Retirement Plans Newsletter

July 8, 2020

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Webcasts, Conferences

Public Companies and ESOPs: Check Yes or No
July 9, 2020 WEBCAST
Hunton Andrews Kurth

The CARES Act: Where Are We Now & How Can We Best Approach the Challenges?
July 16, 2020 WEBCAST
Western Pension & Benefits Council - Orange County Chapter

Environmental, Social, and Governance (ESG) Aware Investments
July 29, 2020 WEBCAST
Multnomah Group

A Challenge to Actuarial Assumptions in Defined Benefit Plans: Are Optional Forms of Benefits Actuarially Equivalent?
September 23, 2020 WEBCAST
Strafford

Just the FAQs about Distributions
October 7, 2020 WEBCAST
American Society of Pension Professionals & Actuaries [ASPPA]

Ethics - It's Never the Wrong Time to Do the Right Thing
December 2, 2020 WEBCAST
American Society of Pension Professionals & Actuaries [ASPPA]

►See All 128 Upcoming Webcasts and Conferences

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View COVID-19 News and Resources

[Guidance Overview]

DOL Releases Proposed Fiduciary Advice Prohibited Transaction Exemption

"The proposed PTE would retain the 1975 'five-part test' for who is an 'investment advice fiduciary,' but the PTE includes an extensive 'interpretation' (or re-interpretation) of that test that in many ways broadens it beyond prior law and practice and articulates principles for its application to plan-to-IRA rollovers. The proposed PTE would condition relief on the fiduciary providing advice in accordance with 'Impartial Conduct Standards' and requires that affected financial institutions and investment professionals acknowledge their fiduciary status and describe (in writing) the services they offer and material conflicts of interest."

October Three Consulting

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Sponsored by SPARK and DCIIA


[Guidance Overview]

Editor's Pick The DOL's Fiduciary Proposal 3.0: Exemption and Investment Advice Fiduciary Definition (PDF)

21 pages. "[It] now is more widely understood that: [1] There can be no financial services business model that is unconflicted in the absolute sense that ERISA presumes fiduciaries can be; and [2] At least in part, these conflicts arise from the industry's function in our financial system and are shaped by the primary pattern of regulation to which that industry is subject. Because those financial services are indispensable to the operation of the private retirement system, ERISA's share of the regulation of those industries must accommodate to those realities."

Eversheds Sutherland

[Guidance Overview]

DOL Proposes New 'Fiduciary Rule' Exemption, Upends Longstanding Guidance on Rollover Advice

"In the Exemption preamble, DOL now disavows the conclusion in [Advisory Opinion 2005-23A (the Deseret Letter)] ... As a result, whether one is an investment advice fiduciary under ERISA or the Code over rollover advice would depend upon whether each requirement of the five-part test is met. DOL acknowledged that not all rollover advice would be fiduciary investment advice under the five-part test."

K&L Gates

[Guidance Overview]

IRS Provides COVID-19-Related Relief to Employers with Safe Harbor 401(k) Plans; Action Required by August 31

"In the case of an amendment to stop safe harbor contributions for HCEs only, the amendment may be adopted at any time and will take effect for contributions that would otherwise have been required for periods after the later of [1] the provision of reasonable advance notice to the affected HCEs ... or [2] adoption of the amendment. In the case of an amendment to stop safe harbor contributions for all employees, both NHCEs as well as HCEs, the amendment must be adopted no later than August 31, 2020."

Clark Hill PLC

[Guidance Overview]

IRS Issues Guidance for COVID-19 Distributions from Retirement Plans

"Ideally, plan sponsors will coordinate with participants and communicate to them how the coronavirus-related distributions will be coded by the plan for tax purposes. Without some coordination, the plan may treat a distribution differently than the way the participant intends for it to be treated."

Cheiron

ERISA Case Against CareerBuilder Dismissed

" 'Defendants' failure to offer every index fund under the sun is not, in and of itself, imprudent, so long as the plan offers a mix of investments and there are no other indicia of a flawed process,' wrote [the district court judge]. 'Here, the plan offers an acceptable mix of options.' " [Martin v. CareerBuilder, No. 19-6463 (N.D. Ill. Jul. 1, 2020)]

Pensions & Investments

Employee Benefit Plans: Internal Controls for Processes and Governance

"Internal control is a process ... designed to provide reasonable assurance about the achievement of a plan's objectives with regard to the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations.... Internal control protects plans by [1] minimizing opportunities for unintentional errors or intentional fraud that may harm the plan ... and [2] discovering small errors before they become big problems."

EisnerAmper

What Happens When an Employer Chooses Not to Treat Participants' COVID-Related Distributions as Such?

"A surprising number of employers have opted NOT to offer the COVID-related distribution (CRD) relief under the CARES Act. But the employer's decision is not the final word on this matter, because the statute grants participants specific tax benefits regardless of the sponsor's choice. So what does this actually mean for participants?"

Robert Toth, via National Tax-Deferred Savings Association [NTSA]

Is Nontraditional Work at Older Ages Associated with Better Retirement Security?

"[W]orkers in traditional jobs who reach age 62 with less projected retirement income, relative to their pre-retirement standard of living, are no more likely to engage in nontraditional work after age 62 than those who are better prepared. In fact, some evidence suggests that those who transition to nontraditional work have greater retirement wealth, especially business income, than those who stay in traditional work or who opt not to keep working. Among those workers who are at risk of not maintaining their pre-retirement income level in retirement, however, nontraditional work appears to move them closer to retirement security."

Center for Retirement Research at Boston College

Executive Compensation
and Nonqualified Plans

Sponsors and Participants Must Follow 409A True to Form (PDF)

11 pages. "[T]he rules with respect to changing [benefit commencement date (BCD)] and changing the form of payment ... share a common purpose: preventing a participant from having the type of excessive control over the timing of payment that Code Section 409A was enacted to eliminate while, at the same time, containing certain exceptions that provide participants with some degree of flexibility in certain circumstances. This column examines how NDCP sponsors can navigate these rules to ensure that their NDCP comply with Code Section 409A with respect to changes in form of payment elections."

Milliman and White & Case, via Benefits Law Journal

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Can a Participant Pay Her Investment Adviser's Fees from Her Self-Directed Plan Account?

"Considering only individual-account (defined contribution) retirement plans that provide participant-directed investments, can a plan (with its recordkeeper's or TPA's help) permit a participant to charge investment adviser fees (unaffiliated with the recordkeeper or TPA) against her account? When a recordkeeper or TPA allows such an opportunity, what conditions are imposed?"

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Press Releases

Most Popular Items in the Previous Issue

The Growing Importance of ESG Due Diligence Post-COVID-19 (PDF)
Prepared by Paul Hastings LLP for TRACE

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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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