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September 17, 2020 logo logo
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[Official Guidance]

DOL Interim Final Rule on Pension Benefit Statements: Lifetime Income Illustrations Now Scheduled for Federal Register Publication

97 pages. "When applicable, the interim final regulation requires plan administrators of ERISA defined contribution plans to express a participant’s current account balance, both as a single life annuity and a qualified joint and survivor annuity income stream. These two income stream illustrations, which must be on the same pension benefit statement, will help participants better understand how the amount of money they have saved so far converts into an estimated monthly payment for the rest of their lives, and how this impacts their retirement planning. The regulation provides plan administrators with a set of assumptions to use in preparing the lifetime income illustrations, as well as model language that may be used for benefit statements by plan administrators who wish to obtain relief from liability for the illustrations. The interim final regulation also requests comments from interested parties on the requirements and methodologies of the regulation

"This interim final rule is effective on September 18, 2021, and shall apply to pension benefit statements furnished after such date....

"Written comments on the interim final rule must be received by [60 days after date of publication in the Federal Register, now scheduled for September 18, 2020]." Icon to read more

Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]


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[Guidance Overview]

IRS Provides Additional SECURE Act Guidance

"Notice 2020-68 [1] clarifies that employers may receive a credit for each year during a single three-year period, starting in the first year that an employer adds an EACA.... [2] clarifies that each eligible employer that participates in a multiple employer plan (MEP) may receive the tax credit.... [3] states that employers with qualified retirement plans and 403(b) plans that are not maintained by a public school will have until the last day of the first plan year beginning on or after January 1, 2022, to amend their plans for the SECURE Act and the Bipartisan American Miners Act." Icon to read more


[Guidance Overview]

Best Interest Standard of Care for Advisors, Part 31

"The SEC's approach requires that cost be considered as an important factor in the context of the retail customer's investment profile. The consideration of costs and other relevant factors indicated by that profile should be done in a manner that is in the investor's best interest. In some cases, though, a greater emphasis on costs would be warranted." Icon to read more

[Guidance Overview]

The Intersection of Coronavirus and Partial Qualified Plan Termination (PDF)

"[IRS] guidance indicates that participants will generally not be treated as having an employer-initiated severance from employment for purposes of calculating the 'turnover rate' if rehired by the end of calendar year 2020. However, the FAQ leaves a number of issues open and unresolved when it comes to determining whether the plan has experienced a partial termination." Icon to read more

Bodman PLC

COVID-19 Layoffs Can Cause Partial Retirement Plan Termination

"Employers may consider amending retirement plans to count a certain amount of furlough time due to COVID-19 as hours of service that count for plan vesting purposes. This likely will not cost much to the employer, can go a long way in fostering goodwill with employees, and will not result in lost vesting service for employees who return from furlough." Icon to read more

Frost Brown Todd LLC


Plan Advisor Checklist: Identifying the Best Retirement Plan Prospects

Retirement plan prospecting can be difficult. Successful advisors are targeted and focused on bringing new ideas to clients and prospects. Use this checklist to define your target audience, identify meaningful opportunities and communicate your value. Learn more

Sponsored by October Three

High Risk Issue iconExcessive Fees Settlement Results in Litigation Involving Employer's Excess Insurer

"In an insurance dispute arising from coverage of two ERISA settlements, the Ninth Circuit held that -- as a matter of first impression -- an excess insurer may not challenge the coverage decisions of underlying insurers, absent evidence of fraud or bad faith or a contractual provision reserving the right to challenge such decisions[.]" [AXIS Reinsurance Co. v. Northrop Grumman Corp., No. 19-55135 (9th Cir. Sep. 14, 2020)] Icon to read more

Thomson Reuters Practical Law

Are Cybercriminals Stalking Your 401(k) Plan?

"At least two pending federal cases deal with attacks on individual 401(k) plan accounts. The fact patterns are similar: a participant submits an electronic benefit withdrawal request to the employer or the plan's record keeper. The request is passed on to the plan's custodian for implementation.... Implementing an additional verification step could not only prevent cybercrime but also could establish a better defense based on the provider's claim of non-fiduciary status." Icon to read more

Benefits Law Group of Chicago

Why 'Six Is the New Three' When It Comes to Automatic Enrollment

"While this could backfire if more participants opt out of auto-enrollment because of the higher rate automatic deferral rate, according to John Hancock's State of the Participant 2020 report, the opposite is actually the case. 12% of employees opt out at 3%, but only 10.4% did so at 6%. Thus, it is possible that with an auto-deferral rate of 6%, more employees, rather than fewer, may contribute to the retirement plan, than they would at 3%." Icon to read more

Cammack Retirement Group

Employee Benefits in M&A Transactions: CARES Act Considerations

"The CARES Act [allows] employers to defer the required minimum contributions to defined benefit plans for 2020 until January 1, 2021.... If an M&A target has taken advantage of these CARES Act provisions, buyers should consider whether any warranties and representations should mandate that all taxes and requisite contributions to qualified plans have been paid since deferrals can stretch into 2022." Icon to read more

Hall Benefits Law

Benefits in General

[Official Guidance]

IRS Announces Tax Relief for Oregon Wildfires and Straight-Line Winds Victims

"Victims of Oregon wildfires and straight-line winds that began September 7 now have until January 15, 2021, to file various individual and business tax returns and make tax payments.... Individuals and households who reside or have a business in Clackamas, Douglas, Jackson, Klamath, Lane, Lincoln, Linn and Marion counties qualify for tax relief." Icon to read more

Internal Revenue Service [IRS]

Executive Compensation
and Nonqualified Plans

Discretionary Adjustments to Executive Compensation Call for Careful Disclosure

"In the wake of uncertainty about the coronavirus pandemic ... many compensation committees are evaluating how to follow through on incentive compensation for their executive teams.... When discretion is permitted, awards that seem excessive can be reduced, and meager awards can be increased. But investors will be wary of companies that exercise discretion -- especially when awards are increased -- so to mitigate ill-will and retain stakeholder trust, companies must prioritize careful disclosure." Icon to read more

Corporate Secretary

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Hardship Withdrawal -- Can I Apply Without My Employer Knowing the Reason?

"I'm in immediate need for hardship withdrawal, I can also go with a loan, but I am inclined towards withdrawal, because, for a loan, I would need to pay it immediately if my employer let me go for any reason. How does that process work? To whom do I send documentation? Would my employer be notified/examine my documentation, or are there protection laws such that I don't have to fully disclose the situation?" 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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