Retirement Plans Newsletter

March 17, 2020

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[Official Guidance]

Effective March 17, 2020, Social Security Offices Will Only Offer Phone Service

"All local Social Security offices will be closed to the public for in-person service starting Tuesday, March 17, 2020. This decision protects the population we serve -- older Americans and people with underlying medical conditions -- and our employees during the Coronavirus (COVID-19) pandemic. However, we are still able to provide critical services. Our secure and convenient online services remain available ... Local offices will also continue to provide critical services over the phone."

U.S. Social Security Administration [SSA]

[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, April 2020

"The April 2020 lump sum interest assumptions will be 0.00 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for March 2020, these assumptions represent no change in the immediate rate and are otherwise unchanged."

Pension Benefit Guaranty Corporation [PBGC]

ARA Asks Treasury and DOL to Provide Plan Filing Relief Due to Coronavirus Impact

"In particular, the ARA is asking for: [1] An automatic extension to October 15 for filing of the Form 5500 series for retirement plans with calendar year plan years (with corresponding extensions for non-calendar year plan years). [2] A 90-day extension to the deadline for correcting a failed ADP or ACP test and a 90-day extension of the period for distributing excess contributions and excess aggregate contributions under a plan ... without incurring a 10% tax under Code Section 4979 ... [3] A 120-day extension of the defined benefit plan restatement deadline (currently April 30, 2020). [4] A 90-day extension of the 1099-R e-filing deadline for employers (normally March 31, 2020). [5] Reasonable relief from notices required to be provided to plan participants[.]"

American Retirement Association [ARA]

COVID-19: Retirement Plan Considerations

"President Trump's recently declared national emergency does not constitute a FEMA disaster and thus, doesn't qualify as a hardship under the safe harbor definition. In the event that the situation leads to unpaid leaves of absence, there could be other issues such as problems making loan repayments, or needs for hardships under provisions for other permitted types of hardship expenses such as tuition or payments to prevent eviction from the participant's principal residence. Employers may also see a corresponding uptick in participants taking plan loans."

Holland & Hart LLP

COVID-19 Quarantine Question: How Should 401(k) Plan Sponsors Communicate to Employees Working from Home?

"Will social distancing lead to a more permanent role for telecommuting in the workplace? There are certainly advantages for both the employee and the employer when it comes to working remotely. One of the disadvantages, however, is the lack of ease of communicating that exists when working proximity is reduced.... For retirement plan sponsors, communication is not merely a form of social interaction, it's a fiduciary duty. How does the change in work location impact this duty? And what can 401k plan sponsors do about it? That the times are trying only makes it harder."

Fiduciary News

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Fiduciary Responsibilities Under ERISA in an Uncertain Market

"It is important to remember that [the duty to act prudently] requires the fiduciary to act with the care, skill, prudence, and diligence that a prudent person acting in a like capacity would use in similar circumstances. When the circumstances include a volatile market, acting prudently may require a fiduciary to research more, ask more questions, or more regularly seek expert advice.... Since this duty emphasizes process over outcome, fiduciaries should take care to document the actions they take as well as the process behind such actions."

Benefits BCLP

ERISA Fiduciaries Must Monitor Market Turbulence

"Plans which were nearly 'at risk' (for single employer plans) or 'endangered' (for multiemployer plans) under Pension Protection Act standards as of their most recent actuarial valuations could easily fall below those thresholds as a result of investment losses. Fiduciaries of such plans should consider asking their actuaries to conduct mid-year valuations taking into account current market conditions, so that any contribution increases necessary to avoid at-risk or endangered status can be spread over a longer period."

Spencer Fane

Market Update: March 16, 2020

"Plan participants will continue to experience volatile returns until the coronavirus issue is resolved. The timing of that resolution is uncertain. Individual investors will understandably be nervous.... Concepts like 'long-term focus' and 'patience' may get bandied about a lot by advisors, but these concepts are reinforced for good reason.... [M]arket turmoil can invite bad investor behavior, like panicked selling or market timing. It is critical that participants stay the course."

Cammack Retirement Group

Markets 2020: Effect on ERISA Minimum Funding Requirements

"Funding requirements for 2020 for a calendar year plan were locked in as of January 1, 2020. 2020 asset declines may affect minimum funding as early as 2021. Interest rate declines won't show up in minimum funding numbers until 2023. If they persist."

October Three Consulting

Salesforce Fiduciaries Slapped With 401(k) Excessive Fee Suit

"[T]he suit notes that Fidelity Investments, Inc. owned over 94 million shares of Salesforce as of September 30, 2019, and that 'FMR's affiliates, including Fidelity Retirement Services, served as the Plan's recordkeeper and investment manager of some of the Plan's investments.' The plaintiffs also point out that Fidelity Contrafund was the largest mutual fund investment in Salesforce with 27.1 million shares ... The suit describes this as 'significant because ... the Contrafund is the largest single actively managed nontarget date investment in the Plan by far.' " [Davis v. Salesforce.com, Inc., No. 20-1753 (N.D. Cal. complaint filed Mar. 11, 2020)]

National Association of Plan Advisors [NAPA]

Actuarial Audits of Defined Benefit Plans

"An actuarial audit is a tool that can be used by plan trustees to monitor the actuarial services provided by the plan's consulting actuary. An actuarial audit consists of hiring an independent and qualified firm to review the work of the plan's consulting actuary. While any actuarial work product can be audited, typically the actuarial valuation and the experience study are the subject of actuarial audits."

CBIZ

Estate Planning with Retirement Plan Assets Under the SECURE Act

"[B]efore the SECURE Act, clients could often choose between leaving their retirement plan accounts to their intended beneficiaries directly or sending those accounts to a properly-drafted trust for the benefit of those heirs -- and there was no difference from an income tax perspective ... Now, there is no longer a 'one-size-fits-all' approach to estate planning with retirement plan assets."

Ice Miller LLP

Staying the Course for Retirement

"Staying aware of your financial goals requires an understanding of where you are on your journey toward retirement. Determining your investment needs involves looking at your current age, your intended retirement age, how much you are saving, and your level of comfort as an investor."

CAPTRUST

Benefits in General

Coronavirus: Top Issues for Employers, Health Plans and Retirement Plans (PDF)

29 presentation slides. Topics: [1] Health insurance (Essential Health Benefits/ preventive care); [2] HSAs & self- funded health plans; [3] HIPAA privacy; [4] Implications for retirement plans; [5] Paid/unpaid leave; [6] Corporate insurance coverage / use of emergency funds; [7] Federal & state guidance -- issued and anticipated.

Groom Law Group

More U.S. Employees Willing to Sacrifice Pay for Better Health and Retirement Benefits

"[O]ver half of respondents (57%) say their benefit package is more important to them than ever before, driven largely by their desire for greater security. Fully two-thirds of respondents (67%) are willing to pay a higher amount each month for more comprehensive retirement benefits. That's up from 55% in 2011. More than four in 10 workers (42%) would sacrifice additional pay each month for a more expansive health benefit plan, a sharp increase from 27% in 2013."

Willis Towers Watson

Executive Compensation
and Nonqualified Plans

Five Tax-Return Mistakes with Stock Options and How to Avoid Them

"[1] Nonqualified stock options: double-reporting compensation income ... [2] Failure to report the sale in a cashless exercise/same-day sale ... [3] Cost-basis confusion ... [4] Incentive stock options: Alternative Minimum Tax (AMT) calculation ... [5] Failure to use AMT credits."

myStockOptions.com

Selected Discussions
on the BenefitsLink Message Boards

Spouse Wants to Disclaim Receipt of Death Benefit

"Surviving spouse is receiving a small QJSA benefit from a defined benefit plan. She is elderly and needs to go into a nursing home, but the pension pushes her past an income limitation-- making the cost of the nursing home very expensive. She would like to disclaim the retirement benefits, but we don't see an avenue to allow for this to occur because her husband died longer than 9 months ago and she has been receiving monthly benefits since his death. Regarding an assignment of Interest, she could assign her interest under 1.401(a)-13(e) but the monthly benefit would still be considered taxable income. And regarding a cash-out, the plan does not allow for any type of lump-sum unless present value is less than $1,000. Current funding status would prohibit large lump-sum benefit payments anyway. Any ideas would be appreciated."

BenefitsLink Message Boards

Employer Makes 'Matching' 401(k) Contributions When Participant Makes Student Loan Payments

"If an employer wants to implement a setup similar to Abbott Labs (2% loan repayment, 5% 'match' to 401(k) plan) and the plan has individual rate groups for a profit sharing allocation, is there a need to amend the plan to allow for this setup? Or is the contract for the 'match' for student loan repayments outside of the 401(k) plan and the 'match' is really just a discretionary contribution to the PS plan by the employer?"

BenefitsLink Message Boards

Form 5500 Software -- Pros and Cons

"I'm trying to get a handle on whether to use the DOL EFAST2 web-based filing system in its native format or use one of the many integrations available on their website. I would like to hear from any BenAdmin familiar users to see which products they prefer. Our staff is very knowledgeable in the employee benefit and ERISA arena but I would like them to have access to a tool that could facilitate and guide their work."

BenefitsLink Message Boards

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Press Releases

Special Announcement Regarding ARA Operations
American Retirement Association

Upcoming Events About Retirement Plans or Executive Compensation

Mar. 18
Webcast
FAQs on the SECURE Act
American Society of Pension Professionals & Actuaries [ASPPA]
Mar. 18
Webcast
Free
Voluntary Fiduciary Correction Program
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
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
Webcast
Free
Impact of COVID-19 on Your Retirement Plan
Multnomah Group
Mar. 19
Webcast
Free
The Importance of Prudently Monitoring Target Date Funds
Multnomah Group
Mar. 19
Webcast
Best Practices For Changing Recordkeepers
Western Pension & Benefits Council - Orange County Chapter
Mar. 20
Webcast
Free
Preparing Your Workplace to Address Coronavirus
Vedder Price
Mar. 23
Webcast
Free
COVID-19 Updates for Employers: Employee Benefits and Compensation Issues
Ogletree Deakins
Mar. 24
Webcast
Free
Voluntary Fiduciary Correction Program
Employee Benefits Security Administration [EBSA], U.S. Department of Labor
Mar. 24
Webcast
Form 5500 Series Update
NIPA [National Institute of Pension Administrators]

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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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