Retirement Plans Newsletter

November 3, 2020

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[Guidance Overview]

Are You Counting LTPTEs for Your 401(k) Plan?

"The [SECURE Act] made changes in the qualified plan rules for eligibility and vesting with respect to so-called 'long-term part-time' employees (LTPTE). The changes are designed to allow LTPTEs to make elective deferrals to a 401(k) plan and, if the employer chooses to provide matching or nonelective contributions to LTPTEs, to permit vesting service based on 500 Hours of Service rather than 1000 Hours of Service. While the first LTPTEs will be eligible to elect deferrals in 2024, employers with 401(k) plans need to start now to identify and prepare for LTPTEs." Icon to read more

Nelson Mullins

[Sponsored]

Don’t Fall Behind! Stay Up to Date with Latest Industry Developments

Join ERISA expert John Griffin, J.D., LL.M. and learn about recent legislation including the SECURE Act, Miners Act and CARES Act. Keep up-to-date on IRS and DOL regulatory developments and pending retirement plan legislation. Register now! Learn more

Sponsored by ASC


[Guidance Overview]

What Employers Should Know About Lifetime Income Disclosure Requirements for Defined Contribution Plans

"[1] Two lifetime illustrations must be provided at least annually ... [2] Contents of a benefit statement that includes a lifetime income illustration ... [3] Assumptions in calculating lifetime income illustrations ... [4] Assumptions for defined contribution plans with annuity distribution options ... [5] Deferred annuities purchased by participants are excluded from lifetime income illustrations ... [6] Interim Final Rule includes model explanatory language ... [7] No liability by reason of providing illustrations if model explanatory language is used." Icon to read more

Thompson Coburn LLP

[Guidance Overview]

DOL Finalizes Rule on ESG Considerations for ERISA Plan Investments

"The overarching principle of the Final Regulation ... is that when making decisions on investments and investment courses of action, an ERISA plan fiduciary must focus solely on the plan's financial risks and returns and the interests of plan participants and beneficiaries.... [T]he DOL eliminated all ESG-specific references in the Final Regulation and clarified that there is no per se prohibition on selecting or considering investment strategies that incorporate ESG so long as it is based solely on material economic considerations." Icon to read more

Ropes & Gray LLP

[Guidance Overview]

DOL Releases New ESG Guidance

"[T]he rule will apply only on a prospective basis, meaning fiduciaries will not have to divest or cease any current investment, even if originally selected using non-pecuniary factors in a manner prohibited by the final rule (with the exception of the prohibition of QDIA investments that use nonpecuniary factors as a primary investment objective, which must be removed from plans by April 30, 2022)." Icon to read more

CAPTRUST

[Guidance Overview]

Tax-Exempt Entity Retirement Plans and the Tax Consequences of Noncompliance (PDF)

"The [IRS] recently issued [FAQs about] the tax implications to participants and employers when a 457(b) plan becomes an ineligible plan and, as a result, is governed by Section 457(f). This latest IRS publication on 457(b) plans stems from the concern that there is an historical and ongoing pattern of noncompliance with respect to these programs and serves as a warning to employers that there are risks and costs associated with noncompliance." Icon to read more

Davis, Malm & D'Agostine P.C.

[Sponsored]

The most important thing you can do today

Let each citizen remember at the moment he is offering his vote that he is not making a present or a compliment to please an individual -- or at least that he ought not so to do; but that he is executing one of the most solemn trusts in human society for which he is accountable to God and his country. (Samuel Adams in the Boston Gazette, April 16, 1781) Learn more

Sponsored by BenefitsLink.com


Allstate 401(k) Lawsuit Argues Plan Not in Good Hands

"The complaint ... accuses the defendants of loading the plan 'with poorly performing' target date funds managed by Northern Trust.... The defendants' actions cost participants 'upwards of $65 million in retirement savings,' the suit said." [Cutrone v. The Allstate Corp., No. 20-6463 (N.D. Ill. complaint filed Oct. 30, 2020)] Icon to read more

Pensions & Investments

ACP Testing for Safe Harbor Plan That Suspended Match Contributions

"[F]or safe harbor plans that suspend their safe harbor matching contributions, the IRS does NOT permit prior-year testing, only current-year testing (where the NHCE ACP for 2020 would be compared to the HCE ACP for 2020). If your plan was NOT a safe harbor plan, it could use prior-year testing if that method was stipulated in the plan document." Icon to read more

PLANSPONSOR; free registration may be required

Pension Risk Transfer: Where Obligation Meets Opportunity

"There are a number of ways CFOs can go about transferring the potential risk from their existing plans. [This article discusses] buyouts and buy-ins, plan terminations and lift-outs, and the respective characteristics of each." Icon to read more

Financial Executives International Daily

Time to Issue Annual Retirement Plan Notices

"[P]lan sponsors might have more to consider and update in this year's annual notice outside of the normal changes to plan COLAs and investment expense ratios.... [T]he 401(k) safe harbor, qualified default investment alternative ('QDIA'), and automatic enrollment notices must all be sent to plan participants between 30-90 days before the beginning of the plan year (i.e., no later than December 2nd for calendar year end plans), and may be combined into a single document." Icon to read more

Graydon

[Opinion]

Pension Plan Managers Aren’t Supposed to Solve the World’s Problems

"[T]he enormous sums of money in retirement plans inevitably catch the attention of people who would like to use those funds to advance causes of personal interest to them.... ERISA doesn't task retirement plan managers with solving the world's problems. It doesn't ask them to be ecologists, sociologists and public policy experts all at the same time. Nor does it ask managers to take on politicians' job of determining which societal trade-offs are acceptable." Icon to read more

U.S. Secretary of Labor Eugene Scalia, in Tampa Bay Times

[Opinion]

DOL Releases Final Rule Snubbing ESG

"What's left for ESG funds is a 'tie-breaker' status -- plan sponsors can indeed consider them if they match up favorably against other funds, and thus a fund's pursuit of the greater social good makes it an attractive choice, all else being equal." Icon to read more

Financial Advisor

Benefits in General

Supporting Caregivers Can Help Create Competitive Advantage for Employers

"[1] Offer a financial wellness program with specialized retirement planning solutions that can help caregivers and people with special needs find a balance between living for today and planning for tomorrow. [2] Incorporate access to ... paid family care leave, disability/long term care insurance, [and] HSA/FSA ... [3] Initiate Employee Resource Groups (ERGs) for people with special needs, disabilities and caregivers to harness the power of peer-to-peer support ... [4] Provide access to an Employee Assistance Programs (EAP) with services specific to caregivers and people with special needs ... [5] Offer child care and caregiving support for parents and health care workers who are impacted by COVID-19." Icon to read more

Voya

Executive Compensation
and Nonqualified Plans

Our D.I.V.O.R.C.E. ... Is Going to Be Tricky for My Employer to Handle

"If [a top hat plan's] terms do grant a plan administrator discretion to honor a DRO, Internal Revenue Code Section 409A permits accelerated payments to a non-employee former spouse ... [T]he distribution is taxable to the non-employee former spouse and excluded from the taxable income of the employee spouse.... It is the reporting and withholding on this distribution that gets a bit tricky." Icon to read more

Holland & Hart LLP

Planning for Early Retirement When You Have Equity Compensation

"Current evidence indicates that fewer than one-fourth of employees have ever exercised their stock options ... If you do plan to exercise your options and use your equity compensation in retirement, you might have to satisfy certain conditions, including an age-at-retirement requirement and a length-of-service requirement.... [E]ven if you meet these requirements at the time you decide to retire, it is possible that under a company plan you still may not be entitled to receive any of your unvested shares." Icon to read more

Kiplinger

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
Holly Horton, Business Manager  hollyhorton@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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