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Alternatives for Comparing Retirement Program Effectiveness
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ERISA: A Busy 2020 for the Department of Labor
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Spooky Documents - Defined Contribution Plan Restatements
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[Guidance Overview]

PBGC to Allow Contributions Made by January 1, 2021 to Count for 2020 PBGC Variable-Rate Premium

"PBGC announced that it intends ... to allow DB sponsors to make contributions through January 1, 2021, that may be counted as plan assets for purposes of the 2020 variable-rate premium calculation. With respect to contributions made after October 15, 2020, this will generally require an amended premium filing and a refund of any premium overpayment.... [IRS Notice 2020-61] generally requires an amendment to the Form 5500 for post-filing contributions that are counted as contributions for that plan year." Icon to read more

October Three Consulting

[Guidance Overview]

DOL's Proposed Rule Solidifies Shareholder Rights, Including Proxy Voting

"The DOL issued this proposed rule in part to correct a 'persistent misunderstanding' that ERISA fiduciaries must vote on all proxies presented to them. There have also been substantial changes in how plan administrators invest their plan assets and in how the investment industry operates as a whole. The proposed rule is intended to align the Investment Duties regulation with these changes and with recent SEC guidance on the proxy voting process." Icon to read more


[Guidance Overview]

Best Interest Standard of Care for Advisors, Part 32

"[T]he consideration of costs and other relevant factors should be done in a manner that is in the investor's best interest and without putting the interests of the broker-dealer (and the financial professional) ahead of the interests of the retail customer. In some cases, though, a greater emphasis on costs could be warranted. [Prior articles] gave examples of three scenarios where costs would likely be weighed heavily in making a recommendation. This article gives additional examples." Icon to read more

Eighth Circuit Dismisses Two Stock Drop Cases Based on Nonpublic Information

"In both cases, the Eighth Circuit concluded that the participants' proposed alternatives -- which required public disclosure of the nonpublic information -- did not meet the Dudenhoeffer standard for imprudence claims. They also rejected the disloyalty claims because they involved essentially the same actions and would, if allowed, 'circumvent' the Dudenhoeffer pleading standard." [Allen v. Wells Fargo & Co., No. 18-2781 (8th Cir. Jul. 27, 2020); Dormani v. Target Corp., No. 18-2543 (8th Cir. Jul. 28, 2020)] Icon to read more

Thomson Reuters / EBIA

Cornell Crafts Cash Settlement with Schlichter

"The suit -- one of the first of the genre filed four years ago -- was filed on behalf of some 28,000 current and former plan participants in Cornell's 403(b) plan, a plan that, as of December 2014 had $1.9 billion in assets. The one remaining claim -- and the one item that was addressed in the settlement -- was the issue of the plan's utilization of retail class mutual funds when less expensive, institutional class shares were available." (Cunningham v. Cornell Univ., No. 16-6525 [S.D.N.Y. motion for settlement approval filed Sep. 21, 2020) Icon to read more

National Tax-Deferred Savings Association [NTSA]

Investment Policy Statement Must Stop Short of Promises

"An Investment Policy statement can do more harm than good if it moves from policy to guaranteeing results. The policy can become more of a liability than a benefit if it steps over the line on trying to do too much. Should you even have an Investment Policy Statement (IPS) for your retirement plan? Yes. Should you throw everything in and include the proverbial kitchen sink? Absolutely not." Icon to read more


Making Sense of ESG Investing

"There will be more to come from the DOL on ESG investing in retirement plans. However, the increasing prominence of ESG in investment decisions has become significant across the industry. On the supply-side, an increasing number of portfolio managers are considering ESG factors in their portfolios. On the demand-side, 85% of individual investors expressed interest in sustainable investing in 2019, up 10 percentage points from 2017. ESG interest is even greater for the Millennial Generation[.]" Icon to read more

Cammack Retirement Group

No Silver Bullet to Eliminate Potential Snags When Offering Retirement Income Options

"[W]hile early indications suggest that a handful of interesting new guaranteed income-oriented products are in the offing, ... adding a new and potentially complicated product or service to a plan investment lineup may not be the solution to participants' retirement income needs.... Without communication and education targeted at the right participant segments, adoption of new features can be destined for a lackluster future. Plan sponsors need to be prepared to communicate clearly and actively with participants about retirement income solutions if they want adoption." Icon to read more


Pre-Approved ESOP Plan Documents Make Your Life Easier

"Historically, ESOPs were custom written documents produced by lawyers, which had to be submitted to the [IRS] for approval. These documents could be costly to amend and maintain. With the arrival this summer of IRS pre-approved 'checklist driven' ESOP documents (similar to 401(k) plans), it is no longer necessary for individual employers to submit these plans to the IRS for approval. As an added bit of flexibility, the due date to decide whether to adopt an ESOP is extended, giving more flexibility for tax deductions." Icon to read more

Employee Benefits Law Group

Helping Those Who Can't Afford to Save for Retirement

"With just these five action steps, I was able to save a total of $500/month. If I were to save just half of that toward retirement, and other goals, and I earn 3% annually, I'll have over $15,000 in just five years, over $34,000 in 10 years, and nearly $143,000 in 30 years! Not bad for some slight changes that had no negative impact on my lifestyle." Icon to read more

Cammack Retirement Group

Exceptional Usefulness and Quality iconGAO Report: Retirement Security -- Older Women Report Facing a Financially Uncertain Future

"In all 14 focus groups GAO held with older women, women described some level of anxiety about financial security in retirement.... Women in all 14 focus groups said their lack of personal finance education negatively affected their ability to plan for retirement. Many shared ideas about personal finance education including the view that it should be incorporated into school curriculum starting in kindergarten and continuing through college, and should be available through all phases of life." [GAO-20-718T, Sep. 24, 2020] Icon to read more

U.S. Government Accountability Office [GAO]

Benefits in General

[Guidance Overview]

DOL Publishes Proposed 'Independent Contractor' Rule

"The rule would give businesses additional clarity in using economic reality factors when determining whether a worker is an employee or independent contractor. Many state laws follow different standards, and the tests used by other federal agencies, such as the [IRS], and under other federal laws are different as well. So businesses should be aware of the law in the jurisdictions where they operate and be sure to analyze these issues under all applicable laws." Icon to read more

Ballard Spahr LLP

[Guidance Overview]

DOL's Proposed Rule Provides Framework for Employers to Classify Workers as Independent Contractors

"The DOL's newly proposed regulations are intended to provide clarity to employers by adopting a simplified model framework for determining independent contractor status under the 'economic realities' test. The economic realities test, which often has been used by courts deciding worker classification issues, generally considers whether a person performing services for a potential employer as an independent contractor truly operates his or her own independent business that is not economically dependent on the employer." Icon to read more

Duane Morris LLP

Employee Benefits in the United States, March 2020

"Private industry workers: ... Medical care was available to 27 percent of workers in the lowest 10th percent wage category and 94 percent of workers in the highest 10th percent wage category had access to this benefit. Sixty-seven percent of workers in an establishment with less than 100 employees had access to paid sick leave and 88 percent of workers at establishments with 500 or more employees had access to paid sick leave.... State and local government workers: Seventy-six percent of workers participated in defined benefit plans.... Eighteen percent of workers participated in defined contribution plans and employee contributions were required for 69 percent of these workers.... Medical care and retirement benefits were not available to 1 percent of primary, secondary, and special education school teachers and 99 percent of these workers had access to both benefits." Icon to read more

U.S. Bureau of Labor Statistics [BLS]

Employers' Sense of Responsibility for Employees' Financial Wellness Increased Significantly Over the Last Decade (PDF)

28 pages. "62% of employers feel extreme responsibility for their employees' financial wellness, up from 13% in 2013. 83% of employers believe financial wellness tools lead to greater productivity.... 67% of eligible employees contribute to their Health Savings Account (HSA). 47% of employers are promoting workplace wellness with established diversity and inclusion programs." Icon to read more

Bank of America

Selected Discussions
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401(k) Plan Is a 'Keogh' Plan for SEC Rule 144A Purposes?

"Is a sole-proprietorship or partnership who wants to establish a 401(k) considered a Keogh plan? My understanding is there is no longer a distinction as they are now qualified plans that include a self-employed individual. If that is the case, I would like to confirm that SEC rule 144A does not apply then to restrictions regarding the use of CIT's for these plans." Icon to read more

BenefitsLink Message Boards

Written Directions for a New Comparability Allocation

"Some years back, before each participant could be in his or her own group for new comparability contribution allocations, groups were specified in the plan document. For example 'partners, family members of partners, supervisors, clerical staff, the office manager, and Top Heavy minimum participants.' Each year, we (where I worked at that time) did a document something like a resolution of the board of directors approving a specific dollar amount of contributions per group for the year in question. With the advent of each person being in his or her own group, those resolutions of the board of directors went by the wayside. My current employer was wondering if that's really okay and wants to know what the rest of you are doing." Icon to read more

BenefitsLink Message Boards

Non-Profit Sponsors a 401(k); Can It Be Replaced with a 403(b) Program That's Not Subject to ERISA?

"Paychex set up a non profit 401k plan. No employer money, no loans etc. Can they terminate the 401k and start a Non-ERISA 403b?" 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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