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May 6, 2020 logo logo
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View Coronavirus (COVID-19) News and Resources

[Guidance Overview]

IRS Provides CARES Act Questions and Answers

"Some of the welcomed clarifications in the FAQs include ... [1] Qualified individuals may claim the tax benefits of coronavirus-related distributions on their tax returns even if the plan sponsor does not elect to permit such distributions and does not report them as such.... [2] Retirement plans are not required to accept repayments of coronavirus-related distributions.... [3] Reporting of repaid coronavirus-related distributions is handled via amended income tax returns.... [4] Coronavirus-related distributions must be reported on IRS Form 1099-R even if the participant repays the distribution during the same year."

Wilkins Finston Friedman Law Group LLP

[Guidance Overview]

IRS Q&As Address CARES Act Retirement Plan Distribution and Loan Issues

"This Q&A confirms a plain reading of the CARES Act that an individual will not be a qualified individual because of a spouse's furlough or job loss ... The suspension of loans is optional, and an employer can elect to add one type of coronavirus-related change and not another.... While there is nothing especially surprising in these Q&As, they are helpful clarifications and confirm that the IRS intends to approach future CARES Act guidance in a way that will not deviate substantially from the guidance it has issued under similar circumstances in the past."

Morgan Lewis

Johnson & Johnson Escapes Breach of Fiduciary Duty Lawsuit Due to Dudenhoeffer's Difficult Pleading Standard

"Plaintiffs argue Defendants Fasolo and Caruso could and should have made public disclosures about the asbestos in talc power. The court engaged in a lengthy discussion on this issue, ultimately concluding Plaintiffs' alternative action would require Defendants to make public disclosures in their corporate capacities and that ERISA liability can only arise from actions taken while acting in a fiduciary capacity." [Perrone v. Johnson & Johnson, No. 19-923 (D.N.J. Apr. 29, 2020; unpub.)]

Kantor & Kantor

Cybersecurity and Retirement Plans: What Plan Sponsors Should Do

"So far, the DOL has not taken a formal position or issued comprehensive guidance on the ERISA fiduciary standards governing retirement plan cybersecurity, including what data is a 'plan asset.' Even when fiduciaries are equipped with such guidance, however, the analysis will likely be highly fact-specific and contingent on the specific data actually misappropriated by hackers.... Employers should consider taking the following steps to protect their plans from potential cyber security breaches[.]"

The Wagner Law Group

Settlor vs. Plan Expenses in the COVID-19 Era

"In the early days of the pandemic, employers have been reviewing optional CARES Act provisions and reviewing the sustainability of their employer contributions to defined contribution plans. These types of expenses are of critical importance but cannot be paid from plan [assets]."

Multnomah Group

Financial Planning is Key to Maintaining Long-Term Balance for Retirement Planning

"[W]hile investors with an established plan report a higher level of confidence (87%) and overall positive outlook for their financial security (75%), only 55% of investors have a plan in place ... In this article, we explore what is a financial plan, how we construct a financial plan with clients, and how we utilize that plan to advise clients."

Schneider Downs

40 Retirees Ordered to Repay Eleven Million Dollars After Plan Administrator's Mistake

"About 40 retirees from the city of Denver have been ordered to pay back [eleven million dollars] in retirement benefits after they were erroneously receiving the funds because of a mistake by a retirement plan administrator ... The error occurred about 15 years ago and was discovered in late 2019 during a routine review, agency officials said, adding that letters were sent out to the retirees and their survivors."

The Denver Post

Assessing the Impact of MPRA Benefit Cuts

"Both the Intl Assoc. of Machinists Motor City Pension Fund and the Alaska Ironworkers Pension Plan were allowed in 2018 to cut benefits under the Multiemployer Pension Reform Act (MPRA) and both have June 30 plan year ends so we now have those full year 6/30/19 5500 filings to make comparisons.... It looks like the cuts were about 25% for Alaska Ironworkers and 40% for Motor City with all participant types reduced equally. Both plans saw their funded ratios rise but the recent market drop could have wiped that out leaving the plans back at pre-MPRA-cut levels."


Unintended Consequences: How Scaling Back Public Pensions Puts Government Revenues at Risk (PDF)

32 pages. "Overall, when we add the impact of investment of assets and spending of pension checks by retirees, public pensions in 2018 contributed $1.7 trillion to the US economy and $341.4 billion to state and local tax revenues.... [In] 2016, public pensions contributed $1.3 trillion to the economy and $277.6 billion to state and local revenues."

National Conference on Public Employee Retirement Systems [NCPERS]


Pandemic Relief Could Risk Spousal Retirement Security

"Retirement plan industry groups are requesting changes to regulations that would make it easier for employees and retirees to access their retirement savings during the COVID-19 pandemic.... [T]he Pension Rights Center and ... the National Women's Law Center warn that such a move would circumvent rules designed to protect spouses' retirement security, and women in particular."

Chief Investment Officer [CIO]


K-12 Employee Benefit Officials Fail This Test

"The typical K-12 vendor list is some combination of expensive agent-sold annuity products ... and high-cost mutual fund companies. The products sold in these plans often contain expensive surrender charges lasting years. The worst of which apply a new penalty time period with each monthly contribution."


Benefits in General

[Official Guidance]

IRS Announces Tax Relief for Oregon Victims of Severe Storms, Flooding, Landslides and Mudslides

"Victims of the severe storms, flooding, landslides and mudslides that began on Feb. 5, 2020, in Oregon may qualify for tax relief ... [C]ertain deadlines falling on or after Feb. 5, 2020, and before April 1, 2020, are granted additional time to file through July 15, 2020.... This is in addition to the nationwide Coronavirus-related relief already available to taxpayers on returns, payments and other time-sensitive actions occurring on or after April 1, 2020 and before July 15, 2020."

Internal Revenue Service [IRS]

Editor's Pick DOL National Online Dialogue: Opening America's Workplaces Again

"[The DOL] is hosting a national online dialogue to solicit ideas about challenges that may be faced as businesses reopen and how best to help employers and workers reopen America's workplaces safely. We want to hear from you -- America's employers and workers. Join your fellow citizens and share your best ideas about [1] reopening businesses, [2] commuting safely, [3] working safely, [4] accommodating members of vulnerable populations, [5] supporting America's families, and [6] reducing regulatory burdens. Don't miss your chance -- please share your feedback by Thursday, May 7!"

U.S. Department of Labor [DOL]

Executive Compensation
and Nonqualified Plans

The HCE Benefits Gap: How It Happens, How to Fix It (PDF)

"Companies generally spend 20% more, as a percentage of salary, on benefits for the core population than they spend on benefits for the executive group.... Strategically designed disability income restoration plans and 401(k) restoration plans (nonqualified deferred compensation plans under IRS Section 409A) offer a viable solution for employers and highly compensated key employees."

Fulcrum Partners LLC

Selected Discussions
on the BenefitsLink Message Boards

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Participant Qualified for Loan Suspension -- But What About Now?

"Participant is furloughed due to the coronavirus. Not terminated, but no pay. Participant requests suspension of loan payments. Two weeks later the plan sponsor receives PPP loan proceeds and the participant is back to working, for argument's sake let's say at full hours and pay for at least the eight weeks of the loan. Must the participant begin payments again, or can the suspension continue?"

BenefitsLink Message Boards

TPA Has 'Actual Knowledge to the Contrary'?

"Quoting from the IRS Q&A released on Monday:

Q11. May an administrator rely on an individual's certification that the individual is eligible to receive a coronavirus-related distribution?

A11. The administrator of an eligible retirement plan may rely on an individual's certification that the individual satisfies the conditions to be a qualified individual in determining whether a distribution is a coronavirus-related distribution, unless the administrator has actual knowledge to the contrary. Although an administrator may rely on an individual's certification in making and reporting a distribution, the individual is entitled to treat the distribution as a coronavirus-related distribution for purposes of the individual's federal income tax return only if the individual actually meets the eligibility requirements.

I think the standard essentially has now been shifted to the plan administrator 'must know for sure they qualify.' Does anyone agree with me?"

BenefitsLink Message Boards

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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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