Retirement Plans Newsletter

April 14, 2020

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Webcasts, Conferences

COVID-19: What You Need To Know
April 15, 2020 WEBCAST
Burnham

Helping Employers Navigate the CARES Act & FFCRA Provisions
April 17, 2020 WEBCAST
Williams Mullen

The CARES Act: Building Resiliency for Retirement Plans
April 22, 2020 WEBCAST
The Retirement Advantage [TRA]

COVID-19: What You Need To Know
April 22, 2020 WEBCAST
Burnham

Retirement Plan Impacts of the CARES and SECURE Acts
April 23, 2020 WEBCAST
University Conference Services

Inside the Beltway
April 30, 2020 WEBCAST
Faegre Drinker

Why Do You Have a Retirement Plan? Defining Success Beyond Cost
May 5, 2020 WEBCAST
University Conference Services

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View Coronavirus (COVID-19) News and Resources
View Coronavirus (COVID-19) Webcasts

[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, May 2020

"The May 2020 lump sum interest assumptions will be 0.50 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for April 2020, these assumptions represent an increase of 0.50 percent in the immediate rate and are otherwise unchanged."

Pension Benefit Guaranty Corporation [PBGC]

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[Guidance Overview]

The CARES Act: Do We Have To?

"Does the plan need to authorize Coronavirus-Related Distributions (CRDs)? ... What does CARES mean, then, when it outlines the plans that are permitted to provide CRDs? ... But, must an employer that does not want to amend its plan for CRDs still identify when someone qualifies for a CRD ... How can the Plan Administrator know whether the distribution is a CRD? ... Do we need to authorize Coronavirus-Related Loans? ... Do we need to suspend RMDs? ... Can a participant receive his or her RMD, even though the law does not require?"

Ferenczy Benefits Law Center

[Guidance Overview]

The CARES Act Suspends Required Minimum Distributions for 2020

"[W]hat if you already took some or all of your 2020 distribution? ... What if more than 60 days have passed since you took the distribution? ... [W]hat if the required distribution you already received came from an inherited IRA?"

Nixon Peabody LLP

[Guidance Overview]

Congress Shows It CARES by Waiving 2020 Required Minimum Distributions

"[T]he waiver by a plan of the payment of RMDs is not a mandatory change for plans, and therefore each plan sponsor must decide whether to implement this change to its plan. Whether or not a plan implements this change, it should be noted that any amounts distributed in 2020 that would have been RMDs, absent the waiver, can be rolled over to another employer plan that accepts rollovers or to an IRA."

Sidley Austin LLP

[Guidance Overview]

PBGC Announces COVID-19 Extensions for Premium Payments and Other Filing Deadlines

"The PBGC's relief automatically applies to the due date for any PBGC filing, payment, or other action (including PBGC premium filings and premium payments) other than the ... filings and actions on the PBGC's 'Exceptions List' ... [T]he [CARES] Act extended the deadline for all required minimum contributions to tax-qualified defined benefit plans that would have otherwise been due in the 2020 calendar year to January 1, 2021. As a result, notices to the PBGC for missed required contributions in 2020 should not be required."

Proskauer

Editor's Pick Sample Employee Notice for Coronavirus-Related Retirement Distributions

"For employees affected by COVID-19, the CARES Act opens up new sources for emergency cash from their accounts in qualified retirement plans, 403(b) plans and governmental 457(b) plans.... [The authors] recommend taking prompt steps to avoid participant confusion.... [C]onsidering the chief purpose of the retirement plan is to provide a benefit at retirement, you may want to consider limiting how much can be withdrawn. [This article provides] a sample notice for your plan participants."

Jones Walker

The CARES Act: Helping Your 401(k) Participants During the Coronavirus Crisis

"If a plan is administered in a manner consistent with this special distribution rule, it will not need to be amended until the first plan year beginning after January 1, 2022.... [Y]our decision on whether or not to adopt the [coronavirus related distribution (CRD)] is a 'settlor' (i.e., plan sponsor) decision, not a fiduciary one. That said, implementation of the decision will be a fiduciary act."

FredReish.com

Exiting a High-Fee 403(b) Product Using a CARES Act Distribution

"[I]ncluded in the CARES Act stimulus package may be some relief for 403(b) participants stuck in high-cost investments.... [T]he provision that permits withdrawal of up to $100,000 from a retirement plan can be used to exit a bad 403(b), and move that money to a traditional IRA with a low-cost vendor."

403bwise

New Fidelity Fee Decision Addresses Several Important Issues for Plan Fiduciaries

"[T]he court's 67-page opinion addresses ... a plan fiduciary's obligations with respect to self-directed brokerage accounts and the consideration of collective investment trusts and separate accounts as alternatives to mutual funds. The court also ruled that relief may be available against Fidelity even if Fidelity's breach caused no harm to the Plan and did not result in any profit to Fidelity." [Moitoso v. FMR LLC, No. 18-12122 (D. Mass. Mar. 27, 2020)]

Groom Law Group

Fidelity Beats Back ERISA Challenge: Infrastructure Fee Complaint Dismissed

"The plaintiffs argued that Fidelity was a fiduciary because its decisions over the past several years to charge -- and increase -- the infrastructure fees showed that Fidelity had discretion over its own compensation. The court rejected this theory on the grounds that Fidelity negotiated the fees with the mutual funds and that the funds were not required to pass the fees on to the plans or participants." [In re Fidelity ERISA Fee Litigation, No. 19-10335 (D. Mass. Feb. 14, 2020)]

Carlton Fields

Determining Withdrawal Liability for Multiemployer Pension Plans: A Range of Approaches to Actuarial Assumptions (PDF)

"Common approaches to selecting the withdrawal liability interest rate include the use of the expected return on plan assets, market-observed interest rates, and a blend of these two approaches. Actuaries select withdrawal liability assumptions through a combination of relevant facts and circumstances, the actuarial standards of practice, and their professional judgment."

American Academy of Actuaries

Reg BI Compliance Deadline; Financial Relief Considerations for RIA Firms

"Firms need to carefully document and monitor any disruptions to implementation created by the COVID-19 pandemic. In particular, how government-imposed 'stay-at-home' orders and restrictions are affecting firm resources (including third-party vendors) that are available to implement compliance with Reg BI and Form CRS. If, despite firms' best efforts, compliance is not feasible, they should engage the SEC."

The Wagner Law Group

Have Localities Shifted Away from Traditional Defined Benefit Plans?

"In 2018, 19 percent of large localities had a defined contribution (DC), cash balance, or hybrid plan for new hires, instead of a stand-alone defined benefit (DB). The volume and geography of alternative plans at the local level is similar to that of states, but localities are more likely to offer a DC plan. Government contribution rates for the local alternatives are lower than for the DBs they replaced, and employees are likely to see lower investment returns. But cost reduction will be gradual as the alternative plans are primarily for new hires."

Center for Retirement Research at Boston College

Benefits in General

[Guidance Overview]

IRS Extends Filing Deadlines for Employee Benefit Plans

"This relief has very limited applicability.... [A] plan with September 30, 2019, plan year-end [that] originally would have had an April 30, 2020, due date will now have a due date of July 15, 2020. That is the same due date the plan could have requested by filing for an extension using IRS Form 5558. A plan with a May 31, 2020, or June 30, 2020, due date is better off filing for its own extension to August 15, 2020, or September 15, 2020, respectively."

RSM US

[Guidance Overview]

IRS Extends Form 5500 Due Dates for Some Employee Benefit Plans

"IRS Notice 2020-23 postpones, among other relief, the due date for employee benefit plans required to make the Form 5500 series filings due on or after April 1, 2020, and before July 15, 2020. Plans with original due dates or extended due dates falling within this period now have until July 15, 2020, to file their information reports.... The PBGC acknowledged this IRS notice ... but reminded filers there are certain actions listed on the PBGC's Exception List that do not automatically qualify for the relief."

Jackson Lewis P.C.

Executive Compensation
and Nonqualified Plans

Editor's Pick COVID-19 Executive Compensation Q&As: Incentive Plans and Nonqualified Deferred Compensation

"[1] Can or should companies make adjustments to their annual and long-term incentive plans in light of COVID-19 business impacts? ... [2] We were about to pay our 2019 annual bonuses but want to indefinitely delay payment given financial uncertainty caused by COVID-19. Will that delay cause any legal issues? ... [3] The COVID-19 crisis has caused our stock price to drop dramatically. What impacts could this have on our equity compensation program? ... [4] Can we permit participants to cancel deferral elections and/or receive distributions from our nonqualified deferred compensation plans?"

Pepper Hamilton LLP

Silver Linings Exist in COVID-19 Market: Funding a Non-Qualified Deferred Compensation Plan

"By liquidating the mutual fund plan assets, a capital loss is preserved, assuming there are losses in the mutual funds. If those plan assets are then used to purchase the same or similar mutual funds 'wrapped' with COLI contracts, all the gains achieved during the economic recovery could grow on a non-taxable basis. This strategy allows you to get a tax credit and eliminate future taxation on the asset."

OneDigital Health and Benefits

Selected Discussions
on the BenefitsLink Message Boards

Limit Coronavirus Related Distributions to Fully Vested Sources?

"If the plan allows for Coronavirus related distributions, can it limit the distribution to be from only sources that are fully vested?"

BenefitsLink Message Boards

CARES Act Allows Money Purchase Plans to Provide Distributions Before Age 59-1/2?

"Can a Money Purchase Plan adopt the optional provisions under the CARES Act or is it not until age 59-1/2?"

BenefitsLink Message Boards

Is the IRS Office Open and Processing 5500-EZ?

"Is anyone aware if the IRS office in Utah is open and/or accepting/processing 5500-EZ's? I have a few clients who still file paper copies and I want to have them switch to electronic filings. I don't want the forms to sit and potentially not be processed for many months."

BenefitsLink Message Boards

7- to 8-Month VCP Turnaround -- What Is Your Experience?

"I just received two compliance statements for VCP applications filed in early August and early September 2019, respectively. Not sure what others are experiencing in that regard. Given recent confusion about referral to audit which was all a misunderstanding but which was rooted in how overloaded the program is, I am trying to calibrate clients' expectations about the program going forward. Would be interested to hear of other experiences with turnaround times."

BenefitsLink Message Boards

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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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