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[Guidance Overview]

Congress Takes the Stretch Out of IRAs (and Other Retirement Assets)

"Prior law defined two categories of beneficiaries, those who were 'designated beneficiaries' (eligible for 'stretch' treatment) and those who were not. The new law preserves those classifications, changes the treatment of designated beneficiaries, and adds one additional category, 'eligible designated beneficiaries.' Different rules apply to each category. Prior law also made a distinction in the treatment of inherited retirement accounts depending on whether the participant died before her required beginning date for taking distributions from retirement accounts or after. The new law does away with that distinction."

Caplin & Drysdale

[Guidance Overview]

Failing to File Form 5500 Just Became More Costly

"The SECURE Act has increased the IRS penalty, and effective after December 31, 2019, the penalty for late filers is $250 a day, up to a maximum penalty of $150,000 per plan year. Also increasing under the Act is the penalty for failure to file Form 8955-SSA (Annual Registration Statement for Deferred Vested Participants) ... from $1 per participant multiplied the number of days the failure occurred (maximum of $5,000) to $10 per participant multiplied the number of days the failure occurred (maximum of $50,000)."


[Guidance Overview]

A Short Guide to the SECURE Act for Retirement Plan Sponsors and Administrators

"[This article includes] a chronological guide to the key retirement plan issues raised by the new law ... Changes effective upon enactment ... Effective for distributions made after December 31, 2019 ... Effective for plan years beginning after December 31, 2019 ... Effective for plan years beginning after December 31, 2020 ... Effective for plan years beginning after December 31, 2021 ... Special effective dates."


Supreme Court Oral Argument Preview: Are Fiduciaries of Defined Benefit Plans That Meet Minimum Funding Criteria Protected from Lawsuits for Fiduciary Breach?

"If the Supreme Court determines that Thole and Smith lack either statutory standing or Article III standing, its decision will provide a roadmap for defined-benefit-plan fiduciaries who allegedly breach their fiduciary duties, or any party-in-interest that allegedly violates ERISA's prohibited-transactions provisions, to avoid claims by participants and beneficiaries. The plan would simply have to satisfy ERISA's minimum funding requirement. Such a ruling would provide an additional incentive for defined-benefit plans to meet that requirement." [Thole v. U.S. Bank, N.A., No. 16-1928 (8th Cir. Oct. 12, 2017; cert. pet. granted Jun. 28, 2019; oral arg. sched. Jan. 13, 2019)]


Target Date Funds: Blend Is the Trend

"DC plan sponsors are increasingly using TDFs that blend active and passive strategies to seek lower fees and enhanced alpha potential.... Blend TDF assets have grown nearly five-fold since 2013 as the number of offerings has doubled ... [B]lend TDFs typically carry lower fees than fully active offerings, without fully sacrificing alpha potential."


IRS Issues 2019 Required Amendments List, Guidance on Hardship Amendments

"This is the first time that the RA List applies to 403(b) plans (prior lists applied only to qualified plans). Sponsors generally have until Dec. 31, 2021, to adopt the amendments identified on the list, but plans must comply with revised requirements in the meantime. The same deadline applies to calendar-year and noncalendar-year plans."


Employee Benefits Issues Prominent in Restructuring and Bankruptcy Cases (PDF)

"[E]mployee benefits practitioners should be ready when employers face financial distress and should understand how employee benefits are treated in bankruptcy. Recent developments involving executive compensation, pension funding, and withdrawal liability give a glimpse of what to expect. [1] Executive compensation dispute in Purdue Pharma ... [2] McClatchy's funding woes ... [3] Dean Foods' multiemployer pension overhang."

The Wagner Law Group


Mercer Comment Letter to PBGC on Proposed Regs for Lump Sum Payment Assumptions (PDF)

"[Mercer is] concerned about the effect these changes will have on private sector pension plans still using the pre-1994 PBGC lump sum basis to calculate lump sums (no less than the statutory minimum under IRC Section 417(e)), or to convert an account balance into an annuity."

Pension Benefit Guaranty Corporation [PBGC]

Benefits in General

A Study of Longitudinal Trajectories of Health and Job Demand on Retirement Age

"Workers with health trajectories that involve more health-related events, and in particular hypertension, were actually more likely to retire later relative to their healthier peers. This may reflect better management of hypertension through more frequent outpatient physician visits, or a greater need for health insurance coverage."

Center for Retirement Research at Boston College

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Unexpected Provision in Proposed Section 162(m) Regulations May Affect Compensation Deductibility for Umbrella Partnership REITs (PDF)

"Based on the private letter rulings and a technical reading of the prior regulations, many REITs had taken the position that Section 162(m) did not apply to compensation paid by an operating partnership. These Proposed Regulations represent an unexpected and significant change in the IRS's position."

Hunton Andrews Kurth

[Guidance Overview]

Editor's Pick Treasury Proposes New Regs on Section 162(m) Executive Compensation Deduction Limits

"[E]mployers should: [1] Begin to establish internal procedures for tracking covered employees, and consider strategies to address covered employees in future acquisitions. [2] Ensure that they can identify the extent to which these employees' benefits are grandfathered under the Proposed Regulations.... [3] Determine whether any of their plans require payments to be delayed until the first year in which the employer's deduction for the payment would not be subject to the Code Section 162(m) limit."

Groom Law Group

[Guidance Overview]

Important Equity Compensation Reporting and Compliance Reminders

"Employers are required to annually report to the IRS all Incentive Stock Option (ISO) exercises and share purchases under an Employee Stock Purchase Plan (ESPP) with an exercise price less than 100% of the fair market value of the stock. The employer must report ISO exercises on Form 3921 and ESPP shares purchases on Form 3922 in the year after the exercise or purchase. A separate Form 3921 or 3922 must be filed with the IRS for each transaction, even if a single participant has multiple transactions in a single year."

Frost Brown Todd LLC

[Guidance Overview]

Fair Treatment for CFOs Under the New 162(m) Proposed Regs

"Under the proposed regulations (and in our experience), CFOs are the most likely class of current executives to enjoy grandfathering protection for amounts paid pursuant to a written binding contract in effect on November 2, 2017.... Prior to November 2, 2017, a company's CFO was not a 'covered person' under 162(m) and, therefore not subject to the $1 million deductibility limit. Thus, compensation paid or accrued to the CFO pursuant to a grandfathered employment agreement could be exempt, even if the amounts are not performance-based."

Winston & Strawn LLP

Selected Discussions
on the BenefitsLink Message Boards

SECURE Act -- Withdrawals for Birth or Adoption

"Had a quick question on the withdrawals for birth or adoption section of the SECURE Act. Is this intended to be another in-service withdrawal option, or does the participant need to have a distributable event available? Also, in reading the section of the Act it does not appear to say anything similar to 'If the Plan permits', or something to the effect so I'm wondering if this is available even if the Plan does not otherwise allow for withdrawals until, say normal retirement age, for example."

BenefitsLink Message Boards

Compensation for ADP Purposes: One Member of Controlled Group Hasn't Adopted the Plan

"I have a controlled group of two companies. Company B isn't a participating employer. For what purposes is compensation aggregated among controlled group members and for what purposes is it not? When performing the ADP/ACP test, do I only use compensation paid to participants by Company A because compensation paid by Company B isn't eligible for deferral?"

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020, 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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