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Derrin's Fireside Chat: We CARES - Session 6
June 3, 2020 WEBCAST

ERISA Basics National Institute 6-Part Series
June 15, 2020 WEBCAST
American Bar Association Joint Committee on Employee Benefits [JCEB]

Voluntary Fiduciary Correction Program
June 18, 2020 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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View Coronavirus (COVID-19) News and Resources

[Official Guidance]

Text of IRS Proposed Regs: Income Tax Withholding on Certain Periodic Retirement and Annuity Payments Under Section 3405(a) (PDF)

"TCJA amended section 3405(a)(4) ... to provide [that], in the case of any periodic payment with respect to which a withholding certificate is not in effect, the amount withheld from the periodic payment will be 'determined under rules prescribed by the Secretary.' ... This proposed Section 31.3405(a)-1 provides a flexible and administrable rule that leaves the communication and mechanical details of the default rate of withholding on periodic payments to be provided in applicable forms, instructions, publications, and other guidance.... While this proposed regulation would update certain Q&As in Section 35.3405-1T, it would not update all of the Q&As, including several Q&As that do not reflect legislative changes that became effective after the publication of Section 35.3405-1T.... This regulation is proposed to apply to periodic payments made after December 31, 2020."

Internal Revenue Service [IRS]


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[Guidance Overview]

DOL: Stop Including Personally Identifiable Participant/Beneficiary Information on Form 5500 Filings

"When you receive an email from the [DOL] about this issue: [1] remove the entire Form 8955-SSA, including the signature page; [2] check the 'amended filing' box in line B; and respond to the DOL's email to inform them that the filings have been corrected. And make sure not to include any part of the 8955-SSA in future Form 5500/5500-SF filings."

American Retirement Association [ARA]

[Guidance Overview]

DOL Finalizes Electronic Disclosure Rules

"In order to use the regulatory safe harbor, the retirement plan administrator must [1] notify each covered individual on paper that covered documents will be provided electronically to an electronic address, [2] identify the electronic address that will be used for the covered individual, [3] provide any instructions necessary to access the covered documents and [4] include a cautionary statement regarding the time period the covered document is required to be available on the website (i.e., one year or until superseded, whichever occurs first)."

Wilkins Finston Friedman Law Group LLP

[Guidance Overview]

DOL Finalizes Electronic Participant Communications Safe Harbor

"The ERISA-required document must be posted to the website ... by the date it is required to be provided under ERISA and must remain there for at least one year, or, if later, it is superseded by a subsequent version of the same communication. It must be provided in a 'widely-available format or formats that are suitable to be both read online and printed' and that can be permanently retained. And it must be electronically searchable."

October Three Consulting

[Guidance Overview]

Things You Might Have Missed About E-Delivery

"[1] The electronic disclosure default is optional.... [2] Only a global opt-out is required.... [3] It doesn't change the timing for disclosures.... [4] The final rule's standard for NOIA readability is less specific.... [5] You can't bury the document(s).... [6] Only one paper copy must be free.... [7] Non-delivery = opt out.... [8] A change in recordkeepers isn't a restart.... [9] You don't have to wait.... [10] The rule may be final, but it's not necessarily 'done.' "

American Retirement Association [ARA]

Are Two Employers Better than One? An Empirical Assessment of Multiple-Employer Retirement Plans

"This Article shows that the bipartisan enthusiasm for expanding multiple-employer arrangements rests on shaky theoretical and empirical considerations. Drawing on newly hand-collected data for multiple-employer plans in effect prior to 2019, it argues that overlooked agency costs, market opacity, and the limits of the fiduciary governance regime have undermined the gains from asset pooling and centralized plan administration in existing multiple-employer plans. Furthermore, while larger single-employer plans typically leverage economies of scale and greater bargaining power to reduce plan fees, the benefits of plan size have not mapped directly onto existing multiple-employer plans."

Natalya Shnitser, via SSRN

Fixes for Your 401(k) Plan

"[A] relatively small number of 401(k) fixes [can] make a big difference in almost every 401(k) plan. None will cost you much money and some may even save you money.... [1] Decrease your investment expenses by reevaluating your TDF.... [2] Offer a Roth in-plan 401(k) conversion option.... [3] Incorporate HSA accounts into retirement planning.... [4] Give your participants access to multiple levels of investment advice.... [5] Cure low participation with auto-enrollment.... [6] Fix failing nondiscrimination tests with auto-escalation.... [7] Move to online employee education."

Lawton Retirement Plan Consultants

401(k) Fiduciary Liability Risk Management in a Post-Brotherston World

"[T]here are four key fiduciary liability issues that most plans and plan sponsors need to address in the post-Brotherston 401(k) world: [1] Cost-inefficiency of the plan's investment options; [2] Prudence of each individual investment option within the plan; [3] Legal rules regarding reliance on third-parties; and [4] Available recourse for poor investment advice provided to a plan."

The Prudent Investment Fiduciary Rules

The Contingency 'Plan'

"[H]ow much should the plaintiffs' attorneys who wrangled a $12 million settlement receive for their time, effort and trouble? ... $4 million [is] the settlement amount requested by the law firm of Schlichter Bogard & Denton for their work in a suit involving Oracle Corp. and its 401(k) plan (over 6,300 hours ...). That's aside from the requested reimbursement of what those same attorneys characterize as 'reasonable out-of-pocket expenses of $410,501.60, and $25,000 for each of the named class representatives.' "

Data 'Points'

What Do Safe Harbor Adjustments Mean for Compensation Definitions?

"The definition of compensation for a retirement plan is one of the plan sponsor's most important decisions and one of the easiest to misinterpret. The four 415(c) definitions are similar in many ways and these similarities can lead to misinterpretation and operational failures for the plan.... Ensuring that the plan's definition of compensation is accurately followed is a fiduciary responsibility that will help the plan and its plan sponsors remain in compliance with IRS and DOL regulations."

Clark Schaefer Hackett

Two Multiemployer Pension Funds Get Permission to Reduce Benefits

"Composition Roofers Local 42 proposed to implement a flat 45% benefit reduction to all participants, except for those aged 80 or older or those who are disabled. ... IBEW Local Union No. 237 Pension Plan is projected to be insolvent by plan year 2028 and is proposing the start the benefit reductions on July 1, 2020."

Pensions & Investments

Data on Multiemployer Defined Benefit Pension Plans (PDF)

22 pages. "This report provides 2017 plan year data on multiemployer DB plans ... First, the report categorizes the data based on plans' zone status. Next, it provides a year-by-year breakdown of the number of plans that are expected to become insolvent and the number of participants in those plans. It then provides information on the 25 largest multiemployer DB plans ... Finally, the report provides data on those employers whose plans indicate they contributed more than 5% of the plans' total contributions." [R45187, updated May 22, 2020]

Congressional Research Service [CRS]

Additional Actions Could Improve Compliance with Early Retirement Distribution Tax Requirements (PDF)

30 pages. "For Tax Year (TY) 2016, [the IRS's Automated Underreporter (AUR) Program] identified 102,988 cases for which the taxpayers reported an early distribution from their retirement account on their tax return but did not pay the 10 per cent additional tax.... During TY 2016, the AUR Program selected 8,429 (8 percent) of these cases to work. The remaining 94,559 cases (92 percent) were not selected.... Of the 8,429 cases selected for work, 2,737 (32 percent) resulted in additional assessments.... 3 percent of the 102,988 cases the AUR Program identified for which taxpayers reported an early distribution but did not pay the early distribution tax were ultimately assessed additional taxes by the AUR Program."

Treasury Inspector General for Tax Administration [TIGTA]


When Bad 403(b) Vendors Offer Good Investing Choices

"[S]everal of the vendors known for high-cost agent-sold products actually offer a few pretty decent options. Call this sheep in wolf's clothing. For teachers stuck without better options, this can be a lifeline to better 403(b) investing."


Benefits in General

[Guidance Overview]

IRS and DOL Issue Sweeping Deadline Relief for Benefit Plan Participants and Plan Sponsors

"[E]mployers should make every effort to comply with any required action, notice, or disclosure when originally due.... [E]mployers should document their good-faith efforts to comply and, where applicable, compliance with any other relief-specific eligibility requirements. The same approach should be taken with respect to any delayed employee benefit-related, time-sensitive actions."

Jones Walker

Editor's Pick Benefit Plans in the 'COVID-19 Era': Careful Review Now Will Avoid Being a Target When Litigation Soars

"Given the unprecedented number of employment changes -- including layoffs, furloughs, reductions in hours, reductions in pay, and changes in employment practices (e.g., mandated temperature taking and testing as a precursor to return to work) -- a hygiene check on how employee benefits are being handled is more important than ever. [This article provides] a list of certain challenges anticipated by the reviewing agencies and/or plaintiffs' bar in a post-pandemic environment."

Michael Best

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CARES Act Distribution; Interaction with 1-Year Wait

"If a plan document requires that a terminated participant wait at least 1 year before becoming entitled to a distribution, would implementing the CARES Act in the plan require the document to be amended to shorten the time that terminated participants must wait (sooner than 1 year)? In this scenario, the participant would have been terminated due to COVID, and hence would be a qualified individual."

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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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