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[Official Guidance]

Text of PBGC Interest Rate Update: Benefits Payable in Terminated Single-Employer Plans; Interest Assumptions for Paying Benefits, August 2020

"The August 2020 lump sum interest assumptions will be 0.00 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for July 2020, these assumptions represent no change in the immediate rate and are otherwise unchanged."

Pension Benefit Guaranty Corporation [PBGC]


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]

IRS Issues Operational Compliance List for 2020

"The Operational Compliance List identifies numerous changes to tax-qualification requirements that will take effect in 2020, including the changes under the [SECURE Act] that will take effect in 2020 and retroactively for previous calendar years.... Changes to plan qualification requirements made by the CARES Act will be added to the Operational Compliance List at a later date. Beginning in 2020, the IRS ... will not update the changes to the requirements for prior years except to the extent new legislation or IRS guidance is retroactively effective."

Thomson Reuters Practical Law

[Guidance Overview]

The DOL's Fiduciary Rule Prohibited Transaction Exemption May Only Be Needed in Limited Plan Circumstances

"[P]roviding on advice on a 'regular basis' may well violate the SEC's 'solely incidental' exemption under the Investment Advisers Act of 1940, and may cause that registered rep to be required to register as an Investment Adviser.... [No] registered rep who is not dually registered can ever really be an ERISA fiduciary, which means they will never need this new Fiduciary PT in order to receive comp which varies based on their 'recommendations.' So, at least in the retirement plan market, is there even going to be much of an effect?"

Business of Benefits

[Guidance Overview]

Editor's Pick Recent Developments in ERISA Plan Investment Regulation

"While the ESG Proposal and [Information Letter 2020-06-03] may, respectively, discourage and encourage investments in the types of investments they address, and raise a number of issues that will require further consideration for those making these types of investments, [the DOL provides] commonality [in] the view that fiduciaries must focus on the expected pecuniary benefits of an investment to the plan and its participants and beneficiaries. In that respect, their approach is consistent with historic views on the fiduciary duty of prudence under ERISA, and it may be that the DOL's differences in approaches here are rooted in concerns that particular investments may raise under ERISA's duty of loyalty -- concerns that may be perceived as elevated in the ESG investment space."

Morgan Lewis

[Guidance Overview]

DOL Proposes Broad New Fiduciary Investment Advice Exemption

"The proposed exemption ... is far broader and more flexible than past prohibited transaction exemptions for investment advice fiduciaries and is intended to avoid the complexity associated with relying on multiple exemptions when providing investment advice. The Notice also sets forth DOL's interpretation of the five-part test and includes DOL's views on when advice to roll over assets to an [IRA] could be considered fiduciary investment advice."

Thompson Hine


Meet O3 Edge - A new prospecting solution for Retirement Plan Advisors

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[Guidance Overview]

Questions on 2020 Required Minimum Distributions Answered in New IRS Guidance

"Key Points in Notice 2020-51: [1] The rollover deadline is extended to August 31, 2020, for RMDs already made in 2020 that were not required. [2] Guidance provided on required amendments for 2020 waived RMDs, including a model amendment. [3] Guidance on RMDs that were distributed in 2020 even if not required due to the CARES Act RMD waiver and the SECURE Act change in the required beginning date. [4] A series of questions and answers for administering RMDs for CARES Act and SECURE Act changes."

Kilpatrick Townsend

[Guidance Overview]

Questions and Answers: CARES Act, Fireside Chat #8 (PDF)

11 pages, 54 questions and answers.  Current through July 8, 2020 webinar.

Preparing for Regulation Best Interest

"Laying the foundation of a due diligence process with a defined, repeatable, and scalable approach with access to tools and services that can support those efforts are steps B/Ds can take that may help meet the Care Obligation. Streamlining and strengthening investment manager selection and ongoing monitoring as well as incorporating a models-based approach can make the ongoing due diligence and management of the financial professional's investment practice more efficient."

T. Rowe Price

Why You're Not Ready for the Coming 401(k) MEP/PEP Revolution (Even Though You Think You Are)

"[H]ere's why people might be wrong to think they know enough about assembling a 401(k) MEP/PEP. It's not simply delegating one underlying plan under umbrella. It's the delegation of multiple underlying plans under a single umbrella. This adds several dimensions to plan administration, each fraught with their own fiduciary traps. Regulatory compliance only heightens the potential liability."

Fiduciary News; free registration required

Coronavirus Retirement Benefits Lawsuits Have Begun

"Former participants in a 401(k) profit sharing plan recently filed suit in Federal court in New Jersey seeking recovery of investment losses allocated to their accounts by the employer-sponsor. The losses were incurred when the employer imposed a special valuation date of April 30, 2020 to reflect the plan's investment losses incurred during the COVID-19 lockdown. This mid-year valuation reduced the account balances available for distribution to the former participants.... The former participants received their reduced benefit distributions in early June, 2020 and promptly filed suit [.]"

Golan Christie Taglia

The Importance of Staying in a Retirement Plan During Turbulent Times

"[1] Craft messages that cover the topics important to employees at different stages of life.... [2] Send small but frequent communications, such as emails, to keep retirement savings top of mind.... [3] Provide plan and saving information in as many mediums as possible to reach as many individuals' learning styles as possible ... [4] Offer one-on-one meetings or small, informal gatherings with a plan representative or investment advisor in lieu of the traditional company-wide enrollment meeting."

Newport Group

Corporate Pension Funded Ratio at 83.7% in June as Discount Rate Hits Historic Low (PDF)

"Despite solid investment returns, June's PFI funded status worsened ... due to an 11 basis point drop in the monthly discount rate, from 2.76% in May to 2.65% for June. This month's discount rate marks the lowest observed in the 20-year history of the Milliman PFI. The PFI funded ratio for the month stayed nearly flat, inching down from 83.8% to 83.7% as of June 30."


Actuarial Perspectives on Determining a Retirement Income Budget (PDF)

"Deciding on a retirement income budget is a challenge for many retirees as a result of varying circumstances, goals, and uncertainties about the future. Several approaches from an actuarial perspective are described that can be used in addressing the challenges of lifetime income budgeting ranging from as simple as required minimum distributions to complex probabilistic analyses."

American Academy of Actuaries

DC Plan Sales Expected to Be 'Considerably Lower' the Rest of 2020

"[R]ecordkeepers that focus on larger plans appear to be faring somewhat better than those not focused on mid-sized and small plans.... Survey participants report plan conversions for 23% of new plans or those under contract have been pushed out 3-4 months. However, for sales where a verbal agreement with the plan sponsor is in place, three quarters of surveyed recordkeepers report that on average, 20% have delayed or canceled signing the contract."

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Proposed Regs Clarify Application of Excise Tax Under Code Section 4960

"The Proposed Regs address all of the ground covered by Notice 2019-09 and provide additional guidance regarding the types of tax-exempt employers that are subject to the excise tax, the 'covered employees' whose compensation could trigger the imposition of the excise tax, the computation of remuneration, and the application of the tax on excess parachute payments in the case where an entity related to an exempt organization may contribute to the payment."

Verrill Dana LLP

Nonqualified Plans in a COVID-19 Environment

"[I]ssues affecting nonqualified plans during the time of COVID-19.... [R]eview the plan document for options that would allow stopping an employer match or contributions, or freezing or terminating the plan.... [P]articipants may be looking for options that would allow stopping deferrals or taking withdrawals in response to unforeseeable emergencies.... Review the financing strategy for the impact of market volatility and/or overall business performance; objectives may have changed."

American Retirement Association [ARA]

Editor's Pick 2020 Relative TSR Prevalence and Design of S&P 500 Companies (PDF)

11 pages. "In the absence of a reliable goal-setting process, compensation committees facing pressure to demonstrate pay-for-performance may increasingly turn to relative total shareholder return (RTSR) ... RTSR requires no goal setting, is simple to adopt, provides a defensible link to shareholder value, and has historically been accepted by shareholders and proxy advisors."


Selected Discussions
on the BenefitsLink Message Boards

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Notice 2020-52: Suspension of Safe Harbor Contributions for NHCEs for 2019?

"We know this applies to SHNE for HCEs, but I do not see any mention of suspension for NHCEs, such that ADP/ACP needs to be met the customary way and HCEs need go through the reductions anyway, through levelling, returning, etc. and the 3% top heavy needs to be for the full plan year. Question: how does this help the sponsor that can't afford the SHNE for NHCEs? Especially for 2019, when many sponsors will wait until end of year or accrue the contribution."

BenefitsLink Message Boards

Purchase Life Insurance Using Roth 401(k) Deferrals?

"Can a plan purchase life insurance with Roth 401(k) deferrals? Everything I've read says that premiums are purchased with pre-tax dollars and PS 58 costs are taxable each year. What would happen if one were to use Roth? Would PS 58 costs still need to be paid?"

BenefitsLink Message Boards

403(b) Escapes ERISA Requirements If No Actual Employer Funding Despite Document Provision?

"If a 403(b) plan allows for employer contributions (such as an option that's selected in the adoption agreement), but doesn't actually fund the contributions, can the plan be a non-ERISA plan? I'm thinking not, but I don't believe that 29 CFR § 2510.3-2(f)(3)(iv) confirms it for me. There's no 'funding.' But would the 'option to fund' mean the requirements of 29 CFR § 2510.3-2(f)(3)(iv) were not met?"

BenefitsLink Message Boards

Severance Plans Must File Form 5500?

"What type of severance plans require a Form 5500 filing? If filing is required, how does one determine participant count? Is it all active employees eligible for the plan? Do you need to include those who have severed still receiving severance benefits?"

BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue, Inc.
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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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