Retirement Plans Newsletter

May 5, 2020 logo logo
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View Coronavirus (COVID-19) News and Resources

[Guidance Overview]

Social Distancing: When State Income Taxes Decouple from the Federal CARES Act

"The CARES Act provides for special federal tax treatment for 'coronavirus-related distributions' from most types of tax-qualified retirement plans and IRAs.... However, this favorable tax treatment may not apply for state and local tax purposes.... [The authors] expect that states generally will conform to the federal provisions for extended recontribution periods and tax adjustments for affected individuals ... However, this is another area that will need to be monitored for potential differences."

Eversheds Sutherland


Direct Answers to your ERISA & Retirement Plan Questions!

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[Guidance Overview]

Dealing with the Pandemic: IRS and DOL Authorized Delays

"Some of these delays apply to the participants, generally giving them more time to perfect benefit claims, and some apply to plan sponsors and administrators. This FlashPoint will outline what deadlines have been extended and for how long."

Ferenczy Benefits Law Center

[Guidance Overview]

Limited Extension of Deadlines for Participant Contributions and Loan Repayments

"It is critical to recognize that the joint relief is not applicable to all situations. The cause of the delay must be COVID-19 related. While there is no guidance that provides a laundry list of causes that are 'solely related to COVID-19,' it is clear that not all failures that occur during the prescribed timeframe will qualify for this relief (e.g., delay in transmission due to a switch in TPAs likely wouldn't be COVID related). Further, the length of the extension in time provided by the relief is limited. Employers must act 'reasonably, prudently, and in the interest of employees.' Therefore, the delay in transmission should be temporary and in proportion to the cause of the delay."


Return-to-Work Benefits Guidance in the Time of COVID-19

"For benefits that are being reinstated, any applicable waiting periods ... must be administered.... [E]mployers may wish to consider plan amendments to address service crediting issues, especially where employees will be returning in phases or on a reduced hours basis through job sharing arrangements.... Employers, as plan sponsors, should monitor the administration of any changes in employer contributions, including any matching or non-elective contributions to ensure they have been adjusted properly[.]"

Epstein Becker Green

Governance Checklist for Today's Fiduciaries: Delegation to Investment Staff or OCIO Partner (PDF)

"The investment committee is rarely in the best position to evaluate specific investment opportunities -- that should fall to the investment staff or OCIO partner. The investment committee does, however, play a vital role in ensuring that the objectives, constraints and risk tolerance are well defined; the investment strategy was arrived at following a sound process; and the results are monitored relative to clearly defined measures of success."

Russell Investments

Lawsuit Alleges Hotel Chain Used Incorrect Compensation Definition for 401(k) Plan Deferrals

"As explained in the complaint, Host requires ... [that] credit card tips be paid in cash to the employee at the end of his or her shift. Host International does not provide its employees with the option to receive those tips later with their compensation paid through payroll. The plaintiff says this interferes with his and proposed class members' ability to defer income under the terms of the plan." [Frankenstein v. Host Int'l, Inc., No. 20-1100 (D. Md. complaint filed Apr. 28, 2020)]

PLANSPONSOR; free registration may be required

Pension Finance Update, April 2020

"Pensions gained marginally in April, as recovering stock markets offset the impact of falling corporate bond yields. Both model plans ... managed gains of less than 1% for the month but remain substantially down for the year, with Plan A off 12% and Plan B almost 4% through the first four months of 2020."

October Three Consulting

Who Participated in Retirement Plans, 2017 (PDF)

32 pages. "Most workers who are likely to have the ability to save for retirement and to be focused primarily on saving for retirement participate in an employer-sponsored retirement plan.... Younger and lower-income households are more likely to report that they save primarily for reasons other than retirement  ... Retirement plan participation increases with age and income[.]"

Investment Company Institute [ICI]

Benefits in General

[Guidance Overview]

Editor's Pick DOL and Treasury Extend ERISA Deadlines, Creating Questions and Disruptions in Administrative Procedures

"There is an open question whether employers need to revise COBRA notices to reflect the extended deadlines applicable to participants.... [Another] open question is what, if any, notice obligation an employer has to communicate this right and whether the plan has an affirmative obligation to identify and automatically enroll employees who submitted late special enrollment requests on or after March 1.... As of March 1, 2020 and through the end of the Outbreak Period, there are no deadlines to file claims or appeals.... [T]his includes health FSA and HRA expense reimbursement requests, which are generally a few months after the end of the plan year."

Groom Law Group

[Guidance Overview]

IRS and EBSA Provide Additional Relief for Health and Retirement Plans and Participants Due to COVID-19

"The Joint Notice technically applies only to plans subject to ERISA and the Code. However, HHS ... intends to adopt a policy of measured enforcement to extend similar timeframes to non-federal governmental group health plans and insurers. HHS encourages governmental group health plans to provide relief similar to that granted in the Joint Notice, and encourages states and insurance issuers to enforce and operate, respectively, in a manner consistent with the Joint Notice."

Ice Miller LLP

[Guidance Overview]

DOL and Treasury Release ERISA and COBRA Deadline Extensions Due to COVID-19 (PDF)

"These extensions are unprecedented, and employers and plan administrators will need to take steps to ensure that participants understand the new rules. During the Outbreak Period, employers and plan administrators should consider supplementing and modifying adverse benefit determination notices, special enrollment notices, summary plan descriptions, and COBRA forms to reflect these extensions."

Sherman & Howard

Selected Discussions
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Pre-funding and Section 415 Limits in a Volatile Market

"Sponsor deposits $100,000 early for 2020 to a 'pre-allocation account' with a well-known recordkeeper. That $100,000 then grows to $105,000 by the time it ends up being allocated the following January. For 415 purposes, is an individual limited to $57,000 as of the date it's allocated? Or can he get $57,000 plus 5% for his share of the earnings? Or $57,000 plus only the earnings after December 31 (the plan's actual allocation date for contributions)? And a similar question. What if the $100,000 drops to $95,000 by the time it's allocated... 'Hey, favored employee, we'll max you out! Oops, we invested some of that for you early and lost you a chunk of it.' "

BenefitsLink Message Boards

Doin' the Hokey Pokey: Safe Harbor Was Amended Out of Safe Harbor, Now Wants to Amend Back In

"A Safe Harbor 401(k) plan amended out of Safe Harbor (match) a couple of weeks ago. Now they got a PPP loan and want to amend back in, for the next 8 weeks. Then will probably want to amend out again. I say no, but this stuff has been changing so fast that I wanted to make sure I haven't missed anything."

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Press Releases

BetterWealth, LLC is Certified for Fiduciary Excellence
Centre for Fiduciary Excellence [CEFEX]

Most Popular Items in the Previous Issue, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020, 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, 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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