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Retirement Plans Newsletter October 9, 2020 |
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Newly Posted Year-End Retirement + Wealth Planning Strategies for Forward-Thinking Employers
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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]
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." Pension Benefit Guaranty Corporation [PBGC] |
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[Guidance Overview]
"[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[.]" Davis, Malm & D'Agostine P.C. |
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[Guidance Overview]
"[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." U.S. Securities and Exchange Commission [SEC] |
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"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)] The Wagner Law Group |
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"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)] PLANSPONSOR; free registration may be required |
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[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 |
"[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." Morningstar |
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"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." Retirement Learning Center, LLC |
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"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." Findley |
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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." American Academy of Actuaries |
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Executive Compensation |
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[Guidance Overview]
"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[.]" Trucker Huss |
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"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." Nexsen Pruet |
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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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"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." BenefitsLink Message Boards |
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"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?" BenefitsLink Message Boards |
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Press Releases |
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Most Popular Items in the Previous Issue |
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IRS Issues Helpful Guidance on the SECURE Act Retirement Plan Changes
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Retirement/Financial Wellness Adages That May Not Be Helpful
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David Rhett Baker, J.D., Editor and Publisher
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