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Retirement Plans Newsletter October 14, 2020 |
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[Official Guidance]
"The November 2020 lump sum interest assumptions will be 0.00 percent for the period during which a benefit is (or is assumed to be) in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for October 2020, these assumptions represent no change in the immediate rate and are otherwise unchanged." Pension Benefit Guaranty Corporation [PBGC] |
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[Guidance Overview]
"The DOL acknowledged that in evaluating investments to be offered as designated investment alternatives, plan fiduciaries must engage in an objective, thorough and analytical process that considers all of the relevant facts and circumstances. The DOL pointed out that, as applied to the fund at issue, certain factors unique to private equity investments should be considered[.]" Faegre Drinker |
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"While the vast majority of service providers won't be ready to kick off the tricycle until the end of the fourth quarter of 2020, or even the first quarter of 2021, the intervening time should be used wisely to prepare both its own staff and its clients.... [1] Look at the numbers ... [2] Communications ... [3] Training ... [4] Prioritization ... [5] How much to charge? ... [6] Safe harbor plan conundrum ... [7] Participant communications ... [8] Get started." Ferenczy Benefits Law Center via Plan Consultant |
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"With the Supreme Court's denial, the Sun Capital litigation appears to have reached its conclusion. While this represents a win for the Sun Capital defendants, this outcome leaves the First Circuit's endorsement of a 'trade or business' theory of withdrawal liability under ERISA undisturbed, as well as its incorporation of a multi-factor test for determining whether multiple funds could together constitute a 'partnership-in-fact' for these purposes." [Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, Nos. 16-1376, 19-1002 (1st Cir. Nov. 22, 2019; cert. pet. denied Oct. 5, 2020)] Paul Weiss Rifkind Wharton & Garrison LLP via Lexology |
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"The plan in question had more than 39,000 participants and approximately $4.2 billion in assets. As other excessive fee suits have alleged, this one alleges that 'after an inquiry reasonable under the circumstances,' the defendants breached their fiduciary duties by 'among other things: [1] authorizing the Plan to pay unreasonably high fees for recordkeeping and administration (RK&A); [2] authorizing the Plan to pay unreasonably high fees for managed account services; and [3] engaging in self-dealing with regard to administration of the Plan.' " [Guyes v. Nestle USA Inc., No. 20-1560 (E.D. Wis. complaint filed Oct. 9, 2020) American Retirement Association [ARA] |
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"If a plan sponsor meets all the proper requirements for either the 2002 or 2020 procedures, most notices and statements can be delivered electronically. Sometimes, this requires participant's consent, and all participants need to be given the option to receive information physically." Meld Financial, Inc. |
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"With the release of two new issue snapshots, IRS continues to focus on nonqualified deferred compensation plans under Internal Revenue Code Section 457. One snapshot explains the rules for correcting deferrals in excess of the annual limits for 457(b) plans, while the other explores some of the tax consequences to nongovernmental tax-exempt employers and their employees when a 457(b) plan becomes an ineligible 457(f) plan. Although snapshots typically don't provide new guidance, they often include tips that could prove useful in the event of an IRS audit." Mercer |
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"Among working respondents, 91 percent say that saving for retirement is a current financial goal, with 64 percent identifying it as a major goal. No goal ranks higher among this demographic group.... Yet 60 percent of respondents report they are falling behind on retirement savings. Of those who do not feel on track with this goal, 30 percent say their progress has been directly affected by the pandemic.... The survey showed that the pandemic has changed nearly 80 percent of Americans' views about what is financially important." TIAA |
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"The use of [Outsourced Chief Investment Officers (OCIOs)] in the DC market remains an evolving area in terms of both services provided and desired, and adoption is in the early days with more interest from mid-size DC plan sponsors. The goal of [this research] was to capture insights and to offer a window into the current landscape of the OCIO arena to help better inform DC plan sponsors, DC consultants and OCIO managers alike." PGIM |
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"15% of plan sponsors currently use an [OCIO] for their entire 401(k) plan. Use of OCIOs are more common for midsize plans (24%) -- with between $250 million and $500 million in assets -- than larger plans (8%) ... Nearly two-thirds (64%) of plan sponsor respondents said they do not use and have never considered using an OCIO[.]" Pensions & Investments |
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[Opinion]
"[IRIC] specifically supports the uniformity of the disclosure ... [P]articipants will receive a consistent message on lifetime income regardless of their employer or their recordkeeper.... IRIC requests additional clarity on the latitude the Department is providing with respect to adherence to the specific language outlined in the IFR.... [IRIC suggests] that the Department make it clear that projecting balances to age 67 using reasonable assumptions is education as defined by I.B. 96-1 and would not be considered fiduciary advice under Section 3(21) of ERISA." Institutional Retirement Income Council [IRIC] |
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Benefits in General |
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"[T]he 203rd open meeting of the [ERISA Advisory Council] will be held via a teleconference on Friday, November 13, 2020.... The purpose of the open meeting is for the members of the ERISA Advisory Council to discuss potential recommendations for the Secretary of Labor on the issues of: [1] Examining Top Hat Plan Participation and Reporting, and [2] Considerations for Recognizing and Addressing Participants with Diminished Capacity." Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] |
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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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"Is anyone aware of a good discussion on whether/when an individual employment agreement will be construed as an amendment to an ERISA plan? For example, assume a retirement plan provides for 3% employer contribution, but the company signs a contract with one employee promising 5%. Or, alternatively, a retiree health plan provides that benefits can be discontinued at any time, but the company signs a contract with one employee promising to maintain those benefits for life." BenefitsLink Message Boards |
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"The Internal Revenue Manual describes a method for a plan's administrator to decide a claim for a hardship distribution using only the participant's written statements, including some that 'summarize' an expense incurred. Under this method, the administrator need not read, nor even immediately collect, a source document that shows the claimed hardship expense. How many of your clients use this method and do not ask for any source document? How many of your clients require a source document? Do your clients' methods vary with the plan's recordkeeper?" BenefitsLink Message Boards |
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"Husband and wife were divorced 10 years ago and a QDRO was issued awarding the wife 50% of husband's account. Wife, as the alternate payee, chose to keep the funds in the plan. Husband had primary custody of children and was due child support payments from the ex-wife. Fast forward ten years. The ex-wife has made no child support payments. Husband obtained garnishment order from the court going after ex-wife's alternate payee account. The only way I see this being accomplished is if a QDRO can be issued for the child support arrearages. Agree?" BenefitsLink Message Boards |
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Press Releases |
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TRAU & RPAG Partner on RPAG University
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The New York Times Company Reduces Pension Obligations by $235 Million
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The Retirement Advantage, Inc. Makes Third Acquisition in 2020
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Most Popular Items in the Previous Issue |
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Social Security Announces 1.3 Percent Benefit Increase for 2021
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2020 Year-End Consideration: Partial Retirement Plan Terminations Related to Personnel Reductions
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401(k) and 403(b) Fund and Fee Litigation Heats Up
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