Solutions Law Press

[Guidance Overview]

DOL Proposes New Rules for Electronic Retirement Plan Disclosures

"Under the proposed regulations, plan administrators can satisfy their notice delivery requirements by posting retirement plan notices to a website, as long as several specific requirements are satisfied."
Smith, Gambrell & Russell, LLP

[Guidance Overview]

Editor's Pick The Circular Challenges of Earned Income and Plan Compensation (PDF)

"Using the incorrect calculation of plan compensation for owners with earned income may expose the plan to compliance and operational failures, jeopardize the tax qualified status of the plan, and require additional contributions to non-owner participants.... However, the correct computation of plan compensation for an owner-employee remains a complex circular formula that is directly affected by many other factors."
Joni L. Jennings, ERPA, CPC, via Journal of Pension Benefits

[Guidance Overview]

Treasury Official Provides Favorable Interpretation of 401(k) Hardship Amendment Deadlines for Volume Submitter and Prototype Plans (PDF)

"Carol Weiser, Benefits Tax Counsel at the Treasury, discussed recent concerns about the deadline for preapproved plans to amend to conform to the recently published final hardship regulations. In effect, she said that the deadline is the due date of the employer's income tax return, plus extensions, if any, for the tax year which includes January 1, 2020. This is true even if the amendment was put into effect in 2019. This gives us more time than many of us had feared, based on a conservative reading of the final regulation."
S. Derrin Watson, via


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DOL Proposes New Electronic Delivery Safe Harbor

" 'We've heard repeatedly from employers and plan service providers that they can use enhanced technology to improve workers' disclosures. In addition, electronic disclosure can create efficiencies, cost reductions that do not exist when disclosures must be delivered by mail in paper. So, we recognize that a lot has changed since that safe harbor was issued in 2002,' said [Preston Rutledge, Assistant Secretary of Labor for EBSA], continuing, 'Today, plan participants want and expect greater access to information electronically.' "
The Retirement Advantage

Still Taxed, Even Without the Distributed Cash

"[A] participant's failure to cash a distribution check does not alter the plan's obligation to withhold and pay taxes on a required distribution or to report the distribution as taxable income on a Form 1099-R.... [Revenue Ruling 2019-19] covers only those situations where distributions are mandatory under the tax code. The IRS will continue to analyze other situations involving uncashed checks, including distributions to missing participants and beneficiaries and including distributions that are not mandatory under the tax code."
McDermott Will & Emery

Social Security: The Windfall Elimination Provision (PDF)

17 pages. "The windfall elimination provision (WEP) ... reduces the Social Security benefits of certain retired or disabled workers who are also entitled to pension benefits based on earnings from jobs that were not covered by Social Security and thus not subject to the Social Security payroll tax.... In December 2018, nearly 1.9 million people (or about 3% of all Social Security beneficiaries) were affected by the WEP." [Report 98-35, updated Oct. 22, 2019]
Congressional Research Service [CRS]

Most Data Sets Agree on Retiree Income

"[A]round half of over-65 households may be experiencing difficulty maintaining the standard of living they enjoyed while they were working ... [based] on the rule of thumb that they need about 75 percent of their past employment earnings."
Squared Away Blog, by the Center for Retirement Research at Boston College

Serving Clients as 'Behaviorally-Enlightened' Fiduciaries

"[F]inancial advisors, as fiduciaries, are faced with new moral dilemmas that arise from attempting to incorporate behavioral insights into how they advise clients. While much of the prior focus has been on the legal responsibilities that fiduciaries have to serve their clients, we need to spend time wrestling with moral considerations as well!"
Nerd's Eye View

Benefits in General

ERISA Preemption: Courts of Appeal Continue to Rule as They Await Further Supreme Court Attempts to Define, Once and for All, Its Limiting Principles

"Two Courts of Appeal reach opposite results on ERISA preemption ... These two cases show how the courts continue to grapple with the nearly infinite nuances of ERISA's remarkably broad preemption provision. Given the historic interest of the Supreme Court on ERISA preemption, it is likely only a matter of time until this or a related ERISA preemption question is again before that Court."
Seyfarth Shaw LLP

Selected Discussions
on the BenefitsLink Message Boards

Hardship Loan Requested But the Need Is Less Than Plan's Minimum Allowed Amount

The loan policy states a loan may only be taken for a safe harbor hardship reason. What if the documentation of the financial need ($900 medical bill) is less than the loan minimum ($1,000)?
BenefitsLink Message Boards

Participant (or Beneficiary) Won't Take Close-Out Check for Only a Few Bucks

What are our options for handling low or small balance accounts (between $0.01 and maybe $10) where the participant or family member in death cases does not want the funds? The individual(s) are voluntarily forfeiting the funds. Do we forfeit funds back to employer or do we automatically disburse the small balance (i.e. to the estate). How do we distribute small amounts out of the account (403b, 457 and 401a)?
BenefitsLink Message Boards

Need Telephone Number to Follow Up on VCP Request

I filed a VCP request on behalf of a client over eight months ago but we have never received even an acknowledgement form from the IRS. Does anyone have a telephone number that they call to speak with a live person to determine the status of the request and possibly, to which agent the request has been assigned?
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Text of DOL Proposed Regs: Default Electronic Disclosure by Employee Pension Benefit Plans under ERISA
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Text of DOL Fact Sheet: Retirement Plans Electronic Disclosure Safe Harbor Rule
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

DOL Proposes New Safe Harbor Electronic Disclosure Rule for Retirement Plans
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL], Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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