Retirement Plans Newsletter

September 15, 2020

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View job as Distribution Specialist for Carpenter Morse Group
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Carpenter Morse Group
Longwood FL

View job as Pension Administrator for KB Pension Services Pension Administrator

KB Pension Services
Telecommute / Bradenton FL

View job as Retirement Plan Administrator for Retirement Solutions Specialists Retirement Plan Administrator

Retirement Solutions Specialists
Jacksonville FL

View job as Retirement Plan Sales Consultant for Primark Benefits Retirement Plan Sales Consultant

Primark Benefits
Burlingame CA

View job as Senior Pension Actuarial Consultant for Nyhart, part of FuturePlan by Ascensus Senior Pension Actuarial Consultant

Nyhart, part of FuturePlan by Ascensus
Chicago IL

View job as Management and Program Assistant (Pathways Intern) for Pension Benefit Guaranty Corporation [PBGC] Management and Program Assistant (Pathways Intern)

Pension Benefit Guaranty Corporation [PBGC]
Telecommute / Washington DC

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[Official Guidance]

Text of Federal Thrift Investment Board Final Regs: New Automatic Enrollment Percentage Is 5%

"[FRTIB] is amending its regulations to increase the automatic enrollment percentage from 3 percent to 5 percent of basic pay for all participants who are automatically enrolled in the Thrift Savings Plan (TSP) on or after October 1, 2020 and for Blended Retirement Service (BRS) participants who are automatically re-enrolled in the TSP on or after January 1, 2021. In addition, the FRTIB is making a non-substantive clarification regarding installment payments calculated based on life expectancy." Icon to read more

Federal Retirement Thrift Investment Board [FRTIB)]

[Sponsored]

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Sponsored by Burrmont Compliance Labs LLC


PBGC Projections Report: FY 2019 (PDF)

49 pages. "This report provides 10-year projections, ending with FY 2029, of the financial status of both programs under a range of future financial scenarios. While last year's report projected PBGC's Multiemployer Program would become insolvent during FY 2025, this year's projections show a very high likelihood of insolvency during FY 2026 and that insolvency is a near certainty by the end of FY 2027.... Results for this year's projections show PBGC's Single-Employer Program is likely to remain out of deficit over the next decade." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]

Participant Savings Strategies That Are More Effective Than Projected Income Disclosure

"[1] Automatic enrollment is the one most commonly recognized 'go-to' strategy when it comes to encouraging savings, especially among younger workers.... [2] 401k plans were designed specifically to encourage retirement savings by offering financial incentives to save.... [3] Participants won't know what they're capable of if they aren't educated.... [4] The retirement savings account should be meant to motivate a savings mentality and project out where an individual can be, not where they currently are ... All these strategies can be employed today and have proven themselves effective. It's unclear that disclosing projected retirement income will provide the kind of incentive that will work." Icon to read more

Fiduciary News; free registration required

401(k) Fraud: How to Protect Your Employees

"Recently, we have seen a number of instances of cybercriminals committing 401k fraud by deceiving providers into authorizing fraudulent distributions. Many of these thefts have resulted in litigation with the intent to determine who will reimburse the plan for the incorrect payouts. Outlined [in this article] are two examples of 401k fraud litigation, followed by steps plan sponsors and employees can take to protect against 401k fraud." Icon to read more

Lawton Retirement Plan Consultants

Can a Former Employee Roll a Coronavirus-Related Distribution Back Into Our Plan?

"The short answer: no, your former employee's only options are to rollover her CRD into an IRA or a new employer's plan (if permitted by that plan).... [C]ompany-sponsored plans ... can only accept rollovers from participants or, in some cases ... new hires who haven't yet met the plan's eligibility requirements ... A former employee who has taken a full distribution is neither a participant nor an eligible employee ... What about a situation in which the former employee still has an account balance in your plan? That is a bit trickier, as there isn't much in the way of clear guidance." Icon to read more

DWC

401(k) Savers Want Help Understanding How Much They'll Need for Retirement

"The area where 401(k) participants say they could most use help is understanding how much they'll need to save for retirement ... Over two thirds (68%) of participants gave an estimate of how long their retirement savings will last, with the average being 24 years. The remaining 32% say they do not know how many years their retirement savings might last ... [P]articipants expect 44% of [their retirement income] to come from a 401(k). The remaining 56% is expected to come from a range of different sources." [Also available: Summary of survey results (14 presentation slides)] Icon to read more

Charles Schwab

Laid Off Employees' 401(k) Accounts Can Mean Higher Risk and Cost

"The price tag for an annual audit can easily total $10,000 or more. This particularly significant administrative cost could disappear if you reduce the number of your plan's orphan accounts.... Another consideration is fiduciary liability. Your duty to safeguard the interests of plan participants who are no longer on your payroll -- whether they are former employees you have laid off, retirees or ex-workers who left to work for a competitor -- is the same as for your active employee participants." Icon to read more

ORBA

[Opinion]

There's No Easy Fix to the DOL Fiduciary Rule

"[T]he DOL has released a proposal that is unworkable for major segments of the insurance industry -- especially the independent distribution channel. The department's proposal would turn most insurance agents into fiduciaries, extend ERISA to 401(k) rollovers, and create a class prohibited transaction exemption that is designed for the securities industry but unworkable for independent agents. It is essentially the Obama Fiduciary Rule all over again." Icon to read more

ThinkAdvisor

Benefits in General

Overpaying and Undersaving: Correlated Mistakes in Retirement Saving and Health Insurance Choices

"Many employees pick a more expensive health plan option, even when, for all possible spending realizations, lower costs are more likely in the cheapest plan. People who make mistakes in health insurance choices are more likely to save too little for retirement and forgo employer-matching funds. Employees with lower salaries and longer tenure have higher rates of shared mistakes. Employees who are younger and have shorter tenure and higher salaries are less likely to make mistakes in either domain." Icon to read more

TIAA Institute

Selected Discussions
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Roth 5-Year Rule and Transfers Incident to Divorce

"Gray divorce (both over 59-1/2), Roth IRA has aged 5 years, Roth IRA balance is divided incident to divorce and spouse's 'new' Roth IRA is the transferee of the Roth distribution. Does the spouse's Roth IRA start the 5-year clock anew or does it benefit from the 5-year maturity of the source Roth IRA?" Icon to read more

BenefitsLink Message Boards

Why Would a Church Plan Elect to Be Subject to ERISA?

"Why would a church elect to have its plan subject to ERISA and thereby subject the plan to all sorts of requirements?" Icon to read more

BenefitsLink Message Boards

Mechanics of CARES Act Loans: So Many Cogs, Axles, Gears and Flywheels Turning

"Client wants $100,000 loan, per CARES Act. [1] If the participant chooses to defer payments and the first payment would normally be due in October, 2020, are payments deferred only until January, 2021, or do we defer all repayments til a year from October (i.e. October, 2021)? [2] Would the participant make double payments after the 12 months, until all of the deferred payments are paid, or would they just be tacked onto the end of the loan? [3] Do I prepare an amortization schedule as I would normally, starting in October, 2020, and re-amortize when they begin payments, or do I start the amortization schedule with the date they are to start payments? [4] I understand interest accrues while the repayments are deferred. Is this then added to principal before amortizing/re-amortizing the loan and spread over the entire 5 years?" Icon to read more

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Press Releases

OneDigital Acquires Resourceful HR
OneDigital Health and Benefits

Most Popular Items in the Previous Issue

401(k) Plan Concerns -- from the Auditor Perspective
Bradley Bartells, CPA, via LinkedIn

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@benefitslink.com

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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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