Retirement Plans Newsletter

November 5, 2020

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Should You Establish a Retirement Plan Governance Committee?

"The plan governance committee's charter and manner of operation are at the heart of sound plan governance....[T]he charter should include ... [1] The committee's purpose and authority, including whether the committee can delegate its authority and purpose; [2] The committee's structure ... [3] The assignment of duties and responsibilities, including what reports the committee will produce and to whom those reports will be sent; [4] The frequency and structure of committee meetings ... and [5] The procedures for protecting committee members financially." Icon to read more

ORBA

[Sponsored]

New! Defined Benefit Proposal Software from ftwilliam.com

Defined Benefit Proposal helps you design and illustrate the best plan options using a few clicks. The compare features, customization options, ability to run complex calculations and create 1-5 separate proposals simultaneously all save you time! Learn moreLearn more

Sponsored by Wolters Kluwer


401(k) Plan and Embezzlement

"If a former employee embezzled money from his employer (who sponsors a 401(k) plan), can the employer/plan sponsor use the terminated employee's 401(k) plan balance to help offset the financial loss to the business? ... No, the anti-alienation provisions of ERISA ... prohibit the plan sponsor from using plan assets as an offset for the stolen funds ... ERISA provides for only four narrow exceptions to its strict anti-alienation rules." Icon to read more

Retirement Learning Center, LLC

Another Self-Dealing ERISA Fiduciary Breach Lawsuit Filed

"The lead plaintiff in the suit says her employer, a large financial services company, has inappropriately prioritized its own investments within a profit sharing retirement plan offered to employees." [Callaway v. The Northern Trust Co., No. 20-6497 (E.D. Ill. complaint filed Nov. 2, 2020)] Icon to read more

planadviser

Americans Were Given the Coronavirus Option to Raid Their 401(k); Most Didn’t.

"Fidelity Investments, the largest 401(k) provider in the country, has seen 4.6% of eligible people take some money out through Sept. 30 due to the virus. An additional 1% have taken a so-called hardship distribution that allows withdrawals for reasons including buying a home, preventing foreclosure or paying medical bills. That is compared with about 2% a year that typically take a hardship distribution." Icon to read more

The Wall Street Journal; subscription may be required

2021 Challenges for 401(k) Plan Providers (PDF)

"The further consolidation of this business ... COVID is still a thing ... The permanency of COVID ... That PEP Thing." Icon to read more

Ary Rosenbaum, Esq.

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

December 31 Is Deadline to Amend Deferred Compensation Plans for Section 162(m) Changes

"Every publicly held corporation should confirm that none of its plans or arrangements that are subject to Section 409A ... require that payment be delayed until the Section 162(m) limit no longer applies. Arrangements that are subject to 409A can include employment agreements and severance agreements, as well as SERPs, RSUs, and other arrangements that are traditionally considered to be deferred compensation. Any plan or agreement that includes a mandatory Section 162(m) deferral should be amended by December 31, 2020[.]" Icon to read more

Husch Blackwell

Avoiding 409A Pitfalls While in Financial Distress

"[E]mployers may be concerned about their employees' ability to access their deferred compensation benefits and may want to terminate their deferred compensation arrangements and accelerate payments. Companies that are financially troubled or otherwise potentially headed towards bankruptcy may want to set aside funds to ensure their employees get paid their deferred compensation. Each of these situations involves significant 409A issues that should be closely evaluated." Icon to read more

Proskauer

2020 Use of Environmental, Social, and Governance Measures in Incentive Plans (PDF)

13 pages. "56% of large companies disclose ESG measures in incentive plans, but the vast majority consider such ESG items as part of non-weighted scorecard or individual performance components of annual incentive plans rather than independent metrics that are formulaically tied to the payout. ESG use in incentive plans ... is most prevalent among Energy, Utilities, and Financials companies (>70% prevalence) and least prevalent among Information Technology and Consumer Discretionary companies (<40% prevalence)." Icon to read more

FW Cook

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.

Non-Profit and For Profit
"Non-Profit organization is not part of a controlled group with a For Profit company (I don't think its even possible?). But there is some very strong connection between the two, probably donation driven, maybe the for-profit handles the accounting work, I don;t really know. Any reason they both cant participate in the SAME 401(k) plan?" Icon to read more

BenefitsLink Message Boards

VFCP Calculator
"Anyone have a pipeline to the DOL? The calculator is great, but it would be GREAT if they could allow you to input the final payment date just once. Frequently there are a gazillion entries that have the same final payment date, and having to enter it each time is a PIA. Or is there some way to do it already that I don't know about? If so, I'd greatly appreciate someone instructing me in the error of my ways!" Icon to read more

BenefitsLink Message Boards

Irrevocable Election Not to Participate
"The plan is a SHNE 3% plan and Profit Sharing is each participant is it's own group. The participant signed an Irrevocable Election Not To Participate on 6/17/2016, her date of Hire was 11/7/2014 and eligibility was one year and dual entry, so her eligibility date would have been 1/1/2016. The plan is a service term and the new advisor is questioning that she should be included in coverage testing( in the 410B group shes in an excluded group) How should she have been listed in the 410 b group? Also, should she have received a SHNE 3% contribution for plan years 2016-2019? Thanks!" Icon to read more

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Press Releases

Most Popular Items in the Previous Issue

Guide to Retirement Plan Fees
Francis Investment Counsel LLC

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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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