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July 6, 2020

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Webcasts, Conferences

Voluntary Fiduciary Correction Program
July 23, 2020 WEBCAST
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Understanding Nondiscrimination Testing Under IRC Section 401(a)(4), 410(b), and 401(a)(26)
July 29, 2020 WEBCAST
ISCEBS - Pacific NW Chapter

Washington Update
September 23, 2020 WEBCAST
American Society of Pension Professionals & Actuaries [ASPPA]

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[Guidance Overview]

How the Proposed DOL Fiduciary Rule Intersects with Regulation Best Interest

"While reaffirming that the five-part test is ultimately based on an analysis of the relevant facts and circumstances, the DOL notes that IRA rollovers will generally be considered part of an ongoing advice relationship that would satisfy the regular basis prong. In addition, recommendations made pursuant to Reg BI (or another analogous requirement) should reasonably be understood to serve as a primary basis for an investment decision. The result is that while the five-part test remains intact, it will be more difficult for financial institutions and investment professionals to rely on the five-part test to argue that they are not acting as an investment advice fiduciary."

Baker McKenzie, via Lexology

[Guidance Overview]

DOL Reinstates Five-Part Fiduciary Status Test and Proposes Class Exemption

"The Proposed Exemption would create a pathway allowing investment advice fiduciaries ... to [1] receive compensation, including that which derives from rendering advice to roll over assets from employee benefit plans to IRAs, and [2] engage in certain principal transactions that would otherwise violate the prohibited transaction provisions of ERISA and the Code.... The Proposed Exemption is intended to align with the SEC's Regulation Best Interest, and to generally mirror similar principles articulated under various state law initiatives. The primary condition of the Proposed Exemption is the Impartial Conduct Standards, which are rooted in the 2016 Rule."

The Wagner Law Group

Senators Re-Introduce Bipartisan Bill to Upgrade America's Retirement Saving System

"Senators Elizabeth Warren (D-Mass.) and Steve Daines (R-Mont.) [on July 1] re-introduced the bipartisan Retirement Savings Lost and Found Act [S 4192] ... [The bill] uses data employers are already required to report to the Treasury Department to create a national, online, lost and found for Americans' retirement accounts.... [It] also makes it easier for plan sponsors to move small accounts into age-appropriate target-date funds so that workers can maximize their investment returns ... [and requires] plan sponsors to send lost, uncashed checks of less than $1,000 to Treasury so that individuals can locate this money and continue to save for their retirement." [See text of the bill and a 1-page summary.]

Sen. Elizabeth Warren [D. Mass.]

Coronavirus Hits 401(k) Contributions by Employers, Causes Many Hardship Withdrawals

"Between the beginning of March and the end of May, more than one in nine employers, 11.8%, decreased or halted their plan contributions, leading to a 11.4% decline in total employer contributions. Yet 7.5% of the employers who had halted or decreased contributions had restored them by the end of May.... [H]ardship withdrawals have been taken from retirement plan accounts at 2.5 times their normal rate[.]"

Financial Advisor

Court Refuses to Overturn Decision of Multiemployer Plan Trustees; Participating Employer Had Made Financial Proposal

"Whether the Kroger proposal would actually have injured the plan was not determinative, the court stressed, as there was no genuine dispute that the trustees considered several sources of input, weighed the risks, and made a choice that benefitted the plan as a whole. Thus, even if the trustees' decision did not provide the greatest value to the plan, the decision did not constitute an abuse of discretion, as the trustees reasonably believed the Kroger proposal would harm most beneficiaries." [Campbell v. Whobrey, No. 16-4631 (N.D. Ill. Mar. 22, 2020)]

Wolters Kluwer; free registration required

Fidelity Settles Fiduciary Breach Suit for $28.5 Million

"The nation's largest recordkeeper has come to terms with participants in its own 401(k) regarding allegations of excessive recordkeeping fees, along with some changes in practices.... Under the terms of the proposed Settlement, Fidelity will cause its insurers to pay a gross settlement amount of $28,500,000 into a common fund for the benefit of the Class.... The settlement also provides that 'one or more Plan fiduciaries will [1] undertake to monitor Plan recordkeeping fees; and [2] undertake to monitor the Plan's investment options, other than any investments available through the Plan's self-directed brokerage account.' "

American Retirement Association [ARA]

Pension COLAs Protected, Says Rhode Island Supreme Court

"Rhode Island's Supreme Court ruled ... that Providence violated the U.S. and state constitutions in 2012 when it suspended cost-of-living adjustments on retiree pensions for an indefinite amount of time, something the New Jersey Supreme Court saw differently in 2016. So what was it that New Jersey jurists got that Rhode Island's didn't?" [Andrews v. Lombardi, Nos. 17-262, 17-263, 17-264, 17-269 (R.I. Jul. 1, 2020)]

Burypensions

Pension Finance Update, June 2020

"June was another positive month for pension finance, rounding out a solid quarter during which plans clawed back about one-third of the 'hole' created in the first quarter. Both model plans ... gained ground last month, with Plan A improving more than 1% and plan B up less than 1% during June. For the year, Plan A is down 8% and Plan B is down 2% through the first two quarters of 2020."

October Three Consulting

Funded Status of U.S. Corporate Pension Plans Rebounded During Second Quarter

"[T]he aggregate pension funded status [for 366 Fortune 1000 companies] is estimated to be 82% as of June 30, 2020, up three percentage points from 79% at the end of the first quarter but below the 87% funded status at the end of 2019. The pension deficit is projected to be $325 billion as of June 30, 2020, ... higher than the $222 billion deficit at the end of 2019."

Willis Towers Watson

Personalized Managed Accounts Can Be Better Than Target Date Funds (PDF)

"Most plan sponsors use target date funds as their plans' defaults. While target date funds are designed with a level of de-risking over time, the simplicity is put to the test during trying times as relatively high equity allocations erode balances. The personalized approach used with managed accounts can help individuals from being blindsided by these events."

Russell Investments

How to Make Your Fiduciary Presentations More Effective

"[1] Don't be afraid to acknowledge emotions ... [2] Find applicability to current events ... [3] Use simple, universal terms ... [4] Model it in 3D ... [5] Be sensitive to decision-making fatigue ... [6] Identify your X factors ... [7] Be lighthearted."

401(k) Specialist

Benefits in General

How to Support Employees While They Work from Home

"With many office workers settling into work from home for the long haul, companies should consider how to make the remote work experience a positive one. That means ameliorating stressors but also taking advantage of newfound workplace flexibility to forge new connections and offer new opportunities.... [1] Check in with employees more frequently ... [2] Organize virtual happy hours and networking events ... [3] Encourage boundary setting: ... [4] Bolster professional development ... [5] Reduce busy work ... [6] Support wellness remotely."

Forbes

Selected Discussions
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Plan Termination Question -- Any Remedy for Otherwise Required Loan Offset?

"When a plan terminates, a loan that's not paid back prior to distribution must be offset. But could the participant pay back the loan after distribution? For instance, the participant might deposit the outstanding loan balance into their IRA within 60 days."

BenefitsLink Message Boards

How to Handle Closed Customer Accounts When Selling a TPA Business?

"When the time comes to sell a TPA business, how are terminated plans/clients or plans that moved on to another TPA typically handled? For example, we have clients that have been gone for 3, 5 even 10 years. If we were to sell the TPA business, who maintains responsibility for any out-of-the-blue questions or follow ups on those old clients -- the new TPA, or the one that is selling?"

BenefitsLink Message Boards

COVID Distributions -- Designations and Withholding

"[1] How does an employer designate a distribution as a coronavirus-related distribution (CRD)? [2] Can the employer designate a distribution as a CRD without amending the plan, for example where the employer intends that only distributions on employment termination will be designated as CRDs? [3] If an employer does not designate an otherwise qualified distribution as a CRD, does the employer have to withhold 20% even if the participant treats it as such on his tax return?"

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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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