Retirement Plans Newsletter

June 19, 2020

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Primark Benefits
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AZ / Telecommute

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AZ

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Rensselaer NY

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Rensselaer NY

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Phoenix AZ / Telecommute

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View COVID-19 News and Resources

[Official Guidance]

Text of IRS Notice 2020-50: Guidance for Coronavirus-Related Distributions and Loans from Retirement Plans Under the CARES Act (PDF)

19 pages. "The guidance in this notice is intended to assist employers and plan administrators, trustees and custodians, and qualified individuals in applying section 2202 of the CARES Act, including by providing guidance on how plans may report coronavirus-related distributions and how individuals may report these distributions on their individual federal income tax returns."

Internal Revenue Service [IRS]

[Guidance Overview]

IRS Determination Letter Program: Upcoming Deadlines and Recent Developments

"With the IRS's limited re-opening of its determination letter program, this summary highlights upcoming deadlines and recent developments."

Groom Law Group

[Guidance Overview]

Editor's Pick DOL's Final Alternative Electronic Delivery Rules for Pension Plans Permit Direct Delivery via Email

"The final rule continues to prohibit plan administrators or service providers from assigning the electronic address.... Unlike under the proposed rule, this special rule no longer permits an annual [notice of internet availability (NOIA)] to cover quarterly benefit statements.... [A] separate NOIA must be furnished for each quarterly benefit statement."

Cheiron

Coping with the Increase in 401(k) Cyberattacks and Fraudulent Plan Distributions

"The heightened level of plan distributions coupled with the security risks associated with electronic communications and the 'new normal' of working remotely, sometimes on personal computers, may increase the exposure of participants' confidential and personal data to cybercriminals.... Monitoring of the cybersecurity controls of third-party service providers, particularly the plan administrator, should occur on a regular basis and should be documented and involve experts if necessary."

Greenberg Traurig

401(k) Plan Sued for COVID-19-Related Special Asset Valuation

"The suit charges that 'the delay in providing the valuations and the resulting delay in distributing Plaintiffs' 401(k) accounts was unreasonable, unfair, arbitrary, capricious and in violation of the terms of the Plan,' and that 'the Plan and Behan Bros. have unreasonably, arbitrarily and capriciously applied the Special Valuation to Plaintiffs' distributions in violation of the terms of the Plan.' Moreover, they argue that they are 'entitled to the December 31, 2019 value of their 401(k) accounts pursuant to the terms of the Plan.' " [Lipshires v. Behan Bros. Inc. Retirement Plan, No. 20-252 (D.R.I. complaint filed Jun. 8, 2020)]

American Retirement Association [ARA]

How Rebalancing Can Benefit Your Retirement Plan

"[T]he utility of rebalancing shoots up in retirement, ... Of course, rebalancing is beneficial from a risk-reduction standpoint, and risk reduction is arguably even more important in retirement than during accumulation. But rebalancing also brings multiple additional benefits. Cash flow sourcing is at the top of the list ... Rebalancing can also help with diversification, taxes, and charitable giving."

Morningstar

Annuity Purchase Update: June 2020 Interest Rates

"The strong equity market returns of 2019 were set back by poor performance in the first quarter of 2020, but Q2 2020 gains reversed the downward 2020 trend. The average duration [7-year] annuity purchase interest rates decreased by 8 basis points and average duration [15-year] rates increased by 3 basis points since last month. This change in rates led to a corresponding increase in annuity purchase price of 0.57% for Annuity Plan 1 and a 0.49% decrease for Annuity Plan 2."

October Three Consulting

Withdrawal Liability Discount Rate Litigation Continues, with the Segal Blend Method Rejected

"Two examples from recent decisions highlight the importance of the actuarial method and interest rate on the amount of an employer's liability. In one, the employer's withdrawal liability calculated by the plan's actuary based on PBGC rates was approximately $115 million, but would have been approximately $40 million had the plan's funding rate been used. In the other, the liability under the actuarial method used by the plan was $26 million, but there would have been no liability if another method had been used."

Fox Rothschild LLP

Understanding the SECURE Act: Managing the 10-Year Rule

"The general impact is that the 10-year rule is less tax-efficient because traditional IRA distributions are condensed and therefore taxed at higher rates. Knowing that, what are some things to know if you are an account owner or beneficiary to help you be more strategic with distributions and potentially reduce the tax impact?"

Manning & Napier

[Opinion]

California Supreme Court Examines Public Pension Spiking

"[S]triking down the California Rule would help California make headway towards a better-balanced budget. Allowing adjustments for pension budgets would relieve city managers of some pressure to enact budget cuts, furloughs, and layoffs. The decision opens the door to future pension reform, and the ability to legislate changes to the pensions of current public employees. Although this ability could certainly be manipulated, any reforms will undoubtedly be challenged in court."

Institute for Pension Fund Integrity [IPFI]

Selected Discussions
on the BenefitsLink Message Boards

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Funding DB Plan After Plan Termination

"We have a defined benefit plan that terminated in 2018 and was underfunded at the time of termination. The plan sponsor wants to fund the shortfall now and then pay out the benefits. Is this permitted because the plan terminated or would the funding need to have occurred in 2018?"

BenefitsLink Message Boards

Preparation of Schedule SB in Light of the Extended Minimum Funding Deadline

"So if the minimum funding deadline's been bumped to 1/1/2021 instead of 9/15/2020, how would Schedule SB be prepared for a client who makes their deposit in November? Show $0 made on the 5500 due 10/15 and simply amend the filing when the date's confirmed? (Or are we expecting any sort of ruling providing an extension on just the SB part of the 5500 filing, perhaps?)"

BenefitsLink Message Boards

SECURE Act Extended the Deadline for Adopting a DB Plan for Plan Year That Starts in 2019?

"Did the SECURE Act extend the deadline to adopt a DB plan until the date of the tax filing as well? Meaning, if I have a company that has a 6/30/2020 plan year end, do I have until the tax deadline to adopt a plan or must it still be signed by 6/30/2020?"

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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