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[Guidance Overview]

Upcoming Deadline iconThe Three-Month Rule and Retroactive Safe Harbor Elections: You Need to Adopt the Plan by October 1!

"Here we are, at the end of September, deluged with questions about the implications of the SECURE Act change that permits retroactive amendments to institute a safe harbor 401(k) plan.... [1] Can an employer wait until November 30 to adopt a new calendar year 401(k) plan and add a 3% safe harbor nonelective contribution? [2] How about waiting until the due date of the 2020 return to adopt the plan, and adding a 4% safe harbor nonelective contribution? [3] Could we adopt a plan in November, make it retroactively effective to January 1 (or October 1), and allow people to start deferring upon adoption? ... The answer to all three questions is NO." Icon to read

Ferenczy Benefits Law Center

[Guidance Overview]

Exceptional Usefulness and Quality iconIRS Issue Snapshot: 457(b) Plan of Tax Exempt Entity -- Tax Consequences of Noncompliance

"Issue Indicators or Audit Tips: [1] [T]he Service generally will accept on a provisional basis ... submissions relating to 457(b) plans outside of EPCRS but using standards that are similar to those that apply with respect to Voluntary Correction Program filings under sections 10 and 11 of the revenue procedure.... [2] The plan document may state when amounts deferred become vested. Many 457(b) plans are silent on vesting because deferrals are fully vested when made. [3] A tax exempt employer that maintains a 457 plan files a W-2 rather than a Form 1099-R." Icon to read more

Internal Revenue Service [IRS]

[Guidance Overview]

IRS Issues Guidance on Pension Distributions at Age 59-1/2

"Notice 2020-68 makes it clear that: a plan is not required to provide in-service distributions, a plan that currently provides in-service distributions need not reduce the eligible age from 62 to 59½, and the reduction to age 59½ for in-service distributions does not alter the rules regarding normal retirement age contained in section 1.401(a)-1(b)(2) of the Treasury Regulations, which currently provide that age 62 is presumed to be a valid normal retirement age." Icon to read more


[Guidance Overview]

DOL Expands Electronic Delivery Rules for Retirement Plans

"Plan administrators will need to put procedures in place to administer and comply with opt-out requests, collect electronic addresses upon employment terminations, and follow-up on undeliverable notices. They will also need to carefully comply with the specific requirements associated with their selected method of electronic delivery." Icon to read more


ERISA Suit Against Home Depot Can Proceed, Judge Rules

"Earlier defendants included Alight Financial Advisors and what is now Edelman Financial Engines.... [The judge] in September 2019 dismissed charges against these companies.... [T]he judge let stand a complaint by the plaintiffs that Home Depot fiduciaries breached their duty of prudence because the fiduciaries 'mismanaged' investment options by using a 'faulty investment process,' according to court documents." [Pizarro v. The Home Depot, Inc., No. 18-1566 (N.D. Ga. Sep. 21, 2020)] Icon to read more

Pensions & Investments

Tips on Selecting a Retirement Plan Adviser When You Can't Meet Them in Person

"If possible, start with a manageable, pre-screened group of candidates.... [D]ecide in advance whether or not you are looking for an adviser who has experience acting as a '3(38)' adviser to governmental plans.... [T]he most important quality beyond knowledge, experience, and reputation is 'relatability' -- the quality of being easy to understand and to be on the same page with the client." Icon to read more

Best Best & Krieger LLP

Growing Your Retirement Money Using 401(k) Dollar-Cost Averaging

"At least four major functions inside the 401(k) plan are important to understand: tax-advantaged saving, systematic investing through payroll deduction, compounding of the gains from investing, and using the funds, which are often called distributions or withdrawals. This article will cover systematic investing, which is formally known as dollar-cost averaging. You could also call it saving the same amount every paycheck." Icon to read more

James Brewer in Forbes

Is There a Lame Duck Opening for Retirement Relief?

"[B]ecause the funding legislation runs only through Dec. 11 ... Congress will have to come back after the elections to either enact another short-term fix or a larger appropriations bill to fund the government for the remainder of fiscal year 2021 (which begins Oct. 1). That opens a door for action on additional legislation could happen as well.... There are a number of pending retirement-based legislative proposals, including some that have a bit of urgency associated with them." Icon to read more

American Retirement Association [ARA]


Multiple Factors in Defined Benefit Plan 'Pandemic' (PDF)

"Beginning in the late 1980s and early 1990s, employers' rights to select single employer DB Plan assumptions were gradually confiscated through a series of Pension Acts in the name of employee protections.... This, and the complexity of the PPA '06 requirements discourages new DB Plan formations.... Current monetary policies and economic conditions do not imply stable investment return rates that will lower unfunded pension liabilities in the absence of other changes." Icon to read more

H. C. Foster & Company


Joint Trade Organization Comment Letter to DOL Requesting Extension of Comment Period on Proposed Proxy Voting Regs (PDF)

"The American Bankers Association [ABA], the American Council of Life Insurers [ACLI], the Defined Contribution Institutional Investment Association [DCIIA], the Insured Retirement Institute [IRI], the Investment Adviser Association [IAA], the Investment Company Institute [ICI], the Securities Industry and Financial Markets Association [SIFMA], and the SPARK Institute ... respectfully request a 30-day extension of the deadline for public comments on the Proposal, currently scheduled to end on October 5, 2020. The Department acknowledges that the Proposal represents a material departure from the current rules. Thus, the Proposal warrants a comprehensive review in order to properly consider its impact on plan fiduciaries, plan investments and current practices." Icon to read more

The SPARK Institute and seven other trade associations

Benefits in General

[Guidance Overview]

DOL Proposes New Rule to Streamline Independent Contractor Analysis

"The new proposed regulation identifies two 'core factors' that are the 'most probative' and should be 'afforded greater weight' in the analysis: 'the nature and degree of the individual's control over the work'; and the worker's 'opportunity for profit and loss.' Three other factors are identified that the proposed rule affords lesser weight." Icon to read more

Jackson Lewis P.C.

[Guidance Overview]

DOL Publishes Proposed Rule on Independent Contractor Classification

"While the Proposed Rule retains the longstanding 'economic realities' test, it aims to streamline the factors and clarifies that the ultimate inquiry when evaluating independent contractor status is whether a worker is in business for herself or himself or is economically dependent on the potential employer." Icon to read more

Morgan Lewis

Selected Discussions
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Plan Termination Scenario -- Is This Particular Participant 100% Vested?

"Participant left employment July 2019 and is/was 60% vested. Employer terminating the plan on November 1, 2020. If this person takes a distribution next week, will they have to be 100% vested? From the IRS website: All affected participants become fully vested in their account balances on the date of the full or partial plan termination, regardless of the plan’s vesting schedule. (Emphasis added.) So, the date of the Plan Termination is after the date he is taking the distribution." Icon to read more

BenefitsLink Message Boards

Book ADP Refund as Liability?

"Do you book ADP refunds as a liability on the 5500? I have an auditor who insists on having the ADP refunds for 2019 booked as a payable on the 5500. I've never done this. What do you guys do?" Icon to read more

BenefitsLink Message Boards

Employee/Owner Terminates in Mid-2020; Still an HCE at End of First Plan Year?

"Looking into designing a new CB plan for an existing 401k plan and trying to determine if Joe is an HCE or not for 2020. Joe was 50% owner in 2019 and received $75k in salary. Joe terminated in 2020 (not informed about the hours yet but let's say over 500) and sold his share to the other owner on 5/15/2020. The new plan will be effective 1/1/2020 but will be adopted in November 2020. The val date will EOY. Because Joe was an HCE as of 1/1/2020, is he an HCE for all years by ownership? Anything I'm not thinking of? Maybe the top 20% rule (I'm not sure how it would apply here and effectively when)?" Icon to read more

BenefitsLink Message Boards

Late Deposits Reported on the Schedule H

"Large plan with late deposits in 2017. Corrected in 2018 with applicable earnings deposited in 2018 and 5330 submitted in 2018. All done. According to the following 5500 instructions, these late deposits go on the 2019 5500 for the last time, correct?" 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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