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March 27, 2020 logo logo
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[Guidance Overview]

IRS Q&As Address Applicability of Tax Filing Extension Under Notice 2020-18 to Retirement Plans and HSAs

"The due date for paying the 10% additional tax on amounts includible in gross income from distributions from a pension plan or IRA in 2019 is extended to July 15, 2020.... [E]xcess deferrals (and income) must be taken out of the retirement plan no later than April 15, 2020 ... The grace period for employers to make contributions to their qualified retirement plans on account of 2019 ... ends on July 15, 2020, if those employers normally would have to file income tax returns and make federal income tax payments by April 15, 2020."

Thomson Reuters Practical Law

CARES Act to Provide Significant Employee Benefit Plan Relief for Participants and Plan Sponsors

"The CARES Act provides companies ... additional time to meet their single-employer plan funding obligations by delaying the due date for 'minimum required contributions' otherwise due during 2020 until Jan. 1, 2021, at which time the 2020 contributions plus interest will be due.... The CARES Act also provides plan sponsors with the option to use the plan's funded status for the last plan year ending before Jan. 1, 2020 for purposes of determining the funding-based benefit limitations under Internal Revenue Code Section 436 for plan years that include calendar year 2020."


Stimulus Bill Would Provide 2020 DB Funding Relief, Access to DC Savings

"The stimulus package provides short-term relief for single-employer DB plans by delaying all 2020 minimum required contributions until 2021 and easing benefit restrictions, among other provisions.... The legislation makes it easier for participants affected by the virus or the resulting economic downturn to access their retirement savings.... Nongovernmental employers have until the end of the first plan year beginning on or after Jan. 1, 2022, to amend their plans for the relief."


D.C. Circuit: ERISA Plan Participant's Release Extends to Fiduciary Breach Claims on Behalf of the Plan

"The ruling extinguishes a participant's class action claims under ERISA sections 502(a)(2) and (a)(3) that 403(b) plan fiduciaries breached their fiduciary duties of prudence and loyalty by paying excessive recordkeeping fees and allowing participants to invest in investment options that were more expensive and underperformed comparable options available in the market." [Stanley v. George Washington Univ., No. 19-7079 (D.C. Cir. March 24, 2020)]


ERISA's Statute of Limitations Conundrum (PDF)

"[N]ow that the United States Supreme Court has addressed the issue, plan sponsors and fiduciaries should expect that the six-year limitations period will apply to imprudent-investor claims. If the Supreme Court's decision is not consistent with Congress's intent in creating the three-year limitations period ... the ball is in Congress's court to amend the statute to make its intent clearer.... So what should sponsors and fiduciaries do?" [Intel Corp. Investment Policy Comm. v. Sulyma, No. 18-1116 (S. Ct. Feb. 26, 2020)]

Jose M. Jara and Anthony M. Fassano of Archer & Greiner P.C., via Tax Management Compensation Planning Journal

COVID-19: Mid-Year Suspension or Reduction of Employer Contributions to 401(k) Plans

"U.S. employers looking to reduce operating costs in the short term in response to the disruption caused by the COVID-19 pandemic may seek to reduce or suspend their matching or nonelective contributions in their 401(k) plan. [This article] summarizes the key issues facing employers in making the determination to suspend or reduce safe-harbor contributions."

Benefits BCLP

Leverage Your Defined Benefit Plan to Retain Essential Talent

"Your older, more experienced employees, who may now be more critical than ever to your workforce, may struggle with the need to access retirement income and remain employed if hardship withdrawals from a defined contribution plan are not enough. Leverage your defined benefit (DB) plan to retain essential talent.... Offer in-service distributions ... Waive suspension of benefits for rehired retirees ... Increase Normal Retirement Age."

Milliman Retirement Town Hall

ERISA Plan Investment Management in a Time of Market Disruption

"[C]onsider whether now is a good time for a special meeting of your investment committee ... [C]areful documentation of decisions -- and the reasons behind them -- is critical to protecting yourself against litigation.... [C]heck in with your plan's service providers to verify how they will continue services amidst COVID-19's disruptions."

Dorsey & Whitney LLP

Innovative Investment Strategies in Volatile Times

"Option contracts (i.e. puts and calls) allow investors to buy or sell risk and potential return, allowing investors to create exactly the risk and return profile they desire with potential outcomes defined in advance and secured by contract. Some option combinations are quite attractive today given increased market volatility."

River and Mercantile Solutions

Virus Hits Unimmunized Pension Plans Hard!

"Immunization using LDI investment strategies can help reduce asset-liability mismatch risk DB plans encounter from both sudden equity market crashes like the one we are currently experiencing, as well as interest rate volatility which has also been extreme. The more immunized a portfolio is, the less a sponsor needs to worry about the impact of market volatility on the funding position of their DB plan."

The Principal Blog

Retiree Pension Risk Transfers in a Low Interest Rate Environment: Issues to Consider

"If your company's pension plan is at the PBGC variable premium cap, the PBGC savings will be in excess of $644 per retiree in 2021. In a low interest rate environment, it is likely your plan is at or close to the variable premium cap.... The annuity premium when compared to the economic cost typically results in overall savings for the plan sponsor even in a low interest rate environment.... Annuities cannot be purchased for a plan that is not 80% funded on a PPA interest rate relief basis unless the plan sponsor makes some immediate funding to the plan."


Impact of a COVID-19 Temporary Furlough on Multiemployer Plan Withdrawal Liability

"The initial determination of whether an employer's contribution cessation is permanent or temporary is made by the plan sponsor (the board of trustees of the [multiemployer plan]) and is generally upheld unless shown by the preponderance of the evidence to be clearly erroneous.... [B]ased on current guidance, a [multiemployer plan] does not have a solid legal basis to assess complete or partial withdrawal liability against an employer for a cessation of contributions as a result of a furlough in connection with COVID-19."

Akin Gump

New Challenges for Contributing Employers in Multiemployer Pension Plans -- Is It Panic Time?

"The key risks, during these times of turmoil, for employers contributing to multiemployer plans are these: [1] A change in zone status resulting in a Funding Improvement Plan or Rehabilitation Plan. [2] Layoffs and work stoppages causing a partial withdrawal in 2020. [3] A business downturn causing the company to completely withdraw during 2020. [4] An industry downturn causing a mass withdrawal in 2020 or (even) in the next 3 years."

October Three Consulting

Withdrawal Activity of Individuals Owning Both Traditional and Roth Individual Retirement Accounts

"Traditional IRAs are the favored source of withdrawals.... Owners of IRAs with the largest balances who took withdrawals each year within the study were among those least likely to take their withdrawal from a Roth IRA, despite being the individuals likely to have the most to gain from taking withdrawals to minimize taxes. There was also little evidence that owners deplete or close one account type before withdrawing from another.

Employee Benefit Research Institute [EBRI]

Benefits in General

[Guidance Overview]

How the CARES Act Affects Employee Benefits

"The CARES Act: [1] expands on the types of testing that plans must cover without cost-sharing  ... [2] provides that for plan years beginning on or before December 31, 2021 (i.e., for a calendar plan year, the 2020 and 2021 plan years), HDHPs can provide first-dollar coverage for telehealth or other remote care services ... [4] permanently eliminates the ACA rule that requiring that over-the-counter medicines and drugs (other than insulin) be prescribed to be eligible HSA/FSA/HRA expenses.... [5] The 10% early withdrawal tax will not apply to any 'coronavirus-related distribution' (CRD) up to $100,000 for any year.... [6] For individuals who are eligible for a CRD, the cap on 401(k) plan loans is increased from $50,000 to $100,000, and employees may take up to the full balance of their account within that limit."

ABD Insurance & Financial Services

[Guidance Overview]

How the Stimulus Bill Would Impact Employee Benefit Plans

"The CARES Act provides qualified individuals with a one-year extension to repay qualified retirement plan loans if the due date occurs between the enactment of the CARES Act and December 31, 2020.... For the period between the enactment of the CARES Act and January 1, 2021, employer payments of principal or interest on any qualified education loan of an employee will not be included in the gross income of that employee. These payments may be made to the employee or to a lender."

Ballard Spahr LLP

Temporary Benefit Strategies to Immediately Help Workers: Benefits Guidance in the Time of COVID-19

"Qualified disaster relief payments.... Coronavirus act paid sick and family leave ... Childcare and elder-care stipends ... Commuting assistance benefits ... On-premise meals ... 401(k) plan hardship distributions ... Home office expenses ... Leave donation programs ... Charitable emergency funds ... Health insurance."

Epstein Becker Green

Executive Compensation
and Nonqualified Plans

Equity Incentive Considerations During the COVID-19 Crisis

"While employee stock options are generally intended to serve as mid- to long-term incentives, ... extreme volatility means that new awards made today could be substantially underwater tomorrow. Now might be a good time to review the equity incentives for key employees including identifying the organization's key service providers, reviewing the equity incentives held by the key service providers (as well as the overall compensation package), and planning for what adjustments might be needed for price projections when possible."

Holland & Hart LLP

Selected Discussions
on the BenefitsLink Message Boards

Profit Sharing Plan -- Excess Contributions (Under Section 415) Made During Consecutive Plan Years

"Takeover case. One-lifer PS plan. Makes over $280k in W-2. Client makes max PS contribution for 2018 and deposited $10k extra during 2018 and paid the excise tax penalty. Did the same for 2019 (same as 2019) and now trying find a way not to pay the penalty but I don't see any way out of it."

BenefitsLink Message Boards

Who Serves as an Abandoned Plan's Qualified Termination Administrator?

"Will anyone please share information on which recordkeepers and directed trustees are willing to serve as an abandoned plan’s qualified termination administrator?"

BenefitsLink Message Boards

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Press Releases

Upcoming Events About Retirement Plans or Executive Compensation

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
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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