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October 28, 2019 logo logo
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[Guidance Overview]

SEC Publishes FAQs on Disclosure of Certain Financial Conflicts Related to Investment Adviser Compensation

"The FAQ provides the division staff's views on compensation-related conflicts that an investment adviser should disclose to its clients, based on the adviser's fiduciary duty and the requirements of Form ADV.... While much of the discussion focuses on 12b-1 fees and revenue sharing, the FAQ is intended to apply more broadly to other forms of compensation that an investment adviser, its affiliates, or its associated persons receive in connection with the services it provides."
Nixon Peabody LLP


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

[Guidance Overview]

DOL Proposes Changes to Antiquated Electronic Disclosure Rules Under ERISA

"These proposed rules update final regulations issued by the DOL in 2002 ... The new proposal establishes a safe harbor standard that employers should find more useful than the previous safe harbor rules, resulting in cost and administrative burden savings for retirement plan sponsors and administrators."
Seyfarth Shaw LLP

[Guidance Overview]

DOL Proposes New Electronic Participant Communications Safe Harbor

"The proposal would dramatically liberalize DOL's electronic communication rules ... Under the new rule, all required communications may be posted to a website, provided the affected individual receives a notice at his 'electronic address' directing him to the website and has the right to request a paper copy or opt out of the electronic communications program."
October Three Consulting

[Guidance Overview]

Editor's Pick DOL Modernizes Disclosure Rules in a Significant Expansion of Electronic Delivery

"The Proposed Rule would supersede the widely used 'continuous access website' rule for pension benefit statement information from [FAB 2006-03], likely resulting in fewer participants receiving their pension benefit statements electronically. DOL also eliminated a key rule for QDIA notices ... Finally, the Proposed Rule leaves open a number of questions including whether and when certain notices and documents can be removed from a plan's website."
Groom Law Group

Cybertheft of 401(k) Plan Assets -- New Case Highlights Fiduciary Exposure

"Fiduciaries should expect that the court is likely to find the duty to keep plan assets secure to be a part of current fiduciary obligations. Failure to make good on these losses could also be viewed as an improper forfeiture of a vested benefit, calling the plan's qualification into question. If there is no cybersecurity insurance coverage payment to be passed on, it appears likely that one or more of the defendants will be directed to reimburse the participant's account for the losses." [Berman v. Estee Lauder, No. 19-6489 (N.D. Cal. complaint filed Oct. 9, 2019)]
Cohen & Buckmann, P.C.


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Editor's Pick Some Retirement Plans Need 2019 Year-End Amendments

"The 2017 RA List included no amendments for DC plans. However, some DC plans may need amendments for certain congressionally authorized disaster relief.... Depending on plan terms, some DB pension plans may need to be amended for partial annuity distribution regulations issued in 2016 and for updated static mortality tables. Certain eligible cooperative and charity plans that became subject to benefit restrictions rules in 2017 will also need amendments by Dec. 31, 2019. Finally, some nonbargained hybrid plans will need amendments for requirements that appeared on the 2017 RA List."

Hardship Distributions Are on the Rise: The Issues for Retirement Plan Sponsors and Participants

"While the increasing number of hardship distributions is concerning, plan sponsors can take some steps to help protect the plan and their participants.... By steering participants in financial need to loans, rather than hardships, plan sponsors may be able to better protect both the plan and the individual.... [P]rudent plan sponsors can limit hardship distributions to as few contribution sources as possible. This, in turn, may help to reduce the number of hardship distributions taken."
Cammack Retirement Group

Using High-Tech Tools to Improve Financial Wellness (PDF)

"Tools that analyze data employers gather and that use artificial intelligence may help employers create more relevant and targeted financial well-being programs. Decision-support tools and artificial intelligence technology can steer employee decisions such as how much to contribute to their defined contribution plan or whether to save money in a health savings account. Combining high-tech approaches with a personal touch, such as a providing a financial planner, can help employees feel more confident in their financial decisions."
benefits magazine, a publication of the International Foundation of Employee Benefit Plans [IFEBP]

The 'Calculated to Be Understood by the Average Plan Participant' Standard: How Well Do DOL Regs Measure Up?

"[If] a document presented on a website has a Flesch Reading Ease score of at least 60, the DOL will deem it to be understandable by the average plan participant.... [The authors] ran the Flesch Reading Ease test on the DOL's new proposed regulations ... The DOL scored 14.2. (A score of 0 to 30 is rated 'very difficult.') Perhaps the message here is that if the DOL wants employers to simplify disclosures, the DOL should first write shorter, simpler regulations."
Davis Wright Tremaine LLP

Fiduciary Breach Lawsuit Issues Explored: No Regular Recordkeeper RFP

"Of the twenty-six lawsuits filed against healthcare and higher education institution retirement plans, twenty-four of them included some language about the lack of regular RFP processes.... In the eighteen cases where there have been motion-to-dismiss hearings that included the question of conducting competitive bidding processes, the judge determined that the plaintiff argued a plausible claim to proceed on this issue in thirteen; only five judges dismissed this claim."
Cammack Retirement Group

Inequality and Retirement: A Conversation with Researcher Alicia Munnell

"Over the past two decades, the Boston College professor has helped to build a comprehensive database used by reporters at national outlets, state legislators and their staffs, retirement plan actuaries, and others. The tool has helped usher in a wave of analyses on public pension plans, but her legacy extends beyond it."
Arnold Ventures

Implications of Money-Back Guarantees for Individual Retirement Accounts: Protection Then and Now

"This paper explores the consequences for savers' wellbeing of implementing market-based retirement account guarantees, using a life cycle consumption and portfolio choice model where investors have access to stocks, bonds, and tax-qualified retirement accounts."
National Bureau of Economic Research [NBER]; purchase required for full document

Second Chance for Major Ruling on Pension Cuts

"A case that could result in the state Supreme Court reviewing the California Rule, which has overturned several voter-approved public pension cuts, is fully briefed and ready to be scheduled for oral arguments.... [T]he Supreme Court faces conflicting appeals court rulings, arising from former Gov. Brown's pension reform, and has a second chance to clarify how pensions can be cut or even lay out a new path."

Benefits in General

Justices Show Supreme Reluctance When They Get ERISA Assignments

"Former Justice Sandra Day O'Connor called ERISA cases 'tedious,' counseling a colleague to 'just do it' and to take steps to reduce the risk of being assigned another one by the chief justice. Her colleague was Justice Ruth Bader Ginsburg, who said ERISA is a 'candidate for the most inscrutable legislation Congress ever passed.' During her first year on the court in 1993, Ms. Ginsburg recalled hoping to receive as her first opinion-writing assignment an 'uncontroversial, unanimous opinion,' a common practice for newcomers. Instead, she was 'dismayed' to receive 'an intricate, not at all easy' ERISA case decided by a 6-3 vote. That's when she asked Ms. O'Connor for advice."
Pensions & Investments

Selected Discussions
on the BenefitsLink Message Boards

Deferrals Mistakenly Suspended When Plan Sponsor Sold to New Owners

A dental practice was sold and the new doctors who purchased the practice took over payroll. I was not made aware of the sale until after it was finalized. As a result deferrals were not withheld or paid in. Employees' paychecks were larger as a result and no one spoke up. Is there any cure? Instead of making everything right with one correction to an employee"s next paycheck, can the missed deferrals be spread out over a few paychecks?
BenefitsLink Message Boards

Terminated Plan, Final 5500 Filed But More Investments Discovered -- Rollover Opportunity Lost?

"Plan terminated and final short-year 2017 5500-EZ was filed (single/owner PS plan). All known assets were rolled over to an IRA in 2017. It was discovered recently in 2019 that two plan investments- stocks worth a fairly substantial amount -- still exist. Due to the passage of time between plan termination and now, I'm thinking it would be a failed/excess IRA rollover. How do we fix this?"
BenefitsLink Message Boards

Bonding Requirement for Plan Having Only HCEs

"We have a client with DB and PS and the only participants are him (100% owner) and his mother. There are no other employees and so no other participants in the foreseeable future. What is IRS position on bonding for such a plan?"
BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

How Best to Annuitize Defined Contribution Assets?
Center for Retirement Research at Boston College, 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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