Retirement Plans Newsletter

May 22, 2020

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View Coronavirus (COVID-19) News and Resources

[Guidance Overview]

New Safe Harbor for Electronic Communications Opens Door to Huge Enhancements

"One question raised by commenters on the proposed rule was whether the standards under the new rule could be used for disclosures required by the Internal Revenue Code. In that regard, DOL (in the preamble to the final regulation) stated: 'The Treasury Department and the IRS have indicated that they intend to issue additional guidance relating to the use of electronic delivery for participant notices.' The final regulation represents a significant improvement over current rules and will permit many sponsors to upgrade, and in some cases transform, the way they communicate with their participants."

October Three Consulting

[Guidance Overview]

DOL Finalizes Rule Expanding Electronic Disclosure Safe Harbor for Retirement Plans

"The [DOL] has issued final regulations providing a new 'notice and access' safe harbor (the 'NOA Safe Harbor') for retirement plans to furnish required disclosures by email or other electronic means to participants and beneficiaries.... What documents may be provided with the NOA safe harbor? ... Who may receive disclosures under the NOA safe harbor? ... What steps must the plan administrator take to ensure an electronic address is valid? ... What is a notice of internet availability (NOIA)? ... Can a combined NOIA be provided for multiple documents? ... When must the NOIA be sent to participants and beneficiaries? ... How long must documents remain posted on the website? ... Can documents be attached to emails rather than posted on a website? ... Must paper copies of documents be available upon request? ... When is the NOA safe harbor effective?"

Kilpatrick Townsend

[Guidance Overview]

In Practice, Electronic Disclosure Safe Harbor Is Immediately Effective

"[A]lthough the final rule is technically not effective until 60 days after it is published in the Federal Register, the Department has indicated that it will not take enforcement action against a plan administrator that relies on the new safe harbor before that date. Therefore, the electronic delivery safe harbor is essentially available immediately. This is good news, particularly given the number of employees who are currently working remotely due to the COVID-19 pandemic."

Spencer Fane

[Guidance Overview]

Relief Granted to Retirement Plan Sponsors and Fiduciaries During COVID-19 National Emergency

"[P]lan sponsors should consider the following best practices: [1] Work with plan service providers to modify plan administration (and modify forms, if applicable) ... [2] [C]oordinate the electronic delivery of documents to participants ... [3] Communicate with plan participants regarding any changes to plan administration ... [4] Communicate with plan service providers and plan participants regarding plan changes specific to CARES Act and timely amend plans as required.... [5] Coordinate timely virtual meetings of benefits committees with a focus on best practices and note any COVID-19 compliance matters in recorded minutes."

Barnes & Thornburg LLP

[Guidance Overview]

Editor's Pick PPP Loan Forgiveness: Retirement Plan Contributions for Business Owners Don't Count

"One of the six areas of spending that qualifies for forgiveness is employer retirement contributions. Thus, many business owners are looking to accelerate company contributions during the eight weeks following receipt of the funds.... However, the 3rd Interim Final Rule clarifies ... retirement contributions for employees ... are eligible to count toward loan forgiveness. But retirement contributions on behalf of owners are not 'covered benefits' and don't qualify."

Greenspring Advisors

Company Retirement Plans: Planning to Move from Survive to Thrive

"To deal with the challenges facing workplace retirement plans during this time, [view] your options through a three-phase approach.... Phase I: Shoring up the business and managing cash flow. This includes making adjustments to retirement plans and communicating to employees to ease their angst. Phase II: Start looking ahead to when your employees are all returning to a more 'regular' working environment. Make improvements to the current plan design and operations. Phase III: Focuses on implementing an effective plan governance process."

MassMutual

Considerations for Plan Fiduciaries During the COVID-19 Pandemic

"[1] Discuss preparedness with investment managers and investment consultant.... [2] Review plan investments to confirm readiness for volatile market -- and then closely watch those investments.... [3] For defined contribution plans, consider whether the plan offers adequate capital preservation options.... [4] Increase participant education, especially for defined contribution plans.... [5] Review and adjust the committee process.... [6] Evaluate the plan's fraud protection mechanisms."

Morgan Lewis

The War on Retirement Plan Fees: Is Anyone Safe? (PDF)

"Predicting which plans might be targeted.... Steps that may reduce exposure to excessive fee claim.... Mitigating corporate and personal risk."

Chubb and Groom Law Group

HEROES Act Includes Significant Relief Provisions for Multiemployer Pension Funds

"[T]he provisions in HEROES would benefit plan participants, the pension funds generally, and perhaps the PBGC.... [T]here are no provisions that jump out as being friendly to the contributing employers.... [W]hile the likelihood of passage of HEROES (as currently written) seems remote, the provisions in the bill give us an indication of the current Democratic negotiating position."

October Three Consulting

Considerations for ESOP Administrators During the COVID-19 Economic Crisis (PDF)

"ESOP valuations are likely being either finished or starting for the valuation of privately held company stock based on a December 31, 2019 valuation date.... Assuming the ESOP fiduciary recognizes that there is a strong likelihood that the December 31, 2019 valuation is overvalued by a significant percentage and is looking for ways to address this issue, this client alert provides some considerations for ESOP administrators, fiduciaries and trustees."

Hunton Andrews Kurth

Editor's Pick An Actuarial Perspective on the 2020 Social Security Trustees Report (PDF)

14 pages. "The combined Social Security trust fund reserves are projected to become depleted during 2035, the same year as projected in last year's report. If changes to the program are not implemented before 2035, only 79 percent of scheduled benefits would be payable in 2035, declining to 73 percent by 2094. The actuarial deficit increased from 2.78% of taxable payroll to 3.21% of taxable payroll[.]"

American Academy of Actuaries

Benefits in General

[Guidance Overview]

Key Benefit Plan Participant Deadlines Extended During COVID-19 Outbreak

"[P]lan sponsors should ... [1] [D]etermine the administrative process for the [COBRA] extended deadlines, including how group health plan claims will be handled during the qualified beneficiary's election period and time period to pay COBRA premiums. [2] Coordinate with plan service providers, claims administrators and legal counsel to revise or supplement forms and claims procedures, to modify plan administration, and to incorporate the temporarily extended deadlines ... [3] Communicate with plan participants and beneficiaries regarding the relief provided through such modified deadlines."

Barnes & Thornburg LLP

Selected Discussions
on the BenefitsLink Message Boards

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Does Anyone Get an Opinion Letter to Resolve Paycheck Protection Program Uncertainties?

"In recent weeks, we've seen many BenefitsLink discussions about ambiguities and uncertainties in what the Paycheck Protection Program pays for. In other contexts, a businessperson might get a written opinion to show that what one did, if later found to be incorrect, relied on a reasonable interpretation. Applied in this context, one might seek a law firm's or accounting firm's written opinion that a borrower's use of PPP assistance is a reasonable interpretation of the borrower's documents and the guidance the government had published. Is anyone doing this?"

BenefitsLink Message Boards

Company's 'Hidden' 401(k) Program

"Came across situation where business owners have been excluding multiple employees from 401(k) program. Most employees (5 current employees and unknown number former)were not informed of plan.(Some for over 10 yrs) they are all eligible. I'm not even sure how to start unwrapping this barrel of worms. Most asked about 401(k) on hire but we're told wasn't available. Doesn't mention in employee benefit package. So owners believe they don't need to offer access. Comments?"

BenefitsLink Message Boards

403(b) Program Never Had a Plan Document

"A 403(b) plan was created in 1989 but apparently has never had a plan document. I'd like to get them through VCP eventually. Would that work?"

BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Text of DOL Final Regs: Default Electronic Disclosure by Employee Pension Benefit Plans under ERISA
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

Text of DOL Fact Sheet: Electronic Disclosure Safe Harbor for Retirement Plans
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

BenefitsLink.com, Inc.
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Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

Article submission: Online form, or email to news.editor@benefitslink.com

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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