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September 25, 2020 logo logo
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[Guidance Overview]

Exceptional Usefulness and Quality and Usefulness iconIRS Issue Snapshot: 457(b) Plans -- Correction of Excess Deferrals

"Issue Indicators or Audit Tips: [1] Review W-2, Box 12 to determine if deferrals exceed the IRC Section 457(b) dollar limit in effect for the year. Verify if these excess amounts were due to allowable catch-up contributions.... [2] Request documentation to verify timely distribution of excess deferrals. [3] Review Forms W-2 and 1099-R for proper reporting of distributions." Icon to read more

Internal Revenue Service [IRS]

[Guidance Overview]

Pooled Employer Plans: Where Do We Stand? (PDF)

"Except for proposed rules regarding the registration requirement, the IRS and DOL have not provided guidance on the PEP and PPP rules.... The registration rules are quite extensive (79 pages) and would require significant disclosures by the PPP.... Although the IRS has not officially announced that pre-approved plans will be allowed to include PEP provisions, ASC expects this will be permitted ... Our understanding is that the IRS is working on this model plan language, but it has not provided an expected issuance date." Icon to read more


[Guidance Overview]

DOL Expands Electronic Delivery Rules for Retirement Plans

"A plan administrator must determine whether it will maintain a continuously accessible website on which it will post the disclosures or whether it will provide the disclosures via email. There are similar, but slightly different requirements for each manner of compliance." Icon to read more


Duke Energy Faces Excessive Fee Lawsuit

"The complaint suggests the plan's recordkeeping expenses demonstrate that defendants failed to engage in prudent monitoring and engage in prudent practices to keep those costs at competitive levels." [Johnson v. Duke Energy Corp., No. 20-528 (W.D.N.C. complaint filed Sep. 23, 2020)] Icon to read more

PLANSPONSOR; free registration may be required

Avoiding ERISA Excessive Fee Lawsuits Isn't Hard

"[M]any of these lawsuits can be explained by the fact that the case law is maturing (providing a blue print for action) and that participants are more knowledgeable and attuned to fees ... [T]here are more tools and better data to reveal plan fees. But often, the reason for these lawsuits is simple neglect.... [A] few simple actions can improve fiduciary processes and reduce litigation risk[.]" Icon to read more


Combined 401(k) Plan and IRA Balances by Age and Time (PDF)

"Owning both a 401(k) plan and an individual retirement account (IRA) leads to larger balances, but missed opportunities to contribute and leakage reduce those balances." Icon to read more

Employee Benefit Research Institute [EBRI]

How Saving in Your 20s Can Lead to Better Retirement Math

"When you start saving $500 a month at age 22, you're contributing an extra $120,000 in principal compared with starting at age 42. But there's a huge difference between that extra $120,000 in contributions and the extra $1.86 million you end up with as a result of investing that principal for an extra 20 years and giving it an extra 20 years to compound." Icon to read more


Measuring UVBs for Variable-Rate Premiums: The Alternative vs. Standard Method Election

"Defined benefit plan sponsors that [1] currently [use] the standard (spot-rate) method to determine unfunded vested benefits (UVBs) for purposes of calculating [PBGC] variable-rate premiums, and who [2] have the ability to elect to switch to the alternative (24-month average) method, may have an opportunity to reduce (in some cases significantly) 2020 variable-rate premiums by doing so. This election generally must be made (for a calendar plan) by October 15, 2020. The decision with respect to this election is made particularly acute by the continuing decline in interest rates over the period 2019-2020." Icon to read more

October Three Consulting

Upcoming Deadline iconOregon Cannabis Companies Are Fast Approaching Final Deadline to Enroll Employees in OregonSaves

"Cannabis employers in the state of Oregon will be required to offer their employees a retirement savings program to save in, regardless of how many employees they have -- whether it be one or 100." Icon to read more

FisherBroyles LLP, via Lexology; free registration required


DOL Lacks a Convincing Legal Basis for Attempts to Discourage ESG/Sustainable Investing

"The [DOL] has proposed two sets of amendments to the ERISA fiduciary regulations that would discourage plans from making ESG/sustainable investment decisions (including selecting, keeping, or exercising ownership rights). These changes would affect not only ERISA plans, but would appear to have similar effects on all trusteed tax-exempt savings and retirement plans, such as those maintained for state and local employees. If adopted these proposals would dramatically reverse long-standing policies without any convincing legal basis. Moreover, these proposals may also discourage ESG/sustainable investing by state and local savings and retirement plans." Icon to read more

Law Offices of Albert Feuer, via SSRN

Benefits in General

ERISA Advisory Council to Meet October 22

"[T]he 202nd open meeting of the [ERISA Advisory Council] will be held via a teleconference on Thursday, October 22, and Friday, October 23, 2020 ... The purpose of the open meeting is for Advisory Council members to hear testimony from invited witnesses and to receive an update from [EBSA]. The Advisory Council will study the following topics: [1] Examining Top Hat Plan Participation and Reporting, and [2] Considerations for Recognizing and Addressing Participants with Diminished Capacity." Icon to read more

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

Employer May Be Held Liable for Service Provider's Error

"The Second Circuit Court of Appeals ... has held that a plaintiff properly pled her breach of fiduciary duty claim for equitable relief against an employer in connection with a third party administrator's clerical error in calculating life insurance benefits payable to her under the employer's ERISA welfare plan." [Sullivan-Mestecky v. Verizon Communications Inc., No. 18-1591 (2d Cir. Jun. 1, 2020)] Icon to read more

The Wagner Law Group

Selected Discussions
on the BenefitsLink Message Boards

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May a Plan's Administrator Override the Section 3(16) Service Provider?

"With those recordkeepers and third-party administrators that offer a Section 3(16) service for the service provider to decide claims for a distribution, including a hardship distribution: [1] Does an employer/administrator want a power to override the service provider's decision? [2] Does a Section 3(16) service provider want the employer/administrator to have such a power (even if the employer/administrator doesn't want the power)? BenefitsLink mavens, what's your experience about what's happening?" Icon to read more

BenefitsLink Message Boards

Doctors with Separate Plans; Staff in Another Plan

"Doctors' group has one main 401(k) plan for staff and each doctor has separate plan (due to historically having separate plans even though plan provisions and investment opportunities presently mimic the main plan). Eligibility requires 1 year of service. Can a doctor start their own plan in the year of hire and make contributions to that plan even though they would not have been eligible to make contributions in the main plan?" Icon to read more

BenefitsLink Message Boards

How Do You Solve a Problem Like Maria? Or UBIT Shares in an ESOP?

"I am curious to hear the group's thoughts on what to do about UBIT shares (that is, shares in an S-corp that were long ago transferred from an ESOP to a non-ESOP portion of the plan in order to avoid a failing 409(p))." Icon to read more

BenefitsLink Message Boards

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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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