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January 24, 2020 logo logo
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[Official Guidance]

Text of 2019 IRS Form 8606: Nondeductible IRAs (PDF)

"Complete this part only if one or more of the following apply. [1] You made nondeductible contributions to a traditional IRA for 2019. [2] You took distributions from a traditional, SEP, or SIMPLE IRA in 2019 and you made nondeductible contributions to a traditional IRA in 2019 or an earlier year.... [3] You converted part, but not all, of your traditional, SEP, and SIMPLE IRAs to Roth IRAs in 2019 and you made nondeductible contributions to a traditional IRA in 2019 or an earlier year."

Internal Revenue Service [IRS]

[Official Guidance]

Text of PBGC Technical Update 20-1: PBGC Premium Filings for CSEC Plans for 2019 and 2020 Plan Years

"This Technical Update provides [PBGC] guidance for cooperative and small-employer charity (CSEC) plans (as defined in section 210(f)(1) of ERISA) on filing PBGC premiums for 2019 and 2020 plan years that reflect the premium changes under the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act). This guidance supersedes any inconsistent information with respect to CSEC plans in PBGC's premium filing instructions. PBGC will amend its premium rates regulation (29 CFR part 4006) at a later date in a rulemaking to incorporate the SECURE Act premium changes."

Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

SECURE Act Impacts Distributions Under Governmental Plans and Other Areas Affecting Plan Administration (PDF)

"The [SECURE Act] has made a number of changes to Internal Revenue Code requirements for governmental plans, particularly in the required minimum distribution (RMD) requirements ... and made a number of other changes to the plan distribution rules. Accommodating these changes may present particular administrative burdens for public plans. Governmental plans should start considering what changes in plan terms, recordkeeping, reporting and communications may be necessary to reflect the new distribution rules."

Groom Law Group

[Guidance Overview]

SECURE Act and Guaranteed Income, Part 3

"This article talks about two practical issues: [1] the need for the guaranteed retirement income products to be on recordkeeping platforms, and [2] the role of plan advisors in helping 401(k) fiduciaries understand and select the insurance company and the product."

[Guidance Overview]

Fix a Decade of Document Errors? Yes, You Can!

"In two months (on March 31, 2020), the window closes for 403(b) plan sponsors to take advantage of the unique opportunity to retroactively amend their 403(b) retirement plans to correct document errors retroactively all the way back to January 1, 2010. After March 31, 2020, 403(b) plans likely will be subject to amendment deadlines that mirror 401(k) plans unless otherwise announced by the IRS."


Hear Ye, Hear Ye: Participant Notices for Retirement Plans

"Notice requirements for retirement plans can be daunting. It may seem that, between the [DOL], [IRS], and [PBGC], there is an unlimited array of notices that need to be provided. Luckily, many notices only need to be provided annually and many will not apply to a plan at all. Even better, if notices are missed, this can be corrected.... A good listing of the possible notices that must be provided can be found here."

Ferenczy Benefits Law Center

It Pays to Be Prepared: Opportunities to De-Risk a Pension Fund

"Low rates mean 'borrow to fund' strategies are back in favor.... Another opportunity arises when falling risk-free rates are combined with widening credit spreads.... It can be very cost effective for a multinational plan sponsor to plug a pension deficit in a country with a weakening currency.... Pension funds are pouring into the longevity market to take advantage of today's attractive prices."


Editor's Pick 2019 Public Retirement Systems Study (PDF)

44 pages. "The overall average expense for all respondents to administer the funds and to pay investment manager fees is 55 basis points. This is down from 60 basis points in the prior year.... Reporting funds saw, on average, one-year returns around 4.5 percent.... The average assumed rate of return on investment for responding funds is 7.24 percent, compared with 7.34 percent last year.... About 82 percent of all responding funds are considering lowering or have lowered their assumed rate of return, and 51 percent are implementing or considering higher benefit age/service requirements."

National Conference on Public Employee Retirement Systems [NCPERS]

U.S. Supreme Court Vacates and Remands ERISA Stock-Drop Suit

"The Supreme Court's decision leaves in place the Dudenhoeffer standard ... Nevertheless, the remand order highlights arguments available to defendants in ERISA stock-drop actions where plaintiffs allege that defendants were required to act on the basis of inside information. The Supreme Court left unresolved both whether ERISA fiduciaries are ever required to act on the basis of inside information to benefit an ERISA plan, and whether Dudenhoeffer requires ERISA fiduciaries to cause disclosures that are not otherwise required by the federal securities laws." [Retirement Plans Committee of IBM v. Jander, No. 17-3518 (S.Ct. Jan. 14, 2020)]

Paul, Weiss, Rifkind, Wharton & Garrison LLP

Supreme Court Decides Not to Decide

"The U.S. Supreme Court has an unusual number of [ERISA] petitions before it in the 2019-20 term. Two recent decisions may increase uncertainty around the use of actively managed funds, as well as the inclusion of company stock, in a defined contribution (DC) plan's investment lineup." [Putnam Investments, LLC v. Brotherston, No. 17-1711 (1st Cir. Oct. 15, 2018; cert. pet. denied Jan. 13, 2020, No. 18-926); Retirement Plans Committee of IBM v. Jander, No. 17-3518 (S. Ct. Jan. 14, 2020)]


Excessive Fee Suit Treads New Ground(s)

"While the allegations are reminiscent of those in other, similar suits, this one cites as evidence 'Defendants' own certified annual plan Forms 5500 ... for the ten plan years of 2009 to 2018.'... The suit also treads some new ground in making arguments that the investment funds on the menu are ill-diversified, specifically that 'the Plans' equity funds have a 90% correlation with no provision to make available to participants less-correlated foreign bond, real estate, commodity funds, etc.' " (Fleming v. Rollins, Inc., No. 19-5732 (N.D. Ga., complaint filed Dec. 23, 2019)]

American Society of Pension Professionals & Actuaries [ASPPA]

Excessive Fee Cases Continue With Lawsuit Against Cerner Corporation

"Repeating a number of excessive fee lawsuits filed, the complaint says the plan, which has more than $2 billion dollars in assets, ... has substantial bargaining power regarding the fees and expenses charged.... It also accuses the defendants of failing to monitor or control the plan's recordkeeping expenses." [Freck v. Cerner Corp., No. 20-043 (W.D. Mo. complaint filed Jan. 21, 2020)]

PLANSPONSOR; free registration may be required

Benefits in General

Generation X: How to Retain These Key Workers (PDF)

"[F]inancial stability tops the list of Gen X priorities as they were among the hardest hit during the economic crisis of 2008 and are carrying more healthcare costs ... [T]he vast majority (85%) of Gen Xers agree to some extent that everyone at their company gets offered the same health and wellbeing resources and over half say they have received irrelevant support."

Welltok; free registration required

Editor's Pick New Online Search Tool for Form 5500s Filed with the DOL

EBSA has released a new search tool for Form 5500 filings. In addition to searching for specific filings, users now can search for filings using new filters including plan type, plan asset value, number of participants, employer plan types, business codes, form years, and locations. The number of search results generated increased to 5,000 filings. Users may export search results to a CSV file. Form 5500 filings with the Department since January 2010 are available in the new search tool.

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Key Takeaways from the Section 162(m) Proposed Regs

"[1] More entities are covered by the deduction limitations than you think! ... [2] Companies that are voluntary filers, voluntarily provide public disclosure, or are not subject to Exchange Act registration or reporting on the last day of the tax year are not subject to Section 162(m) limitations ... [3] Covered employees are not limited to those reported in the proxy or 10-K ... [4] The deduction limitations cannot be avoided by having another entity pay the compensation ... [5] The existence of a clawback policy could result in a loss of grandfathering and the retroactive loss of a deduction ... [6] Potential need to modify deferred compensation arrangements in 2020 ... [7] Compensation paid in another capacity or following termination of employment (even upon death) may not be deductible."

Latham & Watkins

Selected Discussions
on the BenefitsLink Message Boards

Safe Harbor Match and Safe Harbor Nonelective During Transition Period

"Say Company A acquires the assets of Company B. Company B employees will become Company A employees at closing. Company A has a safe harbor match 401(k) plan, and Company B has a safe harbor nonelective 401(k) plan. If Company A assumes sponsorship of Company B's plan, can both plans be maintained separately (for their respective pre-acquisition employee populations) during the 410 transition period without any adverse testing consequences?"

BenefitsLink Message Boards

Stop 401(k) Deferrals, Start My Own Fully Deductible IRA?

"My company offers 401K, but they're shady and don't deposit the funds in the 401K account for months. I'm tired of the cat and mouse game. I'd like to contribute nothing this year and instead do my own IRA. If contribute nothing to my 401K all year, am I allowed to make deductible contributions to my IRA as if my employer didn't have a 401K plan?"

BenefitsLink Message Boards

Ongoing Hardship Distributions for Expensive Drugs Not Covered by Insurance

"We have a client whose plan allows for hardships from 401k Deferrals and Safe Harbor sources using the safe harbor rules. The participant's dependent needs a $2,000 prescription each month. The medication is not covered by their insurance. The participant asked if it would be possible to get a hardship distribution to cover the cost of the medication for the next 3 years ($2,000 each month for the next 36 months). Suggestions as to how to help these people?"

BenefitsLink Message Boards

Mid-Year Death of Partner/Participant

"A Partner passed away in May 2019 and, evidently ceased to be a Partner per the partnership agreement. Fast forward to year-end. Previous Partner is owed the 3% SH and Profit Sharing per the plan document. Who pays the 3% SH and PS for 2019? The other partners? The previous partner's estate? I lean to the other partners, but I just don't know."

BenefitsLink Message Boards

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Press Releases

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

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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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