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Retirement Plans Newsletter October 2, 2020 |
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Newly Posted Fall American Savings Education Council Meeting
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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]
"The CARES Act, together with IRS Notice 2020-61, extended the deadline for minimum required contributions and contributions in excess of the minimum during calendar year 2020 until January 1, 2021. On September 23, 2020, the PBGC issued Technical Update 20-2 permitting contributions made in accordance with these extensions to be included for purposes of calculating the VRP." Haynes and Boone, LLP |
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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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[Guidance Overview]
"The DOL expressly states in the preamble that there is no presumption that abstaining from voting proxies is a per se fiduciary breach; rather, fiduciaries are required to vote proxies in a manner that is in the best interests of the plan, which requires a consideration of the likely impact on the plan's investment performance in light of the size of the plan's holdings in the issuer relative to the total investment assets of the plan, the plan's percentage ownership in the issuer, and the costs involved." Proskauer |
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The third installment of the 2018 Data Tables for PBGC's Single-Employer and Multiemployer Programs and the private defined benefit pension system is now available. This installment includes various breakdowns of the number of plans, number of plan participants, hybrid plans, frozen plans, premium revenue and plan funding. Some of the breakdowns are by industry, location, and plan funded status. Pension Benefit Guaranty Corporation [PBGC] |
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"[Defined benefit] pensions are now an endangered species, leaving younger generations of workers holding the bag to manage ... longevity risk, which requires making important decisions to avoid outliving their savings.... While [deferred income annuities are] well understood within the industry, they still have not made their way into the mainstream of today's defined contribution 401(k) plans, where they could serve an important role by replacing a portion of the guaranteed income that pensions used to provide." Georgetown University Center for Retirement Initiatives |
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24 pages. "[The 401(k) plan account balance for consistent participants] increased at a compound annual average growth rate of 13.9 percent from 2010 to 2018, rising from $63,756 to $180,251 at year-end 2018. The median 401(k) plan account balance for consistent participants increased at a compound annual average growth rate of 17.3 percent over the period, to $90,015 at year-end 2018." Investment Company Institute [ICI] |
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"[T]he state will make a $4.7 billion payment before the next budget year ends June 30, 2021.... New Jersey pushed out the end of fiscal 2020 from June 30 to Sept. 30 as it navigated the impact of revenue fluctuations caused by the COVID-19 pandemic.... [Governor Murphy] said he will rely on a combination of spending cuts, tax increases, and borrowing to cover a $6 billion state budget shortfall -- and will keep his pledge to boost pension payments." The Pew Charitable Trusts |
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"Roughly half (48%) of defined contribution investment-only asset managers say a new proposal from the [DOL] concerning environmental, social and governance investing will be a significant barrier to adoption of ESG products in DC plans ... But the proposed regulation is not slowing down marketing and distribution efforts promoting DC-focused ESG products, as 56% of DCIO asset managers expect to increase these efforts during the next 12 months[.]" Pensions & Investments |
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"Lower stock prices hit pensions during September. Both model plans ... lost ground last month, with Plan A dropping 2% and Plan B slipping 1% during the month. For the year, Plan A is now down 5% and Plan B is down more than 1% through the first three quarters of 2020." October Three Consulting |
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[Opinion]
"To further encourage the formation and operation of these important retirement savings programs, [these comments] focus on simplifying the Proposed Rule's registration requirements. We find several components of the registration requirements somewhat confusing while others rightly can be characterized as overly burdensome and unnecessary." American Council of Life Insurers [ACLI] |
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[Opinion]
"The single-employer program had a surplus of $8.7 billion on September 30, 2019 ... The median projected surplus in ten years is $46 billion.... [Plan] sponsors now wonder why their levies need to be so high.... Two Proposals: [1] Stop Indexing! ... [2] Offset Premiums with Extra Plan Contributions.... Of course, these suggestions only work if the single-employer program is looked at in isolation." The Principal Blog |
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Executive Compensation |
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"The award will be considered vested at the time the retirement eligible executive could voluntarily walk out the door and still receive payment. Thus, if an award is granted to an executive who is 'retirement eligible' at the time of grant, the award would be vested at that time.... Unless the award is paid out within two-and-a-half months following the year the executive becomes retirement eligible, the award will provide deferred compensation!" Miller & Chevalier |
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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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"We are preparing Form 5500 for our client's 401(k) plan with a plan year ended December 31, 2019. In the course of the plan audit, it was discovered that the client applied an incorrect definition of compensation for deferral & matching contribution purposes. QNECs and additional matching contributions have been calculated, and will be deposited to the accounts prior to the end of 2020. Should the 2019 QNEC/matching contributions be reported as a receivable on the Form 5500 Schedule H?" BenefitsLink Message Boards |
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"An owner, who sponsors, participates in, and is a trustee for a plan that covers NHCEs, wants to form an LLC with a friend in which they will each own 50% of the LLC. The LLC will totally consist of an interest in an existing, unrelated business. The owner would like to use plan assets to acquire his 50% share of the LLC. I am guessing that this would be a PT unless he were to own no more than 10% of the LLC - is this accurate?" BenefitsLink Message Boards |
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"There is, or at least was, a rule that if NQDC payments are subject to FICA taxes in, say, the first year of the program, then they are all withheld then, and not subject to FICA later. An accountant suggested that it can't be done any more; i.e., you'd have to withhold FICA each year. I'm not aware of any changes." 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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Federal Court Sentences Kentucky Business Owner for Improper Use of Benefit Plans' Contributions After U.S. Department of Labor Investigation
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PenChecks Trust®, ASPPA Open Applications for Prestigious QKA Scholarship Program
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Most Popular Items in the Previous Issue |
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IRS Issues Final Regs Updating the Tax Withholding Rules for Periodic Retirement and Annuity Payments
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Employee Benefits in the Supreme Court (PDF)
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Why Grandfathering Retirement Plan Changes Can Backfire
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
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