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[Guidance Overview]

DOL Proposes ESG Investment Regulation

"The most relevant proposed additions to the regulation are that a fiduciary: [1] Must evaluate investments and investment courses of action based solely on pecuniary factors that have a material effect on the return and risk of an investment ... [2] Must not subordinate the interests of the participants and beneficiaries in their retirement income or financial benefits under the plan to unrelated objectives ... [3] Must specifically document its conclusion that an investment chosen for non-pecuniary reasons (e.g. an ESG investment) was determined to be indistinguishable from other appropriate investments[.]"


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[Guidance Overview]

DOL Unveils New ESG Proposal, Raising Significant Questions for ERISA Fiduciaries and the Industry

"If the proposal is adopted as-is, plan sponsors, other fiduciaries and the industry, will face a tall order in incorporating ESG factors, especially in furtherance of policy or other non-financial goals (e.g., impact investing), with respect to both the [1] management of plan assets and [2] selection and monitoring of plan investment options available under individual account plans[.]"

Stradley Ronon

[Guidance Overview]

DOL Proposes Rule to Crack Down on ESG

"DOL does acknowledge that ESG considerations may have an impact on an investment's financial performance.... DOL has recently begun to incorporate a focus on ESG investing into its enforcement activities.... Similarly, the [SEC] has included ESG in its examination and oversight priorities.... Although many of the concepts are consistent with longstanding DOL interpretations of ERISA, the Proposed Rule's changes to the regulations describing fiduciaries' duties of prudence and loyalty could create significant challenges for ERISA pan fiduciaries considering ESG investing."

Groom Law Group

[Guidance Overview]

Wait -- There's More! IRS Issues CARES RMD Guidance

"[Notice 2020-51] extends the time frame for rollovers of amounts received in 2020 that would have otherwise been RMDs to August 31, 2020.... IRA participants must return the distributed funds to the IRA that paid them out. The IRA repayment is not considered a rollover for purposes of the one-rollover-per-year limitation.... The Notice includes, in an appendix, a sample amendment for defined contribution plans to adopt these changes.... [T]he plan must be amended by the end of the first plan year beginning after December 31, 2021.... it appears that every plan sponsor will need to sign the RMD amendment, notwithstanding the normal ability under IRS rules of document providers to adopt interim amendments on behalf of those who use their plans."

Ferenczy Benefits Law Center

[Guidance Overview]

DOL Requests Information on Prohibited Transaction Issues for Pooled Employer Plans

"There are two key attributes of PEPs that drive many of these issues: [1] the fact that the PEP would serve multiple employers, increasing the range of potential conflicts that could arise and affecting the ability to address those conflicts; and [2] the primary role of the PPP in managing the PEP.... While these types of issues are addressed by a number of existing PTEs, those PTEs may not deal with specific circumstances that could arise for PEPs and their PPPs."

Morgan Lewis


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[Guidance Overview]

IRS Issues Guidance on Retirement Plan CARES Act Distributions and Loans

"[Notice 2020-50] indicates that it is expected that retirement plans will generally allow recontributions, which are treated the same as rollovers. The Notice acknowledges that plans are not required to accept rollovers ... However, the Notice does not address whether a plan could refuse to accept only recontributions, or specific categories of recontributions, while allowing all other types of rollovers."

Eversheds Sutherland

[Guidance Overview]

CARES Act Gets Needed Expansion and Clarification

"In Notice 2020-50, the IRS decided that the loan could be reamortized over its remaining term plus a period of up to one year. In other words, even if the participant only skipped four installments, the remaining term of the loan could be extended by up to 12 installments. This method is described as a safe harbor, so presumably a plan could reamortize the loan over a shorter period -- even over the original remaining term.

Davis Wright Tremaine LLP

[Guidance Overview]

IRS Issues Guidance on CARES Act Retirement Plan Relief

"[Notice 2020-50] confirms that most other distributions made during 2020, and not merely distributions taken pursuant to a special in-service distribution right added under the CARES Act, will qualify as coronavirus-related distributions. However, not every coronavirus-related distribution will be eligible for all of the favorable tax treatment under the CARES Act."

Smith, Gambrell & Russell, LLP

DOL Seeks to Restrict Social Goals in Retirement Investing

"[E]xperts said the proposed rule would not meaningfully change employers' obligations. And Morningstar has found that funds based on environmental, social and governance goals [ESG factors] outperformed conventional offerings during the first quarter of this year and going back several years as well."

The New York Times; subscription may be required

A Framework for Key Recordkeeping Fee Decisions (PDF)

"Three key recordkeeping fee decisions that go directly to the heart of the question of how fees should be allocated across participants are discussed ... First is the decision as to the type of recordkeeping fee structure. Second is the decision around using a lowest-cost share class strategy for the investment menu versus a revenue sharing model. Last is the decision of how to apply revenue sharing when there is an active decision to use that model or when it is unavoidable."

Portfolio Evaluations, Inc., via PSCA Defined Contribution Insights

Retirement Problems and Solutions for Younger Boomers

"[T]he younger half of the Baby Boomer generation -- those aged 56 to 65 -- are generally unprepared for retirement.... [T]hey generally do not have a defined benefit pension plan. And the advent in auto-enrollment ... came too late to save the retirement health of Baby Boomers.... Here are some suggestions: [1] Max out elective deferrals ... [2] Consider a Roth conversion ... [3] [L]ook to reduce expenses, increase income, or both."

Cammack Retirement Group

The Impact of Thole on Pension Plan Litigation -- A Conversation

"The U.S. Supreme Court said participants of U.S. Bank's defined-benefit plan lacked a concrete injury to sue for repayment of $750 million in plan losses due to alleged mismanagement and for $31 million in attorneys' fees under ERISA. Susan Katz Hoffman and Marc I. Machiz, principals at Justican Mediation, discuss their differing views of the decision and suggest a legislative fix might work."

Bloomberg Law

Most Employers, Workers Remain Committed to Their 401(k) During Pandemic

"No responding organizations indicated that they are currently considering terminating the plan as a result of the ongoing pandemic and economic conditions ... Nearly two-thirds (63.5 percent) of respondent plans are allowing participants to take Coronavirus-Related Distributions (CRDs). Only a third (36.5 percent) of respondents increased plan loan amounts to the lesser of $100,000 or 100 percent of the vested account ... One-in-five plan sponsors (19.7 percent) are still taking a wait-and-see approach, and fewer than 10 percent of employers have already determined they will not implement any of the optional CARES Act provisions."

Plan Sponsor Council of America [PSCA]


Full Rollover Relief for Unwanted RMDs Under IRS Notice 2020-51

"Ultimately, the new guidance just released by the IRS provides a fair and favorable outcome for people who took their RMDs earlier this year ... However, this is an unprecedented and potentially troubling move by the IRS, given that they do not actually have the legal authority to make this change  ... While it's unlikely that anyone will take issue with the IRS' attempt to be fair and equitable, there's no question that they stepped outside of their legal authority when issuing this notice, and that could set a troubling precedent moving forward."

Nerd's Eye View


How to Read the Proposed ESG Rule and What It Gets Wrong on Sustainable Investing

"[The DOL's] failure to see the causal link between long-term social and environmental issues and the retirement security of American workers is surprising. It's even more surprising in the midst of a pandemic and on the eve of a climate crisis."

Bhakti Mirchandani, in Forbes

Benefits in General

Editor's Pick Fiduciary Exception to Attorney-Client Privilege for ERISA Plans (PDF)

"This practice note explains the doctrine commonly referred to as the fiduciary exception to the attorney-client privilege.... [It] also explains how the fiduciary exception doctrine has been used to try to obtain communications ordinarily protected by the attorney work product doctrine. The principles outlined in this practice note can help employee benefits counsel and their clients better understand how best to protect the privacy of their communications and how to anticipate when these communications may be open to examination by plan participants."

Proskauer Rose LLP, via Lexis Practice Advisor

Selected Discussions
on the BenefitsLink Message Boards

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401(k) TE/GE Determination -- Sanctions Range?

"Client's 401k has been audited. The TE/GE Dept. found 3 errors in the 401k plan. The IRS is still in process of issuing its sanctions amount. Because the 401k audit addressed only 2017 to the present, isn't there a statute of limitations for any sanctions outside of the 3 year SOL? Assume no consents to extend were signed. In your experience what amount of sanctions does the IRS usually assess?"

BenefitsLink Message Boards

Plan Filed 5500-SF, Should Have Been 5500 with Schedule I

"Plan has had an investment in gold coins for several years. These are not qualifying investments. So, all along they should have been filing a 'regular' 5500 with a Schedule I attached. The bond was for more than the value of the gold. Any harm or foul here? Maybe next year file the I? Did we really commit perjury by saying all the assets were qualifying in the past 5500s?"

BenefitsLink Message Boards

Missing Asset Value (Not Available)

"My client owns 'Altaba, Inc. Escrow' stock as an asset in a pooled fund in its profit sharing plan. It allocates total plan investment earnings annually among plan participants. The stock is no longer actively traded on the stock exchanges and Fidelity lists its asset value at 12/31/19 as 'not available'. How can I determine the value of this stock at 12/31/19 to use in calculating its investment earnings for 2019 to use in my total plan investment earnings to be allocated among plan participants for 2019?"

BenefitsLink Message Boards

Midyear Safe Harbor Amendment Changing from Plan Year to Per-Payroll

"SH match plan calculates SH match per plan year. Can it be amended mid-year to change to per payroll calculation/deposit?"

BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

EBSA Proposal Pours Cold Water on ESG Enthusiasm
National Association of Plan Advisors [NAPA], 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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