Retirement Plans Newsletter

May 1, 2020

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View Coronavirus (COVID-19) News and Resources

[Guidance Overview]

DOL Provides COVID-19 Relief for Retirement Plans

"This relief provides much needed flexibility in meeting DOL participant notice and disclosure requirements, addressing claims, making plan contributions, and meeting DOL filing deadlines.... Plan fiduciary committees should continue to meet by phone or video conference if possible ... Relief in the guidance for delays in participant contributions may be helpful in limited circumstances, but plans should continue to make every effort to avoid such delays and to remedy them quickly."

Groom Law Group

[Guidance Overview]

CARES Act Plan Loans, Plan Distributions and Other Relief: Plan Sponsor Considerations Before Implementation

"We are witnessing a rush to provide [CARES Act loan and distribution] options to affected plan participants and this rush is resulting in problems ... [1] Plan sponsors are being given a very brief time to respond to [TPAs] with decisions (e.g., five days) and told by the TPAs that the plan will be defaulted into some but not all of the flexibility allowed by these new rules.... Plan sponsors are [thus] allowing decisions of great magnitude to be made by their vendors. [2] Communications to participants are being proposed, and then quickly distributed to participants, that do not correctly describe the new rules or the decisions desired by the plan sponsors. [3] Spousal consent requirements under the current terms of the plan are being disregarded as provisions that can be ignored now and amended out of the plan later."

Smith & Downey, P.A.

[Guidance Overview]

IRS Extends Retirement Plan Payment and Filing Deadlines

"Notice 2020-23 expands the relief provided by the IRS in Notice 2020-18, which extended the deadline for filing individual and business tax returns, and for making certain retirement plan contributions, to July 15, 2020.... [An] individual or entity does not need to be impacted by the coronavirus/COVID-19 pandemic to afford themselves of the extensions provided in Notice 2020-23."

Trucker Huss

[Guidance Overview]

Puerto Rico Eliminates Sworn Statement Requirement for Disaster Distributions

"Special Disaster Distributions may now be requested by furnishing a statement signed by the participant under penalty of perjury, without requiring a Notary Public. Electronic means also can be implemented to apply for Special Disaster Distributions."

McConnell Valdes

Your Plan Has Been Hacked, Now What? (PDF)

"[K]nown examples of cyberattacks include efforts to request fraudulent distributions or loans from plan accounts, redirecting direct deposits or mailing addresses for purposes of distributions from plans, and ransomware/phishing attacks that result in a breach of personal information.... Promptly engage outside legal counsel and follow your script ... Remember the responsibilities unique to retirement plans ... Course of corrective action depends on details of breach ... Develop mitigation plan."

Morris, Manning & Martin, LLP, via Journal of Pension Benefits

Working Through DC Plan Communications in a Pandemic

"[O]ne of the best things you can do as a plan sponsor is to reinforce a message they may not want, but need to hear: the DC plan should be a last resort for getting cash.... Recognizing the tough spot employees may be facing, you can support them by offering suggestions on other steps they can take to address their immediate financial needs before they liquidate their hard-earned retirement savings. Helping participants see the scope of options available to them can better position them to make sound financial decisions."

Buck

What Employers Might Expect from Multiemployer Pension Plans Following the COVID-19 Crisis

"While many multiemployer pension plans had been recovering enough from the 2007-2009 Great Recession to have their funding levels approach or exceed their 2007 funding levels, the COVID-19 crisis now threatens those recoveries and the solvency of the most financially troubled plans. Proactive employers participating in multiemployer plans should anticipate how the plan's potential financial downturn will affect their finances and the retirement benefits of their unionized employees, and plan accordingly."

Jackson Lewis P.C.

Is COVID-19 Driving Americans to Retire Early?

"Logically, one might assume that, as a result of the financial implications of both job loss and market volatility, retirement horizons might expand due to COVID-19. However, there is now evidence showing that the pandemic might actually be causing the retirement horizon to contract."

Employee Benefits Research Institute [EBRI]

FAS87 ASC715 Discount Rates and Moody's Rates, April 30, 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

[Opinion]

CIEBA Letter to Congressional Leadership Requesting Action on Pension Funding Stabilization (PDF)

"While we applaud the swift action that Congress took in response to the pandemic under the CARES Act to provide a slightly delayed due date for pension contributions and the action taken recently by the [PBGC] to extend deadlines for upcoming PBGC premium payments, additional Congressional action is urgently needed ... to extend the current funding stabilization rules to provide more consistent and reasonable minimum required pension contribution obligations for single-employer plans."

The Committee on Investment of Employee Benefit Assets [CIEBA]

Benefits in General

[Guidance Overview]

Editor's Pick DOL Disaster Relief Notice Extends Deadlines, Enables COBRA Gamesmanship

"The DOL ... will not take enforcement action against retirement plan sponsors that are temporarily unable to promptly remit contributions to the plan solely as a result of COVID-19.... [T]he requirement to disregard COBRA deadlines during the Outbreak Period may enable affected individuals to manipulate the COBRA election process.... Although this gives individuals who lose health coverage during the pandemic significant latitude, it also creates a very real risk of adverse selection for group health plans."

Spencer Fane

[Guidance Overview]

DOL/Treasury COVID-19 Relief Includes Long Extension of Participant Deadlines and Rule of Reasonableness for Plan Administration

"The guidance does not get into details on logistics for implementation. Plan sponsors and fiduciaries will need to grapple with issues such as: [1] When and how to communicate the extensions to affected participants and beneficiaries.... What format, and how much detail is appropriate, given that the extension period is fluid and will be short-lived? What should be done for people who are already in election periods and were previously informed of a deadline that has now been extended? [2] Whether and how past actions can be undone.... [If] an individual's COBRA coverage was previously canceled for not paying premiums, can it be reinstated? What happens if an eligible COBRA beneficiary already obtained coverage somewhere else?"

Proskauer

Selected Discussions
on the BenefitsLink Message Boards

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Are 2019 Contributions Considered for Purposes of PPP?

"I saw the great discussion on the Paycheck Protection Program earlier in the week, pertaining mainly to prefunding 2020 contributions. Are 2019 contributions eligible for consideration in the PPP? For example, employer was planning to fund a 2019 profit sharing contribution by their 2019 extended tax filing deadline, and makes the deposit during the 8-week window."

BenefitsLink Message Boards

Suspension of Loan Repayments Pursuant to CARES Act Provisions -- Participant's Spouse Loses Job

"I believe I have this correct with regard to the COVID loan repay suspensions. Participant works for a dental office. The majority of the office is closed but said participant is, at least at this time, getting full pay. Participant's spouse had hours reduced and now the spouse's employer has shut down and let everyone go. Participant wants to defer loan repayments because the spouse is out of work. Is it correct to say that this participant would NOT be a qualified participant under the COVID rules for purposes of being entitled to defer a plan loan repayment?"

BenefitsLink Message Boards

Funding Deadline Extension to 1/1/2021 -- Available to Money Purchase Plans?

"The extension of the funding deadline until 1/1/2021 is only for defined benefit plans, not money purchase pension plans -- is that right?"

BenefitsLink Message Boards

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Press Releases

401(k) Champion® Award Announces Winners
Jackson, Grant Investment Advisers, Inc.

Most Popular Items in the Previous Issue

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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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