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Retirement Plans Newsletter September 15, 2020 |
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Newly Posted ERISA Fiduciary Standards: Identifying and Mitigating Risks
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Official Guidance]
"[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." Federal Retirement Thrift Investment Board [FRTIB)] |
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[Sponsored]
ERISApedia.com Announces 8th Edition of Who's the Employer (WTE) S. Derrin Watson JD, releases 8th Edition, WTE. Over 30% NEW material. Dozens of new examples. Full explanations of how employer and employee status impact testing. Improved organization-easy to find answers. sales@erisapedia.com or 612-605-2266
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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." Pension Benefit Guaranty Corporation [PBGC] |
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"[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." Fiduciary News; free registration required |
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"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." Lawton Retirement Plan Consultants |
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"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." DWC |
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"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)] Charles Schwab |
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"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." ORBA |
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[Opinion]
"[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." ThinkAdvisor |
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Benefits in General |
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"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." TIAA Institute |
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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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"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?" BenefitsLink Message Boards |
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"Why would a church elect to have its plan subject to ERISA and thereby subject the plan to all sorts of requirements?" BenefitsLink Message Boards |
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"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?" BenefitsLink Message Boards |
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Press Releases |
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SageView Welcomes Margarita Cross to Northern California Team
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DOL Continues Effort to Raise Awareness of Paid Sick Leave and Lawful Pay Requirements Amid Coronavirus Pandemic
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ABG – Expanding their footprint in the Great Plains/Midwest region of the country
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OneDigital Acquires Resourceful HR
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Most Popular Items in the Previous Issue |
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401(k) Plan Concerns -- from the Auditor Perspective
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BenefitsLink.com, Inc.
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Winter Park, Florida 32789
(407) 644-4146
Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
Article submission: Online form
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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