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Retirement Plans Newsletter August 6, 2020 |
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Newly Posted Accounting and Auditing Institute for Employee Benefit Plans Virtual Conference
Ascend
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Guidance Overview]
"[Notice 2020-52] offers relief for employers who have already modified their safe harbor plan contributions in light of the pandemic, or that want to change their safe harbor contributions before August 31, 2020. To the extent that an employer is not operating at an economic loss or failed to anticipate a need to reserve the right to reduce safe harbor contributions in its annual safe harbor notice, the employer can make such mid-year changes without jeopardizing the tax-qualified status of the plan." Morris, Manning & Martin, LLP |
"[T]here are plenty of other questionable plan features that all too many plan sponsors adopt that can greatly increase plan administration, be detrimental to plan participants, or both.... [1] Utilizing a non-calendar plan year ... [2] Allowing hardship distributions ... [3] Not having a loan policy." Cammack Retirement Group |
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"In most cases, business owners set up cash balance plans to increase the deductible contributions they can make, i.e., for tax deferral purposes. To mitigate the possibility of higher than expected investment returns (which result in a decrease in the required contribution amount), it is common to adopt a conservative investment policy designed to achieve the stated interest credit rate (3% in this case) as closely as possible." DWC |
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"According to [a recent] study, the amount of working-age households that will not be able to afford their present-day standard of living in retirement has increased from 50 to 55 percent due to the economic downturn. ... Older workers are particularly vulnerable to this effect[.]" National Public Pension Coalition |
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"[Qualified longevity annuity contracts] are a special type of annuity that lets you cut RMDs from your IRAs next year and beyond, reduce the taxes you pay and guarantee more lifetime income in old age." Kiplinger |
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[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.
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"Rather than subsisting on organically generated portfolio income -- which today entails jacking up risk to generate a sustainable level of portfolio -- retirees should focus instead on 'cash flows.' A cash flow approach encompasses income production as well as gain harvesting through rebalancing appreciated positions." Morningstar |
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[Opinion]
"The [DOL] gravely erred in its proposal to limit ESG investing, which will hurt both participation levels and contributions in retirement plans ... Dalbar said in a comment letter.... If the DOL tries choosing the investments employees can select, it ultimately will dictate how many employees participate in a workplace plan and how much they contribute, the company argued." Financial Advisor |
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[Opinion]
"The proposed regulations rely on incorrect premises. The most important incorrect premise is that careful, prudent, skillful, and diligent ERISA plan fiduciaries will, like the DOL and unsophisticated investors, rely on slogans, such as those denigrating or praising ESG/sustainable investing, to make direct or indirect plan investments.... The second most important incorrect premise is that plan fiduciaries may only use pecuniary factors to select and monitor investment options for participants and beneficiaries." Albert Feuer, via SSRN |
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Benefits in General |
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[Guidance Overview]
"The IRS noted that, while employees would be permitted to make an annual irrevocable election of contributions to the plans, they would not be permitted to elect to have the contributions paid in cash or used towards taxable benefits. Accordingly, the IRS ruled that the proposed amendment to the profit sharing plan will not cause the plan to be treated as offering a cash or deferred arrangement pursuant to section 401(k)." The Wagner Law Group |
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"The DOL recently provided retirement plans with a new method to comply electronically with certain participant disclosure and notice requirements.... This new method adds to the previously issued DOL safe harbor and the IRS rules. [This chart provides] a side-by-side general comparison to help plan administrators keep track of when each method may be used, and what requirements must be met." Proskauer |
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Executive Compensation |
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[Guidance Overview]
"The intent of [General Legal Advice Memorandum (GLAM) 2020-004] appears to be to shore up the integrity and consistent application of the rules governing income inclusion, and the FICA and FIT withholding and deposit obligations to the various types of equity awards discussed. The intent of the [update to Section 20.1.4.26.2(5) of the Internal Review Manual] in turn appears to be to mitigate the practical, logistical challenges employers face in the context of a pristine application of those rules and provide administrative relief subject to the satisfaction of certain conditions." Mayer Brown |
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Selected Discussions |
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► It's easy to sign up and participate in discussions! Post answers, ask questions, create custom feeds and views. Join your peers (and potential referral sources or customers)—there is no charge. |
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"Are governmental defined contribution plans subject to the 6-year restatement period? If so, are their restatements due at the same time as 401(k), profit sharing and money purchase plan restatements (July 31, 2022)?" BenefitsLink Message Boards |
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"When is a plan actually considered disqualified? Does the IRS need to formally disqualify before it is considered disqualified? I know the IRS can reach back to open years but I'm wondering how the statute of limitations applies to plans that might not be qualified due to failures (but have not been formerly disqualified by the IRS)." BenefitsLink Message Boards |
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► Subscribe to the BenefitsLink Message Boards Digest -- a free daily email of all new discussions (not just the selected few shown above). View a sample issue. |
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Press Releases |
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CalPERS Chief Investment Officer Yu (Ben) Meng Resigns
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Survey Uncovers Different Health Savings Account Personalities
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Most Popular Items in the Previous Issue |
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SEP, MEP, or PEP: Identifying the Key Differences in Retirement Plans (PDF)
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Here's How Much 401(k) Plan Mutual Fund Expense Ratios Have Dropped
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State-Administered IRA Programs: Overview and Considerations for Congress
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