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[Guidance Overview]
SEC Clarifies Form CRS Relationship Summary Format and Delivery Requirements (Incl. Relief for Fund Advisers)
"On November 26, 2019, staff of the Division of Investment Management and the Division of Trading and Markets released an installment of FAQs to help registrants prepare for the June 2020 implementation deadline for Form CRS. The FAQ addressed Form CRS's: [1] relationship summary format; and [2] delivery requirements. The first of the two questions concerning delivery requirements provides guidance regarding the delivery of Form CRS to existing retail clients and customers via June 2020 quarterly account statements, the annual Form ADV update, or other periodic reports."
Kilpatrick Townsend
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Can Your Plan Records Be Hacked?
"Fiduciaries should ... make sure their in-house systems are as secure as possible ... [and] should also: [1] Make sure their service providers' systems are secure. [2] Insist that their service provider agreements permit them to audit their service provider's systems. [3] Include specific cybersecurity obligations in their service provider agreements. [4] Be careful about agreeing to service provider contract provisions that may limit their remedies if there is a security breach. [5] Not assume their existing fiduciary liability policy provides cybersecurity coverage."
PenChecks
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Pension Funding Index, December 2019 (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans increased by $15 billion during November ... The deficit lessened to $243 billion primarily due to investment gains.... As of November 30, the funded ratio increased to 86.8%, from 86.1% reported at the end of October. Pension funding has improved by $64 billion over the past three months primarily due to positive market performance."
Milliman
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For Some 401(k) Holders, Picking Funds Is as Simple as ABC -- Unfortunately
"401(k) plan participants are more likely to invest in mutual funds at or near the top of alphabetical listings.... On average, each of the top four funds on such a list receives 10% more money than it would receive if money was allocated equally among the investment options ... Funds in the fifth through 10th places on a plan’s list receive 5% less investment than they would if money was allocated equally, while each fund appearing after the 10th position contains 10% less investment allocation[.]"
The Wall Street Journal; subscription may be required
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[Opinion]
Multiemployer Compromises Needed
"The House bill avoids any benefit cuts for employees and retirees and does not increase PBGC premiums.... The Senate bill ... is designed to shore up the PBGC and place the burden of rescuing the troubled plans on participants, retirees and plan sponsors.... [T]he Pension Analytics Group ... proposes that if a plan is within 15 years of becoming insolvent it should be required to cut the benefits to the PBGC level.... Somewhere in the
middle of these proposals lies a plan to help multiemployer plans survive, preferably without taxpayer money or raiding the now-healthy PBGC single-employer plan[.]"
Pensions & Investments
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[Opinion]
Putnam Investments, LLC v. Brotherston: The End of 'Business as Usual' for 401(k) Plans
"The predominant invest options in many 401(k) plan continue to be actively managed mutual funds. However, the evidence with regard to the historical performance of actively managed mutual funds shows that the overwhelming majority of actively managed funds are cost-inefficient, not only consistently underperforming comparable passively managed, or index funds, but doing so at a significantly higher price. So much for the three fiduciary requirements of prudence set out in the Restatement."
The Prudent Investment Fiduciary Rules
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Benefits in General
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Best Practices in Administering Benefit Claims: Litigation Aspects
"Strategically, of course, the plan administrator's goal is to find the quickest means to get the case dismissed. And, putting the administrative record in the hands of the participant prior to the participant commencing an action often helps put the plan administrator in a better position to try to get the case dismissed ... [A] good administrative record is key to setting up the possibility of an early resolution of a benefit claim dispute."
Proskauer
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Multiemployer Health and Welfare Fund Statistics, Fall 2019 (PDF)
"The average plan could pay for approximately one year and one month of benefits and expenses with its net assets. There was an aggregate increase in net assets from 2016 to 2017 of approximately 0.7 months of total expenses. Total income exceeded total expenses by approximately 10.6%, an increase of 1.4 percentage points over the prior year. Administrative expenses represented 5.6% of total expenses on average, a decrease of 0.3 percentage points over the prior year."
Milliman
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Selected Discussions on the BenefitsLink Message Boards
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Can a DB Plan Be Based Upon Section 736(a) Income?
"Partner Joe (over age 70) retired in 2017 from partnership XYZ, LLC (a large law firm) and started receiving IRC §736(a) payments (distributive share or guaranteed payment under IRC §707(c)) for a period of 48 months and in form of a Schedule K-1. These payments are subject to self-employment tax. Joe also has clients on the side with whom he consults. Not sure how he is paid yet but can assume schedule C. Joe wants to start a pension plan on both incomes. Can he do that? How about only on the K-1 he is getting from XYZ, LLC? The plan will be for 2019, 2020 and 2021.
BenefitsLink Message Boards
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No Form 5500 Ever Needed if Assets Less Than $250,000?
"I remember someone once telling me that if Plan Assets were under $250,000 the Plan was not required to file Form 5500 but I don't see that in the Form 5500 instructions. Does it only apply to those who file Form 5500-EZ?"
BenefitsLink Message Boards
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David Rhett Baker, J.D., Editor and Publisher
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Article submission: Online form
BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2019 BenefitsLink.com, 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 BenefitsLink.com, 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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