Retirement Plans Newsletter

November 4, 2020

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[Guidance Overview]

Final DOL Rule Addresses Use of Non-Financial Factors in Selecting Retirement Plan Investments

"In response to public comments arguing ... that there is no clear definition of ESG, the DOL removed ESG terminology from the final rule.... [T]he final rule instructs fiduciaries to focus on whether the factor being considered is pecuniary rather than whether it is an ESG consideration. The final rule also modifies the definition of 'pecuniary factor' to include a factor that a plan fiduciary determines is 'expected to have a material effect on the risk and/or return of an investment.' " Icon to read more

Thomson Reuters Practical Law

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[Guidance Overview]

Latest Volley in ESG Back and Forth: DOL Finalizes New ESG Rule

"[T]he Rule seeks to frame the fiduciaries' duties as permitting only economic evaluations except in limited circumstances, and to impose gatekeeping (in the form of procedural and documentation requirements) around those limited circumstances.... In removing the specific reference to ESG from the final regulatory text, the DOL clarified that the Rule was intended to regulate reliance on nonpecuniary factors, which are not limited to ESG.... [T]he Rule retains a modified version of a 'tie-breaker' test as one of the exceptions for determining when nonpecuniary factors may be considered." Icon to read more

Morgan Lewis

[Guidance Overview]

The 'Pecuniary' Rule: A Roadmap for Navigating the DOL’s Final Rule on Financial Factors in Selecting Plan Investments

"[T]his article provides a roadmap for fiduciaries on the final rule along with a general discussion of the core concepts under the final rule and some of the key departures from the proposed rule." Icon to read more

Bradley

Court Finds Plaintiffs Have Standing to Sue Universal Health Services

"The court noted that ... plan participants ... typically cannot challenge losses to funds in which they did not invest. However, it noted that the 3rd U.S. Circuit Court of Appeals recently ruled that participants can challenge decisions which affect the value of the plan if they can allege specific extra costs affecting their funds and therefore imposed upon them." [Boley v. Universal Health Serv. Inc., No. 20-2644 (E.D. Penn. Oct. 30, 2020)] Icon to read more

planadviser

Guide to Retirement Plan Fees

"Allegations of unreasonable fees have dominated the headlines of ERISA litigation for years, and this trend will only continue to grow. How do plan sponsors protect themselves? ... [1] The 'big three' retirement plan fees ... [2] How to pay retirement plan fees ... [3] Plan participant cost allocation strategies." Icon to read more

Francis Investment Counsel LLC

Bipartisan Leaders of the House Ways and Means Committee Release Latest Retirement Reform Package

"Expansion of auto-enrollment ... Saver’s credit improvements ... 403(b) plan modifications ... Improvements for plan participants." Icon to read more

K&L Gates

Bipartisan Retirement Reforms Offered by Key House Lawmakers

"Student loan match payments ... Mandated automatic enrollment and escalation for new plans ... Expanded coverage of part-time workers ... Required minimum distribution (RMD) changes ... Qualified longevity annuity contracts ... Expanded self-correction program ... Recovery of retirement plan overpayments ... Reporting and disclosure ... Retirement savings lost and found ... Provisions specific to 403(b) plans ... Provisions of interest to small employers." Icon to read more

Mercer

PBGC Premiums Getting in the Way of Its Mission

"[F]rom 2012 to 2020, the flat rate premium has more than doubled and the [variable rate premium] has increased by a factor of 5, though the cap has limited this increase for the most poorly funded plans.... The Academy argues that letting the PBGC set its own premiums would not only take them 'off budget,' but would allow the agency 'to review the premium structure and adjust it to be more timely when needed, to more appropriately reflect its risks, to reduce moral hazards and anti-selection and to discourage termination of plans and lump sums.' " Icon to read more

PLANSPONSOR; free registration may be required

Pension Finance Update, October 2020

"Stocks slipped again in October, producing modest declines for pensions. Both model plans ... lost less than 1% during the month. For the year, Plan A is down more than 5% and Plan B is down almost 2% through the first ten months of 2020." Icon to read more

October Three Consulting

Reducing Estimated Tax Penalties with IRA Distributions

"[R]etirement account distributions are often made only once per year, which effectively creates a 'pay-as-you-go' loophole for taxpayers whose income consists of retirement account distributions! Because of this, advisors whose clients rely on retirement account distributions for income can help maximize savings by withholding taxes later in the year, thereby letting clients keep their money longer (and letting those funds grow in the meantime) without risk of incurring Estimated Tax Penalties." Icon to read more

Nerd's Eye View

Testimony to the ERISA Advisory Council: Cognitive Decline Among Defined Contribution Participants (PDF)

"Six in ten (58%) of our respondents say they provide some level of service and support directly (as opposed to solely through the record keeper) to separated participants, and therefore potentially maintain contact with them. This would indicate the possibility of recognizing cognitive decline if the participant or Trusted Contact communicates with the plan sponsor for service or support.... Seven in ten (69%) respondents say they have no idea how prevalent cognitive decline is among their active, separated or retired participants." Icon to read more

Defined Contribution Institutional Investment Association [DCIIA] Retirement Research Center

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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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