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July 27, 2020 logo logo
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[Guidance Overview]

Upcoming Deadline icon Amendment and Submission Deadlines Are Upon Us; Form 5500 Still Due 7/31

"Pre-approved defined benefit plans' second six-year remedial amendment period ends July 31, 2020; The determination letter submission window for statutory hybrid plans, e.g., cash balance plans, ends August 31, 2020; and Calendar year plans required to file Form 5500s must still file the Form 5500 or the Form 5558 extension by July 31, 2020."

Jackson Lewis P.C.

[Guidance Overview]

PBGC Issues Additional Guidance on DB Plan Funding Relief Enacted by the CARES Act

"Making required contributions after their original due date but no later than January 1, 2021, will not give rise to a reportable event ... [PBGC] will continue to process distress termination applications during the COVID-19 pandemic ... It will continue to review the funding status of pension plans and request information from plan sponsors under its Early Warning Program. It will work with plan sponsors that owe a termination liability in 2020 to resolve such liability, considering their ability to pay based on the facts and circumstances of each case."

Sidley Austin LLP

Plan Sponsors Should Focus on Life Events Rather Than Generations in Communications

"Eighty percent of employees surveyed said they believe their views were created by individual experiences and personal characteristics, and not the generation they were born into.... 65% of respondents said generational differences are 'overstated,' 53% noted their ideas and feeling about money varied greatly throughout each life stage and 40% identified more with others who are going through similar life events than those in defined generations."

PLANSPONSOR; free registration may be required

How Much to Save? The Effect of Decision Costs on Retirement Plan Participation

"[S]implifying one dimension of the enrollment decision, by highlighting a potential rate at which non-participants might contribute, increases participation in the plan. Similar communications that did not include a highlighted rate yield smaller effects. The results highlight how reducing complexity on the intensive margin of a decision (how much to contribute) can affect extensive margin behavior (whether to contribute at all) in a setting of policy interest."

National Bureau of Economic Research [NBER]; purchase required for full document

Cost Savings Seen as Main Force Behind Shifts in 401(k) Investment Offerings

"Changes made to the investment lineups of corporate 401(k) plans in 2019 reflect U.S. sponsors' ongoing focus on cost savings ... Changes to index fund lineups among plans were prevalent, with many adding to their passive tiers or changing index fund providers[.]"

Pensions & Investments


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

The Effect of Fee Disclosures on 401(k) Investment Allocations

"[The authors] examine the effects of a 2012 regulatory reform that mandated fee and performance disclosures for the investment options in 401(k) plans.... [P]articipants became significantly more attentive to expense ratios and short-term performance after the reform. The disclosure effects are stronger among plans with large average contributions per participant and weaker for plans with many investment options."

National Bureau of Economic Research [NBER]; purchase required for full document

2016 DOL Fiduciary Rule Cut Variable Annuity Sales in Half

"Brokers earn higher commissions for selling inferior annuities, in terms of higher expenses and more ex-post complaints.... To help limit conflicts of interest, the [DOL] proposed a rule in 2016 that would hold brokers to a fiduciary standard when dealing with retirement accounts. [A]fter the proposed fiduciary rule, the sales of high-expense variable annuities fell by 52% as sales became more sensitive to expenses and insurers increased the relative availability of low-expense products. Based on [the authors'] structural model estimates, investor welfare improved as a result of the fiduciary rule under conservative assumptions."

National Bureau of Economic Research [NBER]; purchase required for full document

State-Sponsored Pensions for Private Sector Workers: The Case for Pooled Annuities and Tontines

"This paper explains how state governments could create new low-cost lifetime assurance funds to help provide retirement income security for millions of private-sector workers who currently lack pension coverage.... [A]ssurance funds [c]ould be offered as annuity-like investment options on the new investment platforms being created by states like Oregon, California, and Maryland that offer their citizens the opportunity to participate in state-sponsored retirement savings plans. Adding an assurance fund could effectively turn these retirement savings plans into lifetime pensions."

Pension Research Council, The Wharton School of The University of Pennsylvania

How Do Flexible Retirement Withdrawals Work in Practice?

"[T]he idea that retirees would have the ability to have some small amount of flexibility in their spending is actually something that lines up with people's real-life experiences.... If you say, OK, I'm willing to have some flexibility and I'm going to start at a 5% withdrawal, which is 25% more money, that makes a real difference.... [Y]our withdrawal percentage ... is something that you can measure every single day.... So, if that 5% withdrawal rate gets 20% higher, which would be 6%, ... that's the guardrail and you say, I'm going to take that $50,000 down by 10% ... to $45,000. And that's all you need to do for a year."



An Overview of the Proposed Temporary Federal ESOP Grant Program Act

"[The Temporary Federal ESOP Grant Program Act ... introduced on July 23, 2020] provides substantial federal grants to support employee ownership.... The bill intends ESOPs to receive newly issued shares, not to buy shares from current owners.... The bill is not vulnerable to the risk that owners would offload struggling companies to their workers. Its valuation provisions may not be necessary.... This bill advances an approach to employee ownership that is both a bold innovation and a return to the founding ideas of ESOPs ... It is a statement of a policy principle that employee ownership should be an integral part of any economic recovery legislation."

National Center for Employee Ownership [NCEO]

Benefits in General

[Official Guidance]

IRS Announces Tax Relief for Michigan Severe Storm Victims

"Individuals and households who reside or have a business in Arenac, Gladwin, Iosco, Midland and Saginaw counties qualify for tax relief.... [C]ertain deadlines falling on or after May 16, 2020, and before Oct. 15, 2020, are postponed to October 15, 2020. This includes 2019 individual and business returns that, due to COVID-19, were due on July 15.... [T]his also means that affected taxpayers will have until Oct. 15 to make 2019 IRA contributions."

Internal Revenue Service [IRS]

[Official Guidance]

IRS Announces Tax Relief for Utah Earthquake Victims

"Individuals and households who reside or have a business in Davis and Salt Lake counties qualify for tax relief.... [C]ertain deadlines falling on or after March 18, 2020, and before July 31, 2020, are postponed to July 31, 2020. This includes 2019 individual and business returns that, due to COVID-19, were due on July 15.... [T]his also means that affected taxpayers will have until July 31 to make 2019 IRA contributions."

Internal Revenue Service [IRS]

What Freelancers Should Look for in Benefits: A Checklist

"[S]ome professional groups are setting up systems ... offering group health insurance and, in some cases, retirement funds. Similarly, the Freelancer's Union has arranged health, dental, disability and liability insurances for members. And various popular workforce management services offers health insurance options as well."



ERIC Letter to U.S. Senate Suggesting Employee Benefits Provisions for Potential COVID-19 Legislation (PDF)

"ERIC urges that the following provisions be included in potential COVID-19 legislation: [1] Prevent abusive 'stock drop' lawsuits, if the plaintiff cannot prove that the volatility of the investment was due to a cause other than COVID-19; [2] Prevent abusive 'imprudent investment' lawsuits, if the plaintiff cannot prove that the volatility of the investment was due to a cause other than COVID-19; [3] Prevent abusive COBRA lawsuits, by clarifying that it is the responsibility of a plan participant to disclose to providers the source of their health insurance coverage; [4] Prevent abusive ERISA disclosure lawsuits, by requiring plaintiffs to demonstrate actual harm in a case based on failure to provide an ERISA-required disclosure or respond to a document request in a timely manner; and [5] Protect employers from excessive HIPAA liability, by permitting employers to collect and use information related to COVID-19 infections among their worker population."

The ERISA Industry Committee [ERIC]

Selected Discussions
on the BenefitsLink Message Boards

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Remove Roth from a Safe Harbor Plan Mid-Year?

"Can a client remove Roth from a safe harbor plan mid-year? I don't see any rules precluding this. Only 30 days notice as Annual Contribution notice is affected."

BenefitsLink Message Boards

How to Verify IRS Processing of Form 5500-EZ?

"Plan Sponsor wants to verify processing of Form 5500-EZ. Correct procedure to verify?"

BenefitsLink Message Boards

CARES Act -- Suspension Can Apply to Existing Loans?

"Is there anything in the guidance about outstanding loans that are not current. I know loans that are current can be suspended under CARES. Can loans that were not current benefit from suspension?"

BenefitsLink Message Boards

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Press Releases

Most Popular Items in the Previous Issue

Building an Effective Succession Plan and Exit Strategy for Construction Industry Owners and Executives (PDF)
Francisco Pineda, Columbia University; John N. Vitucci, PKF O'Connor Davies LLP; Michael J. Andriola, PKF O'Connor Davies, LLP; Ashley K. Sarokhan, Capital One Bank, N.A.; Noor Rajah, Optimizing Foundations, LLC, 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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