Retirement Plans Newsletter

October 9, 2020

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Rockville Centre NY / Mc Lean VA

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[Official Guidance]

Text of PBGC Proposed Regs: Examination and Copying of Records

37 pages. "This proposed rule would: [1] Clarify that PBGC's disclosable records are generally available in an electronic, rather than paper, format. [2] Describe the procedure to seek expedited treatment for record requests. [3] Clarify the acceptable methods for submitting record requests. [4] Update the time limit to respond to record requests. [5] Clarify the procedures available to a requester when PBGC extends the time to respond to a disclosure request or an appeal. [6] Clarify the procedure for responding to requests that are of concern to a Federal agency other than PBGC. [7] Update the fees for search and review time. [8] Modify the definitions of certain categories of requesters." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]

[Guidance Overview]

Tax-Exempt Entity 457(b) Plans and the Tax Consequences of Noncompliance

"[C]ommonly reported plan compliance issues: ... [1] failure to limit eligibility to a select group of management or highly compensated employees ... [3] failure to limit the deferrals to the annual contribution maximums; [4] failure to report the employer contribution on behalf of a participant for payroll taxes; [5] failure to title the investment account in the name of the employer; [6] failure to recognize that a distribution from a 457(b) plan is a W-2 transaction; [7] failure to file a top hat compliance statement with the [DOL]; [8] failure to prevent loans to plan participants[.]" Icon to read more

Davis, Malm & D'Agostine P.C.

[Guidance Overview]

Joint Statement by SEC Officials on New FAQs for Form CRS

"[T]he staff of the Division of Investment Management and the Division of Trading and Markets [has published FAQs] about the disclosure requirements of Form CRS with respect to a firm's disciplinary and legal history.... [T]he FAQs state that a firm's relationship summary may not omit the disciplinary history section in its entirety or omit the disciplinary history with respect to either a firm or its financial professionals, even when there is no such reportable disciplinary history.... Additionally, the FAQs state that Form CRS does not preclude firms or their financial professionals from providing separately copies of additional regulatory disclosures directly to a retail investor." Icon to read more

U.S. Securities and Exchange Commission [SEC]

Third Party Administrator May Be Held Liable for ERISA Fiduciary Breach and Consumer Fraud Following Plan Data Breach

"The opinion ... raises important questions -- not just about the scope of a TPA's ERISA fiduciary liability for distributing plan benefits that end up in a cyber criminal's pocket -- but whether ERISA plan TPA's can be sued for both ERISA fiduciary breach claims and state law consumer fraud claims resulting from the same alleged misconduct: the failure to enact cybersecurity procedures that prevent the theft of plan assets.... Liability both under ERISA and state law could lead to double or alternative recoveries for plan participants, and subject plan fiduciaries to state consumer fraud statutes that allow for compensatory and punitive damages." [Bartnett v. Abbott Laboratories, No. 20-2127 (N.D. Ill. Oct. 2, 2020)]  Icon to read more

The Wagner Law Group

Lessons from a Rare ERISA Excessive Fee Suit Dismissal

"The complexity of retirement plan lawsuits often makes district court judges reluctant to approve early dismissal motions plaintiffs, but Salesforce has succeeded in defeating a complaint alleging it committed various fiduciary breaches.... [T]he ruling states, a plaintiff's bare allegations that passively managed funds were available as cheaper alternatives to the actively managed funds offered in the plan 'do not suffice to demonstrate imprudence.' ... The dismissal ruling explains that the court found compelling the defense's arguments that the plan engaged in revenue sharing in an appropriately considered, prudent and loyal manner." [Davis v. Salesforce.com, Inc., No. 20-1753 (N.D. Cal. Oct. 5, 2020)] Icon to read more

PLANSPONSOR; free registration may be required

[Sponsored]

TRANSIT EMPLOYEES’ PENSION PLAN (TEPP) RFP for Legal Services

The Board of TEPP is accepting proposals for a firm to provide Legal Services as stated in RFP requirements. TEPP is a non-ERISA, collectively bargained, governmental pension plan. Proposals are due 10/26/2020 @2:00 PM, CST. Contact cnoll@mcts.org Learn more


The Future of ESG in Retirement Investing

"[S]ustainable funds are hard to find in defined-contribution plan lineups. Only about 4.5% of plans had at least one sustainable fund, and they made up, on average, 0.17% of a plan's offerings.... 48% of plan options had a sustainability rating. This means that investors can consider ESG-risk exposure when analyzing their retirement options." Icon to read more

Morningstar

State-Sponsored Retirement Plans for Private-Sector Workers

"As of October 6, 2020, 12 states have succeeded in enacting laws creating retirement savings programs for private-sector workers. One city -- Seattle, WA -- has also enacted an auto IRA program. [A chart provides] a high-level overview of the various plans." Icon to read more

Retirement Learning Center, LLC

Defined Benefit Pension Plan Contributions: To 2021 and Beyond

"Some plan sponsors may choose to defer required 2020 plan contributions to January, 2021, while those companies having a good financial year may opt to contribute on the normal schedule, and may also contribute more than the required amount. The decision to defer 2020 plan contributions, effectively at least doubling their contribution requirements in 2021, should be made only after weighing the pros and cons." Icon to read more

Findley

Exceptional Usefulness and Quality iconIssue Brief: PBGC Single-Employer Premiums and Their Impact on Plan Sponsorship (PDF)

11 pages. "Decisions made by employers to discontinue a plan, reduce the size of their plan, or decide not to adopt a plan due to the large premiums can be attributed in part to lawmakers' failure to recognize the PBGC's mission ... [C]hanges to the premium structure are advisable. This issue brief addresses this complex subject by raising some issues in a question-and-answer format. It focuses exclusively on the PBGC's single-employer program." Icon to read more

American Academy of Actuaries

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Upcoming Deadline iconNonqualified Deferred Comp Plans Must Be Amended by December 31 to Remove Mandatory Payment Delays Due to 162(m) Nondeductibility

"The TCJA amendments to Code section 162(m) changed the definition of 'covered employee' so that once a person becomes a covered employee, the person remains a covered employee for all subsequent years. After this amendment, there is the potential that a nondeductible payment delayed under a nonqualified deferred compensation plan would never become deductible, or payable, because the employee will always be a covered employee.... [Plans that] provide for mandatory payment delays if the payment is not deductible under Code section 162(m) ... should be amended to avoid [this] potential payment trap[.]" Icon to read more

Trucker Huss

Deferred Compensation Plans: Options and Considerations

"An executive deferred compensation plan allows an employer to supplement an executive's base salary over a longer horizon -- either after retirement or over a period of years. [This article outlines] three different options ... all of which are intended to reward executives based on productivity and results and to retain those executives by structuring a payout over time." Icon to read more

Nexsen Pruet

Selected Discussions
on the BenefitsLink Message Boards

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Credit Service at New Non-Controlled Employer for Purposes of Increasing Vesting in Plan Left Behind?

"Hypothetical question which may turn out to be real -- don't know yet if it is 401k plan or ERISA 403(b), but I don't think it matters.

Say you have employer A, whose plan has a (pick it - let's say 4 year graded) vesting schedule for matching contributions. (Not a safe harbor plan, by the way.) Let's say that employer A is going to be involved in starting up a new business, that for now at least would NOT be a controlled group. The new business B will have a bunch of employer A's employees transferred to them. Is there a reasonable way to have A's employees who transfer to B, have their vesting in A's plan continue to increase at the normal rate, based on the service with B? Something like: for vesting purposes only, former employees of A who transfer to Employer B will have their years of service with B apply to their account balances in this plan. Or something along those lines. I've never seen this done, but curious if it can be done." Icon to read more

BenefitsLink Message Boards

Where Are Annuity Contracts' Current Interest Rates?

"For an insurance company's fixed annuity contract (or fixed-interest element under an otherwise variable annuity contract), what is a typical credited interest rate? And for such a contract issued recently, what is a contract-guaranteed rate?" Icon to read more

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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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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