Retirement Plans Newsletter

March 12, 2020

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Webcasts, Conferences

RFP Best Practices
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fi360

Protecting Your Retirement in a Digital Era
April 8, 2020 in TX
Worldwide Employee Benefits Network [WEB] - Houston Chapter

ERISA Plan Investments in Cryptocurrency: Fiduciary Issues, Compliance Rules, Transaction and Security Risks
April 29, 2020 WEBCAST
Strafford

Retirement Design Proposals
October 7, 2020 WEBCAST
Conference of Consulting Actuaries

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[Official Guidance]

Text of SEC Final Rule: Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts (PDF)

713 pages. "New rule 498A ... will permit a person to satisfy its prospectus delivery obligations under the Securities Act for a variable annuity or variable life insurance contract by sending or giving a summary prospectus to investors and making the statutory prospectus available online. The rule also will consider a person to have met its prospectus delivery obligations for any portfolio companies associated with a variable annuity or variable life insurance contract if the portfolio company prospectuses are posted online."

U.S. Securities and Exchange Commission [SEC]

[Sponsored]

Have clients with Qualified Business Income?

Sponsored by DATAIR Employee Benefit Systems, Inc.

DATAIR's Pension System calculates the estimated 199A deduction of having a plan or not having a plan for each owner. Individual reports for the owners are printable for discussion with their tax advisors. Contact DATAIR at 888-328-2474 or www.datair.com Learn more


[Guidance Overview]

SEC Adopts Investor Disclosure Improvements for Variable Annuities and Variable Life Insurance Contracts

Announcement and Fact Sheet. "The changes permit the use of a concise, reader-friendly prospectus designed to improve investors' understanding of the contracts' features, fees, and risks. The framework's use of layered disclosure and technology will provide investors with a roadmap so that they can more easily access information that they need to make an informed investment decision."

U.S. Securities and Exchange Commission [SEC]

[Guidance Overview]

Puerto Rico Issues Guidance for Disaster Relief Distributions from Tax-Qualified Retirement Plans Due to 2020 Earthquakes

"[T]he Puerto Rico Department of the Treasury issued [Circular Letter 20-09 (CL 20-09)] to allow Puerto Rican participants in qualified retirement plans to receive, under favorable tax terms, distributions of the money they may need to help recover from the damages they and/or their close relatives sustained as a result of the earthquakes. Adoption of the disaster relief afforded by CL 20-09 is optional. Plan sponsors have full discretion to decide whether to allow these distributions in their retirement plans, and that decision has no impact on the qualification of the plan under Puerto Rico's tax laws." [CL 20-09 unofficial English translation]

Ogletree Deakins

[Guidance Overview]

IRS Provides Filing Relief to Certain Foreign Trusts

"[Rev. Proc. 2020-17 describes] a procedure whereby certain U.S. persons having an interest in tax-favored foreign trusts established and operated exclusively or almost exclusively to provide pension or retirement, medical, disability, or educational benefits are exempt from the informational reporting of IRC Sec. 6048 (i.e., Forms 3520 and 3520-A). Though Treasury and the IRS have previously issued guidance that reporting is not required for certain Canadian Retirement Plans, this new guidance expands the category of foreign trusts which are exempt from the informational reporting. However, U.S. persons must still file a Foreign Bank Account Report, the Form 8938, Statement of Specified Foreign Financial Assets, and report the income from these plans."

EisnerAmper

[Guidance Overview]

Tontines and PEP Late Deferrals Are Among the SECURE Act's Impactful, Infrastructure Oddities

"Three things in particular [are striking] about the SECURE Act: First was the lack of immediate, significant impact on the employer maintaining plans.... Second was the sheer number of novel concepts that was introduced by the Act: PEPs, Groups of Plans, Birth and Adoption Rules, Portability of lifetime Income, lifetime Income disclosure, and several other new concepts that simply did not exist before the Act.... Third, and perhaps most important, is the volume of small, odd, technical details which need to which attention needs to be paid. This statute is a technocrat's dream."

Business of Benefits

ERISA Advisory Council Report: Voluntary Transfers of Uncashed Checks from ERISA Plans to State Unclaimed Property Programs (PDF)

48 pages; Nov. 2019. "[T]he Council recommends that the Department publish the following:

  • Guidance (i) clarifying that uncashed distribution checks are assets of the plan within the meaning of section 3(42) of ERISA and (ii) reaffirming that ERISA preempts state unclaimed property laws with respect to such assets;
  • Guidance stating that a transfer of amounts attributable to a Missing Participant's uncashed check to a state unclaimed property program constitutes a payment of benefits under ERISA; and
  • Guidance stating that (i) a plan fiduciary will be viewed as having satisfied its fiduciary responsibility to the extent the fiduciary transfers amounts attributable to a Missing Participant's uncashed check to a state unclaimed property program that meets minimum standards ... including allowing claims in perpetuity, and (ii) in connection with any such transfer, a plan fiduciary may rely on a state program's representation that it meets such minimum standards."

Advisory Council on Employee Welfare and Pension Benefit Plans, Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Federal Court Rules for Fidelity in Infrastructure Fee Case

"[T]he court found that Fidelity, as a provider, may define what products it will offer and may negotiate its fees with independent third parties including both other mutual fund companies and plan sponsors.... For sponsors, the question will be whether plan fiduciaries did or did not get a 'good deal' on the service offered. That question will, ultimately, turn on the prudence of the process plan fiduciaries used to select the challenged service/service provider and whether the fees charged for the service were reasonable." [In re Fidelity ERISA Fee Litigation, No. 19-10335 (D. Mass. Feb. 14, 2020)]

October Three Consulting

Second Circuit Says Plan Reformation Is Available Remedy to Recalculate Participant Benefits (PDF)

"[T]he heart of the dispute was whether the Plaintiffs possessed a remedy under ERISA Section 502(1)(1)(B). To answer this question, the Second Circuit merely stated, 'in the absence of controlling authority otherwise, we are inclined to follow the Supreme Court's express preference that violations of ERISA should be remedied.' This open-ended conclusion has the potential to only enhance the ambiguity on this issue and foster a split among the circuits on a participant's remedies under ERISA Section 502(a)(1)(B)." [Laurent v. PricewaterhouseCoopers LLP, No. 18-487 (2d Cir. Dec. 23, 2019)]

The Wagner Law Group

Executive Order, DOL Document Requests Suggest There Will Be More from DOL on ESG Factors

"[T]here have been recent reports that the DOL has begun issuing document requests, in the course of DOL enforcement examinations, to certain plans asking questions about their use of ESG factors.... In light of this activity, it may be a good time for plan fiduciaries that utilize ESG factors on behalf of ERISA plans to evaluate whether that usage fits squarely within the most recent DOL guidance on the topic."

Morgan Lewis

Interest Rates 2020: Effect on Retirement Finance

"The valuation interest rates for a typical DB plan have declined around 90 basis points since the beginning of the year, and -- extraordinarily -- almost 50 basis points since the beginning of March. This in the context of a 75-100 basis point decline for 2019. This decline, and the simultaneous decline in stock values -- if they persist -- will have significant consequences for DB plan sponsors. These declines will also have significant consequences for DC plan participants."

October Three Consulting

Pension Plan Annuity Purchase Update, Q4 2019

"Total pension buyout sales surpassed $11.3 billion in the fourth quarter of 2019, an increase of 6% compared to the fourth quarter of 2018 and the highest quarterly total since Q4 2012. Total 2019 sales reached $28 billion, an increase of 5% from 2018 totals. A record-breaking total of 501 buyout contracts were sold in 2019, 2% higher than 2018 results."

River and Mercantile Solutions

Benefits in General

Emerging Benefit Plan Issues Relating to the Coronavirus

"This legal alert discusses the following important topics for employers to consider during this time: [1] HIPAA-protected health information and data sharing on potential infections; [2] Covering COVID-19 testing under medical plans; [3] HSA-paired high deductible plans and preventive care and treatment, including just-issued relief under IRS Notice 2020-15; [4] Employee access to benefit plan documents, including SPDs and SBCs; [5] Health FSA approved purchases and health FSA coverage during unpaid leave; [6] 401(k) plan investment information and hardship withdrawals; and [7] Short term disability coverage for quarantined employees."

Eversheds Sutherland

Multiemployer Funds and Coronavirus Communications

"Here are just a few things you can do to reassure and support participants: [1] Communicate more frequently.... [2] Be sure to respond to questions and concerns.... [3] Leverage both the local union and participating employers.... [4] Make use of all your communications tools."

Segal Consulting

ERISA Advisory Council Report: Beyond Plan Audit Compliance -- Improving the Financial Statement Audit Process (PDF)

28 pages; Nov. 2019. "[T]he Council recommends that the Department make available to plan administrators new educational resources and access to tools and data regarding the uses of financial statement audits, specifically:

  • Send notices to plan administrators advising them of their responsibilities regarding selecting, retaining, and interacting with the independent auditor of the plan's financial statements, and of the tools available to assist them in these responsibilities.
  • Publish a revised brochure regarding the selection, retention and interaction with an independent auditor of the plan's financial statements, including a best practice checklist. The Council has drafted a sample checklist, which is included in Appendix A to this report.
  • Publish a list of the most common deficiencies found in plan audits.
  • Make more information available to plan administrators and their advisors regarding auditors who perform financial statement audits for employee benefit plans ...
  • Expand the Department's financial statement audit education programs to target plan advisory groups in the Department's outreach."

Advisory Council on Employee Welfare and Pension Benefit Plans, Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Selected Discussions
on the BenefitsLink Message Boards

Safe Harbor Hardship Distribution for Repair of Flooring to Primary Residence?

"The Plan uses the safe harbor definition of hardship. Participant submits receipts for repair of flooring to primary residence. [1] Does this qualify under repair of damage to primary residence for loss qualifies for casualty deduction? There was no reference to a cause of damage, such as a fire, flood or storm. I think this is actually a home improvement project. [2] If that is the case, would it still qualify since the IRS website says that under the Bipartisan Budget Act of 2018 a plan can permit hardship distributions for repair of the participant's primary residence, even though it would not qualify for as a casualty deduction (see 'Changes Coming for 2019' at https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-hardship-distributions). [3] Is that reference only provided to remove the need for the damage to be related to a federal disaster zone, or are rules being relax to even allow for home improvement projects on a person's primary residence?"

BenefitsLink Message Boards

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Press Releases

Upcoming Events About Retirement Plans or Executive Compensation

Mar. 16
Texas
IRA Seminar
Ascensus
Mar. 16
Webcast
ERISA Plan Investments in the Financial Markets 2020: The Fundamentals
Practising Law Institute
Mar. 17
Webcast
Free
Impact of the SECURE Act on Retirement Income Adequacy
EBRI [Employee Benefit Research Institute]
Mar. 17
Webcast
Free
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
Webcast
ERISA Litigation Recent Hot Issues
Western Pension & Benefits Council
Mar. 18
Webcast
FAQs on the SECURE Act
American Society of Pension Professionals & Actuaries [ASPPA]
Mar. 18
Texas
IRA and HSA Seminar
Ascensus
Mar. 18
Webcast
Free
Voluntary Fiduciary Correction Program
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
Mar. 18
Michigan
Impact of the SECURE Act
Fraser Trebilcock
Mar. 18
Webcast
Multiemployer Pension Plan Withdrawal: An In-Depth Examination
Strafford
Mar. 19
Webcast
Basics of Qualified Retirement Plans: Session 4
ASC
Mar. 19
Minnesota
Free
What Does the SECURE Act Mean for Your Retirement Plan?
Faegre Drinker
Mar. 19
Illinois
Free
What Does the SECURE Act Mean for Your Retirement Plan?
Faegre Drinker
Mar. 19
California
Free
What Does the SECURE Act Mean for Your Retirement Plan?
Faegre Drinker
Mar. 19
Pennsylvania
Free
What Does the SECURE Act Mean for Your Retirement Plan?
Faegre Drinker
Mar. 19
Webcast
Free
The Importance of Prudently Monitoring Target Date Funds
Multnomah Group
Mar. 19
Georgia
PECA Welcomes the DOL - Back by Popular Demand
Pension Education Council of Atlanta [PECA]
Mar. 19
Georgia
Innovative Total Compensation Panelist Discussion
Worldwide Employee Benefits Network [WEB] - Atlanta Chapter

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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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