Retirement Plans Newsletter

January 29, 2020

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[Guidance Overview]

Best Interest Standard of Care for Advisors, Part 23

"The SEC has materially changed its expectations of conflict of interest disclosures by investment advisers.... The SEC amplified the comment about seniors by saying: OCIE will again emphasize the protection of retail investors, particularly seniors and those saving for retirement. While not explicit, that could easily be seen as advice to retirees about investing (e.g., advice to IRA owners) and recommendations about rollovers from retirement plans to IRAs."

FredReish.com

[Sponsored]

ASC CE Webcast: Fixing Plan Operational Failures

Sponsored by ASC

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Shell Oil, Fidelity Face Allegations in New ERISA Lawsuit

"[P]laintiffs allege that Shell failed to use the multi-billion dollar [401(k)] plan's bargaining power to benefit participants and beneficiaries in the form of lower recordkeeping and asset management fees. They also allege that the Shell defendants allowed unreasonable expenses to be charged to participants for administration of the plan and managed account services, and that they 'failed to even monitor numerous funds in the plan at all.' " [Harmon v. Shell Oil Co., No. 20-021 (S.D. Tex. complaint filed Jan. 24, 2020)]

PLANSPONSOR; free registration may be required

Justices Eye Another ERISA Case, Signal Interest in Penn Dispute

"The U.S. Supreme Court on Monday signaled its interest in a lawsuit over the University of Pennsylvania's retirement plan by asking university employees to respond to the school's petition for review. A 'call for response' from the justices indicates someone at the high court is interested in the case, and it increases the chances the case will be heard[.]" [Sweda v. Univ. of Penn., No. 17-3244 (3d Cir. May 2, 2019; cert. pet. filed Dec. 16, 2019)]

Bloomberg Law

Groups Lobby Supreme Court for Uniform Standard on ERISA Violation Claims

"Representatives of employee benefits trade groups and record keepers have asked the Supreme Court to establish a uniform standard for determining if federal courts should dismiss ERISA complaints or allow them to go to trial.... These friend-of-the-court briefs support a petition by the University of Pennsylvania, which asked the Supreme Court to overturn an adverse ruling by a federal appeals court in Philadelphia in a fiduciary breach case involving its 403(b) plan." [Sweda v. Univ. of Penn., No. 17-3244 (3d Cir. May 2, 2019; cert. pet. filed Dec. 16, 2019)]

Pensions & Investments

American Views on Defined Contribution Plan Saving (PDF)

36 pages. "Seventy-six percent of Americans had favorable impressions of 401(k) and similar retirement plan accounts in fall 2019, similar to 75 percent in fall 2018 and up from 72 percent in fall 2017 ... More than five out of 10 DC-owning individuals indicated they probably would not be saving for retirement if not for their DC plans.... A strong majority of Americans disagreed with proposals to remove or reduce tax incentives for retirement savings."

Investment Company Institute [ICI]

Is the Adoption of Innovative Plan Features Finally Leveling Off?

"After years of steady increase, ... plan sponsor adoption of automatic enrollment features, Roth options, and target-date funds may be leveling off. Each of those features received considerable attention following passage of the Pension Protection Act of 2006 (PPA), which eliminated the sunset on Roth features and provided fiduciary relief and plan design guidance."

Plan Sponsor Council of America [PSCA]

SECURE to Ignite 'Huge Boom' in Annuities, But Not Immediately

"[R]ecordkeepers need to learn about how annuities are different from mutual funds with age restrictions and contribution differences, and they also need to build technology to support annuity offerings and their proliferation. The third group that needs to be educated ... are the plan sponsors."

InsuranceNewsNet.com

OregonSaves: Spring 2020 Registration Deadline for Employers Using PEOs

"The deadline to register with OregonSaves for employers using professional employment organizations (PEOs) is upcoming ... The Oregon State Treasury has informally indicated that this deadline is likely to be May 15, 2020. In addition, the final registration date for employees with four or fewer employees was extended to January 15, 2021."

Davis Wright Tremaine LLP

[Opinion]

How HR and Finance Can Work Together to Fix the Retirement Crisis

"Let’s fix the retirement crisis. Let’s do it by having retirement programs that are not burdened with labels. Let’s do it in a way that looks like a 401(k) plan to the CFO, but at the same time provides predictable, safe, lifetime income for the workforce. And, above all, let’s not worry about what we call those plans. What do we need in order to make this work?"

John Lowell, via Human Resource Executive

Executive Compensation
and Nonqualified Plans

Senior Executive Incentive Design Practices Study: Retail, Consumer Durables, and Restaurants, 2019-2020 (PDF)

12 pages. "Retail companies tend to have the fewest annual incentive metrics, while Restaurant companies are more likely to have the greatest number of metrics.... It is common to combine an Earnings metric with a Revenue metric as seen by nearly three-quarters of Restaurant companies (73%) and 30% and 40% of Retail and Consumer Durable companies, respectively.... Operating Income, EBIT, and EBITDA, are the most prevalent earnings definitions used by study companies across all three groups[.]"

Meridian Compensation Partners, LLC

Selected Discussions
on the BenefitsLink Message Boards

SIMPLE IRA for 2020 -- Too Late to Stop and Replace with 401(k)?

"Is there any possibility that SIMPLE IRA deductions can be reversed in January so that it can be replaced by 401(k) for 2020? I know the rule that both can't be maintained the same year. However, does the employer really need to wait another year to put in a plan with higher contribution benefits? Is there a fix or way to correct? Seems like it could still be done this early in the year."

BenefitsLink Message Boards

FAS Discount Rate -- What Is Reasonable?

"I am having a debate with some other actuaries about what would be considered a reasonable discount rate for accounting purposes. My understanding is that for accounting purposes, the assumptions belong to the client. I know the rate is subject to auditor approval, client approval, etc. but I am interested in the actuary's requirement to assess the rate. Reasonable for one actuary may be very different from another. So what leeway do we have in determining what is reasonable? What items can/should be considered -- for example, historical market bond rates relative to current? Impact on plan results? Impact on overall company results? Whether the company is publicly traded or not? Discount rate relative to other plans?"

BenefitsLink Message Boards

SECURE Act's Effect on Safe Harbor Notices

"Question on the SECURE Act's elimination of the safe harbor notice requirement for nonelective safe harbor plans. I have read this: "Nonelective contribution safe harbor plans that have matching contributions intended to fall within the ACP safe harbor must still give notice." That would mean that even if a plan is utilizing a safe harbor nonelective contribution for the year, and it provides a discretionary matching contribution as well, the notice is still required each year. Is that correct?"

BenefitsLink Message Boards

RMD for an Alternate Payee

"A QDRO alternate payee has left their transferred balance in a qualified group 401k plan, essentially becoming a non-contributing participant. Assets were transferred during 2018, when the alternate payee was already over 70-1/2. Should the alternate payee have taken a 1st RMD from the plan (for 2019) by 12/31/19, or is the deadline 4/1/2020?"

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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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