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March 26, 2020 logo logo
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View Coronavirus (COVID-19) News and Resources
NEW: Upcoming Coronavirus (COVID-19) Webcasts

Senate Approves $2 Trillion Stimulus Package: Retirement Plan Provisions

"[P]rovisions of the bill [HR 748] addressing retirement plan issues [include] [1] Special rules for use of retirement funds [2] Waiver of 10% tax on early distributions.... [3] Liberalization of plan loan rules.... [4] RMD rules waived for DC plans.... [5] Delay in application of minimum funding rules.... [6] 2019 funded ratio may be used for determining benefit restrictions.... What's not in the bill: ... Reduction in PBGC premiums.... [R]elief for defined benefit plan RMDs, defined benefit plan annual funding notices, and spousal consent notarization requirements."

October Three Consulting


Upgrade Your Signature Line With CEBS

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Join the prestigious community of benefits professionals who hold the Certified Employee Benefit Specialist® (CEBS®) designation. With academic backing from the Wharton School, CEBS delivers focused and applicable knowledge you need to succeed. Learn more

Retirees Get Relief in Senate Coronavirus Stimulus Package

"Provisions in the Senate legislation raise the limits on 401(k) loans and loosen the rules on hardship distributions from retirement accounts. People affected by the coronavirus crisis would get access to up to $100,000 of their retirement savings without the 10% penalty that normally applies to money taken out before age 59-1/2. For retirees, the bill suspends for 2020 the minimum required distributions most must take from tax-deferred 401(k)s and individual retirement accounts."

The Wall Street Journal; subscription may be required

Considerations for 401(k) Plan Sponsors Impacted by COVID-19

"[T]he current crisis does not reduce plan sponsors' fiduciary obligations with regard to depositing employee contributions.... Employers are likely to see increased interest from participants in taking loans or other in-service distributions from 401(k) plans, so it is important to understand what options are permitted under their plans, and the requirements that must be met to allow those distributions."

Morris, Manning & Martin, LLP

How DC Plans Should Prepare for Missed Loan Payments

"Plan sponsors have some ability to facilitate repayments and minimize defaults for participants who are unable to make loan repayments.... Keep in mind that extensions are permitted for participants on leaves of absence[.]"


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.... If current (March 23, 2020) rates persist, ... (higher) market rates will take sponsors out of the HATFA regime beginning as early as 2025 or 2026. And asset declines -- which have a more immediate effect on plan funding -- have worsened, with the result that more plans will begin to have asset-driven minimum funding issues beginning perhaps as early as 2021."

October Three Consulting


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

Seventh Circuit Opinion Affirming Dismissal of Northwestern University Fiduciary Breach Suit (PDF)

"Rather than compare Northwestern's actions to those of a 'hypothetical prudent fiduciary,' ... plaintiffs criticize what may be a rational decision for a business to make when implementing an employee benefits program.... That plaintiffs prefer low-cost index funds to the Stock Account does not make its inclusion in the plans a fiduciary breach.... Plaintiffs also spill much ink in their amended complaint describing their clear preference for low-cost index funds. We understand their preference and acknowledge the industry may be trending in favor of these types of offerings.... Plaintiffs failed to allege, though, that Northwestern did not make their preferred offerings available to them. In fact, Northwestern did.... Taken as a whole, the amended complaint appears to reflect plaintiffs' own opinions on ERISA and the investment strategy they believe is appropriate for people without specialized knowledge in stocks or mutual funds." [Divane v. Northwestern Univ., No. 18-2569 (7th Cir. Mar. 25, 2020)]

U.S. Court of Appeals for the Seventh Circuit

Rebalancing, Risk, and Unavoidable Realities (PDF)

"[If] the investment horizon is 7-10 years or longer, it seems fairly clear that a decision to increase portfolio risk at this time -- with equities 30% cheaper than they were and Treasuries even more expensive -- will very probably create a meaningfully higher return in the future. In very simple terms, it seems more likely than not that equities will outperform bonds over the next seven years -- and they will likely do so by more than our assumed annual equity risk premium of 4.5%. In essence, the longer-term math looks fairly straightforward, within the context of a world where nothing is certain."

Russell Investments

Revisiting Funding-Based Restrictions for Single-Employer Pension Plans

"Single employer defined benefit plans are required to comply with limitations on accelerated benefits payments, future benefit accruals, and implementation of benefit increases triggered by plan underfunding or plan sponsor bankruptcy. Given the recent market and business disruptions, [this] high-level review of these rules may be helpful, especially for plan sponsors of plans that use a non-calendar plan year."

Morgan Lewis

How Plan Sponsors Can Handle Historic Drop in Bond Yield

"[D]ue to the interest rate averaging that is part of the calculation of pension liabilities, the reduction in liabilities may be modest at first.... Investment performance for plan sponsors using LDI strategies remains strong, especially for those sponsors whose LDI strategies have tilted more toward risk-free bond strategies. However, even those whose portfolios tilt more toward credit bonds intended to hedge GAAP liabilities have done well."


Benefits in General

Retirement and Health Plan Cost Reductions During a Financial Downturn or Recession

"[T]arget benefit programs that are costly or underutilized.... [To increase cash flow, a] company can use its current 401(k) plan or adopt a new retirement plan that will be focused on investing in the company as an employee stock ownership plan (ESOP).... If your [health plan] offers three or more coverage options, reducing the options may increase participation in the surviving options, driving down premium costs."

Carlton Fields

COVID-19: Top Retirement and Benefit Plan Issues

"[1] Safe harbor 401(k) plan ... [2] Non-safe harbor 401(k) plan ... [3] Company stock inside of 401(k) plan ... [4] ROBS 401(k) plans  ... [5] Effect of furloughs and layoffs on retirement plans ... [6] COBRA with respect to furloughed employees ... [7] Life insurance, short-term disability, long-term disability for furloughed ... [8] Life insurance, short-term disability, long-term disability for those sick from COVID-19."

AllThingsERISA at FisherBroyles

The COVID-19 Pandemic: Key Employee Benefits and Compensation Issues

"[1] Employer-provided health coverage.... [2] Paid leave and continuation of short-term and long-term disability coverage.... [3] Employer tax credits for paid leave.... [4] Continuation of health coverage during furloughs and mandated leaves of absence.... [5] Employer inquiries, screenings and disclosures relating to infected employees.... [6] Telemedicine programs.... [7] Retirement plans.... [8] Nonqualified deferred compensation arrangements."

Husch Blackwell via BenefitsPro; free registration required

COVID-19: Employee Benefits Issues to Consider

Q&As about specific and varied benefit plan concerns; updated as new information and issues arise.


Executive Compensation
and Nonqualified Plans

Editor's Pick Love and Section 409A in the Time of COVID-19

"Section 409A and non-qualified plan issues ... created by COVID-19 [include] ... [1] Cancellation of non-qualified plan deferrals ... [2] Electing an unscheduled distribution.... [3] Paying annual bonuses by March 15.... [4] Scheduled distributions from a non-qualified plan.... [5] Setting performance goals."

Winston & Strawn LLP

Selected Discussions
on the BenefitsLink Message Boards

Is Anyone Using Force Majeure to Excuse Not Performing a Contract?

"Is anyone aware of a retirement-services provider using impossibility or a contract’s force majeure clause as a reason not to do something that otherwise would be a service obligation?"

BenefitsLink Message Boards

Must Take an In-Service Withdrawal Before Becoming Eligible for a Hardship Distribution?

"With the recent change in provisions for hardship distributions for 2019, I understand that you now don't have to take a loan before taking a hardship. However, my understanding is that you still have to take an in-service distribution (if it's available) before a hardship. Is that correct?"

BenefitsLink Message Boards

Amending or Suspending Fixed Nonelective Profit Sharing Contributions Mid-Year

"If a non-safe harbor 401(k) / profit sharing plan document provides for 'fixed' or 'required' nonelective contributions but has a last day of the plan year requirement in order for a participant to accrue the benefit, can the plan be amended mid-year to either [1] change the 'fixed' nonelective contribution provision to a 'discretionary' contribution provision or [2] to reduce the fixed contribution rate requirement to a lower rate?"

BenefitsLink Message Boards

Contribution Deadline Extended to July 15 for PLLC?

"My client has already filed the 2019 tax return and wants to know if he can make the contribution by July 15. I believe he's out of luck since the return has already been filed."

BenefitsLink Message Boards

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Press Releases

Upcoming Events About Retirement Plans or Executive Compensation

Mar. 27
Managing through the Crisis: Expert Insights for Plan Sponsors
The Plan Sponsor University [TPSU]
Mar. 27
Retirement Considerations in a COVID-19 Environment
Thompson Hine LLP
Mar. 31
Helping Your 401(k) Participants Weather the Economic Storm
Groom Law Group
Apr. 1
The SECURE Act: Key Issues for Benefits Lawyers and Their Clients
American Law Institute Continuing Legal Education Group [ALI CLE]
Apr. 1
Plan Mergers & Terminations: When We Need to Say Goodbye to a Plan
American Society of Pension Professionals & Actuaries [ASPPA]
Apr. 2
Basics of Qualified Retirement Plans: Session 5
Apr. 2
Plans in Times of COVID-19: Our FAQs
Apr. 2
Benefit Plans and COVID-19 - Legislative and Regulatory Update
Groom Law Group
Apr. 2
Washington Update Briefing
Apr. 2
Going Viral: COVID-19's Impact to Employee Benefits Plans
Southeast Benefits Education Network [SBEN]

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