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[Official Guidance]

PBGC Extends Pilot Program for Coverage Opinion Letters

"PBGC's pilot program -- under which employers may request, in certain circumstances, an Opinion Letter about whether a plan in the process of being created is likely to be covered by PBGC -- has been extended to September 30, 2021. For more information, see PBGC's coverage webpage." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]


Just updated! DATAIR's Pension System for CARES Act provisions!

Our Defined Benefit and Defined Contribution Systems were updated last week! We provide outstanding support, including actuaries on staff. Contact us for more information. 888-328-2474 or Learn more

Sponsored by DATAIR Employee Benefit Systems, Inc.

[Guidance Overview]

IRS Finalizes Default Withholding Rules for Periodic Retirement and Annuity Payments

"Under the final regulations, the IRS can change the default rate of withholding applied to monthly pension or annuity payments simply by issuing new forms, instructions, or other guidance, rather than by having to issue new regulations. Plan administrators and annuity providers should consider making changes to their systems and processes to allow frequent changes to the default withholding rate for pension or annuity payments. The IRS will likely issue guidance prior to year-end to announce the default withholding rate that will apply for periodic retirement and annuity payments in 2021." Icon to read more

Hanson Bridgett LLP

[Guidance Overview]

IRS Provides Guidance on Long-Term, Part-Time Employees in 401(k) Plans, Qualified Birth and Adoption Distributions, and In-Service Distributions from Pension and 457(b) Plans

"Defined contribution plans ... may (but are not required to) offer qualified birth or adoption distributions, but defined benefit plans are not.... The distributions are not subject to the 10% early distribution penalty tax under Code Section 72(t) ... [T]he distributions are not treated as eligible rollover distributions under the direct rollover rules, which means the plan is not required to give the 402(f) special tax notice or apply mandatory 20% withholding (although the voluntary withholding rules do apply)." Icon to read more

Frost Brown Todd LLC

[Guidance Overview]

IRS Notice 2020-68 Provides SECURE Act and Miners Act Guidance

"Determining pre-2021 vesting service could be burdensome for employers that lack the hours information for employees under 1,000 hours before 2021.... The notice clarifies that the [small employer auto-enrollment] credit only applies with respect to the employer and not the plan, meaning sponsoring more than one plan providing an EACA will not increase the credit.... The notice also clarified that the credit is available to each eligible employer that participates in a multiple employer plan (MEP), including one sponsored by a pooled plan provider (PPP) that constitutes a pooled employer plan (PEP)." Icon to read more

Morgan Lewis

2020 Retirement Risk Readiness Study (PDF)

"Perceptions from non-retired Americans about when their retirement will start and what it will look like are much different from the experiences of people already in retirement. This disconnect is putting the financial security of those nearing retirement at significant risk." Icon to read more

Allianz Life Insurance Company of North America

Judge Allows ERISA Class Action About Mortality Tables to Proceed to Trial

"A class action lawsuit asserting the use of an outdated mortality table to calculate benefits is moving forward to trial against Huntington Ingalls after the defendant's motion for summary judgment was denied.... The plaintiff filed the lawsuit in May 2019 claiming that the company breached its fiduciary duty under ERISA by using 1971 mortality assumptions to calculate pension payments for workers who choose nonstandard payout methods." [Herndon v. Huntington Ingalls Ind., Inc., No. 19-052 (E.D. Va. Sep. 29, 2020)] Icon
to read more

West Virginia Record

Multiple Employer Plans Now a Target of Fee Litigation (PDF)

"In the first week of May, the ADP Total Source Retirement Savings Plan, a professional employer organization multiple employer 401(k) plan, was the recipient of two suits, one brought by one of the participating employers in the plan and the other brought by participants.... Both complaints make substantially the same allegations ... One of the interesting aspects of the case brought by McCaffrey Financial is that it is one of the employers that participates in the plan and as such it is a co-sponsor and co-fiduciary. It is suing in its capacity as a co-fiduciary." Icon to read more

Boutwell Fay LLP

2020 Litigation: Managed Accounts

"A review of 29 complaints filed in the first half of 2020 shows that the litigation spans industries, plan sizes, plaintiff counsel, and allegations.... Managed account providers benefit from the dearth of available options and limited competition that can hinder more reasonable fee structures as the plan size and participation grow. Plan sponsors should consider the inclusion of managed account services carefully and document the process and rationale, if those services are added." Icon to read more

Callan Institute


American Benefits Council Comment Letter to DOL on Fiduciary Duties Regarding Proxy Voting and Shareholder Rights

11 pages. "Binary choice regarding voting proxies should be removed.... Specificity on prudence and loyalty requirements is unnecessary.... Mandate to review proxy voting policies every two years unnecessary.... The proposal imposes additional costs on ERISA plans.... Clarifications [needed] regarding scope (pass-through voting, mutual funds, timeframe).... The proposed effective date is too soon." Icon to read more

American Benefits Council


Disparate Private Equity Fees Are Erasing Public Pension Gains

"The practice of investing increasing amounts into private equity, however, is purely a result of poor long term fund management. Managers feel the need to invest in riskier options to produce return estimates that look more favorable for the fund to make up for losses. In this case, the drive for investing in riskier private equity options also creates losses through exorbitant fees." Icon to read more

Institute for Pension Fund Integrity [IPFI]

Executive Compensation
and Nonqualified Plans

2020 Meridian Corporate Governance and Incentive Design Survey

"The most prevalent performance metrics [for annual incentive plans] continue to be Operating Income, Revenue, Cash Flow and Earnings per Share (EPS).... 17% of the Meridian 200 include ESG metrics as a weighted corporate performance metric in their annual incentive plans ... 97% of Meridian 200 companies grant performance-based vehicles as part of their long-term incentive plans[.]" Icon to read more

Meridian Compensation Partners, LLC

Selected Discussions
on the BenefitsLink Message Boards

► 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.

Switching from Matching Contribution Safe Harbor to Non-Elective for 2020

"Existing 401k plan with SH match. Looking at adding a CB plan for 2020. Can it be switched to non-elective for 2020 and, if yes, 3% or 4%? Any other issues not asking?" Icon to read more

BenefitsLink Message Boards

PBGC Form MP-100 for Missing Participant in a Cash Balance Plan

"Does anyone have experience filling out the MP-100 for a missing participant in a cash balance plan? If so, is the present value reported equal to the hypothetical account balance or do you need to calculate a life annuity at normal retirement using the plan assumptions and then convert back using the PBGC assumptions?" Icon to read more

BenefitsLink Message Boards

How Much Time Is Needed to Prepare a Typical Form 5500-SF?

"What is a reasonable estimate for time spent by an experienced retirement plan administrator to prepare a 5500-SF filing for a DB plan including AFN, considering the assets and the participant counts have already been reconciled, the actuarial valuation report has already been completed, and the valuation software produces attachments, AFN info, etc. (Datair)? This is for plain vanilla situations, no life insurance, etc. Excluding time spent for the 8955, I am thinking 3 hours to get it to the client for signature, and another hour or so to get it filed. Is that a reasonable expectation on average?" Icon to read more

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View COVID-19 News and Resources, Inc.
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Winter Park, Florida 32789
(407) 644-4146

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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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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