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October 20, 2020 logo logo
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Cary NC

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[Official Guidance]

Text of 2020 Instructions for IRS Form 5329: Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts (PDF)

Oct. 13, 2020. "[1] Qualified disaster or coronavirus-related distributions.... [2] Maximum age for traditional IRA contributions.... [3] Withdrawals in the case of a birth or adoption of a child.... [4] Increase in age for mandatory distributions.... [5] Temporary waiver of minimum required distributions." [Also available: 2020 IRS Form 5329Icon to read more

Internal Revenue Service [IRS]


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. Learn more

Sponsored by SPARK

[Official Guidance]

Text of Draft Instructions for 2020 IRS Form 8606: Nondeductible IRAs (PDF)

Oct. 19, 2020. "What's new ... [1] Coronavirus-related distributions.... [2] Tax relief for qualified 2018, 2019, and 2020 disaster distributions.... [3] Form 1040-NR.... [4] Modified AGI limit for Roth IRA contributions increased.... [5] Due date for contributions. " [Also available: Draft 2020 IRS Form 8606Icon to read more

Internal Revenue Service [IRS]

PBGC Report: Analysis of Single-Employer Pension Plan Partial Risk Transfers (PDF)

14 pages, Oct. 2020. "8.0 percent of PBGC-covered plans performed [Risk Transfer Activity (RTA)] during the 2015-2018 study period. 44.8 percent of large plans (greater than 1,000 participants) performed an RTA during the study period.... 2.4 million participants received either a lump sum distribution or an annuity as part of a risk transfer transaction during the study period, and thus are no longer participating in their pension plan or covered by PBGC insurance." Icon to read more

Pension Benefit Guaranty Corporation [PBGC]

Exceptional Usefulness and Quality iconPBGC Report: Benefit Provisions in Multiemployer Defined Benefit Pension Plans (PDF)

34 pages, Oct. 2020. "This supplement to PBGC's Databook provides a detailed study of the plan provisions available to active workers in multiemployer defined benefit pension plans based on data compiled from [2016] Form 5500 filings for 582 multiemployer defined benefit pension plans which, in aggregate, cover approximately 90% of the total universe of active workers covered by all multiemployer defined benefit plans.... This study analyzes benefit provisions ... by industry classification, by plan funding 'zone status' and by amount of current liability. The primary focus is on the structure and amount of the plans' main benefit accrual formula." Icon to read

Pension Benefit Guaranty Corporation [PBGC]

IRS Publishes Guidance on Withholding and Reporting of Retirement Plan Accounts Escheated to Unclaimed Property Funds

"An amount as described in the Revenue Ruling 2020-24 example is a 'designated distribution' (not wages, not a payment to a nonresident alien or corporation, or dividends on employer securities), and is therefore subject to withholding under Internal Revenue Code § 3405." Icon to read more



Plan Advisor Checklist: Identifying the Best Retirement Plan Prospects

Retirement plan prospecting can be difficult. Successful advisors are targeted and focused on bringing new ideas to clients and prospects. Use this checklist to define your target audience, identify meaningful opportunities and communicate your value. Learn more

Sponsored by October Three

Some Kinds of Compensation to Plan Service-Providers Are Not Just 'Prohibited', They're Flat Out Illegal

"[M]any do not realize that there is a specific 'anti-kickback' rule applying to ERISA plans that is NOT found in ERISA, but instead under criminal law.... The language of the statute is broad, and looks at first glance to be able to cover a number of poorly designed compensation schemes or service arrangements. We all know that doing something as foolish as buying a plan sponsor a car in order to keep its 401(k) business would clearly step over the line. But there are some other, maybe more familiar, arrangements which could raise some issues." Icon to read more

Business of Benefits

Overlooked Fiduciary Errors 401(k) Plan Sponsors Are Making Right Now

"[1] Inadequate ERISA bond coverage ... [2] No clear purpose for the plan ... [3] Access issues ... [4] Monolithic investment advice ... [5] Definition of compensation." Icon to read more

Fiduciary News; free registration required

Can an Investor Make an Investment in a Startup Through an IRA?

"Assessing the potential for a prohibited transaction requires a thorough analysis of the facts and circumstances to determine the existence of any disqualified person(s) and whether the transaction falls within a prohibited category. Whether a prohibited transaction will occur is not always obvious, especially if it is not clear whether a conflict of interest exists (or could exist) or whether an IRA owner will receive a benefit from the transaction." Icon to read more

Davis Wright Tremaine LLP

Stock Purchase Plans and 401(k)s: Not an Either/Or Proposition

"Historically, retirement plan industry experts have been concerned that employees who have access to a 401(k) and an employee stock purchase plan (ESPP) are faced with an 'either/or' decision ... [New] data demonstrates that when employees have access to both plans, in an integrated environment, combined participation is associated with better retirement savings behaviors and greater overall financial wellness." Icon to read more

PLANSPONSOR; free registration may be required

Employees with Company Stock Plans Welcome More Financial Advice as COVID-19 Drives Some Participants to Exercise or Sell Shares

"While the majority of participants are planning to use their equity compensation for retirement (51%), there was a slight uptick overall this year in those turning to their equity compensation to help meet immediate financial needs, like paying off debt (9%, up from 5% in 2019) and short-term emergencies (7%, up from 5% in 2019). Notably, Millennials have experienced a more pronounced impact compared to other generations and may be in more need of help in developing a financial plan. Ninety-five percent (95%) of Millennials who recently exercised or sold equity compensation report that the pandemic influenced their decision, and almost a third (27%) of this group did so because they were under financial stress." Icon to read more

Charles Schwab


The Political Games Proxy Advisors Play with Workers' Retirement Security

"For pension beneficiaries across the country, this proposal by the [DOL] is a positive step toward ensuring that accountability and fiscal responsibility take precedent.... The proxy system has long been taken advantage of by those without fiduciary responsibilities, preventing sound advice from reaching the nation's pension and investment funds ... [M]ore should be done by the Department to counter the unaccountable practice of 'robo-voting,' in which some fund managers have simply accepted the voting recommendations of proxy advisors automatically without considering the broader fiduciary impact of the proposals." Icon to read more

Institute for Pension Fund Integrity [IPFI]


ESG Investing: Protection of Retiree Financial Interests Needed

"This proposed rule is timely and needed, and ought to be adopted as a final rule. But two related problems are not addressed in that proposed rule. Because of the staff interpretations of the 2003 rule noted above, fund managers are forced to vote on every proxy proposal; and the liability shield means that they have powerful incentives to vote automatically in accordance with the recommendations of the proxy advisers." Icon to read more

National Review


Safe Withdrawal Rates: How Far We Have Come in 18 Years!

"The error in the studies that gave rise to the 4 percent rule is that they do not take valuations into consideration. Robert Shiller's Nobel-prize-winning research shows that the market is NOT efficient, that investors are in fact highly emotional and often set stock prices far above or far below their true value. So risk is not constant but variable and the safe withdrawal rate is not always 4 percent but a number that ranges from 1.6 percent when stock prices are insanely high to 9.0 percent when stock prices are insanely low." Icon to read more


Benefits in General

[Official Guidance]

IRS Extends October 15 Deadline for Victims of Hurricane Delta

"Victims of Hurricane Delta that began on October 6 now have until February 16, 2021 to file various individual and business tax returns and make tax payments ... Currently this includes Acadia, Calcasieu, Cameron, Jefferson Davis and Vermilion parishes in Louisiana[.]" Icon to read more

Internal Revenue Service [IRS]

[Official Guidance]

IRS Extends October 15 Deadline for Victims of September Wildfires in California

"Victims of the California wildfires that began on September 4 now have until January 15, 2021, to file various individual and business tax returns and make tax payments ... Currently this includes Fresno, Los Angeles, Madera, Mendocino, San Bernardino, San Diego and Siskiyou counties in California[.]" Icon to read more

Internal Revenue Service [IRS]

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.

Penalty for Failure to Withhold Taxes?

"Participant in plan that has brokerage accounts took a distribution of all her funds in 2019. We are just finding out about this like last week. She took the money to herself and there was no withholding. Is there a penalty for not withholding? How does it get assessed? I know there's gonna be a late fee for the tardy 1099-R." Icon to read more

BenefitsLink Message Boards

SECURE Act Changes Deadline Requirement for a Safe Harbor Plan?

"Did the SECURE Act change the requirements/ability to make changes to a Safe Harbor Plan? A client asked me this, thinking a change could be made up to December 1. I don't seem to see it in the regulations." Icon to read more

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View COVID-19 News and Resources, Inc.
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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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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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