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[Guidance Overview]

Best Interest Standard of Care for Advisors, Part 19

"[A] broker-dealer or investment adviser would need to disclose that it will receive compensation (e.g., fees or commissions) if the money is rolled over, but it will not if the recommendation is not accepted.... [B]roker-dealers and investment advisers may want to take a conservative approach and also disclose that they could have recommended that the participant leave his or her money in the plan and, in that case, the firm and its advisor would not be compensated for their advice."


FTW Webinar: Current Pension Developments with Sal Tripodi, 2 CEs

Sponsored by Wolters Kluwer

Join in December for a CE webinar: Current Developments Affecting Retirement Plan Matters! Sal Tripodi of TRI Pension Services will review important current developments and how they affect plan design and administration. Register now Learn more

[Guidance Overview]

DOL Issues Proposed Regs Providing Alternate Method of Electronic Delivery of Retirement Plan Notices

"[P]lan sponsors that use their intranet or other internal server to post required notices would not reach terminated participants and beneficiaries, and another means of notice would need to be used.... [W]hile plan sponsors are ultimately responsible for establishing and maintaining the website, such duties may be delegated to a service provider ... Plan sponsors should work with their service providers to verify they are capable of monitoring electronic delivery and identifying invalid e-mail addresses."

Reinhart Boerner Van Deuren s.c.

Transcript of Oral Argument Before the Supreme Court on Meaning of 'Actual Knowledge' for Purposes of 3-Year Statute of Limitations on ERISA Fiduciary Breach Claims (PDF)

81 pages. Issue on which certiorari was granted: "Whether the 3-year limitations period in Section 413(2) of ERISA, which runs from 'the earliest date on which the plaintiff had actual knowledge of the breach or violation,' bars suit when all the relevant information was disclosed to the plaintiff by the defendants more than three years before the plaintiff filed the complaint, but the plaintiff chose not to read or could not recall having read the information." [Intel Corp. Investment Policy Comm. v. Sulyma, No. 18-1116 (S. Ct. cert. pet. granted June 10, 2019; oral arg. Dec. 4, 2019)]

Supreme Court of the United States

Justices Wary of Intel Committee Position in 401(k) Dispute

"A majority of justices on the Supreme Court seem to think posting 401(k) plan documents online isn't enough for companies to shorten the amount of time participants have to sue plan managers for mishandling investments.... [T]here were questions from the justices about how a ruling in Sulyma's favor would affect certifications in class actions and whether plan participants have to also understand the law enough to know a violation occurred from the information they're provided." [Sulyma v. Intel Corp. Investment Policy Comm., No. 17-15864 (9th Cir. Nov. 28, 2018; cert. pet. granted June 10, 2019; oral arg. Dec. 4, 2019)]

Bloomberg Law

Private Equity Funds ERISA Decision Is Reversed

"While the court's decision is certainly welcome news for private equity and other investors, the court's decision to look beyond the form of entities chosen by the investors and determine whether a 'partnership-in-fact' existed means that the First Circuit might have reached a different conclusion on different facts." [Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, Nos. 16-1376, 19-1002 (1st Cir. Nov. 22, 2019)]

Paul Hastings LLP

Sun Capital Reversal Offers Important Takeaways Regarding Portfolio Company Pension Liabilities

"[S]teps that investment funds may wish to consider ... [1] Using a separate acquisition vehicle ... to make any joint acquisitions, as well as using a special purpose entity to serve as the general partner or managing member of such acquisition vehicle, rather than the fund's general partner. [2] Specifically including language regarding the intent not to form a partnership into the documentation forming the investment vehicle. [3] Dividing the investment between two or more independently managed funds with distinct portfolios and investors in order to support a finding that funds are separate and have not joined to form [a] partnership. " [Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, Nos. 16-1376, 19-1002 (1st Cir. Nov. 22, 2019)]

Latham & Watkins

Why the Road to Zero-Revenue Sharing Can Be Bumpy

"[W]hile a zero-revenue sharing fund lineup sounds like a great idea, plan sponsors often face two major bumps in the road during implementation: [1] Some funds don't have zero-revenue share options ... [2] In many cases, the zero-revenue share investment option is not the share class of a fund with the lowest net cost[.]"

Cammack Retirement Group

Senator Introduces Bill to Encourage Faster Student Debt Payoff

"Senator Rand Paul [R-KY] introduced S. 2962, the Higher Education Loan Payment and Enhanced Retirement (HELPER) Act ... [which] would allow Americans to annually take up to $5,250 from a 401(k), 403(b), 457 plan or IRA -- tax and penalty free -- to pay for college or pay back student loans. These funds could also be used to pay tuition and expenses for a spouse or dependent."


Do Deferred Benefit Cuts for Current Employees Increase Separation?

"The analysis takes advantage of a 2005 reform to the Employees' Retirement System of Rhode Island (ERSRI) that dramatically reduced the generosity of benefits for current workers. Importantly, the cuts applied only to ERSRI members who had not vested by June 30, 2005.... [T]he benefit cut caused a 2.4-percentage-point increase in the rate of separation ... Although state employees were more sensitive to benefit cuts than teachers, the low elasticities for both groups suggest that the labor market for public employees may not be highly competitive. "

Laura Quinby and Gal Wettstein, via SSRN


Editor's Pick Default Electronic Delivery Works: Evidence of Improved Participant Outcomes from Electronic Delivery of Retirement Plan Documents (PDF)

50 pages. "Estimates indicate that plan participants could increase their final account balance by 63 percent with modest increases in their deferral rate which provider data indicates can be accomplished with electronic communication nudges and engagement with online tools.... [S]witching to an electronic delivery default would produce $250 to $450 million in aggregate savings annually that would accrue directly to individual retirement plan participants."

The SPARK Institute

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

ISS Issues Preliminary FAQs as to 2020 Compensation Policies

"For annual meetings on and after February 1, 2020, ISS's Financial Performance Assessment (FPA) will be based on four Economic Value Added (EVA) metrics instead of the GAAP metrics, which it used in 2019 and prior years.... ISS is introducing a new negative overriding factor for equity plan proposals that contain an 'evergreen' funding provision."

Winston & Strawn LLP

Selected Discussions
on the BenefitsLink Message Boards

After-Tax Contribution to Plan Followed by Rollover to a Roth IRA

"A participant wants to make an after-tax contribution to the plan and then, roll that out the next day to a Roth IRA. It would sit in a holding account and have no earnings for the one day. The 401(k) plan does allow after-tax contributions and Roth deferrals. The participant is over 59.5 and the plan allows in-service of after-tax money at any time. Assume the plan does not have a testing issue with ACP. I believe that is possible using a code G on the 1099R and none of it would be taxable b/c no earnings. Is this right? Seems too easy to go around the Roth IRA limits."

BenefitsLink Message Boards

Plan Loan from Pooled Account; Interest on Repayments Must Be Shared with All Participants?

"Owner/plan sponsor wants to amend plan document to add plan loans, so that he can take out maximum loan. He is aware that this opens the door for plan loans to other participants. In an account with separate accounts, interest from loan repayments would be allocated to the participant who took out the loan. In a pooled account, is the loan considered just another plan asset, so that the interest is allocated across all participants? Or is it allocated only to the participant who took out the loan? Also, are there fiduciary issues related to the fact that the owner has 2/3 of plan assets allocated to him?"

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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