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[Guidance Overview]

DOL's Proposed New Proxy Voting Rule Could Be a Game Changer for ERISA Fiduciaries

"The proposed regulation ... takes the position that ERISA actually requires fiduciaries NOT to vote proxies unless the fiduciary prudently determines that the matter being voted upon would have an economic impact on the plan ... Given that institutional employee benefits plans tend to be well diversified, it may prove difficult to meet this threshold." Icon to read more

Morgan Lewis

[Guidance Overview]

PBGC Modernizes De Minimis Distribution Rates

"This change is part of the PBGC's ongoing modernization initiative.... [T]he Final Rule also discontinues the PBGC's monthly calculation and publication of interest rate assumptions.... Treasury and the IRS confirmed that there is no violation of the anti-cutback rules just because the Final Rule results in a change in the method of determining the interest rate used to determine lump-sum distributions, even if that results in lower lump-sum amounts." Icon to read more

Morgan Lewis

ERISA Excessive Fee Self-Dealing Suit Targets Pentegra MEP

"Comparing Pentegra's plan to another large MEP, the complaint notes that the other plan uses an outside recordkeeper and paid an average of $80 per participant. 'Pentegra's 2018 average per participant fee of approximately $388 for similar 'contract administrator' services was 485% higher,' the complaint states." [Khan v. Bd. of Dir. of Pentegra Defined Contrib. Plan, No. 20-7561 (S.D.N.Y. complaint filed Sep. 15, 2020)] Icon to read more


Evaluation Scorecard for Retirement Income Products

"While ... a large body of knowledge ... has been developed regarding selecting and monitoring traditional investment options within participant directed retirement plans, the new lifetime income options don't easily fit within existing frameworks. The purpose of this paper is to propose a set of metrics that plan sponsors and their consultants can use in assessing the suitability of a retirement income strategy as an investment option within a participant directed retirement plan." Icon to read more

Newport Group

Costs of Annuity Buyouts Could Be Less Than Accounting Liability

"As of June 30, 2020, ... a hypothetical retiree buy-out transaction may cost 97.7% of the plan's accounting obligations. Additionally, the Index estimates the long-term costs of maintaining these pension liabilities to be 105.2%, which reflects costs ... such as PBGC premiums, investment management and administration fees, and the risk associated with fixed income defaults and downgrades. This demonstrates potential economic savings from a buyout of 7.5% compared to holding liabilities for the long term." Icon to read more


Exceptional Usefulness and Quality iconPBGC Bids a Not-So-Fond Farewell to Old Lump Sum Rates

"The final rule adopts the Internal Revenue Code Section 417(e) basis for lump sums payable by PBGC. For private-sector [DB] plans using the old tiered rates for lump sums and other purposes, the rule provides an alternative table that should closely align with the former methodology. The new rule is effective for valuation dates on or after Jan. 1, 2021." Icon to read more


The Role of Active Management in Defined Contribution Plans

"A number of factors, including lower fees and the outperformance of passive strategies against many of their active counterparts, have driven the rise in passive strategies in DC plans. However, there continue to be a number of misconceptions that can steer fiduciaries away from active management.... [T]here is an important role for active management in DC plans in supporting adequate retirement outcomes for participants." Icon to read more

MFS Institutional Advisors, Inc.

Social Security Reform: Keeping It Solvent and Provide a More Equitable System

"[This paper's] primary objective is to highlight the more salient aspects of the issues surrounding Social Security with respect to its primary goal of attaining solvency. A secondary objective is to determine if Social Security can be made more equitable.... Two proposals ... [highlight] aspects of how it may be possible to secure long-term solvency for the program, as well as possibly providing a more equitable solution to those who participate in the labor market." Icon to read more

Steven Tanimura, via SSRN

Benefits in General

Portable Benefit Solutions: Financial, Health & Retirement (PDF)

16 pages. "One of the challenges in building an entrepreneurial ecosystem is that the new jobs created rarely offer employee benefits.... [This] project aimed to assess the feasibility of an online platform to serve as a virtual human relations department for entrepreneurs, self-employed workers, independent contractors, freelancers and other workers without access to benefit resources.... The use of online, fintech platforms hold great promise for bridging this gap and connecting independent workers with information, services and opportunities to build a stronger financial future." Icon to read more

Women's Institute for a Secure Retirement [WISER]

Selected Discussions
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Conditional Profit Sharing Allocations to Encourage More 401(k) Participation?

"Company sponsors a safe harbor 401(k) plan. Plan uses the basic safe harbor formula. Plan also allows for profit sharing, each participant being their own allocation class (with last day requirement). The Plan Sponsor would like to encourage more participation from lower paid participants. They are thinking of making an additional profit sharing contribution to non-HCEs who hit certain deferral limits during the year. Thoughts?" Icon to read more

BenefitsLink Message Boards

Stale Checks Being Redeposited Into Plans -- How to Report on 5500?

"We're seeing more stale dated checks being re-deposited by recordkeepers into plans--typically to an unallocated cash account or the forfeiture account. How are others reporting these on the 5500 filings? Obviously the checks have been shown as distributions in prior years." Icon to read more

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Press Releases

ESOP Companies: Take the Executive Compensation Survey!
National Center for Employee Ownership [NCEO]

Most Popular Items in the Previous Issue

Are Cybercriminals Stalking Your 401(k) Plan?
Benefits Law Group of Chicago

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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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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