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April 21, 2020 in KS

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September 2, 2020 in IL
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[Guidance Overview]

SECURE Act Provides Long-Awaited Relief for DB Plans

"Under the Act closed defined benefit plans may still be combined with an employer-sponsored defined contribution plan for testing purposes, but now additional components may be included. In addition to the employer non-elective contributions to a qualified defined contribution plan, the combined plan may also include employer matching contributions, employee stock options (ESOPs) and matching or non-elective contributions under a 403(b) plan without being subject to mandatory disaggregation."



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VCP Whistleblower's Interpretation May Have Been Misguided

"Recently a 'whistleblower' leaked that the IRS had internally announced an upcoming modification to the ... voluntary correction program (VCP) that would have been a significant disincentive for plan sponsors to use the VCP to report and correct plan disqualification errors. The leak went viral ... [A] senior TE/GE official clarified that the VCP was not being changed, and that agents were only reminded that they already had discretion to seek examination of an underlying plan if inquiries and requests for additional information were ignored or if the negotiation of an appropriate correction became deadlocked."


IRS Priority Guidance Plan Update Includes Retirement Items

"The IRS has issued its [second quarter update] to the agency's 2019-2020 Priority Guidance Plan, in which it describes guidance projects in the current fiscal year. Many have been on the Priority Guidance Plan for some time. A number of the guidance items deal with retirement savings arrangements[.]"


Access to Retirement Plan Data: The Next Wave of Fiduciary Litigation?

"Two recent cases -- one settlement agreement and one participant-initiated lawsuit -- have brought into question how participant data collected by a plan's third party recordkeeper can and should be used for non-plan purposes.... [T]here are several threshold matters that must be decided and analyzed by the courts as lawsuits like these move forward.... Prudent plan sponsors and employers should ... review existing service agreements and engage in open dialogues with third-party recordkeepers and administrators to understand what types of data are collected and retained by such vendors, and what those vendors are able to do with such data."

Morris, Manning & Martin, LLP

Settlement in Invesco Self-Dealing Suit Calls for Additional Plan Investments

Parties in a lawsuit accusing fiduciaries of the Invesco 401(k) plan of loading the plan with proprietary investments have agreed to settle for $3,470,000.00. In addition, the defendants agreed to modify the investment options offered through the plan"s self-directed brokerage account (SDBA) so participants will be permitted to invest in non-proprietary exchange-traded funds (ETFs) in addition to the proprietary ETFs offered to participants.


How Hedge Funds Can Avoid Becoming Subject to ERISA

"[A] hedge fund avoids becoming subject to ERISA if 'benefit plan investors' hold less than 25% of each equity class ... Fund sponsors/managers need to be vigilant and recognize that the test is recalculated at the time of each new subscription, transfer and redemption into and out of the hedge fund. If the 25% threshold is met or exceeded, the fund immediately becomes an ERISA 'plan assets' vehicle and the investment manager must comply with ERISA."

Stradley Ronon

Plunging Interest Rates' Impact on Stable Value Funds

"In general, periods of risk-aversion tend to be positive for stable value funds, both in terms of cash inflows (as investors pull back on risk) and price appreciation from declining interest rates. However, there are nuances within the types of stable value products that may cause divergences from manager to manager."

Cammack Retirement Group

Judge Tosses Challenge to CalSavers Retirement Plan

"Upholding his March 2019 order, U.S. District Judge Morrison England ruled Tuesday that the private sector retirement plan, now called CalSavers, isn't pre-empted by [ERISA].... 'There are no additional burdens or requirements imposed by CalSavers on existing ERISA or employer-sponsored retirement plans which interfere with ERISA's regulatory domain or govern any central matter of plan administration,' England wrote Tuesday. Laura Dougherty, staff attorney with the taxpayer association, says it will appeal to the Ninth Circuit." [Howard Jarvis Taxpayers Ass'n v. The California Secure Choice Retirement Savings Program, No. 18-1584 (E.D. Cal. Mar. 10, 2020)]

Courthouse News Service

New Jersey to Enact Retirement Savings Plan for Private-Sector Workers

"New Jersey lawmakers have approved a bill (A 4134) to create the New Jersey Secure Choice Savings Program -- a state-run retirement savings program for private-sector workers.... Once the legislation is signed, the program must roll out within two years, although an oversight board may delay implementation up to a year."


Understanding Mass Withdrawal Liability and Available Alternatives

"Despite the inability to dictate decisions of others and timing of events, there are things employers can do. Mitigating the risk associated with a mass withdrawal involves keeping close watch on a plan and the other contributing employers, as well as having a strategy in place to respond if certain events unfold."

Fox Rothschild LLP

Editor's Pick Projecting Dynamic Retirement Goals by Retirement Date Not Wealth

"[D]ynamic time-oriented reporting (as contrasted with traditional deterministic wealth-oriented reporting), when coordinated with flexible retirement goals, can help clients understand not just the timeframe required to complete a goal, but also how different factors (e.g., a delay -- or acceleration -- in retirement date, the costs associated with reaching the goal, market variability, etc.) play into and trade off with each other in reaching their goal."

Nerd's Eye View


Fixed Index Annuity is Wrong Move for Investors During Market Slump But Boy, What a Pitch

"[From XYZ & Associates Financial Services:] 'When the stock market goes up, [the value of a Fixed Index Annuity] goes up with the market. But if the stock market drops, it holds its value.' -- [Scott Dauenhauer CFP responds:] This statement is incredibly misleading, bordering on fraud in my opinion. Fixed indexed annuities are just regular fixed annuities, but instead of the insurance company declaring a rate that they will pay for a particular time period, the rate is determined by a formula that is linked to the performance of some sort of market index (generally the S & P 500, but increasingly esoteric indexes). What is left unsaid is that the value of the FIA does not go up fully with the value of the market."


Benefits in General

Editor's Pick Society of Actuaries Research Brief: Impact of Coronavirus COVID-19 (PDF)

16 pages. "The result in February and March 2020 ha s been one where a confluence of risks has come together. Morbidity, mortality, asset/liability management and operational risks are all a part of the initial and evolving story. This Society of Actuaries Research Brief has been constructed to highlight some of the key features of the epidemic and contemplate the risks for the actuarial profession to consider in their work."

Society of Actuaries

Selected Discussions
on the BenefitsLink Message Boards

Transfer from Non-ERISA 403(b) to ERISA 403(b)

"Is there any restriction on transferring assets from a non-ERISA 403(b) plan of an employer to the newly established 403(b) plan of that same employer? Assume of course that both plans permit such transfers."

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Upcoming Events About Retirement Plans or Executive Compensation

Mar. 12
Getting It Right - Know Your Fiduciary Responsibilities: Retirement and Health Plan Sponsors - Day 2
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
Mar. 12
Proving Prudence & Participant Loyalty: A Plan Committee Defends Itself
Mar. 12
Annual Legal & Regulatory Update
Worldwide Employee Benefits Network [WEB] - Northeast Ohio Chapter
Mar. 16
IRA Seminar
Mar. 16
ERISA Plan Investments in the Financial Markets 2020: The Fundamentals
Practising Law Institute
Mar. 17
Impact of the SECURE Act on Retirement Income Adequacy
EBRI [Employee Benefit Research Institute]
Mar. 17
Getting It Right - Know Your Fiduciary Responsibilities: Retirement and Health Plan Sponsors - Day 3
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
Mar. 17
ERISA Litigation Recent Hot Issues
Western Pension & Benefits Council
Mar. 18
FAQs on the SECURE Act
American Society of Pension Professionals & Actuaries [ASPPA]
Mar. 18
IRA and HSA Seminar
Mar. 18
Voluntary Fiduciary Correction Program
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
Mar. 18
Impact of the SECURE Act
Fraser Trebilcock
Mar. 18
Multiemployer Pension Plan Withdrawal: An In-Depth Examination

Most Popular Items in the Previous Issue, Inc.
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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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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