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Retirement Plans Newsletter April 2, 2020 |
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Newly Posted How Much is Your Reputation Worth?
Key Decisions for Defined Contribution Plan Sponsors Under the CARES Act
Benefits Issues Arising from the COVID-19 Crisis
Employee Benefits Hot Topics: COVID-19, the SECURE Act, CARES Act and More
Retirement Plans in a Time of COVID-19
Annual Education Conference
Structuring Equity Compensation for Partnerships and LLCs: Capital and Profits Interests, Sec. 409A, Tax Issues
ERISA Basics Series 1: ERISA Basics Concepts - Statutory Overview
ERISA Basics Series 2: Fiduciary Standards
ERISA Basics Series 4: Benefit Claims: Administrative Procedures & Litigation Overview
ERISA Basics Series 3: Minimum Standards for Tax-Qualified Retirement Plans
ERISA Basics Series 5: Remedies
ERISA Basics Series 6: ERISA Ethical Issues and Concerns
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Guidance Overview] How the CARES Act Affects Retirement Plans "[The CARES Act] significantly loosens the restrictions on loans and distributions from retirement plans ... Employers are not required to implement these new features. However, some aspects of the rules already may be captured in employer plans through the plans' rollover contribution rules. Further, plan recordkeepers have started proactively implementing these changes programmatically, providing employers only with brief 'opt out' periods." Jackson Lewis P.C. |
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[Guidance Overview] Retirement Plan Benefits: The CARES Act and Other Considerations "RMDs for 2020 are calculated based on account balances as of December 31, 2019, when the market was at or near record highs. The Act will allow individuals to avoid the financial hardship of recent market losses combined with RMD withdrawals calculated as of the recent market highs... Some individuals may, however, find now a good time to take RMDs despite this waiver ... The Act gives individuals flexibility to do this planning.... The conditions that make a conversion [to a Roth IRA] a good strategy include a lower income year or a down market. For many people, 2020 may be an ideal time to consider this income tax planning strategy." von Briesen & Roper, s.c. |
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[Guidance Overview] Retirement and Pension Provisions in the CARES Act "Among other provisions, the CARES Act includes an exemption to the 10% tax penalty for early withdrawals from retirement accounts for individuals affected by COVID-19, one-year relief from Required Minimum Distributions (RMDs) for all retirement plan account holders, and a delayed due date for employer contributions to private-sector defined benefit (DB) pension plans." [IF11482, Apr. 1, 2020] Congressional Research Service [CRS] |
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ESOP Companies Should Address Cash Flow Due to Layoffs Before It's Too Late "ESOP sponsors need to appreciate the extent of the financial strain imposed on their company by a simultaneous layoff of a sizeable portion of their workforce. Each one of these terminated employees will receive a distribution of shares from the Plan at the same time and therefore will become eligible to 'cash-out' all or part of those shares concurrently. It is this spike of simultaneous cash out requests by a significant number of employees -- at a time when the company is least able to afford to make these payments -- that may put a catastrophic financial strain upon an ESOP sponsor." Fox Rothschild LLP |
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COVID-19 Impact on Multiemployer Pension Plans "Multiemployer pension plans will have to manage work force availability, business interruption, and investment uncertainty after significant market value decreases. The impact on individual plans will depend on plan funded status, maturity of the plan, whether the industry is deemed essential in areas with 'stay at home' restrictions, and actuarial valuation date." Bolton |
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COVID-19 Impact on Governmental Pension Plans "[I]nvestment losses will have the biggest impact on pension cost but there are other factors. There may be mortality gains (more deaths than normal) and public safety unions may push for line-of-duty benefits (either death or disability) for COVID-19 related outcomes. Groups like retirees also will likely have higher medical claim costs that will impact OPEB liabilities." Bolton |
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65 presentation slides addressed to plan participants. Topics: [1] Recent market volatility and perspective; [2] Financial relief programs; [3] CARES Act, federal and private-sector relief; [4] Opportunities; [5] 401(k)/retirement accounts; [6] Refinancing debt in low interest rate environment; [7] Adjusting your spending and scenario planning; [8] Tools & resources. ABD Insurance & Financial Services |
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FAS87 ASC715 Discount Rates and Moody's Rates, March 31, 2020 An unofficial monthly report of the Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages (used as benchmarks by some corporate pension plans). David Rigby, via BenefitsLink Message Boards |
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Benefits in General |
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[Guidance Overview] Employee Benefit and Executive Compensation Changes Made by the CARES Act "What COVID-19 testing and treatment is our company's employer-sponsored group health plan required to cover? ... Can [HDHP] cover costs associated with telehealth without requiring the participant to pay a deductible? ... Does the CARES Act contain any provisions which may be applicable to employer-sponsored group health plans, but are not related to COVID-19? ... My employees are no longer able to make loan repayments on their student loans -- is there anything I can do as an employer to help them? ... Is my [retirement] plan obligated to make required minimum distributions in 2020? ... Does the CARES Act provide any relief for sponsors of defined benefit plans?" Haynes and Boone, LLP |
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[Guidance Overview]
"[This article provides] a summary of the retirement plan, health and welfare, payroll tax and fringe benefit, and executive compensation provisions of the CARES Act, along with ... comments and considerations for businesses evaluating the changes brought about by the new law." Morgan Lewis |
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Executive Compensation |
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Executive Compensation Restrictions Under the CARES Act "[T]he executive compensation limitations are meant to prevent employers from diverting assistance under the CARES Act to executive compensation packages. However, issues remain open for employers to resolve before signing a binding agreement." Krieg DeVault |
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Selected Discussions |
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CARES Act In-Service Distributions "Does section 2202 of the CARES Act introduce a brand new in-service distribution category for 2020 coronavirus-related distributions by 'qualifying individuals'? Or does it still require employees to satisfy the existing IRS hardship safe harbors and then provide tax relief to hardship withdrawals that qualify as coronavirus-related distributions?" BenefitsLink Message Boards |
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Dual Eligibility -- New Plan -- Eligibility Requirements Waived at Start-Up "Client waived eligibility requirements as of the effective date of a new plan. This brings in an HCE hired on the effective date. There are 5 other employees hired after the effective date (all NHCEs) who are subject to the plan's eligibility conditions of 1 YOS and semi-annual entry dates. For coverage purposes we have 100% of HCEs benefiting and no HNCEs benefiting -- so that's a coverage failure, right?" BenefitsLink Message Boards |
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Effect of CARES Act on the Cure Period "A participant has been repaying their plan loan as slowly as possible, i.e., relying on the IRS cure period for every payment. For example, any repayments due during the first quarter of 2020 wouldn't be paid until the end of June. With the passage of the CARES Act, could the repayments due during the first quarter (or at least prior to March 27, 2020) now be postponed for 1 year, or do you think the Act allows only postponement of repayments originally due after March 27, without the application of the cure period?" BenefitsLink Message Boards |
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Merging Two Retirement Plans Into One -- Short Plan Year Required Because Plan Years Don't Line Up? "A controlled group of 3 employers had 2 plans. Employer wanted to consolidate the 2 plans into 1. The 2-employer plan has a plan year end of 3/31/2020. The employer merging in has a plan year end of 12/31. The money from merging-in plan was moved at beginning of January 2020. Does the plan merging in need a short plan year to match up to the same plan year end?" BenefitsLink Message Boards |
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Press Releases |
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Medcom Cares Disaster Relief Assistance Card
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Empower Retirement Waives Fees on New Loans and Hardship Withdrawals
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Most Popular Items in the Previous Issue |
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The CARES Act: Plan Sponsor Action Items
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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 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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