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Retirement Plans Newsletter October 6, 2020 |
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Newly Posted Opening and Maintaining IRAs
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Discussions |
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This Newsletter:
BenefitsLink Health & Welfare Plans Newsletter:
Message Boards Digest:
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[Official Guidance]
"Use Form 4972 to figure the tax on a qualified lump-sum distribution ... you received in 2020 using the 20% capital gain election, the 10-year tax option, or both. These are special formulas used to figure a separate tax on the distribution that may result in a smaller tax than if you reported the taxable amount of the distribution as ordinary income." Internal Revenue Service [IRS] |
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[Guidance Overview]
"Under the PBGC's new guidance, the deadline to receive 'prior year contributions' that are taken into account is extended to January 1, 2021 for premium filings due on or after March 1, 2020 and before January 1, 2021. Importantly, the PBGC's guidance does not extend the deadline for premium filings, and filings cannot reflect contributions that have not been made. Plan sponsors that want to take advantage of the guidance must instead amend their filings by February 1, 2021 to revise the variable-rate premium calculation data after the eligible 'prior year contributions' are paid to the plan." Proskauer |
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[Guidance Overview]
"PLR 202033008 provides valuable lessons and insight into the operational and compliance requirements of IRAs, which include the following: When it comes to IRAs, much of the responsibility for compliance with rollover rules rests with the IRA owner. The IRS is strict about applying the rollover rules; and waivers are granted under narrowly defined exceptions.... IRA owners should seek IRA advice from trained IRA professionals.... [In] addition to the unfavourable ruling which requires the amount to be included in income, the IRA owner is out of pocket for $10,000 plus any fees paid to the professional whose service was engaged to assist with requesting the PLR." Appleby Retirement Consulting Inc. |
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[Guidance Overview]
"Neither the [custodian's] resignation letter nor the 1099-R issued for the distribution was forwarded to Tyrone's new address. As a result, Tyrone was not aware of the distribution until he received a CP2000 notice from the IRS.... The IRS's fee and other expenses incurred for requesting the PLR might be worth it, as it provides an assurance that the IRS would not later disqualify the rollover, as long as all other rollover requirements are satisfied. But this could have been avoided, if Tyrone had notified Custodian-D that he had moved and instructed them to update his address of record." [PLR 202023007] Appleby Retirement Consulting Inc. |
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[Guidance Overview]
The linked article includes a chart that compares the SEC's standard of conduct for broker-dealers under Regulation Best Interest (Reg BI) with the SEC's Interpretation Regarding Standard of Conduct for Investment Advisers (the RIA Interpretation), and the DOL's proposed prohibited transaction exemption, which includes in the preamble an expanded interpretation of who qualifies as an investment advice fiduciary under ERISA and the Internal Revenue Code. Faegre Drinker |
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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]
"[If] during 2020, a Puerto Rico-qualified plan allowed participants to receive in-service hardship withdrawals on account of either the COVID-19 pandemic or the earthquakes that affected the island at the beginning of the year (collectively, 'disaster-relief distributions' or 'DRDs'), the official plan document must be amended accordingly by December 31, 2020." Ogletree Deakins |
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[Guidance Overview]
"The new standard intends to reduce the financial-reporting complexities and ease the overall implementation costs of GASB 84, Fiduciary Activities -- specifically when evaluating defined contribution pension and defined contribution post-employment benefit plans ... Implementation of GASB 97 is expected to minimize the number of DC plans that meet the criteria for reporting as a fiduciary component unit within a sponsoring government's annual financial report." Moss Adams LLP |
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"The U.S. Supreme Court asked the acting U.S. solicitor general for an opinion in an ERISA fee fight case before the justices decide if they will hear the complaint involving two 403(b) plans run by Northwestern University, Evanston, Illinois. Participants in the two plans petitioned the Supreme Court on June 19 after having lost at both the federal District Court and federal appeals court levels in their allegations that the university and its fiduciaries violated ERISA guidelines in managing the plans." [Hughes v. Northwestern Univ., No. 18-2569 (7th Cir. Mar. 25, 2020; cert. pet. filed Jun. 19, 2020)] Pensions & Investments |
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"A federal judge found Abbott defendants were not fiduciaries with regard to the alleged acts, but claims against Abbott's retirement plan recordkeeper were allowed to stand." [Bartnett v. Abbott Laboratories, No. 20-2127 (N.D. Ill. Oct. 2, 2020)] planadviser |
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12 pages. "As employers execute their Return-to-Work plans and re-open their businesses, they will have numerous compliance issues ... Plan sponsors will re-group and determine how their programs can be enhanced or re-designed in response to the near-term workforce changes.... This article seeks to identify key considerations for the long-view with regard to defined contribution retirement plans and the related programs which will enable employees to more effectively save for their retirement years." Epstein Becker Green |
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"[It] is difficult to envision a circumstance, other than where the plaintiff unequivocally admits he or she received, read and understood the relevant documentation, where a claim on summary judgment will be found time-barred based on the actual knowledge standard.... [However, to] the extent plaintiffs must show they were aware of, read and understand the disclosures upon which they base their claim, such inquires may pose barriers to class certification." [Intel Corp. Investment Policy Comm. v. Sulyma, No. 18-1116 (S. Ct. Feb. 26, 2020)] Jenner & Block, via Employee Relations Law Journal |
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"In order to better learn what you need to know; you must teach it to someone else.... Consider how this might signal a paradigm shift in the way plan sponsors and fiduciaries provide financial literacy education to 401k plan participants. Imagine if that education trains employees to teach the concept of retirement saving to another person. The objective, though, isn't necessarily to successfully teach that other person, but to infuse the lesson upon the employee doing the teaching." Fiduciary News; free registration required |
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"The resource guide and correction of excesses guidance look to be a very useful tools. They not only link to the statute and each of the regs, they also link to the IRS Manual sections on 457(b) plans. They do have their limitations (such as providing no guidance on how one corrects failures in a tax-exempt's 457(b) plan), but it should be a permanent part of the practitioner's research tool list." Business of Benefits |
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[Opinion]
EBSA has begun posting comments on the proposed Registration Requirements for Pooled Plan Providers published on September 1, 2020. As of Oct. 6, 20 comments have been posted. The comment period ended on October 1. Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] |
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[Opinion]
"A number of legal questions remain unanswered and there is an acute need for comprehensive guidance from the DOL. These questions include: [1] what is the specific personal and/or confidential participant information that must be safeguarded by plan fiduciaries; [2] what standard of care applies to the protection of participant personal information; [3] what is the plan administrator's responsibility with respect to disclosing to participants the unauthorized appropriation of participant information; and [4] whether state cybersecurity, privacy, consumer protection or other laws are pre-empted by ERISA." The Wagner Law Group |
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[Opinion]
"Teachers have long enjoyed the ability to contribute to both the 403(b) and the 457(b).... In K-12 circles the 403(b) is more widely available, and maybe more widely understood. That's a big maybe given the total lack of objective retirement plan information provided to school employees. Nevertheless, there is a strong case to be made that the 457(b) is superior to the 403(b)." 403bwise |
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Benefits in General |
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[Guidance Overview]
"The proposed rule would relax the parameters for determining independent contractor status under the FLSA, so employers and business lobbies will likely welcome the new test. However, different standards may apply for identifying independent contractors under other laws[.]" Mercer |
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"[R]esearchers who studied 409 employees found that they were able to identify which emails were legitimate and which were phishing immediately after a security awareness and education program was conducted, and even four months after. But after half a year had elapsed, that was not the case.... The researchers then developed 'reminder measures' to refresh employees' knowledge and awareness.... [T]he interactive reminder measure and the one entailing a video were the most effective[.]" American Retirement Association [ARA] |
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Press Releases |
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DOL Obtains Consent Order and Judgment to Restore $6,545,454 to Union Short Term Disability Fund
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Nova 401(k) Associates Announces the Addition of Industry Veteran Craig Hoffman
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Most Popular Items in the Previous Issue |
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Multiple Employer Plans Now a Target of Fee Litigation (PDF)
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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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