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Retirement Plans Newsletter May 20, 2020 |
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Newly Posted Guiding Your Organization's Retirement Plan Through a Recession
Living With Your MEP or PEP: Mitigating Fiduciary Responsibility and Prohibited Transaction Issues
Executive Compensation Tax Issues in M&A: IRS Rules for Stock Options, Deferred and Equity Comp, Golden Parachutes
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Guidance Overview]
14 pages. "This practice note describes the special status afforded to benefit plans sponsored by churches and certain church-related organizations under [ERISA] and the Internal Revenue Code ... [1] Identifying church plans, ruling requests, and curing eligibility failures; [2] Election to be subject to ERISA; [3] Qualified plan rules for nonelecting church plans; [4] Other church plan rules." The Wagner Law Group |
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[Guidance Overview] Single-Employer Defined Benefit Pension Plans: Funding Relief and Modifications to Funding Rules 25 pages. "This report provides [1] background on single-employer DB pension funding, [2] a discussion of funding rules under PPA, and [3] provisions since PPA that have provided funding relief or otherwise modified single-employer DB pension funding rules." [R46366, May 20, 2020] Congressional Research Service [CRS] |
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[Guidance Overview] New Plan Loan Provisions Under the CARES Act "Plan sponsors considering the new loan provisions should ascertain that their vendors and recordkeeper can administer them. This is particularly important if a loan limit between $50,000 and $100,000 is under consideration. Plan sponsors adopting the new loan rules should also communicate the availability of the loan relief to their participants." Cohen & Buckmann P.C., via PLANSPONSOR; free registration may be required |
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401(k) Plan Litigation Basics (PDF) "[This article identifies] the basic standards that apply to 401(k) plan litigation, highlighting some of the important differences between litigation involving participants and beneficiaries on the one hand and litigation with a plan's service providers on the other." Greensfelder, via 401(k) Advisor |
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ManTech ERISA Challenge Shows Investment Fee Cases Moving Down Market "The plan in question has about $800 million in assets, meaning it is quite a bit smaller than many other employers that have faced fiduciary breach lawsuits.... The plaintiffs allege that ... the company has maintained certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories." [Gerken v. Mantech Int'l Corp., No. 20-350 (E.D. Va. complaint filed May 15, 2020)] planadviser |
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"As more responsibility has shifted to participants for managing their own retirement savings, it has become obvious that they are not as equipped to do so as those responsible for the management of defined benefit (DB), or pension, plans. So features of DC plans have evolved to mimic those of DB plans.... [T]he next focus for DC plans will be how to take accumulated savings and create a lifetime income stream because the way plan sponsors define success is changing." PLANSPONSOR; free registration may be required |
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COVID-19 and ESOP Distribution Policies: Dealing with Down Times in an ESOP Company "[C]onsider having your trustee and appraiser perform an interim valuation to be used for distribution and diversification payments.... If the ESOP currently pays distributions in a single sum or in two or three installments, ... amend the plan or distribution policy to provide for payment in annual installments over 5 years ... If distributions are paid in stock with a put back to the company, the company may be able to pay for the stock over a five-year period using the current stock value by paying the first installment then issuing a promissory note for the remainder[.]" Krieg DeVault |
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When Will My 401(k) Balance Get Back on Track Again? "When the tech bubble burst, the S&P 500 lost nearly 50 percent. What happened to consistent participants' 401(k)s? In 2000, their average balance was nearly $67,000. In the next two years, it fell. But by the end of 2003, it had moved above the 2000 level. How about the global financial crisis, when the S&P 500 declined by more than 50 percent? From 2007 to 2008, the average balance of all consistent participants fell by 26 percent. In 2009, it rose sharply above the 2007 level." Investment Company Institute [ICI] |
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U.S. Single-Premium Pension Buy-Out Sales Total $4.5 Billion in First Quarter 2020 "In the first quarter, there were 77 contracts sold in the first quarter 2020, level with first quarter 2019 results. These contracts covered 60,046 participants. There were no single premium buy-in sales reported in the first quarter. There were 59 terminal funding contracts equaling $115 million, down 45% from first quarter 2019 sales." LIMRA |
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How Conservative Are Your Planning Assumptions About the Future? "[W]hile current interest rates are indeed very low, we are picking assumptions for a 25-30-year period in the future and the actuarial process is self-adjusting, so future spending budgets will be automatically reduced if assumptions employed today are too optimistic (and vice versa if assumptions are too conservative).... The net effect of using our default assumptions is to produce much lower (more conservative) current spending budgets and higher present values of essential expenses than would be produced if you overrode our default assumptions with the Social Security assumptions." Ken Steiner, FSA Retired |
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Benefits in General |
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[Guidance Overview]
"Plan sponsors and claim fiduciaries have different roles to play in implementing the Joint Notice requirements. Plan sponsors can assist by ensuring that the plan's procedures account for the Joint Notice's requirements. Claim fiduciaries must be cognizant of their fiduciary duties in implementing the Joint Notice requirements. [This article describes] some considerations to bear in mind when making the mandated changes to a plan's administrative procedures." Faegre Drinker |
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2019 in Review: DOL ERISA Enforcement "Total monetary recoveries increased for the fourth year in a row, due to another year of historically high recoveries from EBSA's civil enforcement actions. Although civil enforcement recoveries reached a historic high -- the second largest in over fifteen years -- the trend of increased criminal investigations and decreased civil investigations continued in FY 2019." Eversheds Sutherland |
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How to Create an Employee Benefits Communication Strategy for Short Attention Spans "The key is creativity.... [1] Break up lengthy emails into a mini email series. [2] Supplement lengthy content with short, fun videos.... [3] Eliminate jargon. [6] Use interesting examples to make it memorable. [4] Use images (infographics, charts, diagrams, etc.). [5] Switch to intuitive, easy-to-use benefits decision support software.... [6] Consider offering fun in-person sessions, such as benefit fairs with prizes or giveaways." Tango Health |
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"Expanding your international business into the United States is an exciting but sometimes daunting venture when it comes to the myriad rules and regulations at play governing employees and benefits. This alert endeavors to simplify those complex rules and regulations in the fields of employment, employee benefits and executive compensation law.... This checklist will guide your company through a multitude of considerations, including identifying essential parties, processes and compliance concerns in employee and benefits." Holland & Knight |
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Selected Discussions |
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► It's easy to sign up and participate in discussions! Post answers, ask questions, create custom feeds and views. Join your peers (and potential referral sources or customers)—there is no charge. |
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Self-Correction of ESOP While Under Audit? "In general, can a taxpayer/ESOP (retirement plan), which is under audit, still voluntarily self-correct matters they deem need correcting? We believe a former ESOP advisor failed to give basic advice on paying off an ESOP note in a timely manner." BenefitsLink Message Boards |
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Want to Fund Profit Sharing Plan for 2019 But Tax Return Already Filed "Client with a 401(k) plan has filed their corporate tax return for 2019. Today they came back to me and want to know whether, if they amend their corporate tax return for 2019, they make a tax-deductible contribution to the plan for 2019 PS." BenefitsLink Message Boards |
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Press Releases |
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Harry Kamataris named VP of Wealth Management at Hercules Investments
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Most Popular Items in the Previous Issue |
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CRDs and Roth Conversions -- Abuse of the Rules?
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House Democrats Propose New Round of Stimulus That Includes Significant DB Minimum Funding Relief
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David Rhett Baker, J.D., Editor and Publisher
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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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