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Retirement Plans Newsletter September 3, 2020 |
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Newly Posted |
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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]
"The proposal includes provisions outlining general duties requiring fiduciaries to vote any proxy where the fiduciary prudently determines that the matter being voted upon would have an economic impact on the plan.... The new proposal includes a list of obligations with which fiduciaries must comply when making decisions on proxy voting and exercising shareholder rights[.]" American Retirement Association [ARA] |
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[Guidance Overview]
"This rule is likely to change as a result of the comments received, but it does appear this ten-year effort to encourage participants to think about their defined contribution balance in terms of producing lifetime income is moving towards fruition.... [Plan] sponsors may want to consider additional steps they can take beyond what the rule requires to assist participants in meeting their post-retirement income needs." Buck |
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[Guidance Overview]
"Many administrators give participants disclosures that are far more comprehensive than the statute requires.... The rule itself notes that 'nothing in this section precludes a plan sponsor from including lifetime income stream illustrations on the benefit statement' to supplement the required disclosures, as long as the additional illustrations are clearly explained, designed not to mislead participants and based on reasonable assumptions. However, the IFR's preamble explains that DOL cannot provide fiduciary protection for projections that do not use the prescribed assumptions." Mercer |
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"[Rev. Proc. 2019-19 expanded the Self-Correction Program (SCP)] to include the ability to self-correct certain plan document failures.... The IRS ... has informally stated that SCP was modified to permit the self-correction of missed restatements ... There are three conditions that must be satisfied to use SCP. These are not unique to plan document failures -- they generally apply to any failure trying to be corrected under SCP.... The other option is to use the VCP." Robert Richter, for American Retirement Association [ARA] |
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"[T]he minimum amount required to be contributed to a cash balance plan will almost always leave the assets below the promised benefits, i.e. the sum of the hypothetical account balances.... Contributing the minimum will keep the plan in compliance, but not fully funded. That is where the recommended contribution comes into play.... [The 'recommended contribution'] is simply an amount that, when contributed, increases the plan assets to a level equal to the plan liabilities (hypothetical account balance)." DWC |
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"We are nearing the final stretch of the 2020 campaign. What have the parties proposed for the future of the U.S. retirement system? A chart [in this article] summarizes the policy documents prepared by the parties outlining their goals for both the private retirement system and Social Security." Groom Law Group |
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30 pages. "[T]he Social Security Administration's Office of the Chief Actuary (OCACT) estimates that phasing in an increase in the taxable maximum (for both contributions and benefits bases) to cover 90% of covered earnings over the next decade would eliminate roughly 20% of the long-range shortfall in Social Security. OCACT's estimates also show that if all earnings were subject to the payroll tax, but the current-law base was retained for benefit calculations, the Social Security trust funds would remain solvent for over 40 years." [RL32896, updated Sept. 2, 2020] Congressional Research Service [CRS] |
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"The funded status for a typical total-return plan improved by a robust 7.3%, while an LDI-focused plan saw an increase of 3.7%, based on NEPC's hypothetical open- and frozen-pension plans. Gains were driven primarily by the continuing rally in equities and a decrease in liabilities as Treasury rates increased." NEPC |
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"Pensions enjoyed their best month of the year in August, driven by higher stock prices and higher interest rates. Both model plans ... gained ground last month, with Plan A improving 6% and Plan B gaining 1% during August. For the year, Plan A is still down more than 3% and Plan B is down 1% through the first eight months of 2020." October Three Consulting |
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[Opinion]
"[T]he Department's commentary in the preamble to the proposal ... could be understood to broadly impose fiduciary obligations in a manner similar to the Department's 2016 fiduciary regulation. Before it was vacated by the Fifth Circuit Court of Appeals, that regulation's fiduciary-only elitist approach restricted access to professional guidance that retirement savers with low and moderate balances want and need. We are concerned that retirement savers will once again be denied the choice of nonfiduciary services." American Council of Life Insurers [ACLI] |
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Executive Compensation |
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"[Restricted Stock Units (RSUs)] are now the most frequently granted equity awards in public companies. However, companies, employees, and financial advisors often call RSUs 'restricted stock' or 'restricted securities.' ... [T]hose three things are not the same. As a lawsuit by current and former Uber employees shows, it's important to know what type of stock grant you have and its tax treatment." Bruce Brumberg, in Forbes |
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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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"Revisiting the life insurance issues in combo plans. This time not a floor-offset. DB or CB plan combined with a DC plan. All HCEs are at maximum benefit under DB/CB and rank-and-file minimum to pass 401(a)(26). DC plan, in addition to the deferrals +3% non-elective SH, has PS allocations, say minimum 4.5% to pass gateway (SH + PS = 7.5% of compensation). Agent wants insurance in the DB/CB only. Is this not a BRF issue? " BenefitsLink Message Boards |
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"We have a client where the only active 'employees' are the husband and wife owners. One former employee still has an account. Is this considered a 1-participant plan?" BenefitsLink Message Boards |
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"Former participant received a notice from Social Security that she has a benefit under her former employer's plan. She terminated back in 1989. The plan has changed TPAs and recordkeepers a couple of times since the 1989 termination date, so finding the detail as to what happened to her account (paid/rolled to default IRA) has been challenging. What is the employer's responsibility regarding this matter? If they cannot prove the benefit was distributed, is the employer responsible to pay the former participant?" 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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Rachel Leiser Levy selected as new Associate Chief Counsel Employee Benefits, Exempt Organizations and Employment Taxes
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Most Popular Items in the Previous Issue |
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Text of IRS Notice 2020-68: Miscellaneous Changes Under the SECURE Act and the Bipartisan American Miners Act of 2019 (PDF)
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Text of IRS Rev. Proc. 2020-40: Extension of Deadline for Discretionary Amendments to Qualified Pre-Approved Plans (PDF)
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Deadlines for 401(k) Plan Adoption -- Including SECURE Act Changes
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