Retirement Plans Newsletter

August 21, 2020

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[Guidance Overview]

Text of DOL Fact Sheet: Notice of Proposed Rulemaking on Pooled Plan Provider Registration

"The NPRM (along with a proposed mock-up of a form and instructions) would establish requirements for pooled plan providers to register with the Department.... The registration process under the NPRM would involve an initial registration, supplemental filings regarding specific reportable events, and a final filing after the provider's last PEP has been terminated and ceased operations. The initial registration would have to be filed by the registrant no sooner than 90 days before and no later than 30 days before it begins operating as a pooled plan provider.... The initiation of public marketing services as a pooled plan provider or public offering of one or more PEPs are the triggers for registering." Icon to read more

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

[Guidance Overview]

DOL Issues New Participant Disclosure Mandate on Lifetime Income Equivalents

"By relying on the assumptions and the model language, fiduciaries will qualify for a safe harbor and will not be held liable in the event participants are unable to purchase equivalent monthly payments.... [M]any plans ... have been including some form of information in participants' statements that reflects how their balances translate into the ability to be 'on track' to retire. Many of these resources are very sophisticated, comprehensive and well received by participants.... [W]ill plans continue to use those resources that may provide participants better information or will they use the DOL's safe harbor, or maybe both?" Icon to read more

Lockton

[Guidance Overview]

DOL Issues Interim Final Rule on Lifetime Income Disclosures for Defined Contribution Plans

"[R]etirement plans would be required to provide lifetime income illustrations using several prescribed assumptions, which generally include an assumed retirement age (67), use of the 10-year constant maturity Treasury rate (10-year CMT), and use of the gender neutral mortality table used to determine lump sum cash-outs from defined benefit plans." Icon to read more

Bradley

[Guidance Overview]

Upcoming Deadline iconAugust 31 IRS Deadlines Fast Approaching

"Individuals who received required minimum distributions during 2020 have until August 31, 2020, to roll over their payments if they wish to defer paying income taxes on those amounts. Employers have until August 31, 2020, to adopt amendments to suspend safe harbor employer contributions to their defined contribution 401(k) plans even if their annual notices did not reserve the right to reduce or suspend such contributions or they are not operating at an economic loss." Icon to read more

The Wagner Law Group

[Guidance Overview]

Exceptional Usefulness and Quality iconThe Emerging Patchwork of Fiduciary Investment Advice Regulation

"This most recent version of the chart is updated to reflect the [DOL's] formal reinstatement and new interpretation of its 1975 ERISA five-part fiduciary definition." Icon to read more

Eversheds Sutherland

iHeart Communications Sued for 401(k) ERISA Violations

"The plaintiffs alleged that the defendants failed to use the lowest cost share class for the funds within the plan and failed to consider alternatives to the mutual fund.... The plan had more than $1.1 billion and $1 billion at the end of 2017 and 2018, respectively. [Walker v. iHeart Communications Inc., No. 20-2359 (N.D. Tex. complaint filed Aug. 19, 2020)] Icon to read more

Law|Street

How Does Having Both a 401(k) Plan and an IRA Change the Retirement Asset Picture?

"The ratio of the average combined 401(k) plan/IRA balance to the average 401(k) plan balance (of all of those having a 401(k) plan each year) was 2.48 at the end of the study.... However, many individuals with both account types did not maintain both in all years studied: Accounts were closed when individuals changed jobs or dollars were rolled over to other accounts as individuals retired." Icon to read more

Employee Benefit Research Institute [EBRI]

Rethinking the Role of Fixed Income Along the Retirement Savings Journey

"[A] participant's fixed income allocation offers meaningful diversification benefits and, depending on how far along the participant is in the retirement savings journey, can be thoughtfully constructed to also contribute to total return, lower the potential for capital losses, manage inflation risk and generate income[.]" Icon to read more

MFS Institutional Advisors, Inc.

GAO Report: Federal Employees' Compensation Act --- Comparisons of Benefits in Retirement and Actions Needed to Help Injured Workers Choose Best Option

"The Federal Employees' Compensation Act program pays for wages lost due to injury. Employees with lasting disabilities may choose federal retirement benefits when eligible, instead of FECA. However, they may not be aware of their options. [GAO] analyzed how income from FECA would compare with federal retirement income for those without disabling injuries [and found] for example, that FECA may be lower if an injury occurs early on in what would have been a long career because retirement benefits increase substantially the longer employees work. We recommended that the [DOL] help injured workers compare benefits options at retirement." [GAO-20-523: published Jul. 23, 2020; released Aug. 21, 2020] Icon to read more

U.S. Government Accountability Office [GAO]

[Opinion]

Two Cheers for DOL's Lifetime Income Disclosure

"The rule merely tells participants (or a participant and spouse) ... how much income their current savings would buy if they were reaching retirement age today, and bought an annuity at today's interest rates and annuity prices.... That's a fairly useless number. It won't help participants project the amount of savings they might accumulate by the time they retire if they keep saving at the current rate, or how much they might be able to generate from those savings." Icon to read more

Retirement Income Journal

[Opinion]

Despite Just a 30-Day Window, 8,700 People Comment on DOL's Efforts to Outlaw ESG in 401(k) Plans

"The DOL could theoretically make a good case for banning ESG filters from the pension, DC and DB assets that it oversees. Namely, it could say squishy beliefs have no place in long- or short-term investment portfolios. Let the market be the market. The problem is the Labor Dept. is barely making that case ... The result ... is that the public, the RIA business and much in-between just gave it an 'F' in the warning grades portion of the semester." Icon to read more

RIABiz

Benefits in General

[Guidance Overview]

Exceptional Usefulness and Quality iconComprehensive FAQs for Employers on Hurricanes and Other Workplace Disasters

"This article addresses many employment-related issues facing employers in the wake of hurricane-related disasters ... [including] federal laws ... [and] certain state laws, especially those in the areas most impacted by the storms.... [T]he information here ... may be helpful following any unexpected natural catastrophe.... [1] Military leave and emergency workers ... [2] Family and Medical Leave ... [3] Retirement plans ... [4] Group health plan administration ... [5] Special COBRA issues ... [6] HIPAA privacy requirements ... [7] Workplace donations to natural disaster victims." Icon to read more

Fisher Phillips

[Guidance Overview]

DOL Issues 'Promoting Regulatory Openness Through Good Guidance' Rule

"The PRO Good Guidance Rule ... requires that the Department use guidance appropriately, transparently, and in a manner that is accessible to the public. The rule accomplishes this in four key ways: [1] By providing that, for significant guidance involving impacts greater than $100 million, the Department will provide for notice-and-comment review of the guidance; [2] By requiring all Department guidance to be made available to the public in a searchable database [on the DOL website]; [3] By allowing the public to petition the Department on issues related to its guidance; and [4] By limiting the Department's use of guidance to avoid potentially unfair conduct." [Also available: Fact SheetIcon to read more

U.S. Department of Labor [DOL]

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Reimbursement to Plan Sponsor for Advisory Fees; How to Report on Schedule C?

"During the year, the plan sponsor received a reimbursement from the plan's revenue credit account for investment advisory and other consulting fees that the plan sponsor had paid directly. The record keeper issued a report reflecting all payments and recipients during the year, and listed the plan sponsor as a service provider receiving a direct payment. How should this be reported on Schedule C? Is the plan sponsor to be listed, with what service code and what relationship?" Icon to read more

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Press Releases

Most Popular Items in the Previous Issue

Text of DOL Proposed Regs: Registration Requirements for Pooled Plan Providers (PDF)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]

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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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