Retirement Plans Newsletter

September 11, 2020

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[Guidance Overview]

SECURE Act Provides New Distribution Option to Help Pay for Birth or Adoption Expenses

"[Notice 2020-68] made several clarifications regarding the amount and source of the qualified birth or adoption distributions. It is now clear that the $5,000 maximum distribution amount is applicable separately to each parent for every child born or every eligible adoptee the is adopted in a one-year period. For example, a mother and father of twins would each be eligible to take up to a $10,000 distribution that would qualify as a qualified birth or adoption distribution, so long as all other requirements are met." Icon to read more

Graydon

[Guidance Overview]

IRS Issues Guidance on Qualified Birth or Adoption Distributions

"An eligible plan is not required to permit QBOADs. If it does, the plan must be amended by the last day of the 2022 plan year; if QBOADs are added after 2022, the plan must be amended by the last day of the plan year in which the QBOAD is implemented.... Notice 2020-68 [does not address] whether a plan sponsor can limit QBOADs to expenses related to the birth or adoption, and whether it can impose a lesser dollar limit than $5,000." Icon to read more

The Wagner Law Group

[Guidance Overview]

Prepare Now to Count Hours for Part-Time Employee Eligibility and Vesting

"[Notice 2020-68 clarifies] that for purposes of vesting in any employer contributions, you must credit a year of vesting service for all years, not just years after 2020, in which a long-term part-time employee had at least 500 hours of service. In other words, for eligibility purposes, only years after 2020 in which a part-time employee has at least 500 hours of service are counted. But for vesting purposes, once an employee qualifies as a long-term part-time employee based on service after 2020, all years in which the employee had at least 500 hours, including years before 2021, are counted. " Icon to read more

Husch Blackwell

[Guidance Overview]

DOL Proposes Rules on Proxy Voting

"The proposal is in line with DOL's proposed regulation on ESG investments ... in that it is (or at least appears to be) intended to have the effect of reducing 'ESG-related' shareholder engagement by holding fiduciaries to a 'pecuniary interest of plan participants' standard.... While the ESG proposal has generated significant controversy, ... the issue of proxy voting ... may be less critical ... Indeed, the tighter limits on ERISA plan shareholder activism [are] likely to be welcomed by some plan sponsors." Icon to read more

October Three Consulting

IRA Withdrawal Patterns in Times of Crisis (PDF)

Infographic. "The likelihood of an IRA withdrawal among retired households went down during the 2008 market downturn. In contrast, the share of not-yet-retired households taking withdrawals from their IRA increased in the same period." Icon to read more

Employee Benefit Research Institute [EBRI]

Social Security: Minimum Benefits (PDF)

31 pages. "Some recent proposals would redesign the minimum benefit.... However, some have suggested [allowing] the minimum benefit to phase out, arguing that the provision does not accurately target the working poor ... Increases in Social Security benefits targeted at lifetime low earners could be implemented in various ways. " [Report R43615, updated Sep. 10, 2020] Icon to read more

Congressional Research Service [CRS]

[Opinion]

The DOL Is Tearing Down a Landmark of Investor Protection

"Corporate governance and shareholder rights have seldom witnessed an assault on investor protection like the current federal government's onslaught. Whether weakened rules on broker accountability, rules designed to eliminate shareholder proposals, or those taking direct aim at neutering proxy voting, the feds' decisions are to the great detriment of Mr. and Mrs. 401(k)." Icon to read more

Kurt N. Schacht, in Barron's

[Opinion]

Retirement Plans Need to Keep Their Promises. We Make Sure They Do.

"We are committed to working for America's workers every day. By insisting that fiduciaries comply with ERISA, [EBSA] has achieved big results -- recovering more than $2.5 billion in direct payments to plans and workers last year. That amounts to more than $30,500 per investigator per day." Icon to read more

Jeanne Klinefelter Wilson, Acting Assistant Secretary for EBSA, in Barron's

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Upcoming Deadline iconCertain Deferred Compensation Plans Must Be Amended by December 31, 2020

"[T]he proposed [IRS] regulations provide that if a plan requires the employer to delay payment until it is deductible under Section 162(m), the plan may be amended to eliminate this requirement without the amendment resulting in an impermissible acceleration of payment under Section 409A. However, such an amendment must be made no later than December 31, 2020[.]" Icon to read more

Skadden

Selected Discussions
on the BenefitsLink Message Boards

► 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.

Terminated PBGC-Covered Cash Balance Plan -- Unresponsive Participants

"A PBGC-covered cash balance plan terminated. Two participants who had terminated employment years ago, have not responded to the distribution election forms. Can these funds be transferred to PBGC under the Missing Person Program? I don't think the participants technically qualify as 'missing', but they are both unresponsive." Icon to read more

BenefitsLink Message Boards

VCP Filing for Incorrect Match

"A match formula was not applied correctly and all participants were short on receiving their match for the 2017 plan year. It's now 2020 so we are past the 2-year window and we are considering the errors to be significant. Is it correct that the employer should deposit the missing contributions plus an earnings amount as soon as possible or should the VCP be filed and wait to hear from the IRS before taking any corrective action?" Icon to read more

BenefitsLink Message Boards

Overfunded Defined Benefit Plan -- Merge with Unrelated Company Having an Underfunded Plan?

"Does anyone have the name of a company that could help facilitate the merger of an overfunded sole proprietor plan with an unrelated company that has an underfunded plan? Thanks for any suggestions. We cannot increase benefits for this sole prop and he has no employees that can be added to the Plan. He really wants to avoid the huge tax liability with a reversion." Icon to read more

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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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