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January 30, 2020 logo logo
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[Guidance Overview]

IRS Says 'Show Me the Signatures' for Qualified Plan Documents

"Tax laws have long required that qualified retirement plans timely adopt written plan documents and amendments. But what evidence must a plan sponsor provide to an IRS auditor to prove that they have timely adopted a written plan document and required amendments? The IRS recently addressed this question in Chief Counsel Memorandum 2019-002, which advises that absent extraordinary circumstances, 'it is appropriate for IRS exam agents and others to pursue plan disqualification if a signed plan document cannot be produced by the taxpayer.' "

Morgan Lewis

[Guidance Overview]

Round One of SECURE Act Guidance: IRA Reporting Relief for 2020 MRDs

"The law requires IRA providers to [1] report on Form 5498 if MRDs are required for the following year, and [2] provide a notice, generally by January 31 of each year, for those that must take a MRD for that year (e.g., under prior law, IRA owner that turn 70-1/2 in such year). The IRS just issued Notice 2020-6, which provides guidance on how IRA providers may comply with these rules, and provides some relief to address non-compliance based on the late hour of the law change."

Groom Law Group

[Guidance Overview]

SECURE Act Limits Distribution Options

"[If] a beneficiary of a conduit trust is not an eligible designated beneficiary (surviving spouse, etc.) ... the previously required conduit trust language will, at a minimum, require the pass through of all distributions to the trust beneficiary in the year the distributions are received by the trust.... [An] accumulation trust ... may well work better for non-spouse beneficiaries."

Quarles & Brady LLP

[Guidance Overview]

SECURE Act: Retirement Account Estate Planning Changes

"The exceptions to the ten-year rule are complex and must satisfy strict definitional requirements, some of which are still unclear under the new rules. It is important to seek guidance from your estate planning attorney and tax advisor on these definitions to properly assess whether stretch IRA planning remains available for these individuals in a participant's or owner's estate planning."

Miller Johnson

Challenge to Plan's Actuarial Equivalence Calculations Survives Motion to Dismiss

"The [federal district] court says 'actuarial equivalence' may be a term of art, but it is in fact left undefined by the federal statutes governing pension plans.... [T]he motion to dismiss is ... denied -- without prejudice -- for all counts to the extent that they are based on alleged violations of '29 U.S.C. Sections 1054(c)(3) or 1055.' ... [T]he parties have been given an opportunity to submit supplemental briefing as to the meaning of 'actuarial equivalent' under the statute[.]" [Belknap v. Partners Healthcare System, No. 19-11437 (D. Mass. Jan. 24, 2020)]



SPARK Global Public Policy Forum -- June 23-24, Washington DC

Sponsored by SPARK

The retirement services industry's leading event: comprehensive agenda designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Record Keepers -- focus on global retirement public policy and expansion of pension reform occurring worldwide. Learn more

Second Circuit Rules in Favor of Employer in Multiemployer Plan Withdrawal Liability Case

"In vacating the lower court's decision, the 2nd Circuit chose to eliminate the leeway that actuaries to multiemployer trusts were considered to have in changing the interest rate retroactively after the last measurement date used to determine withdrawal liability owed by contributing employers that withdraw from those plans." [The National Retirement Fund, et al. v. Metz Culinary Management, Inc., No. 17-1211 (2d Cir. Jan. 2, 2020)]

October Three Consulting

Supreme Court Sends Jander Back to Second Circuit

"The decision is unusual. It is an unsigned per curiam opinion, but it includes two separate and conflicting concurring opinions ... [which] highlight an issue present in most post-Fifth Third Bancorp v. Dudenhoeffer stock drop litigation -- whether these disputes should be resolved under the securities laws or there is a separate ERISA cause of action with respect to them." [Retirement Plans Committee of IBM v. Jander, No. 18-1165 (S. Ct. Jan. 14, 2020)]

October Three Consulting

The Beginning of the End for Asset-Based Retirement Plan Recordkeeping Fees?

"Until all the large players in the marketplace can correctly price plans on a per-head basis, it is unlikely that per-head pricing will completely take over the marketplace.... Almost all asset-based to per-head charge conversions will decrease profit margins for the recordkeeper, and that lost profit will have to come from somewhere ... [A] per-head charge does little to affect the revenue sharing issue. And, for some plans, particularly those with fewer assets, automatic enrollment, and/or high employee turnover, per-head pricing can sometimes turn out to be MORE expensive than flat-fee pricing."

Cammack Retirement Group

Manipulation of Pension Discount Rates: Biases in Estimation and International Evidence

"This study examines manipulation of discount rates in the valuation of defined-benefit (DB) pension obligations.... [E]stimation methods used by existing studies suffer from systematic bias which increases the probability of type I error (erroneous inference of manipulation). [The authors] develop new measures of discretion which substantially reduce the estimation bias. Using an international sample of DB sponsors reporting under IFRS, [they] find that upward use of discretion is positively related to funding deficits, confirming that manipulation takes place."

Jiaman Xu, Seth Armitage, Ronan Gallagher, via SSRN

How Do Older Workers Use Nontraditional Jobs?

"Nontraditional jobs -- defined here as jobs without health and retirement benefits -- are on the rise among older workers. The impact of such jobs depends on how long they last -- a temporary stint could provide needed flexibility while frequent use could undermine retirement security. The findings show that, strikingly, only about one-quarter of workers ages 50-62 are consistently in traditional jobs with benefits. Most of those in nontraditional work turn out to be frequent users, and they end up with lower retirement incomes at 62 than those consistently in traditional jobs."

Center for Retirement Research at Boston College


Annuity Issuers Respond to SECURE Act with Cheers and Educational Flyers

"Since the bill's passage, firms have added new pages, press releases and resources to public and advisor sites to educate consumers about the annuity implications of the SECURE Act.... For the annuity industry, the Act presents a host of new opportunities to position and sell annuities as lifetime income in retirement, likely intensifying a trend in annuity marketing that was already visible before the SECURE Act."

Corporate Insight


Common Misconceptions About Public Pensions

"[1] Retired public employees automatically receive cost-of-living adjustments (COLAs) that tremendously boost their incomes.... [2] Retirees walk away with huge pension payments.... [3] Taxpayers are solely on the hook for pensions and it's not worth it."

National Public Pension Coalition

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Editor's Pick ISO and ESPP Reporting and Disclosure Requirements for Employers

"[A]ll corporations whose employees or former employees exercised an incentive stock option (ISO) or made a purchase under the corporation's employee stock purchase plan (ESPP) in 2019 ... must furnish an information statement on Form 3921 (ISO) or Form 3922 (ESPP), as applicable, to each employee (or former employee) by January 31, 2020. You must also file information returns with the [IRS] by February 28, 2020, if filing on paper, or March 31, 2020, if filing electronically."

Hanson Bridgett LLP

Selected Discussions
on the BenefitsLink Message Boards

TPA Partnering with a Financial Advisor

"We are a non-producing TPA firm, strictly fee-based with our clients. We have an existing financial advisor who is inquiring whether he could bundle his fees with ours. We get paid annually both our fees and his fee, and then cut him a check for his portion at year end. We would 1099 him for the amount. Does this sound OK for both us and him?"

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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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