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Retirement Plans Newsletter April 10, 2020 |
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Newly Posted Navigating COVID-19 Compliance Challenges Under the CARES Act and FFCRA
Employee Benefits Spring Update 2020: 5-Part Webinar Series
GASB 67/68/74/75 Revisited
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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] CARES Act Makes Changes to Rules for Retirement Plan Loans "[R]etirement plan fiduciaries must carefully ensure that the loans in operation [adhere] to the terms of the plan governing loans.... This also includes any separate loan policies ... Employers who elect to take advantage of the expanded loan and hardship withdrawal provisions provided for under the CARES Act must amend their plan to accommodate these new rules and provide communications ... to participants that clearly delineate the new criteria for loans.... [For] non-Coronavirus related loans, employers are still responsible for enforcing loan repayment schedules that include level payments that must be made by the borrowing participants at least quarterly." Hall Benefits Law |
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[Guidance Overview] CARES Act Provisions for Participant Loans -- Optional or Required? "[A] qualifying individual may take a plan loan up to the lesser of $100,000 or 100% of the participant's vested account balance. This only applies to loans made on or before Sept. 23, 2020 (180 days following enactment of CARES).... [A] plan is not required to permit loans up to these increased limits for qualifying individuals. The law seems clear on this point. What is not clear is whether the 1-year extension of the due date of a loan is optional. There is good reason for this confusion." Robert Richter, for American Retirement Association [ARA] |
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[Guidance Overview] CARES Act Establishes Rules for Coronavirus-Related Distributions from 457(b) Plans "Existing rules allowing public employers to grant public employees with access to their 457(b) accounts for unforeseeable emergency distributions still remain in place. However, under the CARES Act, workers impacted by coronavirus will be able to take advantage of more favorable rules for distributions if their employer allows it." Best Best & Krieger |
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[Guidance Overview] "Under the CARES Act, the due date for any minimum required contribution otherwise due during calendar year 2020 has been extended to January 1, 2021, which may be past eight and a half months after the end of the plan year. However, the CARES Act does not extend the timing for tax deductions. As such, taking advantage of the delayed due date may postpone the tax deduction to the following tax year." Milliman Retirement Town Hall |
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85 pages. "SPARK developed this tool for preparing and evaluating Requests for Proposal (RFP) for Association Retirement Plans [ARPs] ... [T]he Society is encouraging widespread use of this tool to enable service providers to prepare consistent responses, resulting in reduced response time and improved evaluations. This package is designed as a comprehensive guide to simplify the service provider selection process and make it more effective. It may not be appropriate for every situation." The SPARK Institute |
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New Year's Resolutions Thwarted by COVID-19? Tasks for Pension Plan Sponsors "[1] Revisit plan goals and objectives ... [2] Understand your risks ... [3] Revisit glide paths, potentially re-risk ... [4] Review asset allocation and rebalance ... [5] Explore derivatives to manage risk ... [6] Evaluate Treasuries in your portfolio today ... [7] Make contributions (or not!) ... [8] Understand future contribution requirements and financial implications ... [9] Integrate your contribution and investment policies ... [10] Ensure plan administration systems are robust ... [11] Revisit retirement program design." BenefitsPro; free registration required |
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Insurer Annuity Pricing and Solvency: The Impact of COVID-19 "Plan Sponsors embarking on an annuity purchase face additional uncertainty and risks due to the impact of COVID-19. Transactions will continue, but awareness of market conditions and performing due diligence of insurance providers takes on additional importance." River and Mercantile Solutions |
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The New Brain Inside Today's Retirement Plans "Vanguard currently has a variety of ongoing, AI-enabled personalization initiatives in DC plans. The efforts use the full range of AI technologies: rules-based algorithms, machine learning and neural networks. Each plays a distinct role in moving participants along a critical path through the web of human emotions, impulses and actions (or lack thereof) mapped out by behavioral finance. Here are a few examples." Vanguard |
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Answers to Participant Questions About COVID-19 and the Market Drop "For individuals with retirement savings plans such as 401(k)s ... For individuals with a pension plan provided by a company ... For individuals in multiemployer pension plans ... For individuals in government pension plans ... For individuals in 'church plans'." Pension Rights Center |
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[Opinion] Does Multi-Employer Pension Reform Belong In A 'Phase Four' Coronavirus Bill? "[It] is entirely within established precedent to include pension legislation in larger bill. BUT -- that's only the case for legislation that has bipartisan consensus. The Butch Lewis Act does not have this consensus." Elizabeth Bauer, in Forbes |
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Benefits in General |
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[Guidance Overview] IRS 5500 Extension Comes Up Short "Under Notice 2020-23, released April 9, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020.... The extension will surely be welcome news for those June 30 plan year-ends that had filed for an extended deadline of April 15 (the regular Jan. 31 deadline + 2-1/2 months) -- and which will now have until July 15 to file.... [T]he news will be of little comfort to those plans with calendar year-ends -- for which their July 31 deadline is fast approaching." American Retirement Association [ARA] |
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[Guidance Overview] "CC RI 20-22 extends the provisions of CC RI 20-08, which provides income tax exemptions for 'Qualified Payments Made for Disaster Assistance' made by employers to employees and independent contractors, to include certain payments made as a result of the COVID-19 emergency.... CC RI 20-23 amends CC RI 20-09, which provides rules applicable to 'Special Disaster Distributions' from qualified retirement plans and IRAs." Haynes and Boone, LLP |
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Benefits in the Time of COVID-19: RIFs, Furloughs, Layoffs, and Leaves of Absence "[1] Partial plan terminations.... [2] Qualified plan loans.... [3] Health and welfare plan eligibility.... [4] COBRA continuation coverage.... [5] ACA information reporting.... [6] USERRA.... [7] Severance benefits.... [8] Executive compensation.... [9] Multiemployer pension plan withdrawal liability.... [10] ERISA litigation considerations." Epstein Becker Green |
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Selected Discussions |
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Partial Plan Termination -- Full Vesting for Already-Paid Former Participants? "We have a plan that had a partial plan termination in 2019 because 20% or more of the employees were involuntarily terminated. My understanding is that anyone who was terminated in 2019 (whether or not it was involuntarily) should become 100% vested. However, what if there are a few of these affected participants who already took a distribution (that was not 100% vested) from the plan? Should the amounts they forfeited be restored?" BenefitsLink Message Boards |
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COVID-19 Tax Relief When Plan Does Not Choose COVID-19 Options "Now that most of the recordkeepers we work with have put together their strategy for handling CARES Act provisions, I'm wondering how other TPAs are handling situations in which the plan does not want to adopt the CARES Act provisions, but a participant would otherwise qualify for the tax relief on a distribution that is permitted under the plan?" BenefitsLink Message Boards |
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Gold as Investment -- Must It Be Held by a Custodian? "A single member plan participant would like to invest in gold. In an IRA the rule is that the gold must be held by a custodian. Is that the same for qualified retirement plans? This single member 'solo' plan participant wants to invest, for example, in Canadian Maple Leafs, and wants to keep them in his safe deposit box." BenefitsLink Message Boards |
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Press Releases |
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Before You Adopt Those COVID-19 Loan and Distribution Provisions ...
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