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Retirement Plans Newsletter August 27, 2020 |
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Newly Posted Participant Advice During COVID-19 and Beyond
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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]
"If a plan sponsor is interested in applying for a determination letter for an individually designed statutory hybrid plan and is unable to gather all the necessary documentation by the upcoming August 31, 2020 deadline, they should consider filing an 'incomplete' application as soon as possible. Doing this will allow them additional time until December 31, 2020 to submit the remaining information." Buck |
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[Sponsored]
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[Guidance Overview]
"[T]he PBGC actually allows for receivable contributions until their premium filing deadline of October 15. Since receivable contributions after September 15 have been impossible under ERISA funding law until now, however, the deadline for PBGC purposes was also effectively September 15.... [T]he CARES Act makes it possible for employers to make 2019 receivable contributions until January 1, 2021. This immediately triggered the wonky question, 'How will the contribution extension under the CARES Act affect 2020 PBGC premiums?' " The Principal Blog |
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[Guidance Overview]
"The QJSA annuity illustration must be provided regardless of the participant's marital status. The interest rate that must be used to convert the account balance into a single life annuity and QJSA is the 10-year constant maturity Treasury securities yield rate for the first business day of the last month of the period to which the benefit statement relates. As of August 14, 2020, the required interest rate is 0.71%." ICMA-RC |
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[Guidance Overview]
"The linchpin of the new rules is the establishment of basic assumptions that plan administrators may use to calculate the monthly payment illustrations of participants' account balances as SLAs and QJSAs. If the [specified] standard set of assumptions are used for the annual illustrations, the plan sponsors are protected from claims from participants related to the illustrations." Nexsen Pruet |
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"[T]he plaintiffs claimed that the use of the [pre-retirement mortality discount] violates ERISA's and the IRC's actuarial equivalence rules. [The judge] noted that the defendants did not oppose the plaintiffs' arguments regarding this error in their opposition brief, so 'summary judgment is granted on this ground alone.' " [McCutcheon v. Colgate-Palmolive Co., No. 16-4170 (S.D.N.Y. Aug. 24, 2020)] planadviser |
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"Retirement plan sponsors should gain an understanding of how their plan's recordkeeper may be using data from their plan, and work with them to control its usage. Recordkeepers should not have free reign, particularly if the data is being used to market services ... that may compete with the plan sponsor's own benefits. However, prohibiting the use of participant data for all non-retirement plan purposes may not be ideal." Cammack Retirement Group |
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"There is no bright line test, but the IRS has stated that the percentage of compensation includible for the HCEs cannot exceed the NHCE percentage by more than a 'de minimis' amount. What exactly does that mean? In practice, this has typically meant the difference between the two cannot exceed three percentage points (in favor of the HCEs). That said, it's important to look at the reasonableness of the exclusions and proceed conservatively when it comes to the compensation ratio test since there are no set standards on which to rely." DWC |
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"With efforts underway by the [DOL] and other government agencies to address ESG investing in pension plans and other investment products, ... the investment strategy remains ambiguous and lacks a standardized definition. This paper seeks to shed light on these ambiguities. The definition and background of ESG will be examined, the variations in ESG definitions across firms will be identified, case studies on two ESG funds will be analyzed, and a recommendation for more formal definitions will be made." Institute for Pension Fund Integrity [IPFI] |
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10 pages. "Only one in ten millennials have canceled or postponed contributing to a retirement account because of COVID-19.... [M]ore than six in ten millennials (61%) plan to retire before age 65 and 22% plan to retire before age 60 ... The majority of millennials have never received professional financial advice, but nearly half say COVID-19 has increased their interest in obtaining it, far more likely than Gen X (31%) or young boomers (26%)." Vanguard |
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Benefits in General |
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"The court noted that the word 'action', as used in ERISA's fee-shifting provisions, 'generally designates only proceedings in court, not administrative proceedings.' The Ninth Circuit also concluded that awarding the plaintiff attorney's fees in the instant case would result in a rule under which the availability of attorney's fees for an administrative appeal would turn on whether the claimant characterized their claim as either a denial-of-benefits claim under ERISA 502(a)(1)(B) or a fiduciary breach claim under 502(a)(3)." [Castillo v. Metropolitan Life Ins. Co., No. 19-56093 (9th Cir. Aug. 17, 2020)] The Wagner Law Group |
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Topics include: [1] Ensure eligibility determinations under retirement and health & welfare plans are correctly implemented. [2] Qualified retirement plans: automatic enrollment; loans. [3] Equity incentive plans. [4] Health & welfare plans: rehire after less than 13-week absence; rehire after 13-week absence; furloughed employees; determination of full-time status. [5] New rules for cafeteria plan elections. [6] How to appropriately report furloughed and laid-off workers to IRS on Forms 1094-C and 1095-C. [7] Impact of new COBRA rules for returning workers. [8] Avoiding 409A penalty taxes in connection with an arrangement that includes separation from service provisions. [9] Necessary retirement, health and welfare plan amendments. Littler |
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"[T]he 201st open meeting of the [ERISA Advisory Council] will be held via a teleconference on Thursday, September 17, and Friday, September 18, 2020.... The purpose of the open meeting is for Advisory Council members to hear testimony from invited witnesses and to receive an update from [EBSA]. The Advisory Council will study the following topics: [1] Considerations for recognizing and addressing participants with diminished capacity, and [2] Examining top hat plan participation and reporting." Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] |
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Executive Compensation |
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[Guidance Overview]
"[C]larifications in these proposed regulations [include]: [1] A foreign organization that, for its taxable year, receives substantially all of its support (other than gross investment income) from the date of its creation from sources outside of the United States is not an ATEO. [2] Amounts includible in gross income as compensation under IRC Sec. 7872 and related regulations are included in remuneration for purposes of computing the excess compensation." EisnerAmper |
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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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"A participant rolled over his entire balance to an IRA in 2019 without taking his RMD prior to the rollover. He will be taking the RMD now because it was just discovered. Is the only course of action to remedy the missed RMD by filing through VCP?" BenefitsLink Message Boards |
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"Anything going on out there for these plans? I keep hearing 'they're coming!' -- I would expect the Empowers and John Hancocks, etc. to be the ones leading the charge, but I don't hear anything." BenefitsLink Message Boards |
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"What are the pros and cons of merging an ESOP (with half the shares unallocated) into an existing 401k, compared to a termination of the ESOP?" 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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Pinnacle Retirement Solutions Enables Clients to Retire with Confidence
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Most Popular Items in the Previous Issue |
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IRS Issues CARES Act Guidance for Single Employer DB Plan Relief (PDF)
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IRS Modifies Language in Safe Harbor Special Tax Notice
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BenefitsLink.com, Inc.
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David Rhett Baker, J.D., Editor and Publisher
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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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