Retirement Plans Newsletter

February 12, 2020

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Webcasts, Conferences

IRA and HSA Seminar
March 18, 2020 in TX
Ascensus

Basics of Qualified Retirement Plans: Session 4
March 19, 2020 WEBCAST
ASC

Loans: Correcting Taxation, Qualification and Fiduciary Failures
April 15, 2020 WEBCAST
ASPPA [American Society of Pension Professionals & Actuaries]

Employee Ownership Conference 2020
April 21, 2020 in MS
National Center for Employee Ownership [NCEO]

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Discussions

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[Guidance Overview]

SECURE Act Provisions Unique to 403(b) Plans, Governmental 457(b) Plans, and IRAs

"Many of the SECURE Act provisions that are broadly applicable to retirement plans ... also apply to 403(b) plans, 457(b) plans, and IRAs.... There are two SECURE Act changes that apply solely to tax-sheltered annuity plans under Code Section 403(b): [1] Treatment of Section 403(b)(7) custodial accounts upon plan termination ... [2] Retirement income accounts -- clarification of participation by church-controlled organizations."

Spencer Fane

[Sponsored]

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


[Guidance Overview]

SECURE Act: Key Changes for Defined Benefit Plans

"The SECURE Act provides permanent relief [for closed defined benefit plans] ... [1] For testing coverage and the amount of benefits, the SECURE Act expands the ability to aggregate the defined benefit plan with a defined contribution plan and to take into account benefits provided under the defined contribution plan ('cross-testing'). [2] The SECURE Act provides relief from the 'benefits, rights and features' test for features that are unique to the defined benefit plan, such as annuity forms of payment. [3] The SECURE Act provides relief from the 'minimum participation' requirement, which requires that a defined benefit plan provide meaningful benefits to at least 50 employees or 40% of all employees."

Proskauer

[Guidance Overview]

What Changes to Plan Administrative Procedures Are Required by the SECURE Act?

"[1] Extended adoption deadline for new plan... [2] Combined annual report for group of plans ... [3] Disclosure regarding lifetime income ... [4] Modification of required distribution rules for designated beneficiaries ... [5] Increased penalties for failure to file retirement plan returns."

Belfint Lyons Shuman

[Guidance Overview]

Church Plans Under the SECURE Act

"[1] Clarification that non-qualified church-controlled organizations can participate in 403(b)(9) retirement income accounts....[2] Treatment of 403(b) custodial accounts upon plan termination.... [3] Treatment of part-timers under 401(k) plans where the 410(b) nondiscrimination rule applies.... [4] Distribution changes ... for both DB and DC plans: [a] Increase in RMD age.... [b] In-service distribution age lowered ... [5] Changes affecting DC plans only: [a] New 10 year deadline for beneficiary distributions ... [b] Qualified birth or adoption distributions."

Groom Law Group

[Guidance Overview]

SECURE Act: Change to RMD Trigger Age Should Trigger Your Attention

"Successful implementation entails updating: [1] Plan procedures and automated systems for notifying participants of an upcoming RMD date. [2] Any notices and communications ... provide[d] to participants  ... [3] Distribution coding and reporting for participants who attain age 70-1/2 in 2020 (or in any subsequent calendar year) to ensure that distributions made during or after the year they attain age 70-1/2 and before the year they attain age 72 and that would be eligible rollover distributions are treated as eligible rollover distributions and subject to mandatory 20% federal income tax withholding[.]"

Verrill Dana LLP

Eighth Circuit Rules Stable Value Provider Is a Fiduciary

"[T]he Eighth Circuit Court of Appeals ruled ... that Principal was a fiduciary with respect to one of its stable value products ... because of [1] its ability (unilaterally) to set the guaranteed rate on the PFIO and [2] the sponsor's inability (without paying a 5% surrender charge or waiting 12 months) to withdraw from the PFIO, notwithstanding that participants could (individually) withdraw their assets from the PFIO subject only to an 'equity wash.' " [Rozo v. Principal Life Ins. Co., No. 18-3310 (8th Cir. Feb. 3, 2020)]

October Three Consulting

Editor's Pick Managing the SECURE Act's Elimination of the Stretch IRA

"[W]hile there are now three distinct groups of beneficiaries under the SECURE Act, only one of these groups (i.e., the Non-Eligible Designated Beneficiaries) must now contend with the new SECURE Act 10-Year Rule for inherited retirement accounts. For the other two groups (i.e., Eligible Designated Beneficiaries and Non-Designated Beneficiaries), very little has changed[.]"

Nerd's Eye View

Editor's Pick Social Security's Funding Shortfall

"Social Security's projected long-range funding shortfall is driven largely by demographic factors. Declines in fertility and increases in longevity result in a lower ratio of workers to beneficiaries (projections show the ratio of workers paying into the system to support each beneficiary is estimated to fall from 2.8 in 2018 to 2.2 in 2035)." [Report IF10522, updated Feb. 12, 2020]

Congressional Research Service [CRS]

Editor's Pick Social Security: The Trust Funds (PDF)

21 pages. "This report covers how the Social Security program is financed and how the Social Security trust funds work. " [Report RL33028, updated Feb. 12, 2020]

Congressional Research Service [CRS]

Selected Discussions
on the BenefitsLink Message Boards

'Back Door Roth'

"The concept of a 'back door' Roth has been talked about lately through the use of Voluntary After-tax Employee Contributions into a 401(k) Plan that permits in-plan Roth conversions. It seems obvious that this strategy would be enticing to many HCEs wanting to effectively increase their salary deferral limit for a given year. But considering most NHCEs would not likely make deferrals of this sort, how do you pass the ACP test? It appears to be a real problem but perhaps there is some solution."

BenefitsLink Message Boards

Employees Who Have Worked in Their Foreign Offices -- Count Their Service for Eligibility and Vesting Purposes When They Come to the U.S.?

"Corporation A maintains a 401(k) Plan in the US. Corporation A is a U.S. company with foreign subsidiaries. Corporation A has a number of employees that come and work in the U.S. from their Canada and Paris offices. Can employees who have worked in the foreign offices have their time counted towards eligibility and vesting when they come over to the U.S.?"

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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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