Retirement Plans Newsletter

June 1, 2020

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Webcasts, Conferences

Preventing an ERISA Litigation Outbreak After COVID-19: Cybertheft of 401(k) Plan Distributions
RECORDED
Faegre Baker Daniels LLP

The New Electronic Disclosure Rule is Here!
June 16, 2020 WEBCAST
American Society of Pension Professionals & Actuaries [ASPPA]

Plan Design Features to Consider for 2021!
August 12, 2020 WEBCAST
Nova 401(k) Associates

401(K) Loan and Distribution Basics
August 19, 2020 WEBCAST
Nova 401(k) Associates

Introduction to 401(k) Plans for Plan Sponsors
September 16, 2020 WEBCAST
Nova 401(k) Associates

Cash Balance Plans for Advisors
September 30, 2020 WEBCAST
Nova 401(k) Associates

Introduction to 401(k) Plans for Plan Sponsors
December 2, 2020 WEBCAST
Nova 401(k) Associates

►See All 131 Upcoming Webcasts and Conferences

►See All 1558 Recorded Webcasts


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[Guidance Overview]

Editor's Pick DOL Finalizes Safe Harbor Regulation for Retirement Plan Electronic Disclosures

"[T]he Rule is not without its challenges, and it remains to be seen whether the administrative demands of the Rule will outweigh its usefulness for the majority of plans. Importantly, the Rule brings an end to the ability to provide pension benefit statement information via a 'continuous access website,' as permitted under Field Assistance Bulletin 2006-03, likely resulting in fewer participants receiving their pension benefit statements electronically. DOL also eliminated the ability to rely on either the DOL's or the IRS' electronic delivery rules for qualified default investment alternative notices."

Groom Law Group

[Sponsored]

ASC Webcast: ASC's MEP/PEP Functionality

Sponsored by ASC

With the new interest in MEPs and PEPs due to the SECURE Act, it is imperative to keep up to date on the rules that impact the administration of these plans. Learn the special rules applicable to MEPs and PEPs and much more. Register Now! Learn more


[Guidance Overview]

DOL Finalizes Rule Providing Alternative Safe Harbor for Electronic Disclosure by ERISA Retirement Plans

"Key takeaways: [1] The final rule provides a voluntary alternative to (but does not replace) the 2002 Electronic Notice Safe Harbor. [2] The Alternative Safe Harbor utilizes a 'notice and access' structure for default electronic disclosure ... [3] Plan Administrators alternatively may also use direct email to covered individuals. [4] The Alternative Safe Harbor does not apply to employee welfare benefit plans. [5] The Alternative Safe Harbor does not alter ERISA-required substance or timing of notices."

Krieg DeVault

[Guidance Overview]

SECURE Act Helps Struggling Community Newspaper DB Plans

"Besides providing guidance on the timing and form of an election to apply the new rules, the IRS and PBGC will need to publish implementation guidance addressing a number of other items, including the implication of a retroactive election on: [1] Minimum required contributions for affected plan years Section 436 benefit restrictions and adjusted funding target attainment percentage (AFTAP) certifications; [2] Filing of PBGC premium packages and the Form 5500 series; [3] Contributions already made for prior plan years under the old rules."

Mercer

[Guidance Overview]

IRS Issues Proposed Regulation Updating the Tax Withholding Rules for Periodic Retirement and Annuity Payments

"For a periodic payment that is subject to income tax withholding under Code Section 3405(a), amounts are withheld as if the payment were a payment of wages by an employer to the employee for the appropriate payroll period. If the payee has not furnished a withholding certificate, the amount to be withheld is determined in the manner described in the applicable IRS forms, instructions, publications, and other guidance. Rules similar to the wage withholding rules will apply to the furnishing of a withholding certificate for periodic payments."

Thomson Reuters Practical Law

Supreme Court Opinion: Participants in Fully-Funded DB Plan Do Not Have Standing to Sue Fiduciaries Over Investment Performance (PDF)

38 pages. "Thole and Smith have no concrete stake in the lawsuit, they lack Article III standing.... Win or lose, they would still receive the exact same monthly benefits they are already entitled to receive.... [P]articipants in a defined-benefit plan are not similarly situated to the beneficiaries of a private trust or to participants in a defined-contribution plan, and they possess no equitable or property interest in the plan, ... [T]he plaintiffs cannot assert representative standing based on injuries to the plan where they themselves have not 'suffered an injury in fact[.]' " [Thole v. U.S., No. 17-1712 (S. Ct. Jun. 1, 2020)]

Supreme Court of the United States

Cybersecurity Considerations for Retirement Plan Fiduciaries

"[P]lan administrators should ensure that the technical, physical, and administrative safeguards they have implemented to protect the confidentiality and integrity of plan assets satisfy basic legal requirements and meet industry security standards. Here are five areas that can serve as a starting point for a cybersecurity review in the retirement plan context[.]"

Thompson Hine, via Lexology; free registration required

Variable/Adjustable Pension Plans (PDF)

"This whitepaper discusses a couple of new pension plan designs available to plan sponsors and the rationale for why they should be considered.... These new designs offer more stability in the contributions by transferring some or all of the investment risk to the participants (like DC plans do) while maintaining professional investment management, maintaining pooled mortality risk and providing lifetime retirement income at more attractive rates than insurance companies provide."

First Actuarial Consulting, Inc. [FACT]

DCIIA Custom Target Date Fund (cTDF) Survey (PDF)

13 presentation slides. "Custom TDF assets represented in the sample exceeded $312 billion, while plan assets exceeded $1.2 trillion ... [O]verall the median allocations between [2017 and 2018] were very stable, with few changes observed.... YE 2018 data at the plan level [showed] wide ranges of allocations within vintages and asset categories. This indicates that asset allocators and individual plan sponsors had different views of the ideal glide path for each vintage, with asset allocations varying by as much as 30 percentage points."

Defined Contribution Institutional Investment Association [DCIIA]

Editor's Pick Investment Strategy for Pension Risk Transfer (PDF)

"Considerations in preparation for pension risk transfers ... Considerations for managing the plan after the pension risk transfer ... Importance of transition management during a pension risk transfer."

Russell Investments

Editor's Pick Liability-Responsive Asset Allocation: Defining the De-Risking Glide Path for DB Pension Plans (PDF)

"This paper discusses the brief history of the strategy, then explains the rationale for the approach, and finally, lists some of the design considerations that go into implementing such a program.... At its core, LRAA is simple and intuitive. It replaces the traditional asset allocation policy (consisting of a fixed mix of assets) with a dynamic policy that depends on the funded status of the plan."

Russell Investments

Pension Risk Transfer Options and Timing Considerations (PDF)

"While any of these solutions can reduce ongoing administrative expenses and overall company risk, sponsors should carefully consider the timing of any transaction. Interest rates still hover near historical lows, contributing to high annuity purchase prices, large lump-sum values and low funded status in plans.... [P]oor funding ratios may disallow any risk transfer transactions unless the funded ratios (e.g., the AFTAP) improves.... [T]hese solutions may trigger settlement accounting, which is likely to increase current pension expense."

Russell Investments

[Opinion]

Retired Actuaries Submit Comments to DOL Regarding Disclosure of Lifetime Income Stream Equivalents

"The DOL Lifetime Income Calculator should allow input of alternative assumptions, retirement ages, participant data, etc. to further facilitate retirement planning by participants ... The model disclosure language should direct participants to the DOL Lifetime Income Calculator to enable them to model different assumptions, different retirement ages, future contributions, etc."

Ken Steiner, FSA Retired

[Opinion]

New Government 'Hide and Seek' Rule Makes Workers Hunt for Retirement Information on Websites

"Surveys show that 27 percent of U.S. adults do not have broadband internet in their homes. Applied to Census data, that would be 69 million people. Those who participate in company and union retirement plans are being told that if they don't have home computers and printers they can use a smartphone to find out what their pension benefits will be, check their 401(k) account balances, and read about their plan's rules, finances, investment policies, and funded status -- or they can go to a friend's house or use an insecure public computer at a library."

Pension Rights Center

Benefits in General

[Guidance Overview]

IRS, DOL Ease Deadlines for Health, Other Benefit Plans and Participants (PDF)

"[EBSA Disaster Relief Notice 2020-01] doesn't include relief for temporary delays in forwarding participant contributions to health plans. However, the Notice specifically says that DOL won't pursue enforcement action against an employer for a temporary delay -- due solely to the COVID-19 pandemic -- in forwarding participant contributions or loan repayments to an employee pension benefit plan."

Mercer

Rethinking Employee Benefits in Light of COVID-19

"As the United States begins to open back up, many employers are re-evaluating a return to the traditional workplace and are exploring continuing [work from home (WFH)] arrangements, either permanently or on an intermittent basis.... Employers who offer extended WFH arrangements should consider the following benefit modifications or enhancements ... Stipends or expense reimbursements.... Flexible work schedules and paid time off.... Childcare assistance.... Mental health benefits.... Financial wellness programs.... Health checks."

Wilkins Finston Friedman Law Group LLP

The HEROES Act: Key Retirement, Health and Welfare, and Tax Provisions

"[T]he Act reflects the House Democratic majority's priorities, and some of the provisions could be included as part of a bipartisan compromise package. This alert first summarizes key provisions of the HEROES Act impacting retirement plans and health insurance. It then discusses other provisions that may impact employers and individuals."

Groom Law Group

Selected Discussions
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Both Parent and Wholly-Owned Subsidiary Are Participating Employers -- It's a Multiple Employer Plan?

"Company A owns Company B. Both companies run separately and have different EIN's. Company A wants to offer one plan covering all employees equally in both plans. Single or multiple employer?"

BenefitsLink Message Boards

Adding 3% SH Nonelective Contributions Mid-Year But Only for Certain Employees

"A non-safe harbor 401(k) plan with 3 months eligibility wants to add the 3% SH nonelective by December 1 as provided by the SECURE Act. However, they only want to add this feature for not otherwise excludible employees who are age 21 and have a YOS. They will test the otherwise excludible group under ADP/ACP. Can they do this?"

BenefitsLink Message Boards

Determination of Account Balance While Participant Loan Is Outstanding

"Participant has vested balance of $90,000. Takes out a loan for $35,000. We display their account balance now as $55,000 and a loan balance of $35,000. Six months later, Participants wants to take a second loan. The second loan calculation would be based on the $90,000 ($55,000 account balance plus the $35,000 loan balance) and not just the $55,000 account balance, right?"

BenefitsLink Message Boards

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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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