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June 11, 2020 logo logo
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[Guidance Overview]

At Last! DOL Issues New Electronic Disclosure Safe Harbor for Retirement Plans (PDF)

"While the final rule provides a welcome alternative for electronic distribution of retirement plan communications that could produce significant time and cost savings, the changes also place additional administrative burdens on plan administrators to track opt-out requests, terminated employees and undeliverable notices."

Hunton Andrews Kurth

[Guidance Overview]

Actual Knowledge Under the Supreme Court's Intel Decision: Can the DOL's New Electronic Disclosure Regs Bridge the Divide?

"[Q]ualified retirement plan sponsors and fiduciaries will want to consider whether the new electronic disclosure safe harbor might help them satisfy the actual knowledge standard set forth in Intel.... By delivering required ERISA notices and disclosures in accordance with the Final rule, it may be possible to better track a plan participant's engagement with the disclosures such as the number of times a participant viewed the disclosure and for how long.... [It] may also be worth adding an electronic acknowledgment or 'scroll-wrap' feature with each disclosure, which would require a participant to acknowledge that they received and understand the information provided."

Hunton Andrews Kurth LLP

[Guidance Overview]

IRS Announces Opening of Cycle 3 Pre-Approved Defined Contribution Plan Restatement Period (PDF)

"[T]he IRS indicated it expects to issue opinion letters for pre-approved defined contribution plans on June 30, 2020 or soon thereafter.... The IRS further established in the Announcement that pre-approved defined contribution plans must restate and adopt Cycle 3 plan documents by July 31, 2022."


[Guidance Overview]

Third Remedial Amendment Cycle Dates Set for Preapproved DC Plans

"Opinion letters for the third cycle cover changes to the qualification requirements on the 2017 Cumulative List in Notice 2017-37. After IRS sends opinion letters to preapproved plan providers -- expected to start June 30 -- the agency will post a list of available preapproved plans on its website. Employers will then have from Aug. 1, 2020, to July 31, 2022, to adopt a newly approved document."


[Guidance Overview]

DOL Offers Guidance to Fiduciaries Considering Private Equity Investments in Defined Contribution Plans

"While the guidance does not establish any new fiduciary rules or exemptions, it is nonetheless quite helpful in providing factors to be considered by fiduciaries in determining whether investment vehicles with private equity components belong in their plan investment menu. [Information Letter 2020-06-03] considers facts relevant to private equity investments, but the guidance can be applied more broadly to consideration of any alternative investment vehicle with similar characteristics."

The Wagner Law Group


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Another Health System Faces ERISA Excessive Fee Challenge

"The plaintiffs specifically allege that the defendants, as fiduciaries of the plan ... breached their duties 'by failing to objectively and adequately review the investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and by maintaining certain funds in the plan despite the availability of identical or materially similar investment options with lower costs and/or better performance histories.' " [Boley v. Universal Health Services, Inc., No. 20-2644 (E.D. Penn. complaint filed Jun. 5, 2020)]


Replacing Mandatory Employee Contributions with Automatic Enrollment

"[E]employee mandatory contributions (other than in 414(h) pickups) are rarely seen outside of one particular sector: college and university 403(b) plans.... Now that a number of universities are reducing or suspending their employer contributions, due to the COVID-19 pandemic, they are beginning to question the logic of requiring employee contributions.... [T]hese employers should consider replacing their employee mandatory contribution with automatic enrollment."

Cammack Retirement Group

COVID-19 Derails Retirement Plans of Older Small-Business Owners

"More than 40% of the 30.7 million who own small businesses are 55 and older, and the majority of them have poured their savings into their shops and companies. Many have been hit by coronavirus closures at a time when they were within a year of selling in order to fund their retirement. They have to decide whether to invest more time, energy and money in businesses they have put their hearts into, or cut their losses. At their age, they don't have the time to start over."

The Wall Street Journal; subscription may be required

How America Saves, 2020: COVID-19 Update (PDF)

12 pages. "Participation and deferral rates have remained steady during the first four months of 2020, and the proportion of participants in professionally managed allocations has remained the same since year-end 2019. While participant trading has increased with market volatility, nearly 95% of participants did not initiate a trade during the first four months of 2020."


Editor's Pick Impact of the SECURE Act on Retirement Security (PDF)

10 pages. "The Act's mandated disclosure requirement for defined contribution (DC) plans will educate participants on how to make their assets last for their lifetimes by showing numerical examples of how much income might be derived from their account balances. The Act contains provisions intended to increase the number of DC plans offering annuity options. Utilizing annuity options can improve retirement outcomes for some participants, especially those without access to a defined benefit plan."

American Academy of Actuaries

Proposed Technical Corrections for Cash-Flow Relief Provisions of the CARES Act for Individuals with Savings or Retirement Benefits

"The article discusses and proposes technical corrections to address ... [1] Is there a single certification procedure to determine who is eligible to access their own savings and retirement benefits? ... [2] Are those eligible to so obtain their own benefits defined sufficiently broadly? ... [3] Is there an unambiguous and intuitive method to determine the new amortization schedule for an eligible individual who wishes to take advantage of the CARES Act deferral of 2020 due dates for plan loans?"

Albert Feuer, via SSRN


ARA Letter to EBSA Identifies Potential Prohibited Transaction Issues for Pooled Employer Plans

"The [ARA letter to EBSA] provided a series of considerations involving possible service arrangements and proposed fee structures, as well as what the covered transactions might be under potential exemptive relief.... [P]otential pooled plan providers (PPPs) and other providers of services to PEPs would like to confirm that they are able to provide services for compensation to a PEP under ERISA's prohibited transaction rules[.]"

American Retirement Association [ARA]

Benefits in General

[Official Guidance]

Text of IRS Notice 2020-47: Public Recommendations Invited on Items to Be Included on the 2020-2021 Priority Guidance Plan (PDF)

"The Department of the Treasury and the [IRS] invite the public to submit recommendations for items to be included on the 2020-2021 Priority Guidance Plan.... Please submit recommendations for guidance by Wednesday, July 22, 2020 ... Taxpayers are not required to submit recommendations for guidance in any particular format."

Internal Revenue Service [IRS]

[Guidance Overview]

COVID-19 Sent Many Employees Home to Work Remotely -- Remember to Reimburse their Expenses

"Illinois law requires employers to reimburse employees for work-related expenses, subject to certain restrictions. Due to the risks of liability employers face under Illinois law for unreimbursed work-related expenses, it is important for employers to have a written reimbursement policy in place and to reimburse employees for qualifying expenses in a timely manner. With large numbers of employees now working from home for an extended time, it is crucial for employers to contact their employees regularly and remind them to submit any qualifying expenses for reimbursement."

Masuda Funai

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Proposed Regs Address Exempt Organizations' Excess Compensation

"The proposed regulations generally follow the preliminary guidance of [Notice 2019-09] while adding additional clarity and addressing some previously unanswered questions.... Highlights of the proposed regulations ... include: [1] new volunteer exceptions, which serve to exclude remuneration paid by related taxable organizations to certain employees; [2] a new exception from the definition of a related organization when control exists solely because a majority of lower-level employees serve as directors or trustees of a nonstock organization; and [3] an exclusion from the definition of a parachute payment when paid by a related organization."


Selected Discussions
on the BenefitsLink Message Boards

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Avoiding Income Tax on a January 2020 RMD Distribution

"Has there been any rollover relief offered for participants who took their 2020 RMD in January and would like to roll back into the plan (or IRA)? I know they missed the 60 day rollover window and don't fall under the April 1 to July 14 extension to July 15, but was wondering if I missed any further guidance on the January distributions."

BenefitsLink Message Boards

Match Allocations and Annual Compensation Limits

"The plan sponsor has a 401(k) Plan that provides a match formula equal to of 100% of the first 6% contributed. The contributions are deposited semi-monthly. Assuming the HCE has not received the maximum match allocation of $17,100 (6% of $285,000) at the time the compensation reaches the $285,000 limit, would the HCE be entitled to additional match allocations on deferral contributions for compensation earned over the $285,000 limit?"

BenefitsLink Message Boards

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Press Releases

Nominations Due Friday, June 12, 2020: Plan Sponsor Excellence & Innovation Awards
Defined Contribution Institutional Investment Association [DCIIA]

Most Popular Items in the Previous Issue

Recent Developments in Employee Benefits Law (PDF)
Alston & Bird, and Katten Muchin Rosenman LLP, via Tort Trial & Insurance Practice Law Journal, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
(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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