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[Official Guidance]

Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, and for Valuing and Paying Benefits, July and Third Quarter 2020

"The July 2020 lump sum interest assumptions will be 0.00 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for June 2020, these assumptions represent no change in the immediate rate and are otherwise unchanged.... The third quarter 2020 interest assumptions will be 1.98 percent for the first 20 years following the valuation date and 1.57 percent thereafter. In comparison with the interest assumptions in effect for the second quarter of 2020, these interest assumptions represent no change in the select period ... a decrease of 0.13 percent in the select rate, and a decrease of 0.35 percent in the ultimate rate."

Pension Benefit Guaranty Corporation [PBGC]

Editor's Pick On Determining the Qualification of a Domestic Relations Order, with Examples

"On a practical basis, it is critical that the DRO be written in a manner that permits the Plan Administrator to carry out the order without running the risk of a dispute about what was supposed to be paid to the alternate payee. Therefore, the Plan Administrator must review the DRO carefully to ensure that there are no ambiguities that could create a problem when the payments are made to the alternate payee. If there are ambiguities, the Plan Administrator may either advise the parties of its interpretation of the relevant language or ask that the parties clarify the language of the DRO."

Ferenczy Benefits Law Center

Excessive Recordkeeping Fees Alleged in KeyCorp ERISA Challenge

"The complaint recites the fact that service providers charge for administrative services either on a per-participant fee basis or as an asset-based fee. Plaintiffs suggest asset-based fee arrangements are more common for smaller defined contribution plans, which have less leverage to negotiate how services are charged, noting that regardless of how these fees are charged, the cost of these services is typically borne by the plan participants." [Stark v. KeyCorp, No. 20-2922 (N.D. Ohio complaint filed Jun. 4, 2020)]

PLANSPONSOR; free registration may be required

Supreme Court Limits Standing to Sue Over Defined Benefit Plan Investments and Fees

"[W]hat effect will the decision have on litigation relating to defined contribution plans? ...[T]he majority opinion took pains to note the distinction between the two types of plans, and seemed to take for granted that defined contribution plan participants may suffer direct losses to their individual accounts due to fiduciary mismanagement ... The majority opinion also rejected plaintiffs' attempt to analogize to private trust law, which has informed the Court's ERISA jurisprudence for decades. " [Thole v. U.S. Bank N.A., No. 17-1712 (S. Ct. Jun. 1, 2020)]

Trucker Huss

Comparing Seven Different Defined Contribution Plan Designs

"[A chart shows] the results of comparing seven plans for a small business. The owner was willing to spend on staff an amount equal to 5.0% of their total combined payroll. In this case, a cross-tested plan with 401(k) safe-harbor features was the best design. The results show the differences that can be obtained from various plan designs. The best design for any given situation will vary depending on employee ages and salaries, as well as company objectives."

Retirement Management Services, LLC

Economic Recovery for Public Pensions Continues in May

"[F]unding for public pensions in May continued to rebound from the first quarter of 2020 with an aggregate investment return of 2.68% for the month, the second month of improvement for these plans after a dismal February and March. In fact, the Milliman PPFI funded ratio has climbed over five percentage points since the end of Q1, increasing from 66% at the end of March to 71.3% as of May 31. [The authors] estimate that the aggregate deficit shrank from $1.619 trillion at the end of April 2020 to $1.547 trillion at the end of May 2020, a $72 billion improvement."

Milliman Retirement Town Hall

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Back in the Limelight: Executive Compensation at Tax-Exempt Organizations

"The proposed regulations ... are intended to provide comprehensive guidance on the application of Code Section 4960. The proposed regulations generally incorporate the guidance in Notice 2019-09; however, ... the proposed regulations do modify or clarify the initial guidance in certain respects, including which governmental entities will be treated as ATEOs; the definition of covered employees and the rules for identifying the five highest-compensated employees; and the calculation of, and liability for, the excise tax on excess parachute payments."


Select Administrative Issues to Consider When Granting Equity Awards

"[1] Verify the equity plan's share reserve not exceeded.... [2] Verify compliance with any holdover 162(m) sub-limits.... [3] Verify compliance with any requirement that the equity award contain a minimum 1-year vesting schedule.... [4] Verify share reserve on form S-8.... [5] Verify compliance with director sub-limits.... [6] Verify compliance with any prior delegations of authority.... [7] Service provider must be a 'natural person.' "

Hunton Andrews Kurth

Companies Cut Executive Pay in Changing COVID-19 Landscape

"As of June 1, 2020, approximately 16% of S&P 500 companies -- up from 10.8% in early May -- have disclosed changes to CEO pay in response to COVID-19. Of those companies, 40% opted to forego CEO salary entirely, with the rest tending to cut CEO salary by 20-50%. Very few companies have done anything other than reduce or eliminate cash compensation."

Farient Advisors

Selected Discussions
on the BenefitsLink Message Boards

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How Many Disclosure Items in a Typical Year?

"Does anyone have a count of how many notices, statements, reports, and other disclosure items an individual account retirement plan furnishes (or ought to have furnished) in a typical year?"

BenefitsLink Message Boards

Effect of Distribution Fee on the CARES Act $100,000 Distribution Limit

"Let's say a $50 distribution fee is charged to participants. What's the limit -- can a participant take out $100,000 (taxable distribution of $99,950 after the distribution fee) or $100,050 (taxable distribution of $100,000 after the fee)?"

BenefitsLink Message Boards

Remote Notarization for 'Participant Elections'

"I'm aware that the IRS recently allowed remote notarizations and witnessing by plan representatives. I'm also aware that witnessing is required for spousal consent of non-QJSA distributions and loans from plans subject to the QJSA rules. What's confusing to me is that the IRS Notice refers to the relief being available to 'participant elections, including spousal consent.' Are any participant elections subject to the witnessing rule?"

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Press Releases

Most Popular Items in the Previous Issue, 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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