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Retirement Plans Newsletter May 27, 2020 |
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Newly Posted E-Disclosure - The DOL Regulations Are Finally Final!
Women in Retirement: Findings from the 2020 Retirement Confidence Survey
What's on the Minds of Plan Sponsors?
Introducing the Public Retirement Research Lab: Defining the Future of Public Sector Retirement
Furloughs and Layoffs: Pension Withdrawal Liability Issues and Other Critical Legal Implications
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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] DOL Finalizes Safe Harbor Default to Electronic Retirement Plan Disclosures "Plans may go live with the new safe harbor immediately, even though it is technically not effective until July 20.... [1] Evaluate the current communications strategy and the needs of the workforce, especially in the current COVID-19 environment. [2] Determine what strategy is in the best interest of the plan and its participants taking into consideration effectiveness, ease of use and cost to the plan. [3] Consult your recordkeeping partner or thirdparty administrator to determine their ability to implement the new safe harbor and formulate a timeline that includes each of the safe harbor requirements. [5] Pay special attention to how electronic addresses will be captured and how the new safe harbor system requirements will be carried out." Lockton |
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[Sponsored]
SPARK/DCIIA Summer Policy Series
Live virtual event, every Wednesday, July 15 to August 19. Domestic and global topics; general and breakout sessions (live broadcast), exhibitor hall and virtual networking happy hours. Replay on demand. Free to SPARK and DCIIA members. Learn more! |
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[Guidance Overview] Final E-Disclosure Rule from DOL Includes Important New Procedures "The final rule departs from or clarifies the proposed rule in a number of areas, the most significant of which [include] ... [1] Unlike under the proposed rule, the final rule provides that the employer cannot assign an employee an electronic address to be used solely for the purpose of complying with the safe harbor -- the electronic address must have another employment-related purpose (such as the employee's general work email address).... [2] The final rule provides that employers cannot assign electronic addresses for non-employee spouses or other beneficiaries... [3] The final rule clarifies that participant-level fee disclosures are covered by the rule." Trucker Huss |
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[Guidance Overview] Who Needs Cat Videos When You Can View Your Summary Plan Description on Your Phone? "Prior to using the electronic delivery options permitted under the final rule, a plan administrator must give each participant an initial notification on paper stating that covered documents will be furnished electronically. The initial notice must include a statement of the right to get a paper version of a covered document, free of charge, a statement of the right to opt out and an explanation of how to exercise these rights." Sidley Austin LLP |
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[Guidance Overview] What the DOL Giveth, the IRS (May) Taketh Away: Benefits Guidance in the Time of COVID-19 "EBSA Disaster Relief Notice 2020-01 ... provided sponsors of defined contribution plans subject to ERISA relief from DOL enforcement action for failure to timely forward participant contributions and loan repayments ... This DOL relief, however, appears to be limited to ERISA violations and does not appear to provide protection from the excise taxes under the Internal Revenue Code." Epstein Becker Green |
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[Guidance Overview]
"IRA providers may want to ... [1] Notify IRA owners and beneficiaries of the COVID-19 relief provided by the CARES Act and IRS Notice 2020-23. [2] Send a follow-up letter to IRA owners who were age 70-1/2 or older in 2019 and received RMD letters in January 2020 informing them that they had to take RMDs in 2020, that no RMDs are now required in 2020. [3] Put procedures in place for IRA owners and beneficiaries with RMD installment payments in place to notify the IRA provider whether they want to take or skip RMDs in 2020." Morgan Lewis |
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[Guidance Overview] SECURE Act Provisions: Inclusion of Part-Time Employees "The concern for accurately tracking part-time employee hours is justified. However, retirement plan sponsors do have alternatives that do not involve counting hours.... These employees would not cost the employer any money in terms of employer contributions, since the standard age/service requirements still apply to employer matching and non-elective contributions. The likelihood of droves of part-time employees contributing to the plan is unlikely, so average account balances, which drive recordkeeper pricing, should not be negatively affected." Cammack Retirement Group |
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Eighth Circuit Revives Excessive Fee Litigation Against Washington University "[T]he Eighth Circuit found that at the pleading stage, Plaintiffs' complaint alleged enough to infer that the plan management process was flawed. Plaintiffs allege that the fees were too high, and that Washington University should have negotiated a better deal." [Davis v. Washington Univ. in St. Louis, No. 18-3345 (8th Cir. May 22, 2020)] Kantor & Kantor |
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J.P. Morgan Chase Agrees to $9 Million Settlement in 401(k) Suit "Plaintiffs sued in January 2017 ... accusing plan executives of offering several proprietary funds 'despite having access to less expensive investment options that performed just as well, if not better, than the proprietary or third-party funds at issue in which the bank was self-interested or otherwise conflicted.' ... The settlement affects participants who invested in any of five stand-alone equity, bond funds and/or target-date funds." Pensions & Investments |
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Custom Target Date Funds: Is Now the Time? "According to the [DOL], it is prudent to consider custom target date funds as an alternative to 'pre-packaged' target date funds. According to the regulatory authority, custom target date solutions may be able to provide benefits by incorporating the plan's existing core funds and adding opportunities to further diversify the investment lineup. However, it is important for plan sponsors to consider the cost and administrative tasks involved in creating a custom, or non-proprietary, target date fund solution." Cammack Retirement Group |
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Pension Plan Annuity Purchase Update: Q1 2020 "Some [plans] are delaying buyouts due to plan funding levels decreasing sharply since year end 2019. Plan termination buyouts originally scheduled for Q2 will likely be completed later this year. However, retiree carvouts may be pushed further down the road, as plan sponsors deal with more pressing issues from the COVID-19 fallout.... [F]or deals that were still completed, pricing remained very competitive." River and Mercantile Solutions |
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401(k) vs SIMPLE IRA: Which is Right for Your Business? "401(k) plans are extremely powerful tools for building wealth. Their high contribution limits and plan design flexibility make them perfect for business owners who are trying to maximize their savings, or attract high-end talent looking to do the same. On the other hand, SIMPLE IRAs are extremely simple. Their lax administrative requirements and low costs make them excellent choices for businesses who want to help their employees with a no-hassle retirement benefit. Whichever plan you choose, pay close attention to your investment costs, and be sure to work with a provider who doesn't charge sales loads or hidden revenue sharing fees." Employee Fiduciary |
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[Opinion] Changes Suggested by Actuaries Unlikely to Ensure Sustainable Solvency for Social Security "Whether intentional or not, ... the AAA is potentially understating the magnitude of the Social Security financial problem by utilizing the flawed 75-year actuarial balance measure rather than the stronger Sustainable Solvency measure.... [T]he Academy should recommend that Congress consider implementing automatic adjustments to System taxes/benefits as part of the next round of Social Security reform to maintain Sustainable Solvency and to truly improve public trust in the financial soundness of the program." Ken Steiner, FSA Retired |
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Executive Compensation |
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[Guidance Overview] "The memorandum also addresses when an employer must deposit the employment taxes that have been withheld with respect to these awards, including a discussion of the next-day deposit rule that requires an employer to deposit employment taxes with an authorized financial institution on the next banking day after $100,000 or more of employment taxes have been accumulated during a deposit period." Thomson Reuters Practical Law |
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Selected Discussions |
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Deduction for Additional Contribution After Filing of Tax Return "Client files the LLC (single member - Schedule C) tax return on 4/15 with no extension but the return had been extended to 7/15/2020. I just found out that additional contributions will be required for 2019. Because the filing was extended to 7/15/2020 with no extension filing requirements, the client can make the additional contribution and deduct for 2019, i.e., redo the tax return -- correct?" BenefitsLink Message Boards |
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"The normal 5500 filing was due by 4/30/2020, which was automatically extended to 7/15/2020 (if Form 5558 had been filed, it would have been the same deadline). What's the deadline to certify AFTAP -- 6/30/2020 or 7/15/2020?" BenefitsLink Message Boards |
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Electronic Disclosures: Meet the New DOL Safe Harbor -- Same as the Old DOL Safe Harbor? "DOL recently said 'The new safe harbor is an additional method of delivery and does not substantively change the 2002 safe harbor.' Nice that it takes them 150 pages to issue a regulation that doesn't 'substantively' change the existing one. Our tax dollars at work! Now, to be fair, I haven't read it, so maybe it provides more help than I expect. Since my expectations are very low, that's possible..." BenefitsLink Message Boards |
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Press Releases |
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Schwab Completes Asset Acquisition of USAA's Investment Management Company
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Indiana Business Owner Sentenced After DOL Investigation Finds Deception in Administration of Employees’ Benefit Plan
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DOL Obtains Consent Order and Judgment to Restore Assets to Participants in Iowa Trucking Company's Retirement Plan
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New Mexico Human Services Department Pays Back Wages to Employee Denied Sick Leave Allowed by Coronavirus-Related Circumstances
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Georgia Department of Human Services Pays Employee Denied Emergency Sick Leave Allowed by the Families First Coronavirus Response Act
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Most Popular Items in the Previous Issue |
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Things You Might Have Missed About E-Delivery
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DOL: Stop Including Personally Identifiable Participant/Beneficiary Information on Form 5500 Filings
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