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[Official Guidance]

Text of PBGC Final Regs: Lump Sum Payment Assumptions

20 pages. "This rule is intended to modernize the methodology used to determine de minimis lump sums in terminated underfunded single-employer plans. Specifically, PBGC is adopting the interest and mortality assumptions from section 417(e)(3) of the Internal Revenue Code for this purpose. It also discontinues PBGC's monthly calculation and publication of interest rate assumptions. Because some private-sector plans use PBGC's lump sum interest rates, the rule provides a table for plans to use to determine interest assumptions in accordance with PBGC's historical methodology." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Exceptional Usefulness and Quality iconIRS Rev. Proc. 2020-40 Provides Extensions of Retirement Plan Amendment Deadlines

"Under Rev. Proc. 2020-40, Section 15.05 of Rev. Proc. 2016-37 now provides that the Section 15.04(2) deadline applies to discretionary amendments to pre-approved qualified plans for a plan year unless a statute, regulation, or other IRS guidance provides a deadline to adopt a discretionary amendment that is either earlier or later than the deadline under Section 15.04." Icon to read

Thomson Reuters Practical Law

[Guidance Overview]

IRS Issues Guidance to Make Us Feel More SECURE

"A new tax credit under the SECURE Act aims to offset the costs of establishing and maintaining a qualified employer plan that provides an eligible automatic enrollment arrangement (EACA).... Notice 2020-68 clarifies some requirements and limitations of the credit.... The Notice [also] answers 18 common questions relating to Section 113's tax exception from penalties associated with early distributions for any qualified birth or adoption." Icon to read more

Jackson Lewis P.C.

[Guidance Overview]

DOL Proposes Rules on Pooled Plan Provider Registration Process

"The proposed regulations state that a PPP must provide certain information as part of its initial registration, which must occur 30-90 days before the PPP begins operations as a PPP. For this purpose, 'beginning operations as a PPP' is defined to mean publicly marketing PPP services or publicly offering a PEP." Icon to read more

Morgan Lewis

[Guidance Overview]

How to Register as a Pooled Plan Provider

"The DOL explains that the purpose of these filings is to provide time-sensitive knowledge to the DOL, the Treasury Department, and the IRS to permit those agencies to oversee PPPs, and to allow employers hiring a PPP to be able to exercise their fiduciary duties of selection and monitoring.... The Proposed Rule requires electronic filing of all PPP registrations, and also provides that a new EBSA form be established -- EBSA Form PR (Pooled Plan Provider Registration) -- as the required filing format for PPP registrations." Icon to read

ERISA Benefits Law, PLLC

[Guidance Overview]

DOL Describes Pooled Plan Registration Requirements

"The new proposal doesn't categorically exclude any one type of business entity or model from serving as a pooled plan provider, but DOL mentions in the preamble that it believes certain entities -- such as recordkeepers, professional employer organizations (PEOs) and some insurance companies -- may well positioned to offer the plans. DOL also views broker-dealers and registered investment advisors as plausible candidates, but believes many would be reluctant to take on the roles of named fiduciary and plan administrator." Icon to read more


[Guidance Overview]

DOL Regs for Lifetime Income Disclosures and IRS Updated Model Special Tax Notices (PDF)

"The regulations require the plan to assume a rate of interest equal to the 10-year constant maturity Treasury securities yield rate for the first business day of the last month of the statement period, but the DOL is soliciting comments on whether this assumption is the best rate to use.... The plan does not need to include an assumed adjustment to the required lifetime monthly payment illustrations for inflation; however, the DOL has solicited comments regarding this assumption[.]" Icon to read more

Sherman Howard

[Guidance Overview]

Lifetime Income Disclosures for Defined Contribution Plans

"[M]any participants will be confused by an estimate that says it assumes that the benefit payment begins on the last day of the statement period but that calculates the payment amount assuming that the participant is age 67 on that date. A 45 year old participant could not purchase an annuity that would begin on the calculation date and that would be remotely close to the estimate values.... Fiduciaries of plans that use the IFR assumptions and provide the model benefit statement insert will get liability relief from claims arising out of the disclosures. " Icon to read more


[Guidance Overview]

Often Confused: The Use and Impact of ERISA 408(b)(2) and DOL Reg 404(a)-5

"[DOL Reg 2550.404(a)-5] is merely a rule which requires that participants regularly receive certain investment disclosures.... [ERISA Section 408(b)(2)] requires the service provider's contract with the plan's fiduciary contain certain, specific terms. It does NOT require that those fees be disclosed to participants, nor does it require annual disclosure. It is simply a business matter between the fiduciary and the service provider.... 408(b)(2) is, at its heart, a rule which requires specific, enduring contract terms. It is not a disclosure rule." Icon to read more

Business of Benefits

Cybersecurity Risk Considerations for 401(k) Plans

"Many 401(k) plan sponsors mistakenly believe that when they delegate responsibilities to a record-keeping service provider, they have no liability for cybersecurity breaches.... [C]ase law is developing that should motivate plan sponsors to satisfy their fiduciary duty to enact prudent procedures and safeguards to protect plan assets and plan data." Icon to read more

The CPA Journal

Top Retirement Funds See Assets Rise 8% for 2019

"After a modest decline the previous year, assets of the world's 300 largest retirement funds rebounded by 8% to $19.47 trillion in 2019, in what would prove to be the calm before 2020's coronavirus storm ... [G]rowth for the past five years averaged a respectable 5% ... But in the wake of the COVID-19 crisis and the extraordinary policy response to it, the outlook for the coming five years looks considerably tougher[.]" Icon to read more

Pensions & Investments

Considerations When Starting or Enhancing the Purchase of Service Credits in a Public Sector Pension Plan

"This paper provides considerations for plans that are setting up new rules or reviewing existing rules for an Additional Service Credit Program (ASCP). The design of an ASCP can take many forms and will be driven by a combination of public policy, local and state laws, and employee relations.... A careful analysis of the different sources of plan cost, risk, and liability should be undertaken to understand fully how service purchases can impact the plan finances on a long-term basis." Icon to read more


PBGC to Pay Pension Benefits for McClatchy Company Workers, Retirees

"The [PBGC] has assumed responsibility for The McClatchy Company Retirement Plan, which covers over 24,000 current and future retirees. The California-based newspaper publisher operates 30 media companies in 14 states.... The agency estimates that McClatchy's plan is 57 percent funded with approximately $1.3 billion in assets and $2.3 billion in benefit liabilities. The plan is underfunded by $1 billion." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]


DOL's Mixed Message for Plan Sponsors: New Guidance on Private Equity, ESG and Proxy Voting

"In recent actions, [the DOL] has opened the door for sponsors of defined contribution retirement plans to consider adding alternative investments such as private equity to their lineups. And it also sent a stern warning for both defined benefit and DC plan sponsors over including investments with an explicit ESG focus. More recently, it has proposed blocking an ERISA plan sponsor's ability to vote a proxy unless the issue has an economic impact on the retirement plan. Even more galling: Issues unlikely to have an economic impact can be supported by plan sponsors if they are voting in accordance with management's recommendation." Icon to read more

Pensions & Investments

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Withdraw Roth Subaccount Before Pre-Tax Subaccounts?

"A participant is 63 years old. Per the plan, he can take an in-service withdrawal (minimum age 59-1/2) of all of his money. The NRA is 65. He has Roth, rollover, 401k, safe harbor and PS money in the plan. He is 100% vested. He wants to withdraw only from his Roth subaccount. Is he required to take the withdrawal from pre-tax accounts first, though? The recordkeeper says so, but I don't see such a rule in the plan document. Is it an IRS requirement?" Icon to read more

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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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