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Retirement Plans Newsletter September 10, 2020 |
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Newly Posted Fall Roundup of IRS and DOL Guidance Impacting Plan Sponsors and Their Retirement Plans
Private Equity Compliance With ERISA: Fiduciary Duties in Managing ERISA Plan Assets
Retirement Plans Under Attack: ERISA Fiduciary Litigation
IRA Fundamentals
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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 2020-68 clarifies that all years of service, even years before 2021, must be considered for determining a long-term part-time employee’s vesting in any employer contributions allocated to that participant’s account, unless those years otherwise may be disregarded ... [M]any employers were counting on only having to track part-time employee service on a going-forward basis after Jan. 1, 2021. However, this vesting service requirement likely adds a significant administrative burden on employers." Brownstein Hyatt Farber Schreck LLP |
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[Guidance Overview]
"In the last few weeks, the [DOL and IRS] have published a number of key items of guidance. Ranging from Pooled Plan Provider (PPP) registrations and lifetime income illustrations to rollover rules for qualified plan loan offsets, the materials are vast ... [1] Welcome PEPs ... [2] What Is a lifetime of savings really worth? ... [3] SECURE Act clarifications ... [4] Qualified Plan Loan Offsets (QPLOs)." Ferenczy Benefits Law Center |
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[Guidance Overview]
"Although the majority of the Q&As in [Notice 2020-68] relate to qualified birth and adopted distributions, questions still remain about the mechanics of these distributions and later re-contributions.... The Notice does provide that the IRS intends to issue regulations addressing the rules for re-contribution of these distributions, including rules related to timing of re-contributions, so additional guidance is forthcoming." Seyfarth Shaw LLP |
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[Guidance Overview]
"Notice 2020-68 provides answers to questions about ... [1] the small employer automatic enrollment business credit for 401(k) plan sponsors, [2] the repeal of maximum age for traditional IRA contributions, [3] participation of long-term part-time employees in 401(k) plans, [4] qualified birth or adoption withdrawals, and [5] the reduction in the minimum age for in-service distributions under governmental 457(b) plans and under pension plans. The Notice also provides guidance on deadlines for plan amendments for 401, 403(b) and governmental 457(b) plans and for amending IRA contracts." VOYA Financial |
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[Guidance Overview]
"[Notice 2020-61] answers questions concerning the special funding and benefit limitation rules for single-employer defined benefit pension plans under Section 3608 of the CARES Act.... [No] minimum required contributions under IRC Section 430(j) that would be due in 2020 must be paid until January 1, 2021.... The effects of the funding relief must be considered for each reporting purpose individually and to the extent that changes to reporting for one purpose may affect reporting for another purpose." EY |
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[Guidance Overview]
"The final regulations: [1] Adopt the interest rate assumptions in Internal Revenue Code Section 417(e)(3) [and] [2] Amend the benefit payment regulation to specify that the PBGC will apply the 'applicable mortality table' found in ERISA Section 205(g)(3)(B)(i) and Code Section 417(e)(3)(B).... The final regulations are effective on January 1, 2021. This means the PBGC will continue to publish monthly legacy interest rates for both Appendix B (the interest rates for PBGC-paid lump sums) and Appendix C through December 2020." Thomson Reuters Practical Law |
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"The most recent guidance on this issue comes from the IRS's Coronavirus-related relief for retirement plans and IRAs questions and answers, Q&A 15 (added July 2020).... [F]or purposes of determining whether a partial termination of a retirement plan occurred during the 2020 plan year, the IRS will not treat plan participants who were furloughed as having an employer-initiated severance from employment during the year if the business rehires them by the end of 2020. If that is the case, then immediate vesting of employer contributions would not apply." Retirement Learning Center, LLC |
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"Pension unfunded liabilities are usually quoted without reference to the size of the economy supporting those promises. The ratio of the UAL to the state GDP can give a good relative feel for how indebted each state is for their pensions." STUMP |
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"Today, a financial advisor's role is not just to talk about the provisions of the retirement plan or investment options but also: [1] make sure that short-term financial needs are taken care of; [2] ensure that there are adequate emergency savings on hand; [3] get debts consolidated and stick to a plan for paying them off; [4] finally, help the employee set up regular contributions into an account that is invested appropriately based on time until retirement." OneDigital Health and Benefits |
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"The likelihood of the one or both members of a couple aged 65 living well into their 90s is higher than it has ever been (48% chance in 2015 that at least one member of a married couple aged 65 would live to 951), and those odds will keep going up due to advances in technology and medicine. It is imperative that you start incorporating longevity into your retirement planning. Be mindful of the many retirement calculators that default to the average life expectancy (85 or so)." Greenspring Advisors |
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"If you're concerned that your company retirement plan isn't as good as it can be and want to try to help make it better, or if you're helping a loved one with a subpar plan, what follows is a checklist of the key steps to take.... [1] Gather information.... [2] Check up on fund fees.... [3] Check up on plan-level fees.... [4] Assess breadth and quality of investment options.... [5] Assess employer contributions.... [6] Assess availability of other features.... [7] Write it up and share it." Morningstar |
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Benefits in General |
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"A recent decision from the Court of Appeals for the Seventh Circuit offers help to ERISA benefit professionals who prefer to maximize judicial deference in favor of the fiduciaries.... ERISA's core focus is the governing plan documents.... [If] they provide the fiduciary with broad discretion to interpret their terms, and provide that the fiduciary decision shall be final and binding, the court should give the fiduciary the benefit of the doubt." [Bator v. District Council 4, Graphics Communications Conference, No. 19-2626 (7th Cir. Aug. 27, 2020)] Seyfarth |
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"[T]he presence of a circuit split on the issue of whether a late appeal decision forfeits deferential review may invite Supreme Court review.... It is also somewhat surprising that the Eighth Circuit would buck a growing trend among the circuits to find gateways to de novo review.... For plan administrators, efforts need to be taken to strictly comply with the requirements of the claim regulations. While tardiness was excused in this instance, that may not happen the next time." [McIntyre v. Reliance Standard Life Ins. Co., No. 19-2367 (8th Cir. Aug. 25, 2020)] DeBofsky Sherman Casciari Reynolds P.C. |
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Executive Compensation |
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"The IRS has issued an internal procedural update [dated May 26, 2020] that shortens the deadline for depositing employment taxes for certain stock-settled awards from three business days after exercise to two business days after exercise, and expands the application of the administrative waiver of late employment tax deposit penalties for stock options to stock-settled restricted stock units (RSUs) and stock-settled appreciation rights (SARs)." Hall Benefits Law |
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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 client under age 50 makes $500K annually and has been contributing the annual additions limit under his 401(k) plan and also contributing to a backdoor Roth (via traditional IRA) for the past half-dozen years or so. I just learned about the client funding the backdoor Roth. The client's investment broker says all is well. Is it possible to contribute the annual additions limit in the 401(k) plan (all pre-tax) and fund a backdoor Roth?" BenefitsLink Message Boards |
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"Companies A and B were related due to a controlled group. Company A sponsors a qualified plan, in which Company B is a participating employer. Due to recent ownership changes the companies are no longer related. Company B decides to terminate all employees and the entity will no longer exist. Company B will be removed as a participating employer. Company A does not want the balances of Company B participants to remain in the plan due to administrative concerns. What can be done with the balances of the terminated Company B participants who have funds in the plan?" BenefitsLink Message Boards |
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Press Releases |
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Former EBSA Head Launches Benefits Policy Consultancy
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Most Popular Items in the Previous Issue |
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