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Retirement Plans Newsletter April 13, 2020 |
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Newly Posted Coronavirus 60-Day Rollover Relief (IRS Notice 2020-23)
Coronavirus 60-Day Rollover Relief (IRS Notice 2020-23)
SEC's Investment Adviser Interpretation and Reg BI: The (Partial) Convergence for RIAs and Broker-Dealers
Best Practices on Handling Beneficiary Designations
Annual Legal & Regulatory Update
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Official Guidance] PBGC Provides Relief to Mitigate Effects of COVID-19 Pandemic "The [PBGC on April 10] announced extended deadlines for upcoming premium payments and other filings with the agency. Due dates for filings or actions that would otherwise have been due on or after April 1, 2020, and before July 15, 2020, have been extended to July 15, 2020.... The extended due dates do not apply to particularly important or time-sensitive filings ... that may indicate a high risk of harm to pension plan participants or the insurance program, but such filers may request individual extensions." Pension Benefit Guaranty Corporation [PBGC] |
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[Guidance Overview] Preparing Qualified Plans for COVID-19-Related Needs "In-service distributions from 401(k) and profit sharing plans ... Loans to participants in 401(k) and profit sharing plans ... In-service distributions from defined benefit plans ... Changing or freezing benefits ... Investment-related issues ... Partial plan terminations." Sidley Austin LLP |
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[Guidance Overview] Retirement Benefit Expenses Covered Under the CARES Act's Paycheck Protection Program "The 'payment of any retirement benefit[s]' [is] among the payroll costs that are included. However, at this time, it not entirely clear what is intended to be included in the 'payment of any retirement benefit.' ... [It] is likely that participant elective deferrals and matching employer contributions are covered and perhaps any normal payroll period payments to a multiemployer pension plan. However, it is less likely that profit sharing contributions or defined benefit funding obligations are covered." Haynes and Boone, LLP |
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[Guidance Overview] Required Distributions for 2020 Suspended for Many Plan Participants and IRA Owners "Did you take your 2020 required distribution before the law changed (or before you knew the law changed) to suspend required distributions for 2020? ... If the distribution occurred in the last 60 days, you may be able to roll those dollars back into the plan or into an IRA tax-free. That means you will not need to pay the tax on the distribution in 2020. Keep in mind that the dollars are tax-deferred, meaning you will pay income tax on them when they are ultimately distributed." McDonald Hopkins |
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[Guidance Overview] SEC Exam Guidance for Reg BI Compliance "These examinations are designed primarily to evaluate whether broker-dealers established policies and procedures reasonably designed to achieve compliance with Reg BI. The SEC acknowledges that the coronavirus disease (COVID-19) has created challenges for firms; nonetheless, as Chairman Clayton announced last week, the SEC will not be extending the June 30, 2020 compliance date." Faegre Drinker |
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"[The former employee] alleges an unknown user accessed her account online, changed the password and initiated a transfer to a new bank account, after getting additional personal information from Alight customer service representatives over the phone, according to the complaint.... Alight, the nation’s largest employee benefits administrator, is under federal investigation for allegedly processing unauthorized retirement plan distributions through cybersecurity breaches." InsuranceNewsNet.com |
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Are Your Target Date Funds a Prudent Investment? COVID-19 Puts a Spotlight on Fiduciary Choices "COVID-19 may have accelerated a reckoning for fiduciaries who have not fulfilled their responsibilities for target date fund selection. Those who simply selected their vendor's funds without investigation and financial firms that selected their own proprietary funds for their plans, especially funds without good track records, are probably most at risk. However, fiduciaries with exposure can begin to reduce that exposure by reviewing their selections and implementing a prudent review process.... Aren't these funds approved by the [DOL]? ... Aren't these funds all similar? ... What can fiduciaries do now?" Cohen & Buckmann, P.C. |
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An Employer's Crash Course on Withdrawal Liability (PDF) "[T]his article [provides] a basic overview of withdrawal liability ... [1] what withdrawal liability is; [2] the issues businesses may face at different times; and [3] what happens when an employer is assessed liability." Greensfelder, Hemker & Gale, P.C, via St. Louis Bar Journal |
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Public Pensions Face Liquidity Crunch Amid Volatility "[M]any funds claim that market turmoil doesn't affect their returns because they have plenty of time to ride out volatility. However, funds with weak liquidity don't have that luxury ... [P]ublic pension funds that already had weak funded ratios and limited cash on hand may have to liquidate some of their longer-term investments to make their benefit payments. This will erode their earning power and continue to cycle, worsening their funded status even further." ValueWalk |
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Most Americans Are Unprepared for When and How Retirement Will Happen "Half of Americans retired earlier than expected, with the vast majority doing so for reasons outside of their control, yet many non-retirees still believe they'll retire on their own terms. 65% of non-retirees believe they will work at least part time in retirement when in reality only 7% are doing so. Six in 10 non-retirees said running out of money before they die is one of their biggest worries." Allianz Life Insurance Company of North America |
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Benefits in General |
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[Guidance Overview]
"Notice 2020-23 automatically postpones the due date of many tax payments and filings, and extends many deadlines that would otherwise apply with regard to benefit plan administration under Code rules. Any such due date or deadline that would ordinarily fall on or after April 1, 2020 through July 14, 2020, is automatically extended to July 15, 2020.... [C]alendar year plans' due date for the Form 5500 is July 30, 2020, outside the July 15th relief period.... PBGC automatically extended due dates for required filings[.]" Groom Law Group |
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[Guidance Overview]
"Unlike the extensive retirement plan-related relief within the [CARES] Act, individuals or entities wishing to avail themselves of the extensions provided in IRS Notice 2020-23 need not meet any condition of being directly or indirectly affected by the COVID-19 pandemic.... Some are actions to be completed by individuals, others are the responsibility of entities such as financial organizations and retirement plans. For these actions, a deadline falling on or after April 1, 2020, and before July 15, 2020, is extended to July 15, 2020." Ascensus |
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The One About the Audit Requirement for Form 5500 "Why do annual reports for employee benefit plans (Forms 5500) have to be audited? ... Who is authorized to audit the form 5500? ... IQPAs are your friends.... Do all annual reports have to be audited? ... Tell me more about the 80-120 rule.... What about 2019, when [an employer is] close to the deadline and the audit is not done?" Ferenczy Benefits Law Center |
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Executive Compensation |
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Impact of COVID-19 on Executive Compensation: Key Issues "[1] Pay reductions ... [2] Relative vs. absolute performance goals ... [3] Equity plan share reserves ... [4] Appeal of stock options ... [5] Repricing of previously granted stock options or Stock Appreciation Rights (SARs) ... [6] Changing deferral elections; accelerated payment of nonqualified deferred compensation ... [7] Disclosure issues ... [8] Financial needs of executives." Mayer Brown |
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"Section 409A does allow for the cancellation of a deferral election and/or acceleration of payments if an employee experiences an 'unforeseeable emergency' within the meaning of Section 409A.... [An] employer may allow a limited payment of deferred compensation to an employee if the employee experiences an unforeseeable emergency.... [A] plan may provide for the payment of deferred compensation upon certain types of unforeseeable emergencies without providing for payment upon all types of unforeseeable emergencies." Morgan Lewis |
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Selected Discussions |
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1099-R Troubles Due to Change in Plan Name "I have a client who has an EIN specifically for the plan. We have had the plan for years and have had the EIN for years. We have always used the EIN on the Form 5500 and the 1099-Rs. Several years ago, the plan name changed. We have continued using the same EIN and have never had any problems -- until this year. I just need to amend/correct the name associated with the EIN. Any ideas?" BenefitsLink Message Boards |
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No Relief from 30-Day Required Notice Before Stopping Safe Harbor Nonelective Contributions? "Client has a safe harbor non-elective 401(k) stand-alone. You'd think IRS would offer some sort of relief, like 'due to COVID-19, employers can elect to stop SHNE contributions' without a 30-day notice (because a notice was not required for 2020 anyway), and all employees would know why. Also, if the client stops the SHNE, thus required to ADP test from the beginning of the year though the date the contribution ceases, obviously the plan would fail ADP. Isn't the purpose of the SH contribution to avoid any testing issues?" BenefitsLink Message Boards |
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Press Releases |
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Pentegra Announces COVID-19-Related Efforts to Help Clients
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Most Popular Items in the Previous Issue |
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CARES Act Provisions for Participant Loans -- Optional or Required?
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CARES Act Makes Changes to Rules for Retirement Plan Loans
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IRS 5500 Extension Comes Up Short
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