Retirement Plans Newsletter

July 22, 2020

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[Official Guidance]

Text of Revised ASOP No. 27: Selection of Economic Assumptions for Measuring Pension Obligations

Rev. Jun. 2020. "This standard applies to actuaries when performing actuarial services that include selecting economic assumptions to measure obligations under any defined benefit pension plan that is not a social insurance program ... This standard is effective for any actuarial report that meets the following criteria: (a) the actuarial report is issued on or after August 1, 2021; and (b) the measurement date in the actuarial report is on or after August 1, 2021."

Actuarial Standards Board

[Official Guidance]

Text of Revised ASOP No. 35: Selection of Demographic and Other Noneconomic Assumptions for Measuring Pension Obligations

Rev. Jun. 2020. "This standard applies to actuaries when performing actuarial services that include selecting demographic and all other assumptions not covered by ASOP No. 27, Selection of Economic Assumptions for Measuring Pension Obligations, to measure obligations under any defined benefit pension plan that is not a social insurance program ... This standard is effective for any actuarial report that meets the following criteria: (a) the actuarial report is issued on or after August 1, 2021; and (b) the measurement date in the actuarial report is on or after August 1, 2021."

Actuarial Standards Board

[Guidance Overview]

DOL Guidance on ESG Investing: Investment Committees Should Handle with Care

"It is troubling that, although the rule is proposed to be effective only after it is finalized, the DOL has issued ESG investigatory letters to plan investment fiduciaries over the past few months. These letters not only focus significantly on the ESG issues addressed in the proposed rule, but also require the fiduciary to produce an extensive array of plan- and investment-related documents for the DOL to review."

Jackson Lewis, via Lexology

Reasons to Have an Investment Policy Statement for Your Retirement Plan

"Establishing a well-constructed IPS by the plan's named fiduciary ... requires careful consideration of the plan's investment objectives and how to achieve them.... [An] IPS, if adhered to, can promote consistent plan investment decision making in accordance with objective factors.... [E]stablishing the selection and monitoring criteria involved in plan investments, as well as the applicable time periods for assessing investment performance, also helps to demonstrate the existence of prudent fiduciary processes."

Frost Brown Todd LLC

District Court Dismisses 401(k) Excessive Fee Lawsuit

"The court held that it was legally insufficient to state a cognizable cause of action premised primarily on allegations that the plan did not offer the cheapest or best performing funds available in the marketplace ... The district court's ruling is noteworthy in that it departs from other courts that have permitted lawsuits to survive a motion to dismiss based on similar allegations." [Martin v. CareerBuilder, No. 19-6463 (N.D. Ill. Jul. 1, 2020)]

Holland & Knight

[Sponsored]

Plan Advisor Checklist: Identifying the Best Retirement Plan Prospects

Retirement plan prospecting can be difficult. Successful advisors are targeted and focused on bringing new ideas to clients and prospects. Use this checklist to define your target audience, identify meaningful opportunities and communicate your value. Learn more

Sponsored by October Three


How 401(k) Plan Sponsors Can Motivate Employees to Repay CARES Act Early Withdrawals

"Perhaps the first option to focus on is that one that involves 'paying back' or 'not paying back.' The rules, while straightforward to financial professionals, may be less apparent to retirement savers.... Show a projection of compound earnings over a 20-year period to show what they have forfeited that was intended to support them during retirement ... [M]ake the process of paying the withdrawals back as easy as possible.... [U]se the same mechanized features that encourage employees to automatically enroll in the plan."

Fiduciary News; free registration required

PBGC Clarifies Rules Around Pension Plan Changes Made by CARES Act

"The PBGC clarified for employers that as long as they make their required contributions by the adjusted due date, no late contribution notice requirements are triggered. If contributions are not made by the revised dates, the usual reporting requirements will then apply."

Findley

The Silver Lining of Low Rates for DB Plans

"Paradoxically, the answer to coping with a low rate riptide may be to stop fighting and go with the flow. The same rates that are making liabilities expensive are also making debt relatively cheap. So if rates refuse to come up, then maybe sponsors should relax and ride them to improve their DB situation."

The Principal Blog

Annuity Purchase Update: July 2020 Interest Rates

"The strong equity market returns of 2019 were set back by poor performance in the first quarter of 2020, but Q2 2020 gains reversed the downward 2020 trend. The average duration 7 annuity purchase interest rates decreased by 32 basis points and average duration 15 rates decreased by 30 basis points since last month. This change in rates led to a corresponding increase in annuity purchase price of 5.64% for Annuity Plan 1 and a 10.48% increase for Annuity Plan 2."

October Three Consulting

Harvesting Capital Gains vs. Roth Conversions at 0% Tax Rates

"[F]inancial advisors whose clients have lower tax rates today should be wary about deferring income at those low rates -- often causing higher rates in the future -- and instead can soften the impact of higher future tax rates by strategically harvesting ordinary and/or capital gain income today (with their separate tax bracket structures). However, there are several mitigating factors (such as Social Security, Medicare premiums, and the Net Investment Income Tax) that need to be considered when designing a suitable strategy for the client[.]"

Nerd's Eye View

[Opinion]

Attorney Robert Toth's Comment Letter to DOL Outlines the Structure of PEPs

"[T]he new PEP rules do not add any new services to the marketplace. Rather, PEPs merely reorganize existing services to be provided in a different format, with the one exception is that it now permits unrelated employers to be able to file a consolidated Form ... [T]he Department's issuance of guidance as to the allocation of these different authorities ... is a required condition precedent to the determination of whether any prohibited transaction exemptive relief is necessary in the operation of a PEP."

Business of Benefits

[Opinion]

Congress Eyes Additional Pension Relief

"The Emergency Pension Plan Relief Act of 2020 (EPPRA) would double the [PBGC] maximum benefit level.... The Act also reinstates cuts that have been made by firms that were about to deal with insolvency ... [and] cuts made by [MPRA] ... While it is essential that the American economy is guided back on the right course, this shouldn't be an excuse for handouts as a stop-gap measure to remedy underlying problems. "

Institute for Pension Fund Integrity [IPFI]

Benefits in General

Limits to ERISA's Equitable Remedies: What the Supreme Court's Latest Securities Act Decision Tells Us

"The Court observed that disgorgement can be seen as imposing a constructive trust or an accounting, and is equitable in nature even if not specifically mentioned in a statute. The Court added that disgorgement is not joint and several, and is not limited to cases involving fiduciary breaches. The Court held that district courts thus may enter disgorgement awards as part of equitable relief, as long as they target net profits, after deducting legitimate expenses." [Liu v. SEC, No. 18-1501 (S. Ct. Jun. 22, 2020)]

Seyfarth

Press Releases

Most Popular Items in the Previous Issue

Alleged Boeing Retirement Plan Fraudster Charged in California
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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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