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July 30, 2020 logo logo
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[Guidance Overview]

IRS Reminder: CARES Act Provides Relief for Eligible Taxpayers Who Need Funds from IRAs and Other Retirement Plans

"[The CARES Act] can help eligible taxpayers in need by providing favorable tax treatment for withdrawals from retirement plans and IRAs and allowing certain retirement plans to offer expanded loan options.... [I]ndividuals eligible for coronavirus-related relief may be able to withdraw up to $100,000 from IRAs or workplace retirement plans before December 31, 2020, if their plans allow. In addition to IRAs, this relief applies to 401(k) plans, 403(b) plans, profit-sharing plans and others."

Internal Revenue Service [IRS]

[Guidance Overview]

The CARES Act: Waiver of Required Minimum Distributions

"[T]here is an opportunity for an individual to do a rollover if the participant had already received a payout in 2020 before the adoption of the CARES Act on March 27 or if the participant receives such a payout after that date. In addition, in Notice 2020-23, the IRS has already indicated that if the 60-day rollover period would have ended on or after April 1, the rollover period is extended to July 15. In Notice 2020-51, the IRS further extended this deadline, to the later of August 31, 2020 or 60 days after the distribution." [Updated Jul. 28, 2020]

[Guidance Overview]

Editor's PickWhat Employers Should Know About the DOL Final Rule for Electronic Disclosure

"Safe harbors apply to covered individuals ... Safe harbors apply to covered documents ... Covered individuals can elect how to receive covered documents ... Initial notice of default electronic delivery of covered documents ... Notice and access safe harbor ... Direct delivery via email safe harbor ... Effective date and non-enforcement policy."

Thompson Coburn LLP

Republic, GreatBanc Agree to Settlement of ESOP Lawsuit

"The lawsuit alleges a series of bad-faith dealings were made that caused losses to the ESOP while benefiting executives.... The total cash settlement amount is $7.9 million, with $7.5 million to be paid by or on behalf of Rainbow and the other Republic defendants and $400,000 to be paid by or on behalf of GreatBanc." [Hurtado v. Rainbow Disposal Co., Inc. ESOP Committee, No. 17-1605 (C.D. Cal. settlement agreement filed Jul. 27, 2020)]


Quest Diagnostics Faces 'Excessive Fee' Litigation

"A key fact included in the allegations is that the Quest Diagnostics plan reportedly has approximately $4 billion in assets, qualifying it as a 'jumbo plan' in industry parlance. The plaintiffs say this means it should be able to secure easy access to very low-cost investment options, given the economies of scale such buying power generates." [Rice v. Quest Diagnostics Inc., No. 20-9540 (D.N.J. complaint filed Jul. 28, 2020)]



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

Citing 'Endless Risk,' District Court Disqualifies Law Firm from 401(k) Case

"A New York district court judge earlier this month disqualified a firm representing hundreds of 401(k) plan participants based on a conflict of interest. The judge called the risks posed 'endless,' and requested additional briefing on whether the firm would be allowed to remain as counsel in related arbitration proceedings in Missouri. The ruling spotlights the sometimes-thorny conflict issues that can arise in ERISA litigation." [Canfield v. SS&C Technologies Holdings, Inc., No. 18-8913 (S.D.N.Y. Jul. 10, 2020)]

Thompson Hine via Lexology; free registration required

What's on the Agenda for Your Next Retirement Plan Due Diligence Meeting?

" 'Best-in-class' plan sponsors have at least one action item on every due diligence meeting agenda that reflects something they are doing to make a good plan better. Does your plan have auto-enrollment? Have you increased the default percentage or added/increased auto-escalation? ... [B]egin with minor plan improvement challenges and use the momentum created by small successes to complete larger initiatives."

Cammack Retirement Group

Bipartisan Bills Address Missing Participant Issues

"Bipartisan, bicameral legislation to address missing participants in retirement plans would establish a national online registry to help individuals find and consolidate their plan accounts, increase the current cash-out limit and expand the types of investments available for automatic IRA rollovers. The Retirement Savings Lost and Found Act of 2020 [S 4192, HR 7439] would also direct regulators to issue guidance on how sponsors can meet their fiduciary responsibility to locate missing participants."


Practice Note on ASOP No. 51: Risk Assessment in Practice (PDF)

30 pages. "The purpose of the practice note is to provide information to actuaries on current or emerging practices in which their peers are engaged that are affected by ASOP No. 51, Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions, as well as to help with the evolution of ideas in this area.... This ASOP specifically applies to funding valuations, pricing valuations, or risk assessments for defined benefit pension plans."

Pension Committee of the American Academy of Actuaries


CIEBA Comment Letter to DOL on Improving Investment Advice for Workers and Retirees -- Strengthening Protections for Rollovers (PDF)

"CIEBA continues to believe that DOL should re-evaluate the Five Part Test, which was issued well before the proliferation of 401(k) plans. Those who market and recommend rollovers to plan participants should be fiduciaries under ERISA, and the Five Part Test should make it much more clear that rollover providers are almost invariably acting as fiduciaries in the context of the rollover."

Committee on Investment of Employee Benefit Assets Inc. [CIEBA]

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Governmental 401(a) Plan Incurs a Partial Termination When Certain Participating Employers Become Excluded?

"We administer a 401(a) governmental plan. We want to amend the definition of 'employer' to exclude employees from certain entities that are part of our controlled group. This would result in approximately 33% of current participants being excluded from participating in the plan. To me, this sounds like it could be considered a 'partial plan termination.' However, it is my understanding that Section 411(d) does not apply to governmental plans. [1] Can we amend the plan to exclude certain employers without issue? [2] If we do amend the plan to exclude certain employers, does this result in a distributable event for the participants who are employed by those entities?"

BenefitsLink Message Boards

Formal Termination Required for a Solo-K?

"We have a client that has a Solo-K. No contributions since 2013, which was the last year a Form 5500-EZ was filed. (Under $250k in plan assets since then.) We just found out that the owner retired and took his money out in February. Do we need to formally terminate the plan? What's the harm in leaving it 'open'? He will file a final Form 5500-EZ."

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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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