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June 8, 2020 logo logo
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[Guidance Overview]

eDisclosures: A Deep Dive into Electronic Addresses and Internet Websites

"When a plan sponsor does receive a bounce back message, it must take action to correct the issue ... If the sponsor is unable to obtain a new address and does not have a secondary address to use, the participant is treated as if he/she opted out of electronic delivery.... DOL has provided relief for circumstances in which reasonable events such as internet connectivity problems, routine maintenance, or network disturbances interrupt the availability of covered documents on the website -- as long as prompt action is taken to resolve the issue. Otherwise, paper disclosure would have to be distributed."


[Guidance Overview]

IRS Provides Relief for Retirement Plan Elections and Consents Required to be Notarized or Witnessed

"This relief from the personal presence requirement is temporary. It applies to elections such as COVID-19 distributions, spousal consent to distribution from a plan subject to qualified joint and survivor annuity (QJSA) requirements, retirement plan loan applications. The relief applies only to qualified retirement plan elections, and not to other types of benefits such as health and welfare plans."

Jackson Lewis P.C.

[Guidance Overview]

Latest IRS Guidance on CARES Act Retirement Plan Provisions

"[T]he Treasury Department and IRS have received and are reviewing comments from the public requesting expansion of the list of factors considered to determine whether a plan participant is a qualified individual.... An administrator may rely on an individual's certification in making and reporting a distribution, but individuals must meet the eligibility requirements to treat the distribution as a coronavirus-related distribution on their tax returns. It remains unclear how individuals should substantiate their eligibility.... Even if a plan does not normally accept rollover contributions, the plan does not have to change its terms or procedures to accept [coronavirus-related] repayments."

Lathrop GPM

Supreme Court Significantly Raises the Bar for Defined Benefit Plan Participants to File ERISA Fiduciary Breach Lawsuits

"The Court's ruling ... will likely further curtail the number of class action lawsuits brought against sponsors and fiduciaries of defined benefit plans ... [T]he opinion seems to imply that the standing question comes down to a facts-and-circumstances inquiry in deciding at what point the plan's financial condition has become so dire that it would give participants standing to sue fiduciary misconduct in causing the plan's financial harm. This inquiry may be further complicated if the PBGC's funded status suffers a downturn in the future." [Thole v. U.S. Bank N.A., No. 17-1712 (S. Ct. Jun. 1, 2020)]

Ropes & Gray LLP

Editor's Pick When Does a COVID-19 Furlough or Layoff Trigger a Partial Termination for Your Qualified Plan? (PDF)

"Although a rebuttable presumption of partial termination is triggered when 20% of participating employees are terminated, the facts and circumstances may allow the IRS (or a court) to conclude that a partial termination occurred even if the percentage of terminations did not reach the 20% threshold. Although at least one court suggested that turnover rates below 10% are presumed to not result in a partial termination, again, that is only a presumption. If a plan's turnover rate approaches 10%, plan administrators may need to anticipate the possibility of a partial termination."

Boutwell Fay LLP

Structured Equity Can Increase Funded Status

"[P]ension plan sponsors do not need to accept that significant funding level declines are the inevitable consequence of tough markets.... The investment strategy [discussed] in this article would have kept a pension plan that was 88% funded at the end of 2019 at almost 84% funded as of April 30, versus 80% funded using a traditional investment strategy."

River and Mercantile Solutions

Pension Funding Update, June 2020

"Market volatility continued throughout the month of May as the world continues to deal with the COVID-19 pandemic. The equity rally that began in April continued through the month of May, with most indices seeing continued recovery from March lows. Pension interest rates ended the month relatively flat, so for many plans, the equity gains would have outpaced liability growth and funded status should have improved."

River and Mercantile Solutions

Arizona Adopts Best-Interest Rules for Annuity Sales

"Arizona becomes the second state to adopt best-interest rules modeled on a proposal the National Association of Insurance Commissioners sent to the states earlier this year. Iowa adopted similar rules in early May."


Investment Managers Should Not Design Target Date Funds (PDF)

"Investment management firms are in the business of investing other people's money for profit ... [T]he profit motive leads to a design with the highest equity allocation allowed at the target date.... Financial engineers are trained to design investment risk and reward tailored to investor specifications.... A financially engineered glidepath ends at the target date with 10% in equities and the balance in safe assets like T-bills, TIPS, and stable value."

Target Date Solutions

Executive Compensation
and Nonqualified Plans

[Official Guidance]

Text of IRS Proposed Regs: Tax on Excess Tax-Exempt Organization Executive Compensation

177 pages. "This document sets forth proposed regulations under section 4960 of the Internal Revenue Code, which imposes an excise tax on remuneration in excess of $1,000,000 and any excess parachute payment paid by an applicable tax-exempt organization to any covered employee. The regulations affect certain tax-exempt organizations and certain entities that are treated as related to those organizations. This document also provides notice of a public hearing on these proposed regulations."

Internal Revenue Service [IRS]

[Guidance Overview]

IRS Addresses Timing of Employment Tax Deposits for Various Stock Awards

"[Generic Legal Advice Memorandum No. AM 2020-004] takes the position that the fair market value of the stock is measured for inclusion in income (and considered wages for purposes of FICA and federal income tax withholding) on the date nonqualified stock options (NQSOs) and stock appreciation rights (SARs) are exercised and on the date restricted stock units (RSUs) vest, regardless of whether settlement of shares occurs at a later date."

Kilpatrick Townsend

Selected Discussions
on the BenefitsLink Message Boards

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DB Plan Terminates Before Due Date for 2019 Funding

"A client terminated his calendar-year DB plan last month (May 2020). Sole owner is only participant. 2019 minimum funding hasn't been made yet, and there are no funds to make it. CARES Act appears to delay 2019 minimum funding until January 1, 2021. [1] How to complete 2019 Schedule SB: show minimum funding as $0? [2] Because the owner executed a majority owner's waiver of accrued benefits to match the remaining assets, and the 2020 minimum funding is $0, does the 2019 contribution ever have to be made?"

BenefitsLink Message Boards

Owner Had No Eligible Compensation After All But Piggybank Already Fed

"We recently discovered that our client/owner didn't have any eligible plan compensation but has funded the maximum 415 limit to both DB and DC plans for years. Thoughts on how to correct aside from basically removing all contributions and amending the company's tax returns?"

BenefitsLink Message Boards

BOGO: COVID Loan Plus COVID Distribution

"Client wants to take a COVID-related loan of $100,000 plus take a $100,000 COVID-related distribution. I know that the $100,000 COVID distribution limit is from all plans but I'm not sure whether that includes loans."

BenefitsLink Message Boards

Starting a New Plan with PPP Money

"A CPA's client has PPP money left over and has no retirement plan. Rather than return it, he'd like to open a profit sharing plan for his employees and pre-fund it with the PPP money (understanding that at the moment it may not be deductible). Okie-dokie?"

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Press Releases

Most Popular Items in the Previous Issue, Inc.
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(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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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