Retirement Plans Newsletter

May 13, 2020

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Form 5500 Issues and Resolution
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Complex Death Claims and How to Handle Them
July 14, 2020 WEBCAST
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View Coronavirus (COVID-19) News and Resources

[Official Guidance]

Text of IRS Notice 2020-37: Weighted Average Interest Rates, Yield Curves, and Segment Rates for May 2020 (PDF)

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."

Internal Revenue Service [IRS]

[Sponsored]

Thorough analysis of important aspects of the FFCRA and CARES Act

Sponsored by Wolters Kluwer

Understand & respond to the new rules & requirements this legislation brings. Families First Act and CARES Act, Selected Provisions: LEA provides numerous features designed to help you locate and understand the changes made by these Acts. Learn More. Learn more


[Guidance Overview]

Notice and Disclosure Deadlines Extended But Caution Is Advised

"Notices and disclosures should be timely provided if possible. If the extended deadlines or the relaxed requirements are needed, [the authors recommend] including in the notice or disclosure itself, or in an internal document, a footnote, statement, or reference indicating that the plan sponsor or administrator is relying on the relief. This will allow auditors to clearly link permissible delays in meeting compliance obligations to this relief."

Buck

[Guidance Overview]

The SECURE Act's Eligibility Rules for Long Term, Part-Time Employees: The Good, the Bad, and the Questions

"[C]ounting Eligible Long-Term, Part-Time employees as participants, even if they don't have an account balance in the plan, could cause the plan to become a large plan that requires a financial statement audit.... Can long-term, part-time employees be excluded if they are part of an excluded employee class? ... Can plans with immediate eligibility now exclude from the ADP test long-term, part-time employees who had been participating? ... Once in the test, always in the test?"

Belfint Lyons Shuman

[Guidance Overview]

Navigating the 'Good Faith Effort' Standard for Reg BI and Form CRS Implementation

"The SEC's initial Form CRS examination program will, among other things, (i) review whether the firm has filed the Form CRS with the SEC, (ii) evaluate the firm's process for delivering the CRS to existing and new retail investors, and (iii) assess whether the Form CRS includes all the required information and is formatted in accordance with the instructions."

Wilmer Hale

Delayed Deposits of Employee Salary Deferrals Due to COVID-19

"EBSA Disaster Relief Notice 2020-01 relaxes the remittance requirements for some employers.... The phrase, '… solely on the basis of a failure attributable to the COVID-19 outbreak,' is narrow. Therefore, if a delay is necessary, ... a prudent course of action would be to clearly document and provide detail in the plan records (a.k.a., the 'fiduciary file') why the delay was attributable to COVID-19, and how the plan complied as soon as administratively practicable under the circumstances."

Retirement Learning Center, LLC

Second ADP ERISA MEP Lawsuit Includes a Dozen Counts

"Last week, McCaffree Financial Corp., a participating employer in the ADP TotalSource Retirement Savings Plan, filed an excessive fee lawsuit on behalf of the multiple employer plan and a class of similarly situated participating employers against ADP.... This week, a second lawsuit has emerged representing the interests of a proposed class of plan participants. The second suit largely mirrors the first in its allegations of prohibited transactions, excessive fees and other fiduciary breaches, but it is even more comprehensive and stretches beyond 150 pages." [McCaffree Financial Corp. v. ADP, No. 20-5492 (D.N.J. complaint filed May 4, 2020); Berkelhammer v. ADP TotalSource Group, Inc., No. 20-5696 (D.N.J. complaint filed May 7, 2020)]

planadviser

How to 'Value' 401(k) Administration Services and Investments

"[B]enchmarking 401(k) fees on an all-in basis is not a panacea for uncovering excess fees. The process has a major limitation -- it compares cost, not value.... To 'value' your 401(k) provider's administration services and investments, I recommend you do some additional benchmarking -- compare their administration fees to competing providers on a per capita basis and their investment fees to comparable index funds on a returns basis."

Employee Fiduciary

Employment at Older Ages and Social Security Benefit Claiming, 1980-2018

"[F]rom 2000 through 2018, the [labor force participation rate (LFPR)] among individuals aged 65-69 rose from 30 percent to 38 percent for men and from 19 percent to 29 percent for women. Since 2000, the proportion of fully insured men and women who claim retirement benefits at the earliest eligibility age of 62 has declined substantially."

Patrick J. Purcell, via SSRN

Editor's Pick Market Decline Worsens the Outlook for Public Plans (PDF)

"If markets remain at their current levels until June, most state and local pension plans will end fiscal year 2020 with negative annual investment returns, reduced asset values, lower funded ratios, and higher actuarial costs.... This brief will estimate the immediate impact of the drop in asset values on plan finances for 2020 and take a look at the potential longer-term impact -- especially for those plans that were already severely underfunded."

Center for State & Local Government Excellence, and Center for Retirement Research at Boston College

Investment Forecast: May 2020

"Investing now is about treading a fine line between the significant support from central banks, the continued uncertainty for corporates and the global economy.... The positive moves in credit and equity markets in April appear premature, leaving markets vulnerable. [The authors] are waiting for a better opportunity to re-risk portfolios -- either driven by a further price fall, or by greater certainty about the future."

River and Mercantile Solutions

Benefits in General

Embracing Radical Transparency in Benefits Communication

"[1] Invite employee input.... [2] Recognize all employees' needs.... [3] Look for new ways to help your employees.... [4] After launch, diagnose what's missing.... [5] Be honest and thorough when communicating changes."

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Executive Compensation
and Nonqualified Plans

Editor's Pick COVID-19 Impact on Executive Compensation: Amending Performance Goals Under Equity and Other Incentive Awards

"Companies considering taking such actions should review their current arrangements and analyze how current business conditions have affected existing arrangements, performance goals and stock prices. In addition to this review and analysis, companies should consider other issues, including Section 409A ... and limitations under Section 162(m) of the Code. [This article provides] specific questions and limitations to be evaluated in connection with a review of performance goals and potential modifications or other adjustments."

Proskauer

Selected Discussions
on the BenefitsLink Message Boards

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Should This Self-Employed Individual Adopt a DB Plan on Top of a 401(k)?

"Client is self employed with $204,000 in self employment income. Client claims no need for a pension as a 401k profit sharing will allow $62,000 in contributions because he is over age 50. Client's advisor states also 415 does not apply ... Hence no need for a pension. No employees except the owner. Would a DB plan be useful?"

BenefitsLink Message Boards

How Do Plan Distributions Affect State-Provided Unemployment Benefits?

"Does anyone have a good reference showing which states take an individual's retirement plan distributions into account for purposes of the  individual's eligibility for (or size of) unemployment benefits?"

BenefitsLink Message Boards

Same Firm Can Provide Audit Services and TPA Services?

"Can the same accounting firm have an Audit & Assurance Service line that provides Audit Support to larger 401(k) Plans, the financials etc. and also have a TPA Service Line perform the TPA services for those same client?"

BenefitsLink Message Boards

Effect of CARES Deadline Extensions on Funding Deficiency

"Calendar year, small PBGC covered plan (maybe 30 people) has a $300,000 funding deficiency from 2018. Minimum required contribution for 2019 (including prior year funding deficiency) totals $400,000. What is the funding deadline?"

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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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