Retirement Plans Newsletter

June 17, 2020

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[Guidance Overview]

DOL Releases Final Rule Expanding Use of Electronic Delivery of ERISA Documents

"The plan sponsor is ultimately responsible for providing and monitoring the website to host the plan documents or disclosures to participants.... The website must allow participants to save any posted document and take reasonable measures to protect participant confidentiality. Plan sponsors could elect to make the website and covered documents available to all participants, regardless of whether they have opted out of electronic disclosures."

Reinhart Boerner Van Deuren s.c.

[Guidance Overview]

The Impact of the SECURE Act on Frozen Pension Plans

"The relief is significant and will result in major relief for nearly all frozen pension [plans]... Relief under minimum participation, Section 401(a)(26) was not part of the temporary IRS relief and will be a challenge to implement in 2020.... Many plans were frozen quite some time ago, and the testing results may have been prepared by actuaries or service providers that have been changed many years ago. The IRS should provide guidance on testing results that may not be available."

The Retirement Advantage

[Guidance Overview]

Editor's Pick Considerations as Regulation BI and Form CRS Approach June 30 Compliance Date

"SEC Chairman Jay Clayton has placed particular emphasis on good faith efforts to comply with Reg BI and Form CRS by the June 30, 2020 compliance date ... This [article] examines the recent regulatory developments related to Reg BI and Form CRS, sets forth a brief summary of the rules, and then concludes with several important considerations for broker-dealers and investment advisers as we close in on the June 30 compliance deadline."

Eversheds Sutherland

Supreme Court Holds Pension Plan Participants Lack Standing to Sue Fiduciaries for Breach of Duties

"The Supreme Court ... did not base its decision on the plan's funded status; it held that the plaintiffs lacked constitutional standing and that there is no ERISA exception to constitutional standing. The Supreme Court's decision may have a chilling effect on lawsuits filed against defined benefit retirement plan fiduciaries for alleged mismanagement of plan assets, particularly where the facts show all plan benefits have been paid in accordance with plan terms.' [Thole v. U.S. Bank N.A., No. 17-1712 (S. Ct. Jun. 1, 2020)]

Verrill Dana LLP

Parties in Dignity Health Lawsuit Still Have Work to Do on Settlement

"A federal judge said he cannot find that the interests of one subgroup of class members in the case have been adequately protected." [Rollins v. Dignity Health, No. 13-1450 (N.D. Cal. Jun. 12, 2020; order denying preliminary approval of class action settlement)]

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401(k) Plans: The Push for Lifetime Income Options Is About to Begin

"Ultimately, the question is whether there will come a time when the federal benefit rules will mandate the inclusion of an annuity distribution option in 401(k) and similar plans.... [L]est anyone think that the government isn't serious about this issue, note that the federal government's Thrift Savings Plan includes an in-plan annuity option and the Annual TSP Participant Statement already includes an estimate of the lifetime monthly annuity that can be provided with the employee's account balance."

Foley & Lardner LLP

Rethinking the Role of Fixed Income Along the Retirement Savings Journey: From Theory to Practice

"[T]here is a wide range of practices in the allocation to fixed income along glide paths. Depending on how much or how little fixed income a participant has at different points along the glide path, retirement outcomes can vary significantly. ...[Plan sponsors should] consider the level of the fixed income allocation and how it evolves along the glide path when selecting and monitoring a target date fund."

MFS Institutional Advisors, Inc.

Impact of the 2020 Market Decline and Recession on Public Pension Plans (PDF)

"Although investment returns and employer contributions can (and often do) have a primary effect on the funding condition and cost of a public pension plan, other factors also can have an impact.... Over the past 20 years, all of these factors -- investment returns, adequacy of employer contributions, changes to plan benefits and financing arrangements, and changes to actuarial methods and assumptions -- affected public pension plans. This review will briefly address each of these factors."

National Association of State Retirement Administrators [NASRA]

Rebound Forecast for Most Annuity Products by 2021

"As equity markets and interest rates slowly rise over the next two years and the number of people age 65 and over expands to comprise 18% of the U.S. population, SRI is forecasting the annuity market to rebound and make up the losses incurred in 2020."

LIMRA Secured Retirement Institute [SRI]

Executive Compensation
and Nonqualified Plans

Recent SEC Action Signals Greater Scrutiny of Company Perk Disclosures (PDF)

"Generally, perquisites and personal benefits constitute a relatively small portion of a named executive officer's total compensation. Nonetheless, [they] can draw significant scrutiny by investors and the media, especially in cases of unusual or outsized perquisites.... In recent years, the spotlight on these disclosures has become even brighter, as the SEC continues to evaluate the adequacy of public companies' disclosure of executive officer perquisites and personal benefits."

Meridian Compensation Partners, LLC

Selected Discussions
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Plan Termination -- Does IRS Require Earlier Forfeitures to Be Restored for Missing Participants?

"I know the subject of reinstatement of forfeitures on plan termination has been covered before, but I don't believe it was ever in the context of amounts that were forfeited under 1.411(a)-4(b)(6) for missing participants. The PBGC seems to believe that a plan termination does not extinguish a participant's right to claim a reinstatement of such forfeiture. What about the IRS though? Does the IRS expect all amounts previously forfeited for missing participants to be reinstated when a plan is terminated?"

BenefitsLink Message Boards

Form 5330 Excise Tax on Late ADP Corrections -- Can Plan Reimburse the Employer?

"Can the plan sponsor use the proceeds from the forfeiture account to pay the excise tax due on late ADP corrections? The plan sponsor would pay it directly and then get reimbursed from the plan."

BenefitsLink Message Boards

Final 5500-SF Due 6/30/2020 -- Can We Wait Until July?

"So I have a plan that terminated and their final Form 5500-SF and Form 8955-SSA are due 6/30/20. We are waiting for them to pay our final bill before filing. Because of the automatic extension, if I filed it between 7/1 and 7/15/20, do I have to check any box on the form? Or just send it in like normal?"

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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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