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July 17, 2020 logo logo
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[Official Guidance]

Text of IRS Notice 2020-57: Weighted Average Interest Rates, Yield Curves, and Segment Rates for July 2020 (PDF)

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)."

Internal Revenue Service [IRS]

[Guidance Overview]

August 31 Is Important Date for Additional COVID-19 Relief for Retirement Plans

"[Notice 2020-51 provides that] any distribution received in 2020 that would be an RMD but for the CARES Act can be rolled over by the later of August 31, 2020 or 60 days after the date of distribution.... [Notice 2020-52] allows an amendment to reduce or suspend all safe harbor contributions mid-year even if the economic loss or notice requirements in the regulations are not met, provided the amendment is adopted by August 31, 2020."

Murphy Austin

[Guidance Overview]

DOL Proposes New Fiduciary Guidance for Selection of Socially Responsible Plan Investments

"In its current version, this guidance is very likely to steer plan fiduciaries away from ESG-oriented investments.... [T]he proposed rule does not address the financial criteria that must be used to determine when investments are considered 'indistinguishable' for purposes of selecting an ESG as a 'tie-breaker.' ... Additionally, the proposed rule does not address a specific time period that should be considered when comparing the financial metrics of ESG and non-ESG options.... [P]lan fiduciaries should thoroughly document the decision-making process ... when selecting ESG-themed investment options."

Ice Miller LLP

Projected 2021 Retirement Plan Limits

"Most key Internal Revenue Code limits for qualified retirement plans won't increase in 2021, Mercer projects. The 415(c) maximum annual addition and the 401(a)(17) limit on retirement plan compensation will likely rise to the next rounding increment, but these limits are so close to the rounding breakpoint that even minimal deflation may keep the amounts at the 2020 levels."


Approaching Retirement? Be Careful with Equities (and This Has Little to Do with COVID-19!)

"[B]eing over-weighted in equities when approaching retirement is not exactly optimal, for several reasons: [1] It goes against the general principle of investment diversification that is critical to retirement plan investing. [2] Risk is being taken at the time when retirement assets are typically at their highest, and there is the most to lose. [3] There is a shorter time horizon to wait for the inevitable market rebound, and panic may cause some individuals to lock-in their losses and miss the rebound ... [4] Contributions are often less than they were when a participant was an active employee; in fact, withdrawals may be happening concurrently with market losses, thus locking in the losses and exacerbating the problem."

Cammack Retirement Group

Defined Benefit Plan Investing During a Global Pandemic

"Volatile investment markets and historically low interest rates have placed single-employer defined benefit pension plans' funded status under pressure. Accelerating cash contributions can provide multiple benefits to plans seeking to reduce future cost and risk. Plan sponsors should use the recent events as a trigger to reevaluate their plans' asset allocation, rebalancing process, and risk mitigation strategies such as low-volatility equities and liability-driven investing."


Selection of Actuarial Assumptions for Multiemployer Plans (PDF)

"While the plan's benefit obligations, funded status, and withdrawal liability could be measured on the prior year assumptions, using the most recent relevant data ensures the results fully reflect current experience and the actuary's best estimate of the situation as of the measurement date. ASOP Nos. 27 and 35 acknowledge that several different assumptions may be reasonable for a given measurement, and that different actuaries may select different reasonable assumptions."

American Academy of Actuaries

Survey of Capital Market Assumptions, 2020 Edition (PDF)

17 pages. "Over the last 5 years, expected returns have declined for all but a few asset classes.... Even for plans with long-term investment horizons, it is important to understand the potential impact of lower expected returns over the short term. Therefore, this survey shows return expectations over horizons of both 10 years and 20 years."

Horizon Actuarial Services LLC

Benefits in General

Editor's Pick COVID-19 Resource Guide: Employee Benefits Considerations for Reopening in 2020

Outline provides action steps for various types of benefit plans. Topics include: [1] Onboarding furloughed employees; [2] Onboarding employees who have been laid off; [3] Other health and welfare plan considerations; [4] Other qualified plan considerations; [5] Reporting and disclosure considerations; [6] Fiduciary and governance issues; [7] Planning for remainder of 2020 and for 2021.

Troutman Sanders

ERISA Remedies Could Increase After Recent Supreme Court Ruling

"One of the last cases decided this term by the Supreme Court ... addressed the issue of disgorgement of profits as equitable relief available to the SEC.... Like Section 502(a)(3) of ERISA, which permits a benefit claimant to bring an action 'to obtain other appropriate equitable relief,' the Securities Exchange Act also lacks a definition of the meaning of equitable relief." [Liu v. SEC, No. 18-1501 (S. Ct. Jun. 22, 2020)]

DeBofsky Sherman Casciari Reynolds P.C.

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Odd Clause in Employment Agreement: 401(k) Contribution Must Go Up in Successful Years

"I came across a clause in an employment agreement where they promise an additional contribution (to all employees as I read it, but this is the only individual with an employment agreement) to their 401(k) plan during successful financial years. I suppose an employer can decide however they want to make a nonelective contribution, but it strikes me as strange to put it here. Is this kosher? Anything horrible I'm missing, either from a qualification perspective or an employment law perspective?"

BenefitsLink Message Boards

Employer Wants to Pay Investment Management Fees on SEP Participants' IRAs

"Employer (an S corp) wants to pay the investment management fee for the IRAs of its two employees, who are covered by the employer's SEP arrangement. Deductible? Taxable income to the employees?"

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Press Releases

Alliance Pension Acquires Reed Ramsey
Alliance Pension Consultants

Most Popular Items in the Previous Issue

Voluntary Transfers of Uncashed Checks from ERISA Plans to State Unclaimed Property Programs (PDF)
Advisory Council on Employee Welfare and Pension Benefit Plans, Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

2020 PBGC Premium Burden Report (PDF)
October Three Consulting, 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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