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[Guidance Overview]

The Once and Future DOL Fiduciary Rule: A Redux with a Proposed Prohibited Transaction Exemption

"[T]he rule reaffirms the five-part test for determining whether a person renders investment advice for purposes of ERISA.... [T]he rule sets forth a new prohibited transaction class exemption for investment advice fiduciaries that is based on the 'impartial conduct standards,' which were generally adopted as a temporary policy after the prior iteration of the fiduciary rule was vacated. The proposed exemption also provides information on the DOL's view regarding rollovers from employee benefit plans to [IRAs]."

Sidley Austin LLP

[Guidance Overview]

Editor's Pick The Next Chapter in the DOL's Fiduciary Rule Saga: Relief for Investment Advice Fiduciaries

"The DOL's pronouncement consists of [1] a newly proposed prohibited transaction class exemption that would be available for investment advice fiduciaries and [2] a technical amendment to reinstate the text of the DOL's 1975 investment advice regulation, which would eliminate any doubt regarding the removal of the 2016 Fiduciary Rule following the Fifth Circuit's order. [This article] summarizes the conditions of the Proposed Exemption and includes a high-level comparison of the proposal against the 2016 Fiduciary Rule."

Ropes & Gray LLP

[Guidance Overview]

New IRS Guidance on Mid-Year Safe Harbor Suspension During COVID-19

"Notice 2020-52 provides helpful clarification that sponsors can eliminate safe harbor 401(k) contributions for 'highly compensated employees' (HCEs) only and retain the plan's safe harbor status, provided that the safe harbor 401(k) contributions continue to be made for non-highly compensated employees (NHCEs).... [P]erhaps equally important for future years is the IRS's clarification that a plan can maintain its safe harbor status when it is an NHCE-only safe harbor plan, meaning plan sponsors have another tool for cost savings in future years."

Morgan Lewis

[Guidance Overview]

IRS Answers Questions and Offers Relief for RMD Changes

"Notice 2020-51 [provides] defined contribution retirement plans with guidance relating to the waiver of 2020 [RMDs] permitted under the [CARES Act]. The guidance provides certain transition relief, advises plans on how to implement the RMD waivers through a series of FAQs, and includes a sample plan amendment for adopting the RMD waivers."


[Guidance Overview]

DOL Releases Proposed Rule for Financial Factors in Selecting Plan Investments

"[T]he Rule does not explain what it means for investments to be indistinguishable. Professional investment advisers rely on myriad performance and risk metrics to evaluate and monitor investment options over various time periods. The Rule is silent on whether an ESG investment must be indistinguishable from another investment based on all metrics and all time periods. Nor does the Rule speak to whether the ESG investment must be at least the equal of the best-performing non-ESG fund in a particular investment category based on all metrics and time periods."

Thompson Hine


SPARK/DCIIA Summer Policy Series

Live virtual event, every Wednesday, July 15 to August 19. Domestic and global topics; general and breakout sessions (live broadcast), exhibitor hall and virtual networking happy hours. Replay on demand. Free to SPARK and DCIIA members. Learn more! Learn more

Sponsored by SPARK and DCIIA

[Guidance Overview]

Can You Invest Your Retirement Plan to Save the Planet?

"The proposed regulation identifies a number of items a fiduciary must consider when reviewing a proposed investment or investment strategy [in order] for an ERISA plan to satisfy its duties of loyalty and prudence. The regulations make it clear that fiduciaries should evaluate those investments based solely on pecuniary factors that have a material impact on the risk and return of the investment, and they should not subordinate the plan's financial interests to unrelated objectives, sacrifice investment return or take addition risks to promote interest unrelated to the financial interest of the plan."


Wave of Coronavirus Hardship Distributions Still Building

"Only 5% of respondents have withdrawn from their account, but 7% said they plan to do so in the coming weeks. Eight percent of people whose income has been reduced as a result of the pandemic have withdrawn from their account versus 2% of those with unchanged income."


The CARES Act 'Run on the Bank' That Wasn't

"The wave of distributions never materialized! ... In fact, loan volume at Vanguard actually went DOWN in April, and less than 1% of participants initiated a CARES Act coronavirus-related distribution that month! The data from other recordkeepers told a similar tale: from late March through May 8, only 1.5% of Fidelity participants accessed their funds, and at Empower, the figure was only 1% through May 31. And these numbers are in spite of the fact that the CARES Act made it easier and less expensive (from a tax perspective) to take a distribution."

Cammack Retirement Group

CalSavers and ERISA Redux: The District Court's Second Opinion

"Taken together, the district court's [two] opinions about CalSavers provide a roadmap of the ERISA status, not just of CalSavers, but also of other states' similar retirement security programs.... [T]he district court decisions exemplify ERISA's relatively limited preemptive effect in the wake of the Supreme Court's decision in Gobeille v. Liberty Mutual Ins. Co. This restricted interpretation of ERISA preemption contrasts with the broader understanding which the Supreme Court first embraced." [Howard Jarvis Taxpayers Ass'n v. The California SECURE Choice Retirement Savings Program (CalSavers), No. 18-1584 (E.D. Cal. Mar. 10, 2020; on appeal to 9th Cir.)]

Prof. Edward A. Zelinsky, via SSRN

Rep. Neal and ARA/ASPPA Share Opposing Views on Fundamental Issues Underlying the DOL's Pooled Employer Plan 'Request for Information'

"DOL has issued a Request for Information on June 18 to gather information on what further, if any, PTE relief will be needed to make the PEP work.... There are two noteworthy developments related to these efforts. The first is the ARA/ASPPA letter to EBSA requesting PTE relief for PEP operatives. The second, and perhaps more striking development, is the letter Congressman Neal wrote to the EBSA opposing the loosening of the prohibited transaction rules for PEPs.... [H]ow this is resolved will ultimately determine who can offer a PEP and who cannot."

Business of Benefits

Saving for Retirement: Household Decisionmaking and Policy Options

30 pages. "In the past few decades, the major responsibility of retirement investing and planning has shifted from the employer to the American worker. With DC plans and IRAs, people typically need to make decisions about how much to contribute each year, how to invest their retirement wealth over a lifetime, and how to withdraw their funds in retirement without outliving their assets.... Using best practices from behavioral research, policymakers may consider how to best structure retirement accounts and retirement planning decisions to help more people achieve retirement security." [R46441, Jul. 2, 2020]

Congressional Research Service [CRS]

Editor's Pick Notes from Meeting of Actuaries 'Intersector Group' with PBGC, May 28, 2020 (PDF)

9 pages. Topics include: Single-employer plans: 4062(e); Uncashed checks for missing participants in a plan termination; plan termination audits; reportable events and Early Warning Program; possible surge in funding waiver requests. Multiemployer Plans: Pending regulations on withdrawal liability; final rule for terminations and insolvencies; guidance on facilitated mergers; guidance on partitions; guidance on two-pool withdrawal liability methods. PBGC asked the Intersector Group about the ability of multiemployer plans to be able to handle an increase in costs related to a mandated cap on the actuarial interest rate assumption.

American Academy of Actuaries, Conference of Consulting Actuaries, Society of Actuaries, and ASPPA College of Pension Actuaries [ACOPA]

Summary of the Quarterly Survey of Public Pensions, First Quarter 2020

"For the 100 largest public-employee pension systems in the country, assets totaled $3,686.0 billion in the first quarter of 2020, decreasing by 10.5 percent from the fourth quarter 2019 level of $4,118.6 billion. Compared to the same quarter in 2019, assets for these major public-pension systems decreased 4.5 percent from $3,861.5 billion."

U.S. Census Bureau


Technical Corrections Needed to Facilitate COVID-19 Relief for Plan Participants Who Wish to Make Benefit Withdrawals

"[Notice 2020-50] does not discuss ... the significance of the phrase 'due to COVID-19.' Does the phrase apply to consequences due to a general lockdown rather than a specific COVID-19 incident at the business or not-for-profit entity associated with the individual or a member of the individual's household. If so, this ... raises the question why Congress does not take the same approach as that of Notice 2020-23, which makes cash-flow relief available to everyone.... [T]here is still a need for IRS clarification of Notice 2020-23 and the effect of its extension of due dates between April 1, 2020, and July 14, 2020, for all plan loans for all participants and until July 15, 2020."

Albert Feuer, in Tax Management Memorandum, via SSRN

Benefits in General

[Guidance Overview]

Time Is Money: A Quick Wage-Hour Tip on ... Determining Part-Time Employees for Benefits Eligibility

"While the definitions of full-time employees and part-time employees for purposes of FFCRA emergency paid sick leave focus on 40 hours per workweek, the determinations (if not outright definitions) of each type of employee -- i.e., the number of hours applicable -- are not uniform across federal law."

Epstein Becker Green

Fifth Circuit Adds Headwinds to ERISA Summary Judgments, Suggests Possible Alternative Procedure (PDF)

"[T]he parties did not seriously challenge the use of summary judgment to resolve the claims under the de novo standard of review, and the court did not reach the issue specifying the correct procedure. Instead, the court overturned summary judgment under the 'normal' summary judgment standard -- the administrative record created a genuine issue of material fact.... [T]he court suggested that it may endorse the Ninth Circuit's approach, where district courts review the administrative record and make findings of fact and conclusions of law under FRCP 52, without conducting a traditional bench trial[.]' [Katherine P. v. Humana Health Plan, Inc., No. 19-50276, 5th Cir. May 14, 2020)]

Hunton Andrews Kurth


How Discovery Is Evolving in ERISA Benefits Litigation

"While the availability of discovery in ERISA cases has definitely expanded; and the trend continues in support of allowing discovery, the reason there are no uniform rules is that there was never any legitimate basis for curtailing discovery in the first place since the analogy to administrative law was misplaced. ERISA claimants lack the same due process protections afforded in administrative proceedings since claim appeals are no substitute for hearings before administrative law judges."

DeBofsky Sherman Casciari Reynolds P.C.

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

COVID-19 Effects on Executive Compensation of Private Companies: CARES Act/CESA Main Street Loan Restrictions on Compensation

"While the PPP has some restrictions on compensation, the Coronavirus Economic Stabilization Act (CESA) provisions of the CARES Act impose stricter limits on businesses that obtain relief under the Main Street Lending Program. Both limits are discussed [in this article]."

Murphy Austin

Selected Discussions
on the BenefitsLink Message Boards

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Full Plan Year But Deferrals Start 10/1

"A new plan is effective 1/1. But the plan sponsors did not get it all set up until later. Deferrals started 10/1. Do they have to pro-rate either the deferral limit or catch-up? I've seen conflicting opinions. What about compensation? I'm thinking they use just 10/1 through 12/31."

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Most Popular Items in the Previous Issue

Employee Benefit Items in IRS Regulatory Agenda, Spring 2020
Internal Revenue Service [IRS], U.S. Department of the Treasury, 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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