Retirement Plans Newsletter

February 7, 2020

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[Guidance Overview]

SECURE Act Modifications to the Required Minimum Distribution Rules

"Although the modifications to the IRS tables, which are scheduled to take effect in 2021, will not have a dramatic effect, they will, by increasing the payout period, decrease the amount of the distributions that an individual must take from retirement plans and IRAs.... Judgments will need to be made, based upon the amount of the inherited retirement savings, age, and income tax bracket of a beneficiary as to whether it is better to defer payment of the inherited amount or take periodic payments."

Blank Rome LLP

Suggested Changes to 402(f) Notice Because of SECURE Act (PDF)

19 pages. "This document contains suggested edits to the explanation required by Internal Revenue Code section 402(f), to reflect changes made to the Code by [the SECURE] Act... The document uses the most recent safe harbor explanation contained in IRS Notice 2018-74 as a base. Only those changes made by the SECURE Act that directly affect language in the safe harbor explanation have been included. For example, the current safe harbor explanation does not provide any detail on the after-death required minimum distribution rules, and thus no changes are suggested to reflect section 401 of the SECURE Act."

The SPARK Institute

Supreme Court Declines to Shut Door on Public Company ESOP Stock-Drop Claims -- More Litigation to Follow

"Although the original Jander decision has been 'vacated,' the practical effect of the Supreme Court's failure to address the core issues leaves the door open to copycat ERISA stock-drop claims and renders the merit of the defenses asserted by IBM before the Supreme Court unresolved. The key takeaway for public companies that offer their own stock in their 401(k) plans is that the door has yet to be definitively shut on ERISA-based stock-drop claims, and that the future of Dudenhoeffer's effect on such claims remains to be determined." [Retirement Plans Committee of IBM v. Jander, No. 18-1165 (S. Ct. Jan. 14, 2020)]

Tucker Ellis LLP

Alleged Fiduciary Violations, Underpayments at Center of UPS Suit

"Former employees of United Parcel Service of America Inc. have sued the company and two UPS pension plans ... The two UPS defined benefit plans use 1983 mortality data to calculate retiree benefits, which fails to account for people living longer and thus leads to reduced benefits, the lawsuit said." [Brown v. UPS, No. 20-460 (N.D. Ga. complaint filed Jan. 31, 2020)]

Pensions & Investments

Switched Jobs? Consider Consolidating Your Retirement Savings

"[I]f you've had a few jobs, you may have several retirement savings accounts in different places. So what do you do with them? ... You can: [1] Cash out your old account(s) and take the money; [2] Leave the money where it is; [3] Roll it over to an individual retirement account (IRA); [4] Roll it over to your new employer's retirement plan. Each option has benefits and drawbacks."

MassMutual

Benefits in General

[Guidance Overview]

Failing to File Form 5500 Just Became More Costly

"The IRS now has the authority to assess a penalty for late filers up to $250 a day, up to a maximum penalty of $150,000 per plan year. But even with the increase in the IRS penalties, they still pale in comparison to the penalties that can be assessed by the DOL... [E]ffective for penalties assessed after January 15, 2020, the per day DOL penalties have increased from $2,194 to $2,233, with no maximum."

Graydon

Editor's Pick Employee Benefits Liability Coverage vs. Fiduciary Liability

"[S]ome plan sponsors believe that they do not need to spend additional premium dollars to purchase fiduciary liability insurance when they have EBL coverage as part of their commercial package general liability insurance policy. As discussed more fully [in this article], including an analysis of a recent court case, a fiduciary liability insurance policy provides significantly broader coverage than the limited administration coverage in a standard EBL policy to protect employee benefit plans and its fiduciaries. Even the defense of routine benefit claims can be excluded from coverage under an EBL policy, which is why plan sponsors need to protect their plans and plan fiduciaries with quality fiduciary liability insurance coverage."

Euclid Specialty Managers

Selected Discussions
on the BenefitsLink Message Boards

Charitable Donations Directly from an IRA Owned by Non-Spouse Beneficiary?

"Can a charitable donation be made directly from an inherited IRA of a non-spouse beneficiary?"

BenefitsLink Message Boards

2% S-Corp Shareholder's Health Insurance Considered a 'Fringe' for 414(s) Purposes?

"Is the 2% S-Corp. owner health insurance considered a fringe for purposes of 414(s) exclusions?"

BenefitsLink Message Boards

401(k) 5500 Filing Question -- Non-Calendar Year Plan

"If the 401k plan year is July 31, 2018 to July 31, 2019, does the plan use a 2018 Form 5500 or a 2019 Form 5500?"

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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