Retirement Plans Newsletter

October 22, 2020 logo logo
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[Guidance Overview]

The SECURE Act's Effect on Retirement Plans: A Refresher

"[O]f all the SECURE Act provisions, only one, relating to Required Minimum Distributions (RMDs), was delayed by the COVID-19 pandemic. While there were not too many provisions in the SECURE Act that were hugely disruptive to plan sponsors, there are a few about which retirement plan sponsors should be cognizant." Icon to read more

Cammack Retirement Group

Time to Catch Up on Those 401(k) Plan Committee Meeting Minutes!

"[1] Your 401k oversight committee should be meeting no less than quarterly to effectively monitor the plan and perform oversight duties. [2] Make sure you have someone designated to take minutes during the meetings of your 401k plan committee. Ideally, this person would not be a member of the committee so this person can just focus on taking minutes and not being a part of the committee discussions. [3] On a quarterly basis, meeting minutes should include the following ... [4] [T]he following items should be documented as performed annually[.]" Icon to read more

Bradley Bartells, CPA, via LinkedIn

Considerations Before Terminating a Single-Employer Pension Plan (PDF)

"As the economic fallout from the COVID-19 pandemic continues, many employers with significant single-employer defined benefit pension plan liabilities are revisiting options to mitigate their pension exposure in an effort to reduce their annual expenses and to clean up their balance sheets. One option that is often considered is a termination of the pension plan. However, terminations are only permitted under certain circumstances and have ramifications that must be carefully considered and managed." Icon to read more

Proskauer, via Bloomberg Law

Exceptional Usefulness and Quality iconAnnuity Settlements in the Context of Steeply Declining Interest Rates

"Significant declines in interest rates over the past two years do ... lower VRPs for plans at the VRP headcount cap. For plans using the alternative method for calculating unfunded vested benefits (UVBs), headcount reductions via annuity settlements may generate a 'loss' -- that is, an increase in VRPs.... Sponsors will want to consider the effect of annuity settlements on minimum funding requirements -- particularly payments that may take the plan below 80% funding (on a HATFA basis), triggering benefit restrictions." Icon to read more

October Three Consulting

The Best Fidelity Funds for 401(k) Retirement Savers

"In this year's [BrightScope] survey of popular 401(k) funds ... 17 funds from Fidelity rank among the top 100. Four are index funds ... But the remaining 13, seven of which are from the firm's Freedom target-date series, are actively managed." Icon to read more


COVID-19 Fuels Employee Uncertainty About Retirement

"Fifty-eight percent of workers impacted by the pandemic say they now don't know if they have enough saved to retire because of COVID-19, compared to 37% of all workers. Moreover, among workers impacted by COVID-19, 70% say they are worried about how to make sure they don't run out of money in retirement, 61% say they are much more afraid of life in retirement, and 61% say the pandemic took the joy out of looking forward to retirement.... Working men report median retirement savings of $120,000, which compares to $60,000 for working women ... Yet for those impacted by COVID-19, men report median retirement savings of $60,000, which compares to $21,000 for women." Icon to read more

Wells Fargo

Many Furloughed and Laid-Off Healthcare Workers Expect to Delay Retirement Due to COVID

"38 percent of respondents report feeling less confident that they will have enough money to live comfortably throughout their retirement, and 46 percent report that their overall financial condition has worsened. Further, the COVID-19 pandemic has increased the age at which healthcare workers now expect to retire; 45 percent of respondents expect to work past age 67." Icon to read more

Retirement Planning Becomes Top Focus for 403(b) Employee Education

"More than a third of organizations now state that their primary purpose for providing plan-related education is retirement planning (34.8%), outpacing the previous years' top goal of increasing participation ... Thirty percent of organizations initiated a cybersecurity awareness campaign related to retirement plans, and a third distributed email alerts about specific security issues in 2019 ... More participants contributed to their plan this year, 76.6%, up from 72.0%. Plan sponsor contributions up to 6.3%, from 5.5; Participants now contribute 7.2%, up from 6.6%." Icon to read more

Principal Financial Group

Annuity Purchase Update: October 2020 Interest Rates

"Year-to-Date annuity purchase prices have been volatile and are now higher ... Annuity purchase prices relative to GAAP PBO liabilities have also been volatile but are now in line with historical expectations. This past month annuity purchase prices dropped 0.07% for Annuity Plan 1 and stayed the same for Annuity Plan 2.... Plan funded statuses have generally declined in 2020 and PBGC premiums will increase next year." Icon to read more

October Three Consulting

Recordkeeper Consolidation Expected to Continue

"As the defined contribution industry's record-keeping consolidation continues with big-name deals, DC industry experts say there's more to come due to narrow profit margins, increased technology requirements and greater sponsor demands." Icon to read more

Pensions & Investments


How to Fight for Retirement Security During National Retirement Security Week (and Beyond)

"[1] Acknowledge that the United States is facing a retirement security crisis.... [2] Becom[e] an advocate for public pensions.... [3] Combat misinformation from pension opponents." Icon to read more

National Public Pension Coalition

Selected Discussions
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Adding a Profit Sharing Component to a 401(k) Plan; Ignore Prior Service for That Component Only?

"Current plan has only 401k and SH provisions. Effective date of the plan is 2017. Planning to add PS provisions for 2020 (never had before). As with the addition of the PS provisions and the vesting for PS, can the plan exclude service for PS portion?" Icon to read more

BenefitsLink Message Boards

Change to 3% Safe Harbor -- Still Oct. 1 Deadline for New Plans?

"Is there a rule that the change to 3% Safe Harbor has to be by October 1 for 'new' plans but December 1 for existing plans? If that's the case, what's the definition of a 'new' plan? If we have a document for a Plan Year starting 1/1/20, when do they have to make the 3% decision by? Could we instead start by using a non-calendar year?" Icon to read more

BenefitsLink Message Boards

Definition of Compensation -- Different Definitions for Deferrals and for Safe Harbor Matching Contributions?

"In a safe harbor 401(k) plan (non-QACA), is it permissible to have different definitions of compensation for deferrals and safe harbor matching contributions? For example -- for purposes of deferrals, compensation is defined as all compensation within the meaning of Code Section 415(c)(3), including bonuses. For purposes of calculating the safe harbor matching contributions, bonuses are excluded. Is that allowed?" Icon to read more

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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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