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Retirement Plans Newsletter September 30, 2020 |
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Newly Posted A Challenge to Actuarial Assumptions in Defined Benefit Plans: Latest Developments in the Legal Landscape
Navigating a New Landscape: Post-COVID Retirement Plan Design and Administrative Issues
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Guidance Overview]
"This article ... focuses on circumstances where the compensation paid to broker-dealers and their financial professionals increases the cost of the recommended investments.... [T]hat could include a higher compensating share class of a mutual fund or an annuity with a higher commission.... [T]he recommendation of those products implicates the heightened consideration of costs under the Reg BI Care Obligation, and also implicates the requirement to mitigate incentives for financial professionals of broker-dealers (under the Reg BI Conflict of Interest Obligation)." FredReish.com |
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[Guidance Overview]
"If your business has over 100 California employees, September 30, 2020 is the deadline to either register with (or certify as exempt from), the CalSavers Retirement Savings Program (CalSavers).... If you have a retirement plan in place, including a 401(k) plan, SEP or SIMPLE-IRA, you should register as exempt, even if your retirement plan does not cover all of your employees. If you are exempt you cannot auto-enroll employees who are not covered by your retirement plan. However, you may voluntarily notify employees that, if they enroll in CalSavers individually, your business will forward contributions to CalSavers for them." E is for ERISA |
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"U.S. Magistrate Judge Sallie Kim granted the defendants' motion to dismiss ... arguing that the plaintiffs' arguments in the complaint were 'internally inconsistent and illogical.' The suit ... alleged that AT&T's calculations for offering early retirement benefits and joint and survivor annuity benefits resulted 'in plan participants receiving less than the actuarial equivalent of their vested accrued benefit as required by ERISA.' " [Eliason v. AT&T, No. 19-6232 (N.D. Cal. Sep. 28, 2020)] Pensions & Investments |
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"This sort of whipsaw highlights the heads-I-win-tails-you-lose risk that legacy stock funds present for sponsor fiduciaries. The best answer to the question of what to do in these situations is for the plan fiduciaries to engage in a deliberate, well-documented process of evaluating different courses of action, and then choose the one that seems most prudent, seeking advice from outside experts where necessary. Indeed, the alleged failure of Gannett plan fiduciaries to 'monitor' the prudence of the TEGNA legacy stock fund was a necessary element of plaintiffs' case." [Stegemann v. Gannett Co., Inc., No. 19-1212 (4th Cir. Aug. 11, 2020)] October Three Consulting |
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"Despite the TSP's mammoth size, it does not try to 'beat the market' with actively-managed funds. Instead, it seeks cost-efficient market returns with passively-managed index funds.... [Y]ou can pick a comparable menu using index funds from leading providers ... If you want actively-managed funds for your 401(k) plan or more personalized portfolio management for your plan participants ... hire a financial advisor ... that's subject to a fiduciary standard of care.... Even though fiduciary-grade investment advisers are bound by a higher standard of care than non-fiduciary brokers and insurance agents, their advice often costs less." Employee Fiduciary |
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[Sponsored]
Virtual SPARK Forum -- Nov. 4-6 The retirement services industry's leading event for top 401(k) Plan providers, advisors, consultants, administrators & recordkeeping professionals. Join the Virtual SPARK Forum, gain expert insights and strategies to solve your most pressing challenges.
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"Younger participants are more likely to have defaulted into a Lifecycle fund and tend to use it as a single comprehensive fund-of-funds investment. Older participants who invest in a Lifecycle fund tend to use it as part of a broader portfolio strategy. Older workers, participants with longer TIAA system tenure, and higher asset participants are more likely to customize their investment portfolio across multiple asset classes and investment products." TIAA Institute |
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"A Southern California city's attempt to offer 401(k)-style retirement plans to firefighters has led to a new law prohibiting similar efforts to exclude public workers from CalPERS pensions. Gov. Gavin Newsom this week signed legislation preventing cities and counties from excluding groups of employees from CalPERS pensions when they offer them for other groups." The Sacramento Bee |
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13 pages, Sep. 2020. "Although investment earnings and employer contributions account for a larger portion of total public pension fund revenues, by providing a consistent and predictable stream of revenue to public pension funds, contributions from employees fill a vital role in financing pension benefits. Reforms made in the wake of the 2008-09 market decline included higher employee contribution rates for many public pension plans. This issue brief examines employee contribution plan designs, policies and recent trends." National Association of State Retirement Administrators [NASRA] |
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Selected Discussions |
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► It's easy to sign up and participate in discussions! Post answers, ask questions, create custom feeds and views. Join your peers (and potential referral sources or customers)—there is no charge. |
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"Is it still accurate that if a plan has less than $250,000 in assets they don't have to file a Form 5500? I know I've heard it before, but I don't see it in the instructions for the forms." BenefitsLink Message Boards |
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"Participant takes a COVID loan on 9/1/20, and defers payments. When this is re-amortized for payments to begin after 1/1/21, does the loan ending date become 12/31/2025? The participant seems to think that he can go to 12/31/2026, but, truthfully, after reading the literature on COVID loans, I can safely say I have no idea!" BenefitsLink Message Boards |
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► Subscribe to the BenefitsLink Message Boards Digest -- a free daily email of all new discussions (not just the selected few shown above). View a sample issue. |
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Press Releases |
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Sterling Administration Offers New Valued-Priced Online HSA Plan
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Most Popular Items in the Previous Issue |
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Text of IRS Final Regs: Income Tax Withholding on Certain Periodic Retirement and Annuity Payments Under Section 3405(a)
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Schlichter Sanctioned for 'Reckless' Litigation
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IRS Issues Final Regs on Income Tax Withholding on Certain Periodic Retirement and Annuity Payments
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David Rhett Baker, J.D., Editor and Publisher
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020 BenefitsLink.com, 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 BenefitsLink.com, 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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