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Retirement Plans Newsletter May 14, 2020 |
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Newly Posted COVID-19 and Other Recent Developments Affecting IRAs
To Test, or Not To Test. Is That Even a Question? How Do We Return to the Workplace Safely?
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Official Guidance] "The June 2020 lump sum interest assumptions will be 0.00 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 May 2020, these assumptions represent a decrease of 0.50 percent in the immediate rate and are otherwise unchanged." Pension Benefit Guaranty Corporation [PBGC] |
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[Sponsored]
ERISApedia.com authors and staff commend you for the extraordinary efforts you are making to serve your clients. Please let us know how we may help and periodically check our webcasts page for updates. Contact us: sales@erisapedia.com or 612-605-2266 |
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[Guidance Overview] COVID-19 Joint Agency Relief: ERISA Enforcement Relief for Retirement Plans "[F]or plan sponsors and plan administrators that are having difficulty meeting the standard ERISA deadlines for providing notices and disclosures due to the COVID-19 pandemic, [EBSA Disaster Relief Notice 2020-01] provides reassurance that the DOL intends to apply 'a temporary policy of relaxed enforcement' as long as plan sponsors and plan administrators act in good faith when attempting to satisfy their fiduciary obligations related to ERISA-required notices and disclosures.... The Notice confirms that a plan will not violate ERISA's 'reasonably equivalent basis' requirement by making loans with the increased limits available only to qualified individuals in accordance with the CARES Act." Faegre Drinker |
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[Guidance Overview] COVID-19 and Late Remittances of Employee Deferrals to 401(k) Plans "[EBSA Disaster Relief Notice 2020-01] requires that failing to remit Employee Contributions to the plan in a timely manner be 'solely on the basis of a failure attributable to the COVID-19 outbreak.' ... [An] employer that cannot deposit or have its payroll provider deposit Elective Deferrals into the plan in a timely manner solely due to a COVID-19 issue [should] document the existence thereof and how the Employee Contributions were deposited into the plan as soon as possible after the COVID-19 issue was resolved. Potential examples of COVID-19 failures that, in and of themselves, might cause untimely deposits under the general rules include furloughing the employer's payroll staff or staffing shortages at the payroll provider." Jackson Lewis P.C. |
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"As courts across the country have wrestled with the meaning of 'actual knowledge' for decades, the definition solidified in [this case] will have significant practical implications for ERISA plan administrators in how they distribute plan disclosures to participants particularly considering the increased use of electronic transmissions." [Intel Corp. Investment Policy Comm. v. Sulyma, No. 18-1116 (S. Ct. Feb. 26, 2020)] The Wagner Law Group, via Journal of Compensation and Benefits |
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The Impact of the SECURE Act on Guaranteed Income Contracts "While the focus of this article is on the Act's fiduciary safe harbor, it summarizes the three provisions and then goes into detail on the fiduciary safe harbor for selecting an insurance company. But first, let's look at why this matters." Fred Reish and Bruce Ashton, via American Retirement Association [ARA] |
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Is Now the Time for a Roth Conversion? "Individuals will pay less tax on the money than they would have previously (say, in 2019), since retirement account balances have been lowered by the COVID-19 pandemic.... Individuals may find themselves in a lower tax bracket for 2020 than they have been historically.... Individuals can spread out the tax liability if they are affected by COVID-19.... Tax brackets, in general, are at historic lows." Cammack Retirement Group |
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Defined Contribution Plan Participants' Activities, First Quarter 2020 (PDF) "Defined contribution (DC) plan withdrawal activity in the first quarter of 2020 remained low, although it was slightly higher than the activity observed in the first quarter of 2019.... A preliminary estimate indicates that only 1.4 percent of DC plan participants stopped contributing in 2020:Q1, compared with 0.9 percent in 2019:Q1 and 2.7 percent in 2009:Q1.... In the first quarter of 2020, 6.2 percent of DC plan participants changed the asset allocation of their account balances, slightly higher than 4.2 percent in 2019:Q1 and 5.5 percent in 2009:Q1" Investment Company Institute [ICI] |
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April Market Rebound Helps Public Pensions Recover Half of Q1 Losses "[P]ublic pensions in April rebounded significantly from the first quarter of 2020, with an aggregate 5.92% investment return for the month -- welcome news after Q1's dismal -10.81% asset performance.... [T]he aggregate deficit shrank from $1.819 trillion at the end of March 2020 to $1.619 trillion at the end of April. The resulting funded ratio climbed significantly, from 66.0% at the end of March to 69.8% as of April 30." Milliman |
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Benefits in General |
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[Guidance Overview] Coronavirus Recovery and Relief Guidance on Employee Benefit Plans "Employers should review their plan provisions -- particularly the claim and appeal rules -- because the prior maximum limits on filing certain actions such as appeals of denials may need to be altered due to the tolling of these periods during the Outbreak Period. The requirement to disregard the Outbreak Period in determining whether the deadlines have been exhausted may require plan amendments for retirement as well as health, disability and other benefits using the ERISA claim procedures. The final rule extending the deadlines did not address when plan amendments need to be made to consider the Outbreak Period." Jackson Walker |
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Selected Discussions |
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Notice 2020-23: All Loan Repayments on Hold? "Does this really give everyone a blanket suspension on loan repayments until July 15? I didn't read it that way, but the latest ERISApedia webinar with Derrin Watson said that's what it meant (though the loan has to be caught up by 12/31/20). So... since you don't have to be a 'qualified individual' like for the coronavirus suspension, are all loan repayments for everyone suspended until then? Or just if requested? I assume this is mainly a mechanism to postpone defaults. And of course the Notice doesn't say anything about accruing interest or reamortizing... I don't see the recordkeepers just giving everyone a few months off." BenefitsLink Message Boards |
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Who Gets Full Vesting at Time of Defined Benefit Plan Termination? "How do you interpret and apply IRS Code section 411(d)(3) in Defined Benefit Plan termination? If the plan terminates in May 2020 and there were participants who terminated in 2019, do those terminated participants become 100% vested when the plan terminates? How about anyone terminated in earlier years with an accrued benefit in the plan (2018, 2017, 2016, 2015)? How about anyone terminated in earlier years whose accrued benefit was entirely distributed to them (2019, 2018, 2017, 2016, 2015)?" BenefitsLink Message Boards |
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Press Releases |
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PSCA "Siggys" Shine Spotlight on Defined Contribution Plan Education Stars
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Hawaii Food Retailer to Pay Back Wages to Employee Wrongly Denied Paid Sick Leave to Care for Child After Coronavirus Closes School
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Most Popular Items in the Previous Issue |
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Text of IRS Notice 2020-37: Weighted Average Interest Rates, Yield Curves, and Segment Rates for May 2020 (PDF)
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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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