Retirement Plans Newsletter

January 28, 2020

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SECURE Act, Secure Lifetime Income Options Now!
February 6, 2020 WEBCAST
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SECURE Act Webinar
February 6, 2020 WEBCAST
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Answering the SECURE Act Insecurities
February 20, 2020 WEBCAST
ERISApedia.com

A Deep Dive on RMDs
February 25, 2020 WEBCAST
Western Pension & Benefits Council

Litigation Lessons and Minimizing Risks
March 10, 2020 WEBCAST
Trucker Huss

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[Guidance Overview]

IRS Notice 2020-6 Provides Reporting Relief for IRAs Following SECURE Act Change to Required Beginning Date

"Notice 2020-6 provides relief to financial institutions because they will have a short amount of time to change their systems to comply with the SECURE Act. Specifically, if a financial institution provides an RMD statement to an IRA owner who will attain age 70.5 in 2020, including by providing a Form 5498, then the IRS will not consider that statement to have been provided incorrectly if the financial institution notifies the IRA owner no later than April 15, 2020, that no RMD is required for 2020."

Thomson Reuters Practical Law

[Guidance Overview]

SECURE Act Encourages Annuity Payouts from 401(k) Plans

"There are a number of complex, statutorily-imposed obligations applicable to the distribution of a 401(k) plan account in the form of an annuity, including election and information dissemination requirements, and, in the case of a married participant, the right of a spouse to receive a survivor benefit ... Failure to satisfy these obligations may cause a plan to lose its tax qualification, which has been a driving force in the historical trend by employers to eliminate annuities from their 401(k) plans."

Blank Rome LLP

[Guidance Overview]

Are We Now Required to Include Part-Time Employees in Our 401(k) Plan?

"Since the provision is not effective until plan years that begin in 2020 or later, the first opportunity for long-term, part-time employees to enter a plan under this new requirement is January 1, 2024. That's right; employees would need to work at least 500 hours in 2021, 2022, and 2023 in order to enter the plan January 1, 2024.... Once these employees enter the plan, they are only eligible to make 401(k) deferrals and not for any employer contributions unless or until they satisfy the 'regular' eligibility requirements contained in your specific plan document[.]"

DWC

[Guidance Overview]

SECURE Act: Implications of Changes to Required Minimum Distribution Rules

"From a plan operation and administration perspective, this change gives rise to a number of questions and considerations:... [1] [T]he effective date can impact employees differently depending specifically on when they reach age 70-1/2.... [2] Actuarial increases for defined benefit plans ... [3] Effect on life expectancy and distribution period tables ... [4] Update plan documentation.... [5] Change applies to surviving spouses."

Proskauer

1099-R Reporting for Uncashed Retirement Plan Checks

"If a distribution check is issued and then subsequently voided and reissued in the same year, the amount reported on the Form 1099-R should be the amount of the reissued check. If a distribution check is issued in one year, but voided and reissued in a subsequent year, this would be a 1099-R reportable distribution in the year of original distribution and is also reportable as income on the recipients' personal tax return for that earlier year.... If a distribution check is issued and subsequently voided in the same year, but reissued in the subsequent year, the distribution should be reported on the Form 1099-R for the year the check was reissued."

Withum Smith+Brown, PC

What Should Plan Administrators Do About Uncashed Retirement Plan Checks?

"[It] has been estimated that the total amount of retirement benefits unclaimed by U.S. employees exceeds $100 billion.... The GAO's report contained three primary recommendations.... [T]he IRS published Revenue Ruling 2019-19 dealing with a participant's failure to cash in 2019 a distribution check received from a qualified retirement plan.... The [ERISA Advisory] Council notes in the description of its review objectives that a plan administrator has a number of options for dealing with an uncashed retirement plan check."

Thompson Coburn LLP

Supreme Court Remands Outlier Stock Drop Decision

"Had the Court considered the merits of whether the 'early disclosure' allegations satisfied Dudenhoeffer's rigorous pleading requirement, it could have breathed new life into, or closed the door on, so-called 'stock drop' lawsuits. Instead, it remains to be seen whether plaintiffs that allege that fiduciaries 'should have told me sooner' that company stock was overvalued will survive motions to dismiss." [Retirement Plans Committee of IBM v. Jander, No. 17-3518 (S. Ct. Jan. 14, 2020)]

Trucker Huss

Who Is Generally Responsible for Designing, Detailing, and Approving the 401(k) IPS?

"In order to fulfill its function, the [investment policy statement (IPS)] ideally brings together many variegated elements. This includes everything from the broad strategic vision of the company, to the actual mechanics of the plan, to the specifics of dealing with the plan investments. Each of these areas can feature different specialists, including company insiders as well as plan vendors. In the end, however, it is the duty of plan sponsor to vote up or down on the IPS."

Fiduciary News

401(k) Savings Rates Are Up, and SECURE Act May Push Them Higher

"[E]mployers offering a safe harbor 401(k) plan with an automatic increase (or auto-escalation) feature can increase plan participants' contributions until they amount to 15 percent of pay. Before the SECURE Act was passed, the cap on default contributions under an auto-escalation program was 10 percent for safe harbor plans. Higher default contribution rates can prod workers to save more for retirement -- if they can afford to do so."

Society for Human Resource Management [SHRM]; membership may be required to view article

Don't Leave Retiring Plan Participants Hanging

"Retirement plan sponsors may be providing investment guidance to participants as they are saving for retirement, but what happens after they retire? ... [M]ore than half of respondents (54%) lack an understanding of how to invest in retirement. The majority (58%) of the youngest age cohort surveyed, ages 45-59, say they do not know how to invest their own money when planning for, or during, retirement. In addition, 43% say they won't change their asset allocation in retirement."

PLANSPONSOR; free registration may be required

Don't Sleep on Reg BI Compliance, Industry Officials Warn

"Industry officials are warning advisors and broker-dealers not to dawdle on compliance with the [SEC's] Regulation Best Interest and advice-standards package, with one compliance firm stating that the consequences for noncompliance are 'heavy.' "

ThinkAdvisor

Benefits in General

[Official Guidance]

Text of EBSA Notice of Participant Assistance Program Customer Survey

"This survey will collect customer satisfaction data for a sample of private citizens who call into the participant assistance program to ask about their private sector employer-provided benefits such as pensions, retirement savings, and health benefits. Three types of callers will be queried: [1] Those who need benefit claim assistance; [2] Those who have a valid benefit claim; and [3] Those who have an invalid benefit claim. The results of the survey will be analyzed to provide actionable data that could be used to improve program performance."

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

Selected Discussions
on the BenefitsLink Message Boards

Tax Credit for Start-Up Plan if Plan Started in 2019 -- How Much?

"I understand that the new law increased the start-up plan credit for tax years beginning after 12/31/2019. How would this work for a plan started in 2019. Would their maximum credit be $500 on their 2019 tax return, but then $5,000 in the next two years? Or do they stick with the $500 credit for all three years?"

BenefitsLink Message Boards

Can Governmental DC Plan Offer 457(b) Plan Plus Deferrals/Matching Contributions?

"Can a money purchase defined contribution plan maintained by a municipality offer elective salary deferrals and matching contributions in addition to 457(b) plan? Not eligible for 403(b) or 401(k), so I think not. Am I missing something?"

BenefitsLink Message Boards

Using Integrated Formula on Cross-Tested Plan

"I have a 3% SH cross-tested profit sharing plan that seems to work best at this time using an integrated allocation method. Is it mandatory to use the full taxable wage base as the integration level?"

BenefitsLink Message Boards

PS58 Costs Not Reported

"We have a new client that has a life policy in the plan. it does not appear that the PS58 costs have ever been reported. I read on a prior thread that the PS58 costs were optional, but I also read they are required to be reported. Is it required? If so, would I just start now? I wouldn't want to go back and have him redo taxes."

BenefitsLink Message Boards

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