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September 30, 2020 logo logo
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[Guidance Overview]

Best Interest Standard of Care for Advisors, Part 33

"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)." Icon to read more

[Guidance Overview]

Upcoming Deadline iconSeptember 30, 2020 is CalSavers Deadline for Large Employers

"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." Icon to read more

E is for ERISA

Judge Dismisses Challenge to AT&T Early Retirement Benefit Calculations

"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)] Icon to read more

Pensions & Investments

Fourth Circuit Allows Legacy Stock Claim to Proceed

"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)] Icon to read more

October Three Consulting

Options for Selecting a Prudent 401(k) Investment Menu

"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." Icon to read more

Employee Fiduciary


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. Learn more

Sponsored by SPARK

Trends in Retirement Plan Contributions and Asset Allocations by TIAA Participants, 2012 to 2018

"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." Icon to read more

TIAA Institute

California Law Blocks Cities from Replacing Some CalPERS Pensions with 401(k) Plans

"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." Icon to read more

The Sacramento Bee

Exceptional Usefulness and Quality iconEmployee Contributions to Public Pension Plans (PDF)

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." Icon to read more

National Association of State Retirement Administrators [NASRA]

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Under $250,000 in Assets -- Form 5500 Required?

"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." Icon to read more

BenefitsLink Message Boards

Reamortization of COVID Loan: When Is New Loan Ending Date?

"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!" Icon to read more

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Schlichter Sanctioned for 'Reckless' Litigation
American Retirement Association [ARA]

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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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